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tv   Worldwide Exchange  CNBC  April 16, 2012 4:00am-6:00am EDT

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headlines from around the globe, spain's borrowing costs spike to levels not seen since the height of the debt crisis. also pushing german bund yields to a record low despite an agreement to apply tough miss c fiscal targets. >> u.s. slides against the greenback as the central bank stretches out the daily trading range. r reform reflects confidence to steer a soft landing.
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>> and the earnings parade gets under way with nearly a fifth of the s&p 500 set to report results this this week. >> and we bring you a cnbcs exclusive, chir man of the board of supervise ors at cic. why the sovereign wealth fund is now ready to buy europe inc. >> i would say euro would have no difficulty taking say 20% or something of that. >> welcome to "worldwide exchange." you're watching the show with christine tan and i'm beccy meehan. loads coming up in today's program. france's presidential candidate held major rallies ahead of sunday's election. steve and stefane have joined them on the streets and we'll get an inside view in 15
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minutes. plus do covered bonds provide a safe way to invest in spain? and at 11:00 cet it, we'll find out why our guest host the second hour thinks equities still look cheap. well, in the meantime, spain's finance minister says the government is committed to helping the country's regions refinance some 50 billion euros worth of debt this year. the comments come after 11 regions controlled by the ruling party gave their backing over the weekend to the prime minister's us a tirity measures. julia chatterly has traveled out to spain and has the details. it does seem to be this autonomous regions issue and the september to which they will stick to these targets. >> absolutely. will this is definitely one of the key concerns. 191 regions have agreed to get hair deficits down to 1.5% this year. deficits last year were 2.9%, so this is a huge task.
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half the deficit that we saw last year. they also did pledge over the weekend to implement these cuts that we had last week, the 10 billion euros worth of cuts to health and education. this is a key responsibility for the regions. it represents around 70% of their budgets. and we can't forget that they in turn represent around a third of the total public spending here in spain. and two-thirds of the slippage that we saw in the deficit last year was down to these regions just to give you some idea of how important they really are. growth obviously is another important part of the equation and we will get more details on that tomorrow when the imf release their current forecasts. big risk event is the auctions. we have two ten year auctions on thursday. particularly important following the weakness or relative widening that we saw concessions given by the government in order to get bonds away in early april. so obviously that will be a focus for the markets particularly given the weakness that we saw and we now have ten
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year spreads above 6%. isn't back to the wides we saw in most of. they were above 6.5% at that point. but then you have to remember at that time, too, we had the greece situation going on which obviously contributed to the concern in the markets. so we'll continue to watch the markets here in spain. >> so interesting points raised there by julia covering this issue on the ground. bob parker is with us for the next hour. hang you gentlemen for both coming along. so let's start off with you. we were hearing from julia that the spanish ten year is back over 6%. how concerned should we be about that level in particular? >> i think probably what's more important is the spread with
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germany. >> german yields are record lows, as well. >> that's right. so those spreads have moved higher and i think the key is whether we get the move sort of beyond the highs that we were last year and sort of 470 basis points. and i think probably we will get to those sorts of levels. so, yeah, assay, the difficulty is not just the spanish yields are rising, it's that germany is falling. >> bob, what are your thoughts on how essential these spreads are? >> i think the answer is they're not sustainable. and if we have a situation where ten year spain stays in a range of let's say 6% to 7% for six months, 12 months, i think that raises a very serious question as to whether spain would have to go to the esm to refinance. >> steve, we did have the these year l it tro and if a while that seemed to provide some respite. is there any mileage left in
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this, will we see another three year to help bring it back under control or is it just not effective in the long term? >> i dare say we probably are going to see more of those operations, but then it's not effective. the evidence that we have from the ltro suggests obviously that banks in spain, for instance, were very heavy takers of that and if you look at the data on spanish bond hold willings of government bonds or italian holdings of government bonds, they've really shot up since the ltro. so it's clearly evidence of what's happened here is that the banks went to the the ltro and then they invested the money in the bonds. and the question now is have they invested most of that money and if that's the case, then things look a little difficult. what's helped i suppose in a sense is that maybe issuing schedule in spain is maybe not too onerous, redemptions are not too large. but at the same time, i think market pressure is going on continue and those things are not necessarily going to stop
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these spreads and yields from continuing to move higher. >> bob, this is chris even here in asia. given what's happening over of course in spain and overall eurozone, asian markets concerned about the overall financial fallout. how much truth is that somehow realistic are the markets, are they overreacting? >> i think they're not overreacting because if we look at risk in europe, and it's not just spain, if we look at the risk of the french presidential election resulting in a socialist victory, italy, the situation short i think is stable. but if we had italian french and spanish debt, that's 4.2 trillion. if that has to be refinanced this way or another, the esm doesn't have adequate funds. and although i think the situation in the eurozone today
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is very different from let's say one year or even two years ago, the eurozone crisis is not over and at least in the short term, that can be a drag on the global droe growth. the euro except germany is still in recession. so this dead weight of the eurozone crisis is at least in the short term a neglect i have for global markets. >> steve, do you agree? >> yes, i do. i think that we obviously have focused attention on spain at the moment, but for me, the whole euro zone is broken. we just moved from one country to another finding out how broken the whole system is really. and i think the thing that's disappointing i suppose in many respects for me is that we're not seeing progress in areas like the development for instance of a single mond market, which is still somewhere where i think the eurozone has to go. more movements towards a fiscal
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union, as well, i don't think the moves so far have been sufficient. i think we need to see more of a eurozone wide approach rather than just putting out individual bush fires. the next one will be spain. there will probably be another one after that and each complaican't carry on in that way. >> for some time, we have been very much going from bush fire to bush fire without an overarching conclusion. will there be some kind of event which forces the eu to either abandon the project or go to pu full union? >> i think the argument for full union is overwhelming. the problem is i think politically that will be very difficult to achieve. and the french locations obviously have been mentioned and if he does win and socialists get in, i think that becomes even more difficult. so i do think we're more likely to see a crunch point where europe has to basically to
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decide whether it wants to try to move to that system or we end up with losing countries. >> thank you very much for coming in. bob will be staying with us for the entire hour. >> asian markets mostly lower. in the end, it should be positive for the overall china markets longer term, but in shanghai, this market mostly worried about earnings of companies. so moving a little bit to the down side, down two points. hang seng up 0.4% today drifting further and further away from the 21,000 level. we had financials the bigger drag. investors needed more conviction to get in to the particular market. nikkei biggest loser today, 1.7%. investors dumping stocks with
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exposure to the eurozone, exporters getting hit big time after the euro spell to eight week low against the yen. concerns about wider financial fallout. australian market down 0.5%, sensex up 0.1%. >> overall, we see fairly even divide between gainers and losers on the individual stock front. we are up for a region as a hole by 0.2%. looking at some of the individual markets, but a variation really, the ftse 100 is higher by 0.4%, so certainly outperforming several of these other markets. biggest gainer in percentage terms is international power. it's up would i nearly 3.3% after we heard that gdf will buy the rest of the company it doesn't really own for 418 pentz per share. declines coming through there in germany where the dax is losing 0.2%, but cac shifting higher by
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1.0% or so. ibex lower by six points. nokia has dipped below three euros raiding down by 2.6%, ten year lows for that company. where is the entry point for north korea? certainly the stock has been moving a great deal lower in recent sessions. bond market is the focus of attention. big movements to the down sigh for the bund. the ten year, record lows today. the yield at 1.72, while in spain, continuing to see yields rise, so the spread here is widening once again, of course much of the concern about the state of the eurozone. in spain, we're looking at levels of 614, so pushing well
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back above the 6% level. these levels seen as unsustainable. italy also seeing the yields rising, but not quite the levels we're seeing in spain. it wasn't long ago that the levels in italy were much higher than they were in spain. now they've flipped around .ten-year at 564 and the ten year gilt is just over 2%. >> in asia, the slips in volatility. the chinese currency move suggests traders are comfortable with the current range in a bid to guide the economy towards a soft landing. in an interview in beijing on friday, i spoke with the chairman of the board of supervisors at cic, china's sovereign wealth fund, and asked about china's latest efforts to
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internationalize the yuan. >> the efforts to promote renminbi's role in the international settlement of investment or trade is certainly beginning and it's taking off pretty well. but renminbi accounts for 0.4% of the international settlement. very much limited, right some u.s. dollars, euro, sterling pounds or japanese yen to an extent. so this it 0.4% is very meaningful because we finally have moved forward to have renminbi play a role which can reduce the burden on the u.s. dollar, other currencies, as international reserve currencies. and people should understand that will is not undermining the united states dollar as international reserve currency. it is reinforcing the dollar.
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why? because when u.s. economy as a proportion of global economy is going down. >> the outspoken chairman was also more upbeat about the investment opportunities in the eurozone. a few months ago, he openly criticized european labor laws after leaders called on china to help bailout debt burden countries, but in a markedly positive tone, he says investors in europe could easily account for a substantial chunk of cic's total portfolio. take it a listen. >> we are looking at the investment units and we believe we would have cooperations putting together which could make us both profit from that activities. kind a number of european companies are well managed companies. at this moment, they may short
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on liquidity because of the very dismal forecast about some of the eurozone members. they need capital injection. they need a vote of confidence. this could be done. so we hope they would feel relaxed, they'll open to us, and they will find our investment will be really a plus. >> so looking for strategic assets in the eurozone, in the uk. does this somehow mean that china is interested to be a white knight to the eurozone crisis? >> the chinese government has been very, very explicit in supporting eurozone, in supporting euro. but when it comes to concrete investment decision making, certain it's a different matter. it depends on both sides, both companies partners to work
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together. so you cannot say because will this is the political support by china for any member, you just couldn't do anything because of risk concerns. no, that's not the way to do business. >> what deals in the eurozone would cic be interested in? >> for instance, infrastructure. certainly eurozone members want it upgrade in-practice a structure. power supply, power transmission and distribution, water supply, water treatment, real estate. residential, commercial office buildings. and also we invested in the property markets stocks in the balance, you know. because if we inject capital into the public market, that's also a vote of confidence. >> potentially what percentage could europe contribute a as a
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total investment of your portfolio? >> it's really very hard to say, but i would say euro would have no difficulty . >> let's get some analysis now. joining us live from hong kong is author of china and the credit crisis, emerge gents of a new role. charles, what do you make of this turn by cic? 20% still does not count for a lot if you think about it. >> i think they've been trying to invest in europe for some time, but it's only now some
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european countries would regard as strategic assets. transport links, that sort of >> cic is still pretty much owned by the government, so how will it go down in europe? >> i think that it will go down pine in europe. or pea europeans are going throa difficult time and a lot of people have changed their view about the position of china in the world. so i think that it will all work out okay. >> i agree with your confidence that this is not a turnaround by the chinese and everyone looks at cic's sister organization
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save its exposure to the euro as being on average 20% to 30%. so that 20% number is not surprising. i think one observation to make is that cic strategy is the focus on real assets, so whether they're investing in equities, infrastructure, real estate, they don't want to invest in government bonds. and i'd be interested in your comments if you agree with that statement. >> i totally agree with that. china, the western developed countries, the problem they have is that they consume so much before the credit crisis, at the were rowed so much future growth, that they have to start giving some of that growth back how. populations like the spanish are not prepared to tolerate as to
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almost in-evident thabl we'll see higher inflation and i think the chinese realize that. >> what kind of timing do you think they're looking at for those kind of investments? >> very difficult on call the bottom. and i don't think they will try. they're very -- cic and safe have now become pretty experienced investors. they've started to invest themselves in size and also through some of the world's most experienced fund managers like pimco in the u.s. and others in europe and asia. so they've learned an awful lot in a short time. and i don't think they'll try to
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call the bottom in europe, but they will look for people primarily who want to cooperate with them andness their point of view and see a long term future with china. that will be their number one interest. >> charles, the other story dominating asia is the widening of the currency trading ban by china. how soon before we see the currency becoming fully convertible? >> i'm in the short term or medium term camp. i think it's probably a three year job, maybe four or five year job. i don't think it will be a 50 or 20 year job. because i think china immediates to realize that having the yuan as a reserve currency is very useful for china. the other big implication is that the more convertible and more liberalized the u.n. becomes, the more independent chinese interest rate policy becomes and that could have a very significant impact for interest rates within china.
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and for the chinese economy. in other words, asset prices if interest rates rise, which they normally would, if china had freedom of interest rates, asset prices would tend to fall. >> okay. thanks so much for coming along. author of chinand at credit crisis, emergence of the new world order. we're live in paris where they go head to head a week before the elections first round. steve sedgwick is there. steve. >> reporter: yeah, a little bit of a day trip for some of us from the squawk team. you of course have have been manning the fort in london, but we're taking a look at the economic fundamentals. why does france enjoy 3% ten year yields when the spanish have 6% ten year yields and yet the dynamics of the economy are strangely familiar in many ways. we've been doing a lot of work
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on this. karen is also still doing a bit of work on the french economy. and stefane, of course, has been helping along, as well. we'll be back after the break and explain to you always bits what we found out. ♪
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we're in paris taking a look at some of the dynamics of the economy ahead of the presidential elections on sunday. this was built on the order of florida polian to be the hub of stock market trading in france. for the next 150 years plus, the exchange became the hub of equity trading here in france where the stockbrokers would imagine client orders into the trading pits. but by the late 1980s as in will not did not, stream based trading became the norm. but that wasn't the end. in fact, it was then that i
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first became being a quabacquai. i came down here to check out the monet on this floor, single stock options and the testosterone driven guys on the first floor. and one hinge i lea thing i leat contrary to popular belief, the french loved red blooded capitalism just as much as the anglo-saxons. those were the days. what a young man i still look, hey, karen? >> thank you for showing us around. what was key yesterday is we had a lot of mass rallies playing
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out here in paris. these mass rallies really interesting. it seems as though the opinion polls are telling us the second round could see a change in politics. >> yeah, but there's not a bigger suspense. we know that sarkozy has never been in position. he could win the second roun according to rely opinion polls. >> ben was talking about how neither of the major candidates were addressing kcompetitivenes and growth. and 5% budget deficit, 90% debt to gdp, 10% unemployment, biggest trade deficit ever last year, and 55% of gdp, i can't see where the remedy comes from. >> none of them really addressed the debt issue in france. they didn't want to talk about it because we know that taxes will rise in france. but of course it's not something you want to speak about during
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the campaign. >> the focus on the the competitiveness issue is very important iks and ben was talking about the labor market which is the number one issue that we needed to see reform. very specific issue when you take a look at the european financial crisis. >> they want to block the companies from delocalizing in case they move the production facilities outside of the country. >> but they said i can hire a worker for about 3 1/2 times cheaper in slovakia than employing in france. so these are some of the competitive issues which i'm not sure if either of these candidates are addressing. but six days to go to that showdown. it looks as if the socialist is
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holding the majority. we'll be back in london tomorrow with you onset. stefane, thank you so much indeed for being such a magnificent host. beccy, back to you. >> still to come, we talk to a guest who says the covered bobtds space may be the best in time of dry sis. this at&t 4g network is fast.
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headlines today, spain's borrowing costs spike to levels not seen since the height of the debt crisis, also pushing german bund yields to a record low despite an agreement to apply tough fiscal arrest gets. >> yuan slides against the greenback. china central bank stretches out the currency's daily trading range deflecting confidence in its ability to steer a soft landing. >> earnings parade gets under
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way with nearly a fifth of the s&p 500 set to report results this week. >> and we bring you a cnbc exclusive with the chairman of the board of supervisors at cic, telling us why the sovereign wealth fund is now ready to buy europe inc. >> i would say euro would have no difficulty taking 20% or something. >> so let's talk more about spain. breaking news for you. spanish default swaps a record high. so we should also look at what's going on with the ten year yield, as well. which has been continuing to rise again today. risen above 6.15% german bund is
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falling to record lows. so that spread continuing to widen out. so our next guest says that despite the country's problems, spanish banks have been able to raise money new covered bonds. joining us head of european covered bonds. ted, you say will is an opportunity. explain to us. >> well, in spain, the rules for issues covered bonds is that they need to be backed by a collateral pool and it was backed by the entire mortgage pool. so you see some of the banks having an overcollateralization by 700%. so even in times of stress or difficult financial markets, investors have found this attractive because even if the
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economic situation deteriorates, cash flows into the asset pool is enough to service the bonds. so that's why we've seen investors buy spanish covered bonds despite the news in the market. >> if we look at the balance sheets of spanish banks, would be thing that concerns us is the phrase overencumbrance. to what september where they overencumbered because they are obliged to provide too much in collateral. >> depends on which bank you're talking about. some of the smaller ones have assets tied up in the cover pool. some of the larger ones, that's a number that's a lot lower. so for the covered bond investor, they're sitting pretty, although what we've noticed is that as you point
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out, if you uncover too much of your assets, investors would say do you really want to buy into a bank that's pretty much mortgaged their best assets to the hit. >> you said it perfectly, the best assets are now collateralized. what does that leave. you he said up with a very distorted balance sheet. >> i think the senior unsecured investors are becoming more subordinated. but this is what in a sense has made people feel more comfortable about covered bonds. if things get very difficult and you find that the banks themselves are having much more difficulties, it's better to be the covered boez investor than the senior uncovered investor. >> who is the covered bond investor? >> that's what's interesting. one of the market that's benefited has been the covered bond market.
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private individuals, bank treasuries, cooperative banks, we are everybody seeing the insurance companies and asset managers lifting their game on a global basis. >> asian countries looking to establish these kind of markets. >> i think the covered bonds have become a well identified asset class for safety around the world. some of the largest in australia have been covered bond issues. so that's good for our economy. and so we've seen many countries
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for example singapore is in the process of looking to establish covered bond. japan. even discussions in china. so this is really a pattern we've seen all over the world. we've seen latin american countries starting to get into this process. mexico has been in the the process of establishing the covered bond market for a long time. so for governments, it's a good thing if local banks can tap into an investor base worldwide. >> i completely agree that the trend is very clear. expansion of the latin american market and asian market. but i' conversation to the question of valuation. we have balance sheets with
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collateralize the assets, the good assets, and then increasingly bad assets for the rest of the balance sheet. isn't there a risk in the covered bond market that comes interest what overexpensive? are values starting to disappear, is the game over for investors so investors? >> i don't think so, but we suggest before you buy a covered bond issue, look at the financial institution's balance sheet, look at its business, is their business model sustainable. it's nice to be a covered bo investor in a bank, but who wants to buy from a bank that gets in to trouble. so we suggest do that exercise first apand you will find there are some very good valuations. in the case of spain, there are certain spanish banks that haven't borrowed any money under the ltro, but if you look at the way their covered bonds are
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trading, they're not really being distinguished from others that have borrowed quite extensively. so that in itself i think is a starting point to look at. so, yes, there are some pockets of value, but you need to do your homework. that's the advice that i can personally will give. >> i've heard that many teams over the years. ted, thanks for coming along. christine, let's send it back out to you. >> concerns about the debt crisis in the eurozone and of course dominating the news today with china widening it currency trading ban. positive for the markets in the longer term, but shanghai is not buying it. pretty much lower to the down side. hang seng off 0.3%. investors needing more conviction to buy into the market. nikkei 225 down 1.7%.
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investors really cutting stocks with exposure to the eurozone. of course exporters getting slammed big time after europe euro dropped to eight week low against the yen. financials lower. kospi down 0.8%. and the sensex was up earlier, now trading to the down side, 13 points lower. beccy, what do the european markets look like? >> in the past four weeks, they've lost a great deal of ground. cac over 11% in the past four trading weeks, down by #% for the dax, ftse lost over 5%. today turning around a fraction, though, the ftse trading up by nearly half a percent, international power is helping deal with that. dax flat, just up by four or five points. cac managing to add ten points or so. by the ibex fresh three year lows. the yield on the ten year continuing to creep higher and that is very much in contrast to
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what's going on in germany where we see the safe haven trends sending bund down to 172. in spain, 6.14 is where we stand. and you heard me telling you that the five year record high 520 basis points, but that ten year yield has been over 6.50 this morning, but just around 6.14% right now. this italy, we're looking at elevated yields, 5.63%, so gaining but still sitting below the spanish ten year. and here in the uk, 2.02 is where we stand on the yields on the ten year. quick check on the euro rates, as you might expect, this this has been demonstrated, trend demonstrated in euro-dollar to some extent. euro was just below 1.30 a little earlier, trading at 1.3011, so losing 0% #%. but still holding unreasonably well. trading in this fairly narrow bond just over 1.20 for some time now. dollar-yen, the yen svenneni80..
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sterling holding steady against the dollar. christine. >> well, the u.n. security council set to condemn north korea's paled rocket launch and discourage further provocations when it meets later today. here's the story from seoul. >> we're expecting a security council to issue either a resolution or presidential statement while it took seven 7 to 10 days for the u.n. security council to announce the meeting in the past, it could take a shorter period this time as we had a agreement by china that the launch was wrong. however, reuters sources are saying that the chinese diplomats are looking to tone down the language of the rebuke. in the meantime, north korea's new leader spoke publicly for the first time at a military
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parade on sunday vowing to maintain his father's work. there was also a military parade which showed what appeared to be a new mobile ballistic missile. following this, analysts are predicting north korea could be planning a third nuclear test sometime soon. back over to you. >> thank you very much for that. well, it may be fitting that we move on to japan right now after korea. new report says japan's per capita gdp may tumble to 18th place in the world by 2015. below south korea. the story live from nikkei. >> that's a prediction the 21st century public policy institute made today. the think tank which is affiliated with the japan business federation forecasts that at the present pace,
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japan's economy will experience extended negative growth from the 2030s to overcome decreasing birth rate and aging population, that institutes suggest japan widen its door to more immigrant workers. the think tank also urged japan to tap economic growth throughout asia by joining the ttp free trade agreement. and in another story we're following, japanese companies are accelerating thes peace of foreign currency bond issues in just the first three months of this year, their issuance has reached more than half of last year's total. the reason for the return, japanese firms are ben pitsing from lower fund raising costs on the back of better credit standings. many are using the funds to snap up local companies as a way to expand overseas. back to you, chris evtinechrist. some thank you very much for that from the nikkei. i said i can't's inflation slowed marginally and day it take pay help support expectations that the central bank will cut interest rates by
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25 basis points. the rbi will announce its decision tomorrow. more live from mumbai. >> thanks for that. as expected, the march inflation figures came below that 7% march at around 6.89%, but there was no effect on the equity markets or on the bond markets considering that it is pretty much factored in that the inflation figures will come in below 7% this month. but that is actually very because of higher crude prices and fewer subsidies remains to be an issue, which the markets will have to deal with going board. so based on what came out with the industrial production figureses around 4.1% and revised figures at 1.1% for january indicates that maybe the rbi will possibly move by around 25 basis points. but most economists or some at
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least are saying that the cuts will reduce quite significantly, so if there is a 25 basis point move, that does not move that it will follow through with more and that could possibly be the only one in 2012 simply because inflation continues to rear its ugly head. now, the ten year yield did not reacmuch. it's at around 8.45. and the rupee, however, did depreciate to 51.6. and now back to you. >> thank you very much. >> still to come, facebook appears to leading the charge in web advertising, but another rise will in costs per clicks. but can google keep up? we'll discuss that next. ♪ ♪ i can do anything
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time to welcome jackie deangelis from the states. >> great to be here. we're watching facebook here in the states. appearing to be winning the battle against google in the web advertising stakes. while the search engine's cost per click have fallen for the second straight quarter, facebook cpcs continue to rise.
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up 23% from the previous quarter. according to a report by tgb digital. joining us is the ceo of tbg digital. simon, good morning to you. want to start off with a facebook issue and costs per click. we are in fact seeing that facebooks are on the rise, get google is on the decline. will google make up the shortfall and are they going to be able to compete with facebook in that area of iz itting? >> tbg dinlg al is around 2.6 billion, so i feel much more qualified to comment on facebook business than google specifically. facebook's is very stron. cpc specifically rising in the last quarter globally. so i do think that facebook's business is definitely strong. >> and we look at facebook obviously pretty high value as they go public in may.
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do you feel given what we've seen in terms of advertising and revenues, that that valuation is justified? >> i'm not a financial analyst. i'm an expert in their advertising business. but what i can comment on is the fact that advertising business seems to be very strong. big clients have significantly up weighted investment for this year. so i can't specifically comment on their valuation number, but i can say that their business seems strong to us. >> when you look at a company like facebook, when we think about the acquisitions they're make, are they getting the value when it comes to the sway they hold with advertisers? what is it did facebook that advertisers want them to keep on top of? >> well, i think advertising in general is about scale. so big global clients, platforms with large numbers of years.
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i instragram is growing very fast. so i think they need to stay relevant by having that scale. so the purchase of instragram meant that they were buying into a platform which had a significant growth he is spebl l especially on mobile, so both of those things add to the scale facebook already had. >> so facebook is making he's being these acquisitions trying to remain attractive to advertisers, facebook needs to buy whatever it takes to keep that growth trajectory for the number of users and to keep those years sticky. is that how it works somewhat kind of ways to they chief that? >> they focus on the users of the platforms. so creating useful products for people to be connected socially
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globally. and if you have a platform which is probably going to go over a billion users fairly soon, advertisers will generally follow that level of scale. >> i want to get your thoughts on what we've heard from simon. >> my question is i know what the growth strategy is. what's going to change it sf i'm trying to look at what are the risks to this growth strategy. and i'm struggling to get an answer to that. what could go wrong? >> i suppose the big companies like google, for example, are going to really struggle in my opinion because they haven't got social built into their dna. they're a company that helps find you information. social is critical. if there was a risk, which is fairly unlikely, it's to me more likely to be the small start up, you build something from scratch. but obviously with facebook having such a huge valuation
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likely and also being very profitable business, they're more likely to be able to purchase companies like instragram like they did. >> plenty more we could talk about, but we'll have to leave it now. we've run out of time. bob, we do thank you. we have a whole hour of programming still on go, though, and jackie joined us a bit early will, but she'll be around for the whole of the next hour to tell us what we should expect. >> that's right, coming up of course, watching city group reporting first quarter results at 8:00 a.m. kicking off a big week of earnings for the banks. we'll give you analysis. this at&t 4g network is fast.
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headlines this morning, here in the united states, time to strike up the band. earnings parade gets under way with nearly a fifth of the s&p 500 set to report results this week. >> spain's borrowing costs spike on levels not seen since the height of the debt crisis, while debt insurance costs hit a new record despite an agreement by the spanish regions to apply tough fiscal targets. >> and we'll bring you an
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exclusive on why the wealth pupd is toward buy euro inc. >> euro will have no difficulty taking let's say 20%. >> let's see how we're setting up for trade. when i first got in, we had a miksd picture, but no it looks like the markets will open higher. this after a tough week for the markets last week, beccy, we did see the dow with triple digit losses on friday. a key technical level. the financials were the worst performers despite the pact that we did have strong earnings from jpmorgan and wells fargo, so it will be interesting to see how city comes in line. and of course we saw pressure coming in from that china first
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quarter gdp number as well as concerns resurfacing in the market about those spanish yields. so today looking like some of those fears are easing, but of course we could always turn the tide. >> if you look at the region as a whole, we are moving higher, but the ftse up by half a percent. international power has had a take over. shares of that company sending higher. dax and cac both moving up after declines. ibex in spain moving lower by 0.3%. fresh three year lows on the market there. eurozone february raid surplus coming in at 2.8 billion euros.
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that's versus a deficit in february of 2.8 billion. the january figure was revised to a deficit of 7.9 billion, as well. this february number was estimated to be 3 billion coming in at 2.8 billion. and switching around from the deficit reported in 2011. how, there's renewed concerns about spain's ability to service its debt has pushed the yields this morning and the cost to protect against spanish sovereign default has reached a new record high. julia chatterly is in spain looking at some of the reasons behind these moves. >> thanks very much, beccy. as you said, we're seeing spreads widening by around 15 basis points in the ten year thorning. follows on from the weakness in both the equity markets and this bond spreads from last week. sentiment wasn't helped by the news on friday that the banks here in spain had taken around
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2 28%. it just reinforces the fact that we know that a lot of these banks are taking money from the ltro which is where that mum came from. so we've got this negative reinforcing view of spreads widening and the banking sector again being hit. so sentiment not being help willed. bond spreads are wider. also a lot of chatter about whether the ecb will get back involved in the market with their purchase program. and draghi is a lot less enthusiastic about this than trichet every was. he's pointed out this is a signal to the governments to get the fiscal house in order and reduce their deficits. obviously there's a lot of debate in the market. there are clear doubts about the ecb's commitment and their am you munition available to get involved with the s&p precious program again. lloyds, though, points out that given how much development market policymakers have done already to stem the crisis, why
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would they stop now. they're looking at this as a spread tightening trade rather than and ongoing deterioration. what is key is that it's a timing game. it's whether the markets will give us time to assess the data in spain to see whether these reforms are actually making a difference and whether they can actually implement the austerity they need. will they be given the time. >> okay, julia, han thanks for . a chief economist is joining us. john, we're looking at pretty extraordinary levels in spain three year low for the ibex, things tough for the ten year yield, that record reported in the cbs market. what does all this tell you about how convinced or otherwise the markets are on spain's ability to fix its own problems? >> i think it's not just spain's ability to fix its problems. it's the general rescue package. and at each stage, policy makers in europe have somewhat
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grudgingly found the next step and they haven't found the big bazooka to hit will the problem. >> three year ltro was a big decision. >> absolutely. that was very significant. ecb is about providing lidly liquidity. same as in the u.s., the ped is about providing liquidity. none can get their house in order without big enough help. we think of spain. spain had one of the best miss cal records in europe. spanish government was in terrific ship relative to germany or france in terms of debt to gdp, deficit to gdp
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ratios. and now they're completely dragged down in to it because of fears over spanish banks. and yet spanish banks are less exposed in many ways to troubled mortgage is on individual properties than some other areas within the eu like ireland. so spain it is in the thick of it and i think they will need more help. you said 2ri8 i don't know euro money, 1% for three years. that's a lot of fire power. >> speaking of fire power, eurozone economies of course looking to china as a sort of white night. how significant is it that they say it's ready to invest in the
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eurozone by the cic? >> i think that could be very significant. china sat in total more than 3 trillion dollars of foreign exchange reserves and up until now, the lion's share has gone into the u.s. dollar. and certainly can't be in china's interests to go to a single -- or back to more of a single currency foreign xhank reserve system. because after china -- after the u.s., the euro is number two in globoreign exchange holdings in terms of where people put their money. so i think that's very significant when you're looking at that degree of foreign exchange reserves. >> all right. he'll be with us for the full hour. jackie, back to for you now. >> still to come, earnings season gets in pull swing for u.s. banks with citigroup
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publishing its first quarter results. plus deadly tornadoes ripped lieu four states across the midwest over the weekend. we bring you the latest right after this break.
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time for your global markets report. take a look at the u.s. futures. looking to be a higher on open at this point. the dow could be higher by 24 points, nasdaq by nearly 3 and the s&p 500 higher by 2. it after stocks finished in the red on friday for the day and the week. the dow logging a triple digit loss on friday, s&p settling in at 1370. financials the worst performers on the day despite the fact that we saw strong earnings from jpmorgan and wells fargo. of course it was that lower than expected first quarter gdp number weighing on the market. high spanish bond yields bringing our markets down. but this morning looking like a change in tide here and looking like some positive sentiment. christine, how does it look in asia? >> well, we are reacting to the fall on wall street on friday, not to mention renewed concerns about the debt crisis in the eurozone. but what was dominating
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sentiment or making news today was china widening its currency trading. in the longer term, that should be positive if china and the financial markets, but take a look at shanghai. focusing more on earnings coming from chinese companies. that seems to be the big worry overshadowing the currency move down two points ending a little bit to the down side. anxious sang off 0.4%. investors needing a lot more conviction to get into this particular market. japan down 1.7%. investors ki investors ditching stocks with exposure to the eurozone. the kospi concerns about a wider financial fallout coming from eurozone. financials were the biggest drag in this particular market. kospi off 0.8%. australian market down 0.5%. and a choppy session over in india. up and then down. now trading to the up side. overall a negative session here in asia. >> a positive session for europe as a whole.
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four week of declines for each the three major indexes. so a big of welcome relief, i suppose. pretty modest gains. 0.4% for the regional index. depends which market you're in, though, as to how the performance is shaping up. the ftse is higher by nearly half a percent. we good have big gains canning through because of a bid from gdf. the dax managing to push up by 0.4%. cac has lost over 11% over the last few weeks. ibex has had fresh three year lows. just managing to move back to the unchanged level right now, just up by a point or so for the spanish market. but tension clearly on the bond markets in spain nokio stock down by another 3% today. it's had a precipitous fall in recent weeks. last week they did have a rough ride of things below the three
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euro level now. and they're continuing to decline it would seem. so i mentioned the bond markets. we have a very low yields, record lows in germany on the ten year government debt. check out the spread between that and the spain, where the ten year has been creeping ever higher. off the highs of the session, but still trading about 6.14, high hiding the concerns about the peripheral eurozone economies. the other european economy which has been the topic of some debate is italy. now, it's pot long since we had italian yields well above the spanish yields. they reversed, but still elevated in italy, too, 5.6%. and here in the uk, low yields, too. so very different picture. on the currency markets, this is playing out to a certain sent in
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euro-dollar which is trading just over 1.30. now, the euro losing 1.4% or so against the dollar, we did just dip below the 1.30 level, but for some time, we've been trading in a narrow band just above 1.30, does seem that that's been eroded slightly by the renewed concerns about spain in particular. the yen strengthening there. we do have the risk aversion coming back through today, which is also sending the aussie dollar lower. sterling steady against the dollar. christine. >> the chinese yuan slipped in volatile trade against the dollar after the pboc decided over the weekend to widen its daily trading ban from 0.5% to 1%. the chinese currency move suggests raiders are comfortable with the current range in a bid to guide the economy towards a soft landing. in an exclusive interview in
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beijing on friday, i spoke with the chairman of the board of supervisors at cic and asked will him about china's latest efforts to internationalize the yuan. he said the efforts to promote the yuan on a global scale may help, quote, reduce the burden on the u.s. dollar as an international reserve currency. meantime, he tells us the cic is ready to invest in eurozone assets and also how this may impact its investments in the u.s. >> proportionately, it will be going down because we are invest in africa, central asia, russia, european countries or latin america. if the intrigue is eased somewhat, it will be a lot easier for us to do more investment because you see the market will not wait for you.
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>> you can catch the full interview on managing asia this sunday at 13:00 cet or 6:00 p.m. hong kong and singapore time. and on that note, that's it for me. be back tomorrow with news moving markets in asia. >> have a great night, christine. residents in the midwest are cleaning up after dozens of tornadoes ripped lieu oklahoma, kansas, nebraska and iowa killing five and leaving thousands without power. one of boeing's major suppliers has just shut its plant in wichita through tuesday too assess the damage. a majority of the plant is intact. spirit makes fuselages. wichita is also home to the biggest makers of business jets, hawker, beachcraft as well as
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cessna. and coming up next, taxing the rich. congress begin what is could be a long divisive debate on the so-called buffett rule which aims to impose hire taxgher tax the nation's richest. uh, i'm in a timeout because apparently
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congress returns from the easter recess today with several items on their on do list. the senate holds a procedural vote this afternoon on the so-called buffett rule which would require millionaires and billion mayors to pay at least 30% of hair income in taxes. republicans say the bill are will hurt the economy by taxing job creators, a notion can dids missed by treasury secretary tim geithner. >> effective tax rates on the rich he is americans are at the lowest point they've been in a very long period of time and there is no credible argument that asking help to pay a modestly higher share of hair income in taxes would be damaging to economic growth. again, if you don't do this, whose taxes do you want to raise. >> john, i want to bring you in on this. you just heard those comments from tim geithner. and you take the opposite side
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of the coin. so share your view. >> first of all, will this is very political because in the end, tax change revenue bills originate from the house. . but the problem with it is let's take the top 400 americans. they have about $108 billion of income in the lax set of ax returns. $70 billion of that came from capital gains and from dividends. and capital gains and dividends are taxed at 15%. why? because that income's already been taxed he corporate level and the tax level on equity is very high. so to fix this rule, what you have to do is to massively raise taxes on capital. and economic growth depends on kapts capit capital. so the lil argument is focus only on the taxes paid on the tax returns of those individuals. and not the total amount of taxes paid on that income that's flowed through to the individuals above the corporate level and at the personal level,
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the economists should say regardless of who pays the taxes, the true tax is how much tax has been paid on that income stream. >> i also want to bring in our guest joining us now, janet novak, i'm not sure how much of john's comments you got to hear, but we did hear a bite from secretary imgtim geithner talking about the buffett rule. what's your take on the rule and is it enough -- or is it the right way to help this country move forward and be able on recur to reduce the deficit? >> it won't make a big dent in the deficit. it's estimated to raise about 47 build over a decade, but that's assuming the bush tax cuts are allowed to expire. so if we have another standoff or they're not allowed to expire because we have some sort of a one year, two year exhe thinks, it could raise as much as $160
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billion over ten years. and i think the argument that the obama administration makes for it is, well, this is a down payment on insuring we raise something from the rich. in fact they would like to raise about $1.4 trillion from the rich over the next decade. that would make a huge tent in the deficit. >> but isn't the real problem here, because all of these numbers about how much money will be raised is based on what is called in washington, d.c. static scoring. which is to say it assumes that everybody continues to make the same amount of income despite the higher tax rate and they continue to happily pay it over. so much of that income is actually generated from capital gains which if you choose not to realize the capital gain, you don't pay the taxes at that time. actually taxes on capital gains lose revenues and these cal could you ha
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lagss are pure fantasy on the part of washington statisticians. >> the $47 billion estimate assumes that fewer capital gains will be realized. and you can go back and look at various treasury studies and the conclusion is that about 28% is the tax rate where wealthier people will stop realizing gains. that's the rate that will maximize the amount coming this to the treasury. so in fact when they estimated the $47 billion or the $160 billion, they do assume there will be a behavioral effect in terms of realizing gains. >> so the way you get this 30% rule is you massively raise taxes on capital. and economic growth depends on capital. so i think that there's much more about politics here. we need it reform the u.s. tax system. tomorrow's tax filing day is have a ordinarily complex. but all sensible proposals are about broadening the base and
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lowering marginal tax rates. and that is just not the way this administration seems to want to go. >> well, this administration is not airbly committed to tax reform, i will totally agree with you on that. however, the last i'm we had a major tax reform and the proposals in the simpson-bowles commission reform actually did away with differential for capital gains. now, you can argue that those gains are doubly taxed, but if you look at what was done by ronald reagan in 1986 and what simpson bowles has proposed, they say go to a low rate and have apply to capital gains, also. so reformers don't necessarily all want to get away from taxing capital gains. >> i think many of us could agree with a lower rate and wider base, but the problem is in washington, d.c. the argument tends to be to go to in the opposite direction right now, which is to a higher rate and to a broader base where we hear
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about limitations even beyond what we currently have. so i do think the focus for economic growth and for fairness needs to be on tax simplification and base broadening, and not just go after the you've mystic millionaires and billionaire s where that number ends up being lower in the income distribution. much devalued. >> well, i would say that the obamaed a ma administration is terribly committed to tax reform, but they have called for reform, they just haven't proposed one. helped this is their down payment on tax reform. >> all right. janet, we will have to leave it there. thank you so much for joining us this morning. janet novak, executive director and washington bureau chief for forbes. and also thanks to john of course chief economist rdg
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economics. he will stay with us for more insight on the program. meantime, coming up, stocks suffered their worst week for the year last week. but are equities still undervalued some today is gonna be an important day for us. you ready? we wanna be our brother's keeper.
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what's number two we wanna do? bring it up to 90 decatherms. how bout ya, joe? let's go ahead and bring it online. attention on site, attention on site. now starting unit nine. some of the world's cleanest gas turbines are now powering some of america's biggest cities. siemens. answers.
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welcome to the show. headlines from around the globe, here in the united states, time to strike up the band. the earnings parade gets under way with nearly a fifth of the s&p 500 set to report results this week. >> spain's borrowing costs spike to levels not seen since the height of the debt crisis, while debt insurance costs hit a new record despite an agreement by the spanish regions to apply tough fiscal targets. >> and the yuan slides against the greenback after china central bank stretches out the currency's daily trading range. the reform reflects beijing's confidence in it ability to steer a soft landing. >> let's and he look at the european bourses. today the ftse up by half a percent. cac has seen ale rally, up by 0.7%. while the ibex now moving lower
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again by 0.3%. in the spanish equity markets, would he have seen declines coming today to new three year lows. just want to highlight to you some of the breaking news talking about spain and the situation there. eu is confident in the determination of the span issuing government to make its much needed efforts. and believes that spain can meet its economic challenges. we've also had news out from moody's which says spanish and portuguese markets will suffer more in 2012 than they did in 2008. so a bit of positive and negative really on the outlook for the situation in spain. >> seeing some of the positive sentiment from your markets vehicle li
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vehicle ellihe wi trickling into the united states. and this of course after it was a rough week for stocks last week. in fact the worst week for stocks in this the u.s. this year with both the kdow jones ap 500 lower for three out of the last four weeks. financials taking the worst hit on are friday despite jpmorgan and wells fargo report positive results. made michael gurhka is joining us to talk about will this. mi michael, heard you looking he ten year yield and shaking your head a bit. what's your take on it right now? >> the markets really -- i do applaud goldman and even some of the morgan stanley guys that had mentioned already that inflation adjusted yields have gone to
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zero or negative and that's one or two times since eisenhower's been president. and the point there is just the fact that markets will chase yields without question and when you start seeing treasuries have these situations where you're going to see yields at 2% or below, it's not attractive enough on think that the rally will continue or lower yields will be there forever. that being said, i think the equity markets become very bullish scenarios. i saw one quoted as one in a lifetime. but again i think there are pitfalls there because economically we are for the going to get the support over the next quarter to watch the equity markets continue to go on this bull run. we'll be stuck between at least probably for the week between the 50 and 100 day moving average and that's 1375 on the 50 all the way down to 1317 for the 100. so if that's the case, where will the markets look to? and again it has to be the commodities markets because
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again, you'll continue to see more commademand there and espey crude oil holding probably at 101, the bullish come out will. and watching the strength in the dollar as ended the week last week, the euro right on that border, i believe the dollar could be where you're starting to see a little bit more of the lead. >> all right. a lot for take in fro take in t. but do i want to drill down a bit on the markets. you mentioned the fact that you think it will be a sideways trading period throughout the rest of the quarter. what's the best way for investors to manage that? >> well, you're going to get your lead again today with some of the citigroup earnings that are coming out before the opening. a lot of people believe that you would probably see it in line with where jpmorgan looks so stellar to end the week and when the financials lead, the equities are right behind them. right now at least, it seems as
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though we'll be looking at these numbers, retail sales is expected lower. nothing bullish there. so again, we're set up properly at least for a surprise if we see a good number there and that could be the tleed start the week. again, i think the equity markets themselves are somewhat calm here and a lot of belief that you'll see a bullish scenario because they look a little in-1k3eexpensive. if you look at certain sector, technology has been stealth as always as far as where the lead could come here. the nasdaq's had a really nice slope to start the year and the question is does the second quarter really continue that trend. if you want to drill done on the stock market particularly, i think investor sentiment is still looking for a lot more surprises to the up side on earnings and of course earnings will take the forefront again to start the week. and that's kind of the precipice this. will we in-to start seeing the outpacing of narrowed balance
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sheets and right now at least kind of healthy corporate earnings. and again if that's the case, equities laook great. >> it seems the u.s. equity markets is in a bit of a transition in the sense that the earnings growth has been margin expansion driven. profits tremendous leverage to margins. but with profits a record share of gdp, employment picking up, productivity slowing, and wage increases picking up recently, seems we have to transition to a market where profits are driven by the top line rather than by margin expansion driving the bottom line. and in-evidently that means slower profit margins. so on the one hand, we think we have that issue to deal with. on the other hand, we do think that spanish flare ups and other european issues notwithstanding, we are moving towards a year in
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which there's going to be less swings towards the risk on/risk off trade that we saw through last year. so when i think about that, it seems that it becomes less a compelling buy the market than it becomes more of an individual equity which economists like myself do not find useful. so if we are going to a stock picker's market, how does that play in to what investors should be doing? where should they be looking? >> that's a really good point because what happens is you're starting to get -- the markets are starting to act more at normal a fair i don'ts or historical scenarios, which is that the margins aren't going to continue at this record pace. and at the same time, if you want to use an animal gi, your foot will be on the brake a lot because you are expecting extremities like spain to come into the markets play and really kind of stem or temper these rallies. one of the things i've been looking at over the last so many
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years is the expansion of the emerging markets and how well they have outperformed and now you're starting to see what i would consider the developed markets, especially the u.s., taking the lead here and doing very well at that. but at the same regard, i think the expectations is that margins cannot continue at this pace and at the same time, it's not going to last forever because of the employment scenario. now, for myself, either as a technician or trader or someone that looks at the market as a whole with many different asset classes as mentioned, i just want to say that that's the problem is that economically i don't think we have the expansion to get the market through this 50 day moving average. i'm bearish. >> thanks, michael. michael gurhka will stay with us. we will get more of his views later in the show. and john will stay with us, as well. of course coming up, we'll be looking at citigroup leading a host of big u.s. banks reporting earnings this week.
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can citi look past the failing grade made it received on the fed's investigation test last month and deliver profit and cash to shareholders some ? some some
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wall street telling the banks to back off their program. executives from goldman sachs and six other bank met with the fed saying the move would hurt liquidity causing a ripple effect in the financial markets. meantime citigroup reports first quarter results at 8:00 a.m. eastern time, kicking off a week earnings by the big banks. companies forecast to earn a dollar a share on about $19.8 billion in revenue. city failed the fed's latest stress test and plans to issue a revised capital plan later this year and return cash to shareholders. joining us now to talk more about city oig a about citi and other issues is brennan hawkins. let's start with the city oi expectations. >> we think citi can do better than the street expectations. it's going to be an interesting
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quarter for capital markets. we saw jpmorgan on friday report $5 billion in revenue out of the thick line. we had a tremendous deal calendar in 1 q. that led to a lot of strong revenue opportunities in fixed income currency and commodities. citi has a strong franchise there and we think that should bring solid results. >> and despite the fact that we saw good results from jpmorgan and as well as wells, we logged the week. if citi beats expectations today or at least performs in line, do you think this could boost the markets? or do you think that negative sentiment from china and what we're worried about in europe still will doctoring drag? >> what i'd say about jpmorgan and wells and how that played out on friday, it seems as though investors were worried about a regulatory requirement
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forcing second lean mortgages to get reclassified even about if they were current as long as they're behind first notes. will this doesn't have any impact on reserves. >> how relevant a metric for the pnks financials is current period earnings? we know coming into the financial crisis, the earnings numbers gave no indication of what the earnings numbers were going to be like for the write-offs over the next few years and now the banks seem to be in the political cross hairs and still regulatory and legal issues surrounding the mortgage servicing. so how do you weight hose two factors of the earnings versus the regulatory risk when you want to make a decision on u.s. financials? >> good question. what i'd say about earnings pre-crisis, we had balance sheets that were par more laden with toxic assets and such.
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at this point firms have cleaned up their balance sheets and are in far better shape. so you have an equity base that is far more strong. and so from that perspective, i think that's less fear. the worry is that the return on that equity base will be weak which leaves to the low tangible book multiples that we're seeing today. so what's going to drive higher returns on that think takable is in fact the earnings power that needs to come through and start becoming actually real and apparent. and so i think actually earnings are increasingly important in this stage of the recovery. so i think actually a solid earnings figure for the quarter will matter. but what i was saying about friday and the second lean, i think that made people rather worried. the issue is they're fully reflected in reserves. banks will monitor all these things either by servicing it themselves or watching the credit metrics on the actual first lien mortgage holder.
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so they're aware of whether or not the first lien is delink distinguish and they know that that puts the second lien at a higher risk corresponding reserves against that. >> down in xwgeorgia last week, financial reform was a key issue and i came away from that conference really being struck at how much of the deand i will of the regulation has yet to be written. so coming out of dodd frank and the volcker rule and the other issues, those rules that have yet to be written, how do you see that you were certainty or that environment playing out for an investment thesis in u.s. banks? >> regulation is a key issue and we were actually just down in d.c. a month ago meeting with key regulators. what i'd say about volcker is that everyone we met with, both
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sides of the political aisle, no will one was supporting volcker as it's currently written. volcker, everyone i think understands that there are significant risks to liquidity in some of these fixed income markets and as a result, they need to significantly adjust some of that market making regulation that would have put a serious damper on some of these markets. and so i think we're going to see a meaningful rewrite. the expectations that we had heard is that it might be even the end of the year by the time we see the next version. but everyone you talk to, no one was supporting volcker in its current form. >> okay. and of course maybe better take they take a little extra time on it and get the reform to be the right way. of course than sort of try to speed up and push something lieu that's not right. brennan, great to have you with us. he's the director of quit i research at ubs. >> so treasury secretary tim geithner says the u.s. economy is stronger and better shape to
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weather challenges like high gas price, although europe's gas prices is still a worry. geithner dismisses suggestions the u.s. deficit puts it at risk of being the next greece. >> you saw a precipitous drop in consumer and business confidence at a very fragile i'm for the global economy. those drops in confidence were like what you saw in a typical recession. very avoidable. and it's good to not put the country through that again. >> so geithner says president obama's plan to impose at the least a 30% tax on wealthy americans won't hurt the economy by stifling growth. u.s. senate hold as prer ocedur vote on the so-called buffett rule. and retail sales for march are expected to rise. we'll discuss the outlook for the sector as we look ahead to the trading day on wall street. [ male announcer ] this is lawn ranger -- eden prairie, minnesota.
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that's why there's guys like me. [ male announcer ] it's a network of possibilities -- helping you do what you do... even better. ♪ is. carlyle group will file its registration papers today. the private equity firm seeking to raise up to $763 million selling shares for between 23 and 25 dollars each. the ipo expected in early hey. and march retail sales are out at 8:30 a.m. forecast to rise about 0.3%, half a percent when you exclude autos. national association of home builders releases its monthly sentiment index. and also business inventories
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forecast to rise. fed presidents speaking this it afternoon about economy. city group's first quarter results and we also hear from mattel and as well as charles schwab. michael, retail sale, give me your take. >> i would not be surprised if we come in line or slightly higher. i think the market is kind of really believed at least that these levels are not necessarily going to be sustainable on the retail side. and for the same reasons, i think economically we're setting ourselves up only to do better because the market really has started to see some of the selloffs or more importantly profit taking believing that the worst could be behind us because the numbers are relatively low. just a take on the geithner comments, though, i will mention he's really priming the pump.
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it seems as though to anticipate that prices are only going one way in particular in crude. if you mention back at the end of the third quarter, crude was at $75 and then all the way to $1010. and when you see a 33% increase there, the 200 day moving average sloping higher now to 95 are and better, it seems as though the market can only go up from here. and when you start seeing basically expectations tempered by the treasury secretary, i agree that the economy is in better shape, but it doesn't make you feel warm and fuzzy. >> and just quickly want to get your take on some of the fed comments out, as well. a couple ped speakers speaking today. all eyes on them last week, as well. do you think we could hear anything that might boost investor sentiment? >> it's unlike lly we'll get an suggestion on qe-3 arising out
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of these two federal reserve presidents. james bullard has quite firmly staked out his position that it's a pretty high hurdle to a third round of qe even though he was pushing earlier rounds of quantitative easing. so that's a shift. and sandy has also made similar kind of comments and the economy's more sustainable. so we haven't really seen after the slightly disappointing employment number a big rush back in by the federal reserve to trumpet qe-3 expectations. >> all right. we'll have to leave it there. we're running out of time. thank you so much to john and michael. that wraps it up for today's show. >> thanks for watching "worldwide exchange."
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earnings central. today's corporate headliner, citigroup. numbers, numbers and more numbers. key economic releases on the state of the consumer, housing and manufacturing. it's monday, april 16th, 2012. "squawk box" begins right now. good morning. welcome to "squawk box." i'm becky quick along with joe kernen and gary kaminsky. andrewoff today. if you haven't submitted your tax returns yet,

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