tv Worldwide Exchange CNBC April 18, 2012 4:00am-6:00am EDT
welcome to the show, everyone. you're watching "worldwide exchange," and these are the headlines around the globe. the battle is not over. reps all gear up and spain threatens to retaliate against argentina following its nationalist move, but shares in the spanish oil giantfall fa faa second day in a row. israeli rallies are at an all-time high. and in the u.s., a mixed bag
of results from the jientds. they could weigh on market sentiment today. iag's chief willie walsh tells cnbc, he will consider investments into a whole host of allied companies including american and jal. an exclusive interview is coming up. hello, everyone. yes, you're watching "worldwide exchange" with christine tan in singapore, and, of course, i'm carolyn schober filling in for ross westgate. the bank of spain has boosted capital boosting plans admitted by all 135 spanish banks but it's warned that some lenders are going to find it difficult to meet the capital requirements set by the government. meanwhile spain's prime minister says his country can avoid a bailout but admits the eurozone
remains very fragile. spain will issue long-term debt tomorrow. that's going to be the key for the country after it creeped above 6% this week and also last week. meanwhile he says he plans to stick to target this year and there debt costs will cease. >> carolyn, lovely to see you. meanwhile they're hoping to boost the resources. they've stepped the plate to offer $60 million to boost its fire wall. they hope to help the imf in crease the fight against the eurozone crisis. it comes ahead of the meeting in washington. they want to top imf funds with at least $400 billion. let's get some reaction to this.
simon is our guest host today. what do you thing of this the move to up the resources to prop up the imf? >> it's all encouraging. the one thing you have to remember is whenever the imf gets involved with lending you money, there's an awful lot of funds attached. spain and italy and the likes of them will probably be relung aunt to go to the imf more money. they'd rather keep it internal and then they don't have to follow through on the commitm t commitments. so while it's good news, it's a sign of the progress that the eu has made over the last few months. it's still far from a long term solution and it comes with a lot of cash yachts. >> interesting to know.
simon grose-hodge, our guest host. carolyn, let's move on. >> they may have dispelled some of the fears about eurozone, but portugal may still be a cause for concern. head to cnbc.com for more analysis. christine. >> well, carolyn, this is how the asian markets are looking today. pretty good actually. pretty green across the board. we have, of course, concerns about the eurozone fading. we had positive earnings from the u.s. that kind of saw investors increase across the region. the shanghai market is up 1.9%. it with us the biggest gain in more than two months. over in hong kong, this particular market up 1.1%. we had a couple of things, gains over china, those things easing. wall street helped prop up the market. 2.1% higher. the market up 2.1%.
elsewhere, kospi is up 1%. australian market up 1.9%. we had a healthy report from the bhp bulletin. remember, yesterday the rbi, of course, cut interest rates by 50 basis points. this particular market buying carolyn, how are they looking in your neck of the woods? >> it's a pretty mixed picture. the ftse 100, just marginally higher. the xetra dax dipping into negative territory. the biggest declines for ibex 35 in spain, remember we did see the strongest gains for the european markets in four months yesterday. it is a bit of a technical bounds last year. the ftse is getting a nice boost from tesco shares. they came out with a little bit
better than expected earnings. up around 2%. it is also plans to spend 1 billion pounds on a rebound plan to rebound its uk business. on a negative note, though, it did say the u.s. break've will be later than planned. let's move on and take a look at the government bond markets. remember we have seen some improvement in terms of the ten-year yields. currently 5.8%. it came better than the auctions. it will be on the two and ten-year debt sales, which will be tomorrow. today they don't want to take too much risk. the ten-year italian yield moving back 5.5%. but do keep in mind investors were rattled by yesterday's move by the italian government to lower its forecast for 2012 and 2013. also it raised its deficit targets so it will not be able to blabs its budget by 2013. finally, let's take a look at
the euro rate because we did see the euro move higher. it did reverse those moves actually above 131 here, but slightly lower against the dollar in this morning's trade. the dollar yen moving by 08.6%. a lot of focus on sterling. 151.18. that's because we've got boe minutes coming up, christine. >> these going to be key. >> bhp, the world's biggest minering company has released a mixed bag of quarterly figures signaling what appears to be a softening of the resource base. we have a report from sidney. >> well, the good news is bhp held its production guidants. it's because of weather-related interruptions. the bad news is they warped that
it could well be. they're calling for a new workplace agreement. bhp says it could have an impact on the quarters. if we look, production was up 14% on a year earlier, down 8% on the quarter. now, investors bought into the stock in the australian session but concerns remain over china. remember last month the former president of bhp's division says there was evidence that china's growth was flattening. the mixed results, very similar to rio yesterday. they were saying their production was restrained by activity. back to you. >> interesting the pullback in iron ore production.
up 7.7% this year. 149.206789 joining us now to talk resources, andrew shull. he's the director at credit suis suisse. you happened to work for bhp. >> for many years. >> you do have the insight when it comes to these companies. >> i have a viewpoint on the markets. >> let me ask you about. this does it seem to you that things are softening in the resource base? >> i think a lot of people have misinterpreted what was said in terms of the chinese market. there are a number of features in the chinese market that are poorlied up. in the mid-2000s, they were twice the rate of gdp.
since then we've seen a moderated level in line with gdp growth. i suspect they're very similar to what producers are looking at, if that moderation to continue. in other words, a profile of that growth starts to flatten out. but it doesn't peek. i think china that is building up with its capital. china's only half built rather than fully built and i think a lot of people have misinterpreted this slowing growth rate with this sudden change and i don't think it's beyond the sort of cycle we saw last year, the change is less pronounced. demand is strong. that growth is actually taking place off a much larger base, of course. steel demands in china. that's where bhp's statements have sort of been putting it. that's a very different interpretation. >> i'm interested to know. how much is for real demand for actual use as opposed to
stockpiling? >> stockpiling is going down. there's a seasonal production taking place in china. there's no insenn fiv for people to stockpile. it's actually been problem at ca iccal. no incentives to stockpile that material. it's going through consumption and anyone who spending time in china can see it in the buildings and roads and rail systems that have been built. >> carolyn, journey ump on it. >> you say one of the things is shifting forward. what is the shift in pricing? >> i think it's something the miners are living with. it's something where they're more focused on the price and less on the targeteds and what they're willing to do.
nay be in a worst cost position. they have better assets they feel an they want to deliver that growth on time and on target and maintain market share. the prices that we're seeing today are really a reflection of spot market conditions, and the major producers have been very key to moving toward a better pricing mechanism which is almost a day-to-day realization. and they appear to have done that. liquidity in the stop market is moving. it's considerable volume. 50, 60 million tons a month. this market is not going go away. gone are the days of the old sitting in smoke-filled rooms negotiation. spot markets are the thing of the day. producers are willing to accept the price the market gives them. i believe that is a function of a relatively tight market in this part of 2012. >> andrew, hi. we probably agree with you on
the longer term prognosis for the markets and the fact that demand is going to stay and increase. but we're getting more short term in everybody's outlook. and when you look at it, there seems to be no hurry for pcob to respond to stimulus. in the short term, do you see that there's the possibility of further weakness and what sort of levels should we be looking at to get more bullish for the base metals? >> coming to steal first, the march numbers are very encouraging. 8% gdp growth, a very significant slug of that is actually investments tisht whis very heavy. it's heavily warranted toward investment uses. ultimately in consumer goods as well. 8% headline growth, i suspect, will actually turn out to be a little bit higher this year. yes, i agree.
china is not going to stimulate the same way it did in 2009. but i think they'll be very pleased. still very heavily invested growth. there are signs they're going to return the focus to key areas of investment activity and other areas they need to report. >> i've been told to wrap up. but very quickly, of all the miners, who do you like? >> i like them all. the big boys have their differences. i think investors have to sort of select and pick the ones that are delivering on target. >> we're talking to andrew shaw, director of base metals and bulker er. at credit suisse and simon grose-hodge is still with us. in peru the economy expanded almost 7% last year after growing 8.8%.
becky meehan sat down with the government's finance ministry. she started by asking the finance minister about the outlook for this year. >> growth will stabilize around 5.5%, 6% for the whole year, which is, i think, the estimate that the ministry, and it's shared by the central bank. what explains this growth has to do with investor building and confidence. public investment is growing at 30%. consumer confidence is also up. i think we -- sustained growth that doesn't introduce overheating would lie around 6%, which is a little bit below our potential, which is about 6.5%
growth. that's good growth and low inflation, which is, you know, the combination we're seeking. >> now, i understand the metals part of your economy represents 60% of exports. when we look at the growth rates in china beginning to moderate, how much of a concern is that for your own growth trajectory? >> well, china is our main trading partner, and china is a key determinant of commodity prices. we're a country, as you mentioned, that is dependent on exports, fiscal revenues. about 25 -- a bit over 25% of our revenues are generated by commodity prices. so obviously if there was a collapse, you know, a hard landing in china, it would definitely put a dent on our growth. what we suspect is that china is being able to manage by policy a soft landing in its economy, and
it will grow, the consensus is, around 8% or a bit more than 8%. that would still leave commodity prices at an average high in comparison to the levels that we saw five or ten years ago. so with those commodity prices, think we can -- we can have growth at the levels we expect, around 6%. and we can have enough of fiscal revenues to pursue the policies and inclusion and closing infrastructure gaps and still have a fiscal surplus. it's important for us to locate fiscal revenues during the booming years and avoid being cyclical and save for the rang days. we're doing so, and we hope that china continue have an accident or hard landing. >> now, becky meehan also spoke to peru's central bank manager.
you can watch that interview tomorrow on cnbc. christine. >> they're keeping a firm grip on property prices. and new housing data is showing the effects home prices in cities across china are apparently dropping off. tracy chong has more details. they're betting the government may ease up on property controls after home prices fell for the sixth consecutive month in march. the national bureau of statistics says the market prices in seven cities did average in march from the year earlier. this is the first year on year decline. also newly built homes in eight major cities including beijing and shanghai were marginally lower compared with february as well. some market waters say even if the government does not remove property restrictions any time
soon, a second triple is definitely on the horizon for the lenders and they feel a publicly rising bankruptcy following with a growth in qe1 are more apt to tracey, thank y. carolyn. madrid threatens retaliation over the ypf nationalization plans while in buenos aires crowds cheer the move. don't go away. stay with us. we're back after the break. [ male announcer ] this is the at&t network... a living breathing intelligence bringing people together to bring new ideas to life. look. it's so simple. [ male announcer ] in here, the right minds from inside and outside the company come together to work on an idea. adding to it from the road, improving it in the cloud
welcome back to the show. spain has threaten argentina with what it calls consequences after buenos aires moved to seize ypf. madrid says it will take action in the areas of diplomacy, industry, and areas. it's said to be unjustified and damaging for all concerned. joining us now to discuss this issue is neal.
thank you so much for coming in. before we talk about it, does rap sal have any chance of appealing this decision? >> it's very difficult unless they get support from the spanish government using the managing directive using spain itself but also working within the european union because there are many who have weighed in on the side of spain. there's an awful lot of ways in which rep sal can get a result. >> it may directly impact the trade relations not just between spain and argentina but also the eu and argentina. >> i think it's an extraordinary country, argentina, which is a liberal economy operating a
diversified economy in the modern world. this is not the 1950s or '60s where you seize the commanding heights of the economy. this is a different world, an interconnected world. and to send out a signal like this where essentially you're seizing the single biggest assess meant in your country, when at a time your country is sitting on an enormous amount of shale and gas which you would think you would like to develop, this seems extraordinarily, well, stupid thing to do. >> hi, neil, this is simon from lgt. does this presage scramble for resources on an international level? and if so, what does it mean for merger and acquisition activity in the industry? how is that going to play out? who do you think is going to be a name for the acquisition as
everyone goes out trying to get more resources? >> i think we need to be a little bit calm here and not assume that what's happened here in argentina is going to pressage further developments of a similar nature. you're right in that there's a race for resources and companies around the world, including repsol have gone to many, many different countries around the world look looking for many resources. shale and gas is a relatively new energy picture in the last few years and argentina has an enormous amount which the government should be encouraging foreign companies who have the money and who have the expertise to come in and develop. there are other countries around the world like venezuela, russia, and there are other examples that are not so important where they've also adopted resource nationalism policy, if you'd like. that has had very, very bad
spain threatens to retaliate against argentina following the nationalist move. shares fall for a second day in a row. australian stocks rally to a five-month high, boosted by gains in the mining sector despite mining warnings from the big producers. and in the u.s., a mix bag of results could weigh on the market sentiment today. >> and iag's chief willie walsh tells cnbc he will consider investments including an american company and jal. an exclusive interview is coming up. all right. let's just remind you where we are in terms of european equity
markets. yesterday we did see the strongest rise in about four months. today we're seeing markets pretty much a mix actually. the only mix in positive territory at this point is the ftse 100 pretty much flat. we're seeing modest declines for all the other maths with the exception of the ibex 35 trading by more than 2%. let's get you the latest from the boe. it's out with its minutes for the latest rate decision meeting. they voted 8-1 to keep qe total at 325 sterling billion sterling. the finely balanced call. as expected. 9-0 to keep the interest rates at 0.5%. that was completely in line with expectations. but, again, the big surprise should come with regards to keeping the qe total down. we were expecting that miles along with posen would vote for an extension of qe, maybe for an
extension of 25 billion pounds or even 50. simon, let's get out to you. let's get some reaction on this. do you think that if the economy deteriorates in britain, do you think there's a chance that qe will be back on the table, even if innation is quite sticky? >> there's only a chance. the only one left voting on that is posen and he's come out with inflationary concerns just recently. so it seems that they're moving away from further stimulus the same way the federal reserve is doing. if things keep going, the uk may possibly avert the recession as europe will definitely have one, then the bank of europe probably feels it's done enough now and hold on to any easing in case you get that coming in the second half. inflation is starting to tick back up a little and it's been
considerably above their target for years, so there is a limit on how long they can ignore it, how long the governor would have to write to the chancellor. it looks for now policy is on hold. there would be no qe3 as far as the bank of england is concerned. certainly if you look within europe, the pound is starting to make good progress against the other european currency, even the more popular one. >> but, simon, how much higher can the sterling pound actually go? we know it's benefitting from the safe haven flows and that inflation is stickier than expected. what's your target there specifically against the euro? >> one of the other things is the s&p reaffirmed the aaa stimulus. that's going to attract a lot of sovereign welfare money into it. we've seen a few attempts go up to 161 and it doesn't seem to
leak it above the 160 level. we know they'd rather have a weaker sterling than too strong. we don't see it making too much progress against the dollar, but against the european currencies and perhaps against the asian curren currencies, you can see it moving up another 2% or 3%. >> let me bring the latest on the uk unemployment numbers. the jobless claims up up at 4.9%. this is, by the way, the forecast was for 5%. sol higher than expected. let's move on. let's get more with stephane in paris. >> thank you very much. carolyn. they post a 25% increase in
sales. the revenue was boosted by an exchange and exchange in rates. if you look. 15%. it's a touch better than expected for the first quarter. it was boosted by a strong first quarter in asia and north america. if you look at it, the fashion on leather goods division post add 17% growth on the quarter. the jewelry and watches division posted a 141% growth. this is due, indeed, to the acquisition last year and the wine and spirits unit. they'll wait and see on the 22% rise. despite it, especially in europe, it remains cautious in terms of outing. the company says that it will continue to implement a tight kroft control for the rest of the year and this is raising questions about the real outlook of the company for europe and that explains why all the good
numbers of stock is down 0.9% on the french market. also they declined to comment on it. the company was in talked to buy the german perfume and jewelry maker which has 1,100 shops across europe according to a senior financial officer. they don't want to comment on that. that could be why the stock is trading a little bit lower on the french market. back to you, carolyn. >> thank you so much. after years of preparations, there are just 100 days to go until the 2012 olympic games. the opening ceremony takes place in east london. before that finish -- before, that touches are being made to the events. becky meehan joins us at one of them in london, and that's where
beach volleyball is going to take place, is that correct? >> reporter: we're here in trafalgar square waiting for the 100-day celebration to start. they kick off in a few hours' time. hopefully the weather will pick up. it's pouring with rain. who would have thought. we have droughts in london right now. lit rerally there's a ban. we have been preparing here in london for 2012 for serval years now. let me bring you some of the facts and figures around these games taking place in three months' time. the cost in total for the games is about 9.3 billion pounds. in dollar terms that's about 15 billion dollars. in 100 days apds time there will be thousands of athletes descending on lauchblt 21,000 media and almost 11,000 ticket holders -- sorry, 11 million
ticket holders as well. about 4 billion people are expected to watch the opening ceremony in 100 days' time when it all kicks off. now, over the next hundred days there are still lots of preparations to be completed, particularly the construction of temporary venues because while you may have seen coverage of the huge efforts that have gone into building a brand-new olympic park in east london in an area which has been significantly regenerated for the games where you've got the stadium that holds 80,000 people. we have lots of temporary venues being buforhe olympics as well. part of this is there should be a fitting legacy for the games. that involves not building tons of venues that won't be fully used after the games are over. as a result, we've got some very cool venues being built around london. like horse guards by parliament. they're building a temporary venue there now for the beach
volleyball, so that's all happening as we speak. in fact, preparations well under way in the last 100 days. back to you. >> sounds exciting. i wish i could be with you, becky. thank you very much for that. becky meehan. in the olympics were an olympic sport you bet some would make it to the podium. finally apple and samsung have agreed to sit down and talk over the little ongoing fight against pattern. are they ready to make peace? reyoung limb has it. . filing by california's a presiding judge shows the two companies were to enter settlement talks set the last 90 days. while they have shot it off as a nonevent, this is the first time am ceo tim cook and the samsung owner are holding such talks.
some are saying this could end the battle. if you remember earlier reports suggested that apple may have floated the idea of a royalty deal but others are taking it with a grain of salt. that obviously failed. so it's probably too early to make any prejudgments at this point. back to you, christine. rhie, thank you very much for that. rhie-young lim. >> we have a story live from toq tokyo. >> the central bank is considering moderate divisions.
it will be prenled when they meade on april 278. the new outlook falls short of 1% as the bank regards the priced stability goal. to support price recovery trends it will consider monetary easing steps at that meeting. in another story we're following. companies are preparing for a summer without nuclear power. potential reactionty vags of two power reactors has bogged down, raising the likelihood that japan will be operating without reactors. as a result they're bracing for even more power shortages than last summer. firms are planning to operate in-house generators fueled by lng at their plants. the government hasn't ruled out the possibility of roll blackouts if electricity supplies become tight this summer. back to you, christine. >> thank you very much.
nozomu kitadai from japan. what will the industry look like when and if it returns. joining us now for discussion is george, head of the international nuclear projects team. george, good to have you with us. what are the economic ramifications here, specifically for japan when they go nuclear-free? >> well, the question is, of course, if they're going to go nuclear-free eventually. but japan gets over 30% of its electricity from nuclear power plants, and we saw the previous repo report. that's going the have long-term effects if that's going to be the case. >> what is nuclear energy going to look like in call of years. a couple of years ago it was seen as clean energy. that was the future. now after fukushima in japan, what is it going to look like? is the future uncertain?
>> it has changed quite -- somewhat since fukushima, but the general direction has not. we have today 60 nuclear power plants that are being built around the world. most of the countries considering building nuclear power plants are proceeding with their plans. china's building, korea's building, russia's building. there are still lots of interests. japan is going -- yes. >> if japan can get it right what makes you thing china and india could do it properly? >> well, that's going to be the process that the whole entire nuclear industry is undergoing right now is looking at fudge she marx understanding what happened, what went wrong and make long-term decisions about the safety and decisions with these nuclear power plants.
we have a previous example that they can look to. that was the three mile island accident in 1979. also the accident was not at the scale of fukushima, that changed fundamentally the operations of the nuclear power plants in the united states. since 1979 you have 104 nuclear power plants in the united states operating safely and efficiently. what's interesting about the combination is when you have a safe operational plant, you also tend to have plant that operates most of the time and you have a more secure as well as a more profitable nuclear power plant. >> george, let me pick up on that point. this is carolyn in london. just because they have been operating safely doesn't mean that they're going to be doing that in the future as we saw in the case of japan. do you feel that the likes of china, russia, and india, for example, also the u.s., do you thing they're too complaisant with regard to nuclear security energy then? >> not at all. i visited plants in some of
these countries and i know a lot of the people that are working at these plants. i don't think there's any complaisancy. fukushima was a wakeup call, there's no question about that. the industry has taken a hard look at itself to determine what went wrong. but safety is paramount. it is a safety culture within the entire nuclear industry. what we're going to see now, we're going to start seeing global nuclear cooperation. so there's 436 nuclear power plants around the world. i think we we're going start seeing more sharing of informing between the regulators and the governments and the operators of the industry as well. i think overall you're going to see the exchange of snfgs going help have a more ee fish enand safe nuclear power industry. >> thank you very much for your time. good to have you. carolyn. >> let's take a quick look at where we are in terms of the european equity markets. it has a pretty mixed session.
they were quite positive. that did fail to translate into gains on the euro mean markets. the stocks currently lower by 0.1%. the ibex 35, once again, racking up some pretty big losses down by 2.2%. that follows the three-year lows that we saw for this particular indebs last week. the cac 40 and paris showing half a percentage decline. the only market holding up relatively well is the uk market and that has to do with shares in tesco. the uk's biggest supermarket chain higher by almost 2% and this comes after profit for the company rose slightly for the reporting period. also it is spending 1 billion pounds for a rebound strategy because it wants to get back its uk business back on ilts feet. also let's take a look at government bonds. we did see some improvement in terms of the yield. the ten-year spanish yields back
below 6% actually improving further, currently at 5.7%. that comes after the slightly better than expected yesterday. everyone's going to be quite jittery after the two and ten-year auction which is coming tomorrow. italy did rattle the market a little bit this morning. that's because it said it won't be able to balance its budget by 2013. it will happen a year later. also significantly lowered its gdp forecast for ten years. also, let's take a look at euro rates here. we saw the euro moving higher yesterday, but today it is taking a step back down by around 0.2% against the dollar. we did see some pressure on the euro just over the last two hours. that's because the french president sarkozy said it's too strong. it is hurting the exporters.
the dollar/yen higher by 0.8% and the sterling getting a boost here. that's after we got the boe minutes out which tells us that there's a very small chance asset purchases. christine. >> asian markets are getting a nice boost. we have the strong u.s. corporate earnings. that is helping to lift it. up almost 2% high. we had some signals that maybe -- or some signs or hopes rather from ingesters that a pcob might do some more easing. that's helping to lift the finance or property sections in the market. the hang sack up. also we had hopes of the eurozone crisis fading. the nikkei is up 2.1%. a strong finish there. also sieps that boj might be
helping to put easing in the market or help with buying momentum. kospi is up 1% and the australian market you have the miners moving up. up 1.4%. continuing its upside from yesterday because we know that rbi cut interest rates by 50 basis points yesterday to help boost sagging domestic growth. carolyn, over to you. >> christine, thank you is much for that. coming up on the show, mitt romney hits on obama's economic policies and says no to qe3. we'll discuss romney's rhetoric next.
let's get some final thoughts from our guest host simon grose-hodge. simon, before we palette you go, you say japan is a trading buy. why optimistic on japan. >> we think they're markets you should be buying into with the recent dip we've seen. the bank of japan is on a huge pressure and we thing that policy easing is coming through. that's going to lead to a significant week again. that's going to be a good boost to the exporting section and that will help the nikkei. also if you look at the earnings, while everyone's concentrating on it, japanese
companies are coming out with very strong earnings. the equity market is still relatively cheap so we think there's the potential to g up 10% or 12%. we realize japan ends up being a fris stratsing investment. it's quite an interesting market. >> it's interesting to make it go from 85 to 86. what is going to drive the currency to the level we're talk about the. >> the fact that we're going to get a lot more easing out of the boj. the government has made it clear if we don't dough 'do what's wanted by the government, they will start replacing members with people who do what they want. it's the government who controls policy intervention, not the bank of japan. if they want to weaken the yen, they will. they're very significant and they've got an awful long way to go to meet the 1% target. >> simon, interesting. always a plaerchlt simon grose-hodge.
well, international consolidated airline group better known as iag seems to have an insatiable taste for takeovers. we spoke with willie walsh hours ago and asks him about the important airline tap. >> we've made no secret of the fact that we have an interest in looking at t.a.p. in portugal when the portuguese government decides to profit ooiz. i think there's enough there to warrant a close examination on our part. >> will turning around iberia being b be a fresh investment? >> we've got a come prehencish plan in place that can be deliver and will make a big place. >> is one of those options in american airlines? >> we certainly would give
consideration to an investment in restruck urd american airlines so we're supporting their restructuring plan. we think we even got a comprehensive plan in place. >> what about a possible fresh investment in the japan airlines. i understand that you did meet with mr. oneshi yesterday in tok tokyo. would you consider investing in that that. >> it's gone through a, you know, painful and difficult restructuring but it's definitely an airline that would warrant investment. now whether they would do that has yet to be assessed. >> for both american airlines and japan airlines, the the rules of both of the nations would prohibit you from taking a minority stake. majority stakes in airlines, what's your view on them. has there been an advantage?
>> it's a great question. clearly we're not looking at a merger with either of those couriers. i don't see that as even a potential option for a long, long time to come. i think we've now seen that a strategic investment can have value because it cements the relationship and we're seeing more and more the development of joint businesses which are, you know, a step above just an alliance relationship and it can make sense to, you know, cement that and demonstrate the perm nens of that relationship by having some equity participation. >> when you look at asia, you see all of the airlines in china that. kal and even places like vietnam announcing multi-year plans to expand their runway because china is right around the corner. is the uk aviation industry investing enough that they don't miss out on this great opportunity in china? >> this is one of the most frustrating things i have to
deal with or the lack of government policy with regard to it in the uk. we've debated the issue of a single runway, third runway at heathrow for years. meanwhile the u.s. has gone on and built hundreds of airplane airports. there's no question the uk economy will suffer because of a lack of policy with regard to aviation and particularly with regard to capacity at the major hub airport, heathrow. >> let's take a look at aig stock prices and see how that is stacking up in light of that. we don't have it? okay. in a bit? do we have it or not? it's coming up? no, we don't. of course, he believes of course a airline profitn't will be depressed by 50% or 60% due to higher oil prices. carolyn. >> it's that time of the day. jackie deangelis joins us from
the u.s. and she's going to tell us what's on the agenda from across the popped. good morning to you, jackie. >> good morning, ladies. there's nothing in the u.s. we'll be looking for but secretary treasurer will be speak about the global state at 8:00 a.m. meanwhile they're among the companies reporting results before the bell, so of course investors will be watching those. after the close we'll hear from american express, ebay, qualcomm, blackberry and yum! brands. stick with us on "worldwide exchange." we'll give you a preview.
[singing] hoveround takes me where i wanna go... where will it send me... one call to hoveround and you'll be singing too! pick up the phone and call hoveround, the premier power chair. hoveround makes it easier than any other power chair. hoveround is more maneuverable to get you through the tightest doors and hallways.
more reliable. hoveround employees build your chair, deliver your chair, and will service your chair for as long as you own your chair. most importantly, 9 out of 10 people got their hoveround for little or no cost. call now for your free dvd and information kit. you don't really have to give up living, because you don't have your legs. hoveround replaced the legs. and now every hoveround comes with this handy tote bag and cup holder for access to your favorite items. and right now, get this limited edition hoveround america travel mug free with your hoveround delivery. [singing] hoveround takes me where i wanna go. call or log on to hoveround.com to find out where a hoveround can take you!
good morning and welcome to the show. the headlines from around the globe this morning, here in the united states, a mixed bag of results from tech giants ibm, intel and yahoo! could weigh in. repsol gears off and spain threatens to retaliate against argentina, but shares in the giant oil fall fall for three days in a row. adam cozen drops his call for more still lichl and greater
inflation risks. iag's chief willie walsh tells cnbc he'll consider investments from a whole host of airline companies including american and jal. good morning. you're watching "worldwide exchange" with christine tan in asia and carolyn schober in london and myself. the nasdaq, lower by 9 and the s&p 500 lower by about 5 points. some of these tech earnings seeming to wag on teigh on the despite the fact we saw a broad basted rally up 194 points. in fact, stocks posting their biggest gains in a month. we saw good earnings from j & j, goldman sachs, fueling fire with the rally and shaping up the rest of the day. we saw apple regaining some of the losses that we saw.
it was up 5.1%, carolyn. closing yesterday at 6.09, spot 70. today it's shaping up to be a little iffy at this point. >> yeah. it's exactly the same perfect here, jackie, because we are taking a little bit of a breather after we saw the biggest rise in european forces yesterday. of course, we're coming off the three-month lows that we saw last week. ftse 100 and lowered by 0.2%. ze draw dax losing about two-third of 1%. keep in mind that the giant sin jeanetta is underperforming in that particular market. that's because they were slightly lower than expectations. once again, the biggest underperformer, i should say, off by 2.8%. we got data this morning showing that bad loans for spanish banks were up 8.2% in february and this is highest since october
'94. so worries about the spanish bank's funding decision does persist. with that in mind i do want to bring you comments from him. he says he sees no reason for discussions of a third ltro. again, no third ltro. jackie. >> thanks, carolyn. as we said, a mixed back for ibm tech. the first quarter profits rose 17%. but revenues were flat, just shy of forecasts on a decline in sale of hardware. ibm expecting better than expected growth in the second half of the year as it overcomes currency issues. big blue is raising its outlook. the company also selling its cash register business to toshiba for $850 million. ibm fell 2.4% in the after ho s hours. in frankfurt it's down 0.9%.
meantime intel's first quarter profit fell 13%. revenues were flat. the chip maker expects sales to pick up in the second half of the year as it ramps up its production. that's going to power super thin notebooks called ultra books. it will impact gross margins more than expected. >> we continue to see pc unit growth. we saw strong growth in the notebook segment of the market. really we saw a continuation of demand trends that we had seep at the end of last year and very consistent with our expectations. >> intel plans to launch the first smartphone based on its technology sometime this quarter. in fact, we saw shares fall 3g% in the after hours session. right now in frankfort they're down 3.5%. and yahoo!'s first quarter profit rose, beating targets.
we saw revenues edging up 1%. ceo scott thompson outlining more details of his construction plan. making ecommerce and mobile the bigger sanction. he's working with ailbaba. here in the u.s. we saw yahoo! rising. right now, up 4.4% at 11 spot 71. ji joining us now, cliff. great to have you with us. appreciate you coming out to our headquarters here. let's start with the tech earnings. a strong day for the markets yesterday on the back of coke, j & j, goldman sachs earnings and it looks like the futures are a result of it. >> tech has been one of the best performing sectors of the year. if there's any bright spots on the market these days, that's really the focus.
for me i think the question is what happens next. am just seems to be unstoppable. personally i think it feels very topee. it's had this long dunning rally. i think what the investors want to take a look at are the qs. if you look at qs, that's 20%. that's apple alone. google, you're talk 3g 3%. i think the investors at home, if they're thinking about what's going to happen to tech, to me it feeling like they're going to have a pullback. we're in touch with some investors who take the opposite view. we have a couple of institutional investors. they're looking for numbers like 68, 69. i think with this tech rally, it's anyone's best guess. you know, they're not great. some are beating. some are just in line. what they're telling me for a second quarter, there's probably more jittery fear into the markets. you're starting to see more names around placing like
europe, you're starting to hear about asia and decent earnings that aren't quite as well as expected but they're still decent. i think if you want to talk broad base, they're the way to go. >> dlifcliff's going to stay wi us. he's from bnp paribas. carolyn, over to you. >> he says his country can avoid a bailout. spain will issue long-term debt tomorrow. that's going to be a key test for the country after yields on the ten-year paper creeped above 6% this week. meanwhile global leaders are discussing plans to boost the imf's resources. jarngs sweden, denmark are helping to increase its resources. cliff let me get your take on the european situation for a moment. the bad news, they don't seem to be ending here. we've got italy coming out saying it's not going to meet its deficit targets.
now that we heard that, a third round of the ltro is probably not going to be on the table. what do you tell your clients in terms of the exposure to european stocks, particularly banking stocks is. >> we're largely having some trouble having those conversations because we don't really know. we're hearing what you're hearing and on a day-to-day basis, the investors i'm in touch with in the u.s. are kind of looking at the markets from a global perspective. we're seeing decent earnings out of the u.s. the fed chairman, ben bernanke, his comments are that he's going to have a closer angle and view as to what's going to happen next. i think how this year started. this year started 2012, risk on, markets up. a lot of liquidity in the markets. that's the same thing that happened in 2011/2012. qe2 last year, your selloff really started about two months after qe2 was launched. so i think if you're thinking to
qe3, if that's out there, if there's additional liquidity, which i kind of question, what's going to happen after that tribute launch? and i think that's anyone's guess at this point. the banking sector specifically in europe, you know, we're sitting there thinging what everyone else is thinking, which is we want to be defensive. we're trying to be protective in terms of how we're protecting our positions. when people are looking for upsate, we're sayings you want to be consistent in terms of how you're expressing your views across numerous stocks and thing that's important. i think diversification these days is key. >> cliff, hi. this is christine from asia. with so much uncertainty coming from the zur doan and news of china slowing down, to what extent can we continue to count the u.s. to drive global growth? >> i think chairman bernanke's done a terrific job. he's constantly expressing his views as to how much monetary stimulus he things is out there.
my take is that i think it's gets to be somewhat limited, but he certainly has been a man to get involved quite quickly when that needs to be. i think overall global liquidity, there's been so much money injected into the markets, the question is what happens next. now that you're wake up and seeing spain in the news every day, the question is how much more money are they able to allocate to these different measures. so we're looking at the world saying, you know, where's all this additional liquidity going to come from? when you look at the amount of risk assets on banks, it's kind of where does i got from here? that's what we're focused on, just like you aerchd else that that's a great point. i think invests are really appreciating the fact that they're less complaisant and showing more care for this ek. folk growth and things in the states. we're going have to leave it there, of course. a lot more to come from cliff
throughout the show. meantime, we still have a lot coming up as well for you. pfizer has reportedly agreed to a sale of its baby formula business. but who snapped it up and how much are they paying? we've got all those details coming up next. [ male announcer ] if you want a luxury car with a standard power moon roof, standard keyless access, and standard leather-trimmed seats, then your choice is obvious. the lexus es. it's complete luxury in a class full of compromises. see your lexus dealer. today is gonna be anry in aimportant day for us.mises. you ready? we wanna be our brother's keeper. 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.
welcome back to "worldwide exchange." let's see how we're setting for trade on wall street. the markets could open lower. the dow by 35 point, the nasdaq lower by 8, and the s&p 500 lower by 4 and change, and that's because of that mixed bag of tech earnings that we saw after the bell yesterday. but yesterday, a good day for stocks. we saw the dow rally 149 points we saw good earnings in the morning from coke, j & j helping to boost that rally. we got a little bit that was mixed but the mergers were overshadowing. we saw apple, of course, apple of everyone's eye manage to go up 1.1% yesterday. how does it look in europe? >> i should say we're moving back to the session lows we saw right after the session opened. let me kick off with the ibex 35 in spain. that's after we got the news that the spanish bank bad loans rose to 8.2% in february.
and that's the highest since october '94. the cac 40 up 1.10%. talking about the ftse 100 here in the uk, it is trading lower, yes, but only to a marginal extent here. way tonight talk more about tesco because the biggest retailer comes out with the fullest numbers for a full year. also it says it will spend 1 billion pounds on the uk business. on a more negative note it did say that the u.s. break even will be later than planned. speaking first, tesco explaining why it's continuing its push into the u.s. >> once we know those stores make a profit, we can then actually roll out much quicker and cover the substantial overhead that's in place, but making sure we've got the model right before we start to scale it. that's the key to the success for the u.s. >> and let's move on and take a look at the government bond
markets. the 10-year bund moving off its lows that we saw on monday. keep in mind we'll get results of a two-year debt auction later on. and the ten-year spanish yield way below the 6% yield we hit on monday. so we are seeing some improvement, but the big focus will be on the two and ten-year auctions we'll see tomorrow. the ten-year italian yield, the low 5 preside.5%. that's going to happen one year later now. and the ten-year gilt moving slightly low finally let's show you the dollar rates aet this point. sterling/dollar getting a nice boost, up by 0.4%. that's after we got the boe minutes for march. that shows us 8-to-1 members voted for the asset program.
aussie dollar at 1.03. just slightly lower by 1.1% and euro/dollar currently trading back below 131 at 132.91 off by 0.3%. christine. >> carolyn, a strong session here in asia right now. couple of things over the eurozones. all that culminating, pushing markets higher. here in asia it's up. i'm sorry. the biggest one-day percentage rise in two months. we have the chinese government easing. that's helping this particular market, particularly the finance and sectors. a couple of things as well. u.s., europe, as well as what's happening in china, helping to lift sentiment in this particular market. up a strong 2 ppt 1%. we have signs that the boj might help out with more easing. the central bank is ready to take additional steps if necessary. 2.1% higher.
kospi is up almost 1%. the australian market up 1.1%. after a hello sthi production report coming up from bhp bulletin and they're continuing gains if there yesterday. of course, remember, the rbi, the central bank cut interest rates by 50 basis points all in an effort to boost a sag domestic intoian economy. that's it from me. eibel back tomorrow with the new, moving markets here in asia. >> thanks so much for that, christine. way to kick it off on o a positive note in asia. we'll see you tomorrow. one story we're high lightning the u.s. fiedser reportedly interested in selling its infant nutrition to nestle. the sale could be announced next week. pfizer has been looking at its options for infant nutrition and animal health business for quite sock time. taking a look at pfizer and nestle right now seeing pfizer
welcome back. you're watching "worldwide exchange." you are seeing a live shot of times square at this early hour in new york city. we're preparing for trade on wall street. of course, dimly lit right now, but as the sun comes up, you're going to see a lot more activity there. carolyn. >> looking a little bit better than here in london. very chilly here. let's move on. spain has threatened argentina with what it calls, quote, consequences as they move to seize ypf. madrid says it will take action. spanish prime minister says the plant nationalization owned by repsol is justified and damaging for all parties concerned. yesterday we spoke to the peruvian finance minister, he was quick to distant his government from argentina's move. take a listen. >> i think investors have become more sophisticated in not
lumping all latin-american countries together. in a clear example is trade policy, for instance. we've maintained open policy of rejecting any sorts of protectionist pressures, and there hasn't been any contagion effect. i think -- overall i think investors are able to discriminate among countries that are pursuing market-friendly policies and are quite respectful of the contracts and the rule of law. >> meantime, halliburton reports first quarter results before the opening bell. they're forecast to earn 86 cent as share on $6.8 billion in representative knew. joining us now to talk more about it is marker necessary, managing director of csla and still with us, cliv davis from
bnp paribas. let's go ahead and start with you when we're talking halliburton. i was reading your notes. you say its operating margins are going to be lower. how do you think that's going to impact halliburton? how do you think they're going to come through today? >> we're projecting earnings below consensus, and we took down our numbers for baker, slummer and hail burton. halliburton is the biggest, the best. what will offset that -- it's already in the stock. what will offset that is the international deep water, other areas are doing very well. >> when we talk about oil prices, you're expecting a lower oil price? >> we ooh expecting it in the $09 range. oil drilling continuing to go straight up and will do so for the considerable future. and that's been the silver
lining, you know, if you will, as natural gas prices remain very depressed. and there's a shift from gas to o oil, and there's a cost associated with that. >> mark, this is carolyn in london. let me pick on the gas prices. how are the likes of hall burden adjusting to that? what does it mean for their margins? >> obviously they're not able to charge what they did in the gas basins so they're moving their equipment down to the eagle ford into other more oil leverage plays, and as i said, there's downtime, costs associated with that. we're moving out of gas, moving into oil. so it's a bit of a transition in their costs associated with that that are taking a toll on earnings. >> okay. we also can't talk about hall burden without talking about what happened in the gulf, of course, in april of 2010. and we did see bp settled with
individuals and businesses last week, but we still have to face the government on the civil penalties. what are you expecting in terms of the liability there? >> halliburton has a reserve for it. transsession has, and it's impossible to quantify. it's unnoechblt i expect it to be immateriel almost to halliburton's balance sheet. they have a lot of cash so, they're prepared to deal with what they need to, but i don't expect it to be a large number. >> okay. also seeing an increase in offshore activity. tell me about that. >> well the offshore recon keeps going on. halliburton is getting a lot from that. so it's a really positive trend for the industry. >> okay. and last but not least, i just want to ask you about your full year targets and what you're looking at for halliburton for the full year, 2012, what you
expect them to say on the guidance. >> we're expecting the earnings in the 370 range per share, which puts the stock at 8 1/2 times the earnings. we see a lot of upside actually to the stock. >> all right. fantastic. thanks so much for joining us. mark urness, managing director of clsa and cliv davis. we'll get more insight from you. meantime coming ouptown show mitt romney hits on the economic policies. we're going to discuss romney's rhetoric coming up next.
good morning and welcome to the show. the headlines from around the globe. here in the united states, mixed bag of results from tech giants that could weigh on the sentiment today. >> david miles is the last dove. he dropped his call for more stimulus and view of greater inflation risks. >> and the battle is not over. repsol gears up its defense and spain threatens to retaliate against ar jeb tina following its national list tick move but
shares fall for a second day in a row. markets had a pretty good day here in the u.s. yesterday. the doll posted its best performance in a month. in fact, we saw the dow up 194 points and saw a lit bit of a broad-based rally as a result of the good earnings coming out in the morning from coke, j & j, goldman sachs. that fueling the rally despite mixed data from the u u..s. we're still with our guest host cliff davis. it appears sentiment is changing day by day, week by week. it's still very touch and go here in the u.s. >> we've seen a little be it of a pullback in the last two or three weeks. think that's healthy. i would prefer to see a little bit more of a pullback. i think the markets have had such a strong rally for 2012.
coming down 20, po points i don't think is quite enough. earnings have been good as we mentioned earlier. we've seen some numbers out with the past day or two. we've just heard about halliburton. i think we're going to see a bit more of a pullback. what i've seen is volatility. volatility for most investors is looking at vix. it's telling you -- what's the short-term sentiment? it's come down a little bit seeing vix trading at under 18. what it'sal telling you is there's a little more complacency. i think we talked about tech. i think you'll see more of a pullback in tech. i think you'll start to see numbers overall just start to sell off a little bit. i think there's enough discussion right now in terms of china possibly even having a hard landing, a lot more news as we just talked about in terms of europe, so i think you want to
be cautious. i'm a little bit opportunistic. overall, i think you want to be well prepared for a little bit more of a pullback which would be good for the markets overall. >> you bring up a very good point by saying the vix has moved back to the 20 level, dloes 18. we can't fight it. we're moving closer to may. what does that mean for investors? should they leave in may and not come back at all this year because really this is what they should have been doing last year. >> you know, that's correct. if hiemd site's always 20/20. but i think overall there's still some good opportunities for 2012. i think tech's had a great move. tech's been probably the brightest point of the year with apple moving up so much, but overall, i think 2012 could end up being a decent year. i think it's going to be a mixed bag. and the question is what's going to happen to global liquidity? if there's global liquidity
injected into the markets, there's something to keep your eyes on. right now what i'm focused on is looking at a lot of what's coming out of europe. i'm think about what's's happening out of asia in terms of a hard landing. i think something you also want to keep an eye on is middle east. you've heard a lot less about it over the course of the past few weeks but the question is that could start up at any time and that's going to be the weighing factor on the markets. >> cliff, i just want to bring you those results from germany's two-year paper auction. germany, in fact, paying a record low issuance yield receiving bids of 6.67 auction. it's reasonable at 1.8. the yield is at 0.14%. again, that's the low efest yield ever for that two-year auction. the previous yield was at 0.31%. so, again, that's highlighted the flight that the investors are taking and going into the german paper. >> i mean let's look at the u.s.
dollar even. you know, the u.s. dollar, i think, between the dollar and the yen has been probably one of the two best performers out of the g-10 this year. what that's telling you is that overall investors are putting their money into dollars, looking at the yen saying where else am i going put it? i think euro/dollar could break 130 pretty soup, then take a look at gold. if you're going to see a dollar rally, you're going to see a bit of a selloff in gold. >> thanks, cliff. we're going to bring in our next guest, bill sperlopolous. great to have you on the program this morning. not sure how much of the conversation you've heard this morning. what's your reaction to the results in the market and generally how things have been playing out in the united states? >> well, the markets in the u.s. have been trading to the bull's favor. the last several quarters were is surprise to a lot of folks who were underinvested. thing because it's an election
year, that theme continues. people are unaring and hiding. that's clearly not the answer. i would be surprised to see the u.s. dollar strengthen, gold down, interest rates up. so there's lots of great opportunities here. >> okay. but you still think in terms of the markets we could hit new highs before the election. >> i think you do. the stage is set. it's a good quarter and a half. people are underinvested. earnings look decent. there's also been many good reasons on why you should not invest and why it makes sense to high. but courage is not rewarded with more interest rates. earning nothing overnight and 2%
over ten years is not a workable solution. >> all right. let's just pause there for a second and talk a little bit more. there's no need for a further round of quantitative easing in the united states. that's the view of republican presidential hopeful mitt romney. romney said it's time to allow the markets to take their natural course. >> i think as you look back at qe2, the second round of stimul stimulus, it had very little positive effect. i don't think there's a reason for us to further inflate our money supply. my own view is that this is time for the fed to pull back a little bit and let the market recover on its own. >> romney also dismissed the buffett tax rule as just a gimmick saying that this type of political posturing is not going to get america strong again. all right, let's bring it back to you, bill. reactions to romney's comments there. >> i'm all over it. i think that's great. i hope he has a loud and clear
voice. i think that's a big part of the problem in the world today. you don't have clarity on tax issues. you don't have clarity on the spend side. we haven't seen a budget for three years from the senate. it's a mez. mess. the problem in the world today, if washington got its act together would all of a sudden dissipate. >> okay. i also want to get your view on oil. i know we're shifting gears but we were talking about it in the last segment and we're really talking about the geopolitical risks with the threat of i reason on the table. but you are a bear on oil and you think prices will continue to decline? >> we have the iran scare stuff in the marketplace. and the bottom line is this. the iranians have been overdue for a good beating. i don't believe they would do anything in the straights. when this preemous dissipates and the prices come back down to reality, it should be in the 75 to 85 range, not over 100. if wi were to see a charge in power where all of a sudden
natural gas makes great sense for the united states, maybe we'd see $50 or $60. tlirng's a lot of hype built in these prices heechlt it doesn't make sense and i think i would trade to the downside if i were, in fact, going take a position on oil futures here. >> bill, this is carolyn in london. i'm curious about your view on treasury yields. they're far away at around 2.4%. but what makes you so confident that the bear market and bonds will actually continue? >> well, number one, you've had a powerful secular bull market in bomds for the last 25 years plus. and there's been a lot of complacency. people are reaching. there's -- there's not enough reward for the risks taken when you look at some of the yields in these bonds. you have a big rollover program over the next three years. trillions of dollars. the deficits have to be addressed. you have the return to normalcy that's our key thing that
becomes believable in 2012. get back to normal. do business. and interest rates and demand for credit have to go up. and i thinket's just a matter of time before you see a 2-4-6 is what we movie is going to occur. looking specifically at the teen eur -- ten years. >> thanks so much for that. bill spiropoulos. bill's going to join us later for more insight and more of his opinions as well. meantime i do want to take a quick like at the u.s. futures and see how we're doing as we set up for trade on wall street here. it looks like it's going to be a lower open but it could pull back. the nasdaq lower by 7 preside.5. the s&p 500 down. carolyn, how does it look in europe? >> european markets are taking a bit of a breather but the biggest gain for the european
markets yesterday in four months. let's take a look at where we are here. the ftse 100 off by 1.1%. the xetra dax moving lower to the tune of 1.5% p and the smi down. i want to quickly mention we're seeing some pressure on the chemical stocks after switzerland reported numbers for the first quarter that were below expectations but we're getting a little bit of support in europe from the mining numbers. 's after we got the numbers from hp billiton. let's take at where the u.s. is trading. back below that 130 level which we managed to look at yesterday. around 106.50. dollar/yen currently at 81.41. of course, the lower support level there seen around 80.50. jack jackie. >> thanks, carolyn. meantime coming up next on the show, will big blue be singing
the blues? as the tech giants' first quarter forecast. we break down what's going on at ibm when we come right back. are you still sleeping? just wanted to check and make sure that we were on schedule. the first technology of its kind... mom and dad, i have great news. is now providing answers families need. siemens. answers.
rose 7% beating estimates, but revenues were flat, just short of a decline on sales of hardware. ibm expecting a sales growth in the second half of the year as it overcomes currency issues. big blue is raising its demand. the company is also selling its cash register business to toshiba for $850 million. joining us now to talk a little bit more about ibm and technology is ed mcguire. he's the managing director. we have a lot of tech earnings out after the bell with ibm. what are your thoughts? >> so far it was a very much typical first quarter that we've seen. there were no exogenous shocks to demand. it was typically seasonably light but underlying instakt in the markets allowed most tech earnings so far to meet and exceed their earnings, although
revenue trents have not been as forgiving. . >> ibm has been in a long-term transition toward higher solutions. so hardware was weaker because of a mainframe cycle that's in its late stages. so that's bleeding off. and ibm's been shifting their focus toward higher value solutions software which is focusing around analytic solution and cloud solutions. this is higher value technology and allows ibm to continue to deliver margin improvements as well. >> ed, this is carolyn in london. i want to get your view on the value. it seems like they're priced for perfection and then, of course, apple is in a league of its own. are valuations too lofty at this point? >> valuations at least for the near term have priced in very
little room for error, so what we'll see today i anticipate with ibm as giving back a little bit of the froth that we recently got. of course, we do have investors that are looking at ibm as well as microsoft for their dividend yields here. so i think that gives us a little bit of a cushion that we might not have had several years back. >> good. >> you know, we were -- you just mentioned microsoft. we were talking about ibm. you know, microsoft, ya hoorks y -- yahoo!. what are your thoughts on that? do you think that business of yahoo! could actually be a good pairing for microsoft? do you think there's other acquisitions that would make sense for them? >> sure. most by partnering with yahoo! was actually able to dodge a lot of the problems that yahoo! is having to restructure out of its business right now. at this point, microsoft is -- has a fairly hefty cash. they recently bought some patents to help bolster their
portfolio in the -- in the ip wars against google and android. but i certainly expect that they'll be a little more active. the last big acquisition they did was with skype and they were able to use european cash to get that deal done. look for them to be on the hunt. they're not a serial acquirer but they've been tactile. a lot of people thing they should buy rim or nokia given those stocks are quite depressed. i would highlight that one of microsoft's biggest successes over the last decade has come from their own hardware platform, which is xbox. so it does seem like it could make a lot of sense for them to move into hardware on the phone side, but i certainly wouldn't be holding my breath at this instant. >> okay. you like microsofting you're reiterating a buy on that in your price target right now? >> price target is $38. they reported last night. a lot of companies are looking through sickle windows 8.
it's currently in a consumer preview, which is a beta. this is a very much touch-optimized operating system. intel was talking about a new generation of touch-enabled laptops and tablets. so this is really a new range of form factors. we'll be looker for a lot of these new devices in the second half of this year. but the reason we like microsoft goes beyond that. i mean microsoft is really the premiere enterprise play for software. 50% to 60% of the revenues are occurring. and if you're a cio that handles corporate technology, there's nothing that can compare with a microsoft stack and they have a huge portfolio of new product cycles that are coming up over the next several years. >> thanks so much to ed maguire of clsa. in the meantime let's get more details. first quarter profits fell 13.4%. revenues were, of course, flat. chip maker expecting sales to
pick up in the second half of the year as it ramps up the production of it newest processors called ipm. they're saying it will impact gross margins more than expected. intel planning to launch the first smartphone based on its technology. we saw shares of intel falls 3% after hour. in frankfort, up and down 2 president 9% at 21 spot 22. and revenues edging up 1%. the first quarterly sales growth in three years. ceo's scott thompson outlined more details of his restructuring plans. making ecommerce and mobile a bigger focus. thompson says that he's working with alibaba to monetize their 40% in the company. we saw them rise 3% in frankfort. it's trading higher as well.
and warren buffett says he's been diagnosed with stage one prostate cancer. in a letter to berkshire shareholders, he says his prognosis is very good. he's decided to delay treatment until mid-july so he can keep some travel commitments. he tells cnbc's becky quick he feels good and there's no change rather to berkshire's succession plan. looking at berkshire class a shares right now we're seeing them up 1.4% at the moment. in the meantime pfizer -- excuse me. carolyn, over to you. >> i'll take that story. they're looking to sell their infant formula business to nestle. "the wall street journal" says necessary lel beat out a bid by mead johnson. they have been looking for options for its nutrition and animal health business for quite some time. let's take a quick look at how
the shares are trading. nestle trading a touch lower. fran fort up by 0.3%. jackie. >> coming up on the show, yum! brands, the company in charge of taco bell, kfc and pizza hut among those earnings. does fast food mean fast cash? we're going to discuss that next as we gear up for the trading day on wall street.
reporting results before the opening bell. after the close today, we'll hear from american express, ebay, qualcomm, marriott, yum! brands, the parents of kfc, taco bell, and pizza hut. a lot of big earnings to watch for today. still with us bill spir on lus, ceo and capital adviser. bill i want to sort of go to you this day on wall street. what do you think the strongest point is going to be out of the different companies that are reporting? >> better than expect. i don't see any huge surprises ahead. the markets are going to continue to worry and climb forward. we'll have a tough open but we'll see what the bell brings at the owned testify day. >> all right. do you worry that we've been seeing some of the earnings overshadowing some of the data points we've been getting out as well, negative housing data? some of those points talking about sort of the fundamentals
of the u.s. economy being overshadowed by the earning right now. >> no. i think the housing market's on demand. it's getting a lot of traction here. you receive some inventory burn. starts are probably not where they need to be but that will change. eventually it will be a positive addition to the economy, whereas right now we're getting nothing out of it. >> all right. thank you so much to bill spiropoulos, ceo and my thanks as well to clifford davis, head of institutional equities at pnb paribas. that wraps up for today's show. i'm jackly deangelis in the u.s. >> and i'm carolyn show ber. thank you, everyone, for hing "worldwide exchange."
good morning. warren buffett disclosing he has stage i prostate cancer but sees no danger. earning central, three big reports out last night. intel beating the street, but gross margin concerns sent that stock lower. ibm posting better than expected earnings and upbeat guidance but a revenue miss sent that stock lower in late trading. and in a change, yahoo! shares actually got a boost after earnings and revenues topped targets. u.s. equity futures at this hour pointsing to a lower open. what a big day yesterday. almost 200 points up.