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tv   Worldwide Exchange  CNBC  May 22, 2012 4:00am-6:00am EDT

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welcome to today's program. >> these are your headlineses from around the world. >> equity markets in europe are in the green. leaders in it europe battle it out over cry says fighting measures. >> despite more gloomy projections for spain. losses could amount to 260 billion euros. >> and u.s. lawmakers put jpmorgan under the microscope as congress gets set to grill regulators today. >> and south korean president urges greece to accept the
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bailout terms in an exclusive intervi interview. i wonder what it's like to lose 2 billion in a day. >> i guess it's just a drop in the bucket. >> what were the termses of the pre-nup? i'm fascinated by this. projections from the oecd. >> saying india's government needs to cut its fiscal deficit it in order to support its monetary policy. >> they have room to cut rates. interesting because what's going on with the inflationary numbers. >> and they're coming out with a lot of projections with global
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growth. mexico gdp growing 3.6%. and saying ongoing uncertainty remain as key down side risks. i would imagine europe being the lion's share of that. >> well done forgetting that right. on today's show, we'll find out how greece's lemg he said dear shipping industry is performsing mondays the debt problems. >> hows has the country's economy faired since the arab spring? >> the handling of the european debt crisis and why he says greeces has had it easy in terms of its bailout. >> and we'll take a look at the u.s. housing market and while one analyst says although it's fragile, there are signs of
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treasury. >> and internet company up 46% this year. incredible. >> if you have any thoughts or comments, or tweet us, as well. >> greek banks reporting set to receive a much delayed recapitalization down payment on friday. the banks are being propped up with some 100 billion euros in emergency liquidity assistance from the country's central bank. this is according to a separate report in the financial times. any support above 500 million euros needs ecb approval. julia is in athens. let's talk about this.
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without will this ela support, is the greek bank system bust? >> we've seen it with the irish banks that they can't get access to ecb liquidity, so this switch to this emergency assistance. some of the numbers being bandied around, i've seen figures that are lower, 6 on to 70 billion are euros worth. it is a concern and the banks need recapitalizing. this is not something new. 48 billion euros has been set aside from the bailout program in order to recapitalize the banks and actually the greek authority have the 18 billion euros, there's just disagreement on how it would be used. the reports are that we'll finally see it transferred to the banks on friday and then we will allow them to get access back to the ecb rather than using this emergency liquidity assistance from the national bank of greece.
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>> and you're there in the port, i can't tell whether it's quiet or not in the shop behind you, but what is happening to the shipping industry as a whole at the moment throughout this crisis? >> it is meant to be the bright shining star. anticipating selling off 12, but i don't i can't mention it without saying the privatization is on hold until at least after the election. the greek shipping industry is the largest in the world, 16% of global economy. in terms of gdp, 6% to 7% and it has been a tough few years. excess capacity. china, though, has seen investment opportunity here and they have invested in what's known as pier two.
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they are seeing opportunity here. the problem is it seems to be down in red tape and rumors of indecision. so like with many things, the potential is there, it's just whether they follow through. back to you. >> and a couple more quick headlines. they like mexico's growth prospects. and they also like chili where they expect a 4.4% expansion in 2012 and over 5% in 2013. our guest host is david muran. welcome. we're talking briefly about the headlines coming out of the americas, but europe still such a focus. you say you're feeling more
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optimistic take. >> you have to separate out the european story to the future of the body poll tick in europe. we really pushed ourselves into this boot of huge pessimism and there will be a relief rally. >> which we're starting to see already. >> this is the beginning of that moment, but you don't want to be short markets. so it's all about timing market wise. >> there has to be a catalyst. what is the catalyst going to be? >> euro stocks and bunds have hardly moved. but if you look at the sentiment, the discussions, the fears that has gone with it, it hasn't gone any further. for markets to go down, you need to create selling pressure.
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everyone owns those positions, you tend to get relief in some way. >> i find it hard to believe that we could be at a bottom when we haven't really gotten to some of the pressure points. >> because when you look at the crisis, it's not just a one month, two month crisis. it's a multiyear crisis. i think we've been through one phase and the markets have pushed it themselves into a point and we'll have a relief phase. >> why are the greek elections not the intensity of -- >> depends what happens between now and then. you sit here and wait? that's not what markets do. >> is europe a great by and just not yet? >> we have different views on timing. i think overall i'm incredibly pessimistic for this construct.
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if it you separate out markets and oversold conditions over a three week period and you look at really what europe faces, it's an incredible disaster. historically all the work skuts you can't do that. you have no character plat tick leadership that works together in europe. fra france and germany can't resolve their differences, i don't see how that would work. >> the eurozone is a huge problem but you say asset prices have price td it in? >> you have three week rally before the next big move. nothing moves in a straight line. >> we'll have more with david in just a little bit. >> we'll check on the european markets in a moment, but it first, it's not a bad day for
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asian stocks and asset prices. tracey chang has more for us. >> asian markets are widely recovering on the improved sentiment of greece. beijing will fast track investments to lift growth. the shanghai composite added more than 1%. led by banking shares. nikkei also gained about 1.1% extending the technical rebound that we saw yesterday. and also riding the bargain hunting wave. and lastly, india sensex fails to join the regional rally currently trading to the down side, off about 0.2%. so some signs of recovery
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finally here in asia. back over to you. >> okay, tracy, thanks for that. here in europe, one hour into the trading session, advances outpacing decliner by more than 9:1. dax up 1%. this is where we stand right now. cac up nearly a percent. ibex also up about 1%. number of stocks in focus, a lot on the london market. it they loath the medium term target for revenue growth. it for the first time having a profit/loss in around three years. a 1.2% fall in their full year
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numbers. so the underlying picture not so bad. chinese copper likely to improve in the second half of the world's fourth biggest miner set today. they lifted their output around 60%. arm holdings doing well ahead of the british ship stedesigner shrugging off concerns on sales of smart phones and tablets. bond markets, no surprise to see bond yields higher in the core. gilt yields up. ten year italian yields are down. euro-dollar also slightly firmer this morning. dollar-yen steady. aussie dollar moving away the
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six year lows. that's where we stand on the markets. >> if you want to join the conversation, get in touch with us. you can contact us at or @cnbcwex. kelly underscore evans or at ross westgate oig. you can share your shouts on where you agree with our guest host this hour about whether europe equities have bottomed at least for now. >> also still to come, why does gold appear to be losing as debt problems worse snn our next guest has tips on how to read bouillon's next move.
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>> the eurozone crisis carries familiar understones for south korea. it received a bailout in the 1997 crisis. chloe cho asked if they thought europe was doing the right thing to counter its own crisis. >> translator: i think the terms greece is facing now by the imf is very reasonable considering what korea had to go through. i ask the corporations, the workers and the people to accept
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those terms. >> times have changed in south korea now contributes its share to the international monetary fund. >> the emf has $400 billion to tame the financial cry circumstance however, it can only be used it if greece accepts the terms. it if they don't, there is no disbursement. i would not leave greece the way it is now. i urge the leaders of france and germany to take active discussions. >> arab spring has taught thaws contingencies can happen any time. what plans does your government have in store? >> we don't want north korea to collapse. that would mean a huge burden on south korea if north korea
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opened up and lives within the international community this, nuclear issue can be resolved. if pyongyang lives within the international community, it can survive on its own. once it stands on its own feet, i believe it there can be a peaceful unification. >> a quick programming note. catch that full exclusive interview with the south korean president as part of a cnbc conversation special episode airing this weekend. you can take it a look there at the times. taking a look now at gold. the asset has been hovering around the key $1600 mark. but despite the dell soef precious metals have been witnessing, some think you should allocate 13% of your portfolio to precious metals. do you agree that gold should still be a place for investors
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right now? >> i don't think we're at the end of the road of the crisis. we had the internet crisis and the banking crisis, now the government crisis, and each time we basically increased the amount of debt we have in the system which means we have the value of the money itself. and so how you preserve your wealth if your interest rates in the bank is zero and you only have risk from government, from the banking side, so you need some certain assets outside the bank security basically so to speak. >> as tensions have increased in markets, we've actually seen gold underpermit. so why should people want exposure to this right now? >> if you look at the situation over the last ten years, it's basically we started to issue debt in order to monetize slapss in the markets.
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during this period about, we had br six corrections to the tune of between 20% and 30%. so i want to see governments changing their approach in how they treat basically investors and how they give them a fair return. return of sozero is certainly n a fair return. >> you want to own gold for all the reasons you've outlined but it's a painful loss to take at a time when the crisis has got worse. gold has not exhibiteded the safe haven status in the last few months. >> certainly putting all your money in only gold and believe you're making a fortune overnight is probably a bit dream world. so we advocate you build
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positions over time. so average cost is probably somewhere like 600, $700 over the last ten years. you can continue to run the profits, continue to invest and average up in an environment where you play frietrend like a retirement fund until you start seeing government policies change. there's very little in the framework telling me joechlts are changing their approach. >> you told me you think gold has bottomed. why has it fallen in this last period? are people selling gold to cover margin calls? >> i would agree with the comments about what gold represents. and you to not get immediate gratification with high correlations all the time pep i
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can't see a substitution for a failed dollar as a power shift from west to east, with you it's something you do as either a trader with short term entry points or long term average which go has been discussed. >> and is there any degree to which -- we're talking fundamentals for central bank easing in the system. but is there a change in the relationship of physical demand going to be a headwind here? >> i think the west will have slower and slower stocks. the ability to have the physical supply coming out has really put at an extreme stress so i don't
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see where the demand collapse will be coming from. we've seen governments trying to disturnlg the export. no supply coming out of russia, no supply coming out of chi it in a. royalties are getting bigger. structural issues are driving prices higher. >> appreciate it. we want to bring and you couple headlines coming across on greece. a senior greek banker has confirmed that the top pour grefour banks will receive about $19 billion in recapitalization funds on friday. this is part of measures earlier announced. with this this is a game changer is another matter entirely, but we'll continue to bring you those headlines. >> also egypt goes to the polls.
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described as the first ever democratic vote. yousef takes a look at what's been promised. >> just 15 months after the resignation of mubarak, the outlook for the country's write remains uncertain. >> now is better of course. >> economic growth fell to 1.8%. government's budget for the next fiscal year now projects growth of 4 about% % to 4.5%. >> i don't see the scenarios proposed in the budget for 4.5% to be realistic for budget the taker -- from a budgetary point of view. >> lack of security and ongoing political paralysis have seen egypt's key sources of revenue take a hit. billions of dollars in annual remittances lost and tourism plunging 28% on the year in
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january. annual influence of foreign direct investment, 6.4 billion in 2010, have come to a halt.central bank's efforts to shore up the value of the egyptian pound has wiped out more than 50% of the foreign currency reserves. the remaining $15 billion are barely sufficient to cover two months of imports and raise the risk of a disorderly devaluation. long promised aid has become to drig he will in. the eu disbursing its largest ever aid package last week. but the egyptian government continues to drag its heels on political consensus for a $3.2 billion loan from the imf. and as egyptians head to the polls, the country's leading candidates are sticking to their talking points. >> if if you look at the written material and you watch watch statements, it stays at the
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level of objectives. you're not talking about the very near term challenges and how they will be able to stabilize or help stabilize the economy. >> mean it time egyptian stock exchange remains one of the best performing indices in the world, but has lost some momentum as the country prepares to go to the polls. >> it's not perfect. still bumpy. but i think people are starting to see that this is going to be a transition that will take a while and if you want to get in on it, you have to get in early. >> remains to be seen if the presidential elections will set into motion the policies needed to fix the economy and resolve investors' concerns. >> and yousef joining us now from cairo. right report on the hopes and problems that the country is facing. what's your own take on where we'll finish by the end of the process which will take quite a
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few weeks? >> absolutely. and there is still a lot of uncertainties. again, the election kicks off tomorrow and no analyst really has a clear idea as to who is in the lead. they show a mixed surveys in the polls and some of the unofficial results we're getting from egyptians voting abroad are showing a picture favoring the islamic candidate and especially the one from the muslim brotherhood. despite reports of some irregular hairities inities in . keep in mind the military has called on egyptians to accept whatever result may come out of the election and whatever policies ensue, because the worry here is whoever wins, that people would not accept that and
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it that may be a source of tension, perhaps even a source of violence. egyptian stock exchange yesterday up 1.8%, bargain hunting going on here and similar picture in the u.s. >> yousef, thanks. uk inflation data will be out in just a couple minutes times. we'll bring you the numbers.
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uk inflation 6% on the month, annual rate 3%. weaker than the 3.1% forecast. loes annual rate since february 2010. still higher than where the bank of england were wanting it to be six months or so ago. the rpi, annual rate of that 3.5%, that'ses as forecast rpix. i miss the old target. 3.5% the annual rate of that low since november 2009. that as forecast. biggest downward effect from airfares, alcohol, clothes and sea transport. also latest borrowing numbers. sterling falling on that. here's the borrowing numbers. public sector net borrowing minus 16.5 billion. expected plus 8 about.5 billion. it's boosted by the raw mill asset transfer and the bank of
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england specially liquidity scheme. so i'm afraid you'll have to look through that number because it's totally flattened by balance sheet accounting. >> the first time mervyn king will not have to write a letter explaining himself. >> of course as the bank of england just also launched an investigation into how its performance versus -- one of the key metrics will be its inflation target. reaction on that in just a second. but equity markets back higher. >> and warns the region's troubles risk global recovery. >> and the bank industry warns losses could amount to 260 billion euros. >> south korean's president urges greece to accept the bailout terms.
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>> so on the bank of england target cpi, annual inflation in the uk is running at 3%. slightly better than the 3.1%. it was 3.5% last month. public sector net borrowing down by 16.5 billion, but that is due to special one off factors. joining us for more, economic adviser from the banking group. slightly better fall in inflation than expected. still uncomfortably high, though. >> you know i don't worry about these things. i worry enless than the bank of england. at least i don't have to write letters to the chancellor. but obviously one of the big reasons for the fall is because of the very big jump in figures in april 2011. so it's a year on year effect, as well. 12 months ago, you were talking about big increases in food and commodities and they're beginning to wind down. and looking forward, i actually think the bank of england's forecasts may actually come to pass so to speak because they're
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saying by the end of this year, inflation should be down to 2.5% and it might reach the magical figure of 2% in the first half of next year. but the pound is a bit stronger. commodities -- >> anymore quantitative easing? >> it is possible fp if there's a real crisis in the eurozone, i reckon they will go for more qe. >> the word stagflation isn't a more common word amongst people in the press and the population that we sit in a period of negative real growth. >> if i my say so, when i remember stagflation in the 1970s, you're talking about 25% inflation. and for me, 3% is, all right, it's inflation, but it's not 25%. i think that's why it's not quite as successful as it was in it the '70s. >> more with ruth and david in a moment. bank of england is expected to be the subject of an independent review into its crisis management techniques and its
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forecasting models. the bank has faced particular criticism after repeated provisions of inflation. >> i personally would like to have done better with my forecasting. i'm glad there's going to be reviews because it's important that we're accountable p. and i don't mean that in lip service way. >> yesterday he spoke more broadly about how central banks including the ecb have acted thought the financial crisis. >> the monetary mechanism i think has been extremely well managed by the european central bank. i don't think there's any serious thought anyone can make there. they built the monetary system, they operated an effective monetary policy, they responded to events quickly. and they've providedly equity as we've seen this year. >> so he thinks -- he's the man
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investigating the bank of england and he thinks the ecb has done well. so on that basis, have they or not? >> i think what they've done reason pli well, i think they were a hit behind the game if we all remember back in 1997. but i think even the bank sort of caught up. it was a bit late. >> apparently mervyn was the one who came up with the big swap scheme in october. how do you think the banks have done their record? >> if you look at the incredible real growth levels that we're going through, not enough. i think there's a complete failure to get it down to make a difference. >> there's the question of whether before the crisis it should have been more proactive and then there's the question of when in the crisis it was proactive enough. the latter point seems to be one where you can say they acted,
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they did things. but looking back now, what should have been done differently or what should be done differently now? >> our conversation earlier is that when you're anned old society, you try to leverage what little growth you have to make it looks as if it you're politically viable for your politicians. so the west had a pressure to leverage. and it would have taken incredible institution led by a very powerful individual to it stand up and say actually i think this policy is wrong. so you you can't dump the problem on the central banks. you've got to go back to the politicians that arctic it could you articulated processes. >> i suspect mervyn king wasn't independent in what gordon brown was up to. because even though they were hitting the cpi target, that was mainly because there was a lot of cheap imported goods. but you had a property boom, you had an asset price boom. and that was obvious for a lot of us to see. and you looked it at the money
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supply figures, you knew that a lot of the growth in the economy is really on steroids. it wasn't real. and if you you had had a really genuinely independent bank of england, they would have said enough is enough. but i expect the man down in the treasury would have trohrown hi hands up in horror. he never did want a second term, so there you go. >> we have to leave it there for now on this topic. ruth, thanks very much for coming in. first to china where policymakers and top academics are reportedly in heated debate about what to do with the country's capital account. tracey chang explains. >> that's right. a pboc backed newspaper says officials and scholars are figuring out if now is the best time for china to free it capital account. this essentially means china should look into lifting capital controls that stop the yuan from
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being fully convertible. those that are for it say the current market conditions namely volatility in the forex space as china's growth stabilizes makes accepting the yuan more feasible, but those against it say the question is not if it china should open its capital account, but how it should do it. back to you. >> david, comment there on what's happening in china or did you want to pick up on the earlier thought on central banks? >> i think if you look at the problem for the west, we need growth and you need real growth. and if you don't did that, you've got the elements of fracture in our society. and what you see right now is european system isn't driven with fundamental energy of democratic expansion and ongoing wealth. it's interesting watching the korean example you had earlier.
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they actually had the benefit of a high tide effect. the high tide moved them back through and now they have a growth filled which i. in europe, we don't have high tide. we're going the opposite way. so you have very definitive emergency action to create and control the crisis. >> so it's not just about saying no more austerity. it's also about saying that's fine, but even if you agree to growth, you can't snap your fingers and make that happen. >> it's bigger than that. you have to recognize is the tide with you you or against you. and the stories we're using for the emerging market countries from argentina to russia, they all had arising tide which dubbed them out of the problem. we is have a tide going the opposite direction for the european crisis, so you you need definitive action and the incrementalism is not going to work. >> okay. we'll come back to that. france building its case ahead of the eu summit.
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new prime minister said euro bonds are a strong idea. but it confident some kind of agreement can be reached. >> translator: we need close cooperation and i'm optimistic that we will accomplish that like we always used to in the past by the way. >> so is this a brewing story? stefane, are the french talking about a grand eurozone bond it that's already been struck down by germany or are they talking about a might be any eurozone bond that might be issued by the eib or european commission that could be used for infrastructure projects? >> for sure several options are on the table and the french government is ready to consider any of the following options. that being said, it's not
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something specific to the new socialist government. if you remember, two years ago, sarkozy was already supporting the euro bonds, but at the time angela merkel the german chan chancellor managed to convince him to drop the plan but the new finance minister wants to discuss the option. he's aware that it will be difficult for france to impose its view on the other european countries. to get some other agreement, at the believes they could find a compromise including boosting the capital of the ecb including the mobilization of unused structural funds and the creation on the tax and financial transactions.
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>> is there going to be any movement at all at the summit? >> well, i think what you will see is merkel will have to cave in on some of the voices from hole loond oig who gets quite a bit of support when it comes to growth as well from the iif. so, yes, a lot of pressure on merkel. she has to give something somewhere. and i also have to say she never really said, okay, no to euro bonds as such. she says let's get our economic houses in order first, let's get the basics right and then we can take the next step. so for her, the next step might be euro bond, might be another thing. however, she was always very adamant about trying to get the basics right first and then move on. apfarther from that, she does need the support from the spd which is leaning quite a bit towards holland and that means also she will have to careful will in to hollande to get more
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consensus within her own party. >> and we're seeing yields rise yet again. carolyn. >> yes, we did expect them to rise. but then again, the overall auction size was fairly small. it was 2.5 billion euros and it did sell off. that was wasn't a problem at all. the bid to cover 4 abo.3 for th three month. although i think it has come down a little from the previous auction. are a ohio oig said we don't have time to talk about the idea of euro bonds. what's more urgent is to talk about the stability of the financial system. he says could be reached in 24 hours versus years and years.
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basically what he's aiming at is for the e skrchlt b to step back it in and buy government bonds. but the ecb hasn't been buying government bonds for the last ten weeks. >> okay, carolyn, stefane, patricia, thank you. >> losses at spanish banks could reach 260 billion euros according to the international institute of finance. their estimate comes as goldman sachs cuts a price target on a raft of spanish lenders. carolyn, these figures are getting a lot of attention especially regarding the depth of losses at spain's banks. but in fact some people have said once you go beyond property losses, we're looking at something at least in the range of 200 to 300 billion euros. is that the talk you're hearing around policy circles? >> yeah, definitely. but i want to come back to the
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iif forecast. first is for property loans of 2600 billion euros. base case is losses of only 218 billion euros. but the researchers, they make the point about why the 260 billion euro figure is the more likely one. because they say when compared with the situation in ireland, unemployment and the economic contraction in spain is much bigger. on top of that, it says housing prices in spain haven't reached a bottom yet. so that's why we should expect an acceleration of the loss this year. always pointing out the banks provisions are insufficient for these heavy losses at this point. they would need state aid to the tune of around 60 billion euros. but this specifically concerns smaller banks, not so much the big banks. >> carolyn, thanks for the clarification. banks a mixed performance in spain. final thoughts here from david.
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>> what are some of the radical policies would be in your view. >> you need to consider why we have a debt problem, you need to grow to pay your debt or you need to restructure it. those are your two options. and you can't sit in the middle as we are with negative real growth hoping to go into one unit. you'll -- >> if you're a betting man, you've got to invest here. what is the -- >> i've said for a long time the euro break up. the greatest winner in this process has been germany by suppressing it foreign exchange rate and its ability to export and grow its economy and the question is to what extent are they prepared to pay maximum winnings into the system to
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perpetuate it and i don't think merkel's strong enough to follow that route. so you'll have a whole series of impasses. unfortunately. >> david, thank you so much for joining us on set this morning. chief executive officer at emerging asset management. and still to come, is technology reaching lofty levels? take a look at out cloud is changing the way companies do business.
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we had the biggest ever contraction or repayment of public at the time in april, mainly due to the transfer of post office assets into public coffers. that's it actually treated as a gain for public borrowing. you've transferred the liabilities of the pension scheme on to the government. european stocks are firm again. we've snapped a five day losing
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streak. up around two-thirds of a percent. we've pushed up bond yields in germany once again, 1.46%. still at pretty low levels. and in spain and sitly, yields are lower today getting town back towards that 6% mark for spain. >> industrials a little more comfortable risk in it market. morgan stanley reportedly cut revenue forecasts on the company just days before the ipo. the move is unusual during an investor road show and it came after facebook filed an amended prospectus warping its revenue growth could be hurt by years shift to go mobile devices. so a lot of focus on this element of the story. facebook shares down 11% on monday. and their ipo price was at $38 a share. shares in sales are meanwhile up 45% year to date.
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european customers have risen 32% since the beginning of the year. they will educate firms on how to become social enterprises and joining us is kevin garnett. you just in the last couple minutes have announced that you're going to add more than 750 jobs across europe. why are you winning in a region that is under so much stress? >> well, what we do is we're helping our customers grow the it top line business. so our customers are using sales force to increase their sales, the sales effectiveness and fesh city, we're building social networks which is bringing in prospects into their organizations. and so we're helping them succeed and grow their business. >> so is basically a company that uses the cloud to help customers and clients build social networking sites. one example between customers and employees, explain a little
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bit about this this model people may not fully understand and why it's been so successful. >> i think what we've been seeing is a social revolution out there. facebook has taught us, a billion years and the company didn't exist 5 years ago. one in 13 people in the world logon to facebook every day. so it's quite phenomenal. 50% of them also come if through the mobile devices from the ipad and iphone and android. so we're seeing the world move social, move mobile, and of course it's all based in the cloud. so what that has done, it's taught us that there's a better way to collaborate. this is really important for business because our customers, our prospects are out there discussing our brands. >> you you are to businesses what facebook is to consumers?
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>> absolutely. we are building internal social networks so their employees can collaborate more efficiently, but also so that their employees can collaborate with their customers, with their prospects, with their partners, their suppliers. and i think what facebook has taught us is that there's a more effective way of doing this fp when you think about it your brand, whether you like it or it not now, not just talking about facebook, but when you add the extra 200 million tweets going on, google plus and on and on, the bottom line is your brand, the company's brand, is being discussed whether you you like it or not. and this is a tremendous opportunity to -- >> vodaphone today lowered medium targets. it talked about regulation being a problem for their revenues. yet you've just signed them up as a client, right, and their business going one way, yours going the other. >> well, with vodaphone, we have
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signed them as a cleentd and they're making enroads. what they're trying to do is improve their top line, trying to be more agile, trying to build a social network whereby they can engage in customers more effectively so they can close business faster, they can stop term rates. what our customers are doing is when they reach out into the -- on the internet, they can find if a customer is disgruntled, if your brand is being discussed negatively. >> big data. and it's also meant a big valuation for your shares which are like a 90 times price to earnings ratio. do you worry about that vulnerability at all that you'll be able to keep up the growth going forward? >> the stock market will take care of itself. we focus on our customers being su successful with our technology. 50% of our revenues comes from customers expanding. so this is a good indication that they're having success.
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but what they're trying to do now is to be able to reach out on to -- into the social networks and find out what their customers think of them. find out whether they've got problems. if they have got problems, will is a great opportunity to bring that data into your systems and -- >> got to let you go. between to see good to see you. you'll have to come back and talk about how to get growth in europe. ♪ ♪ i can do anything ♪ i can do anything today ♪ i can go anywhere ♪ i can go anywhere today ♪ la la la la la la la [ male announcer ] dow solutions help millions of people by helping to make gluten free bread that doesn't taste gluten free.
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headlines today, equity markets in europe are in the green following asia and wall street hire and leaders in europe battle it out. >> and warns without action, the region's troubles derailing the global economy. >> iif warns losses for the lend are's lenders could amount to 260 billion euros. >> and jpmorgan under the micro skop as congress gets set to grill regulators today on the bank's trading losses.
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>> we'll bring you footage of a meeting between lagarde and osbourne. we're waiting for their appearances and potentially any comments as they head into key meetings in brussels. in the meantime, let's take a quick look at how u.s. markets are positioned ahead of the open. we have green and red going on behind me. dow would open just a little lower. nasdaq roughly flat. s&p is the only one in the green hanging on to some of the losses. global 300 up about 0.3%.
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>> some of the journalists looking awfully young, which means i must be getting rather old. we'll bring you those comments in a few moments. right now, this is what we had. we snooped a five day losing streak yesterday. ibex up 0.4% as well. as far as some stocks focused in on today, a number particularly out of europe. vodaphone lowering the medium term targets. talking about slowing growth for consumers of course in the south of europe and regulation all impacting. nevertheless the stockstill up 1.8%. spencer had first profit decline it for three years today. never or less the stock not doing it too badly. up 0.4%. was worse than expected.
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underlying picture actually still holding up. xstrata say chinese demand likely to improve it in the second half. pledge to lift output by some 60% over three years. some rivals have put the breaks on expansion and on the chip design ahead of the shrugging off concerns, they have designed chips for apple and amongst others. we've seen core bond yield higher, as well. gilt yields have come down slightly. annual rate of cpi down to 3%. yields in italy are lower and getting back toward the 6% mark for spain, as well. t-bill yields at an auction this morning also go higher again. and ten year bund yields off those record lows and continue
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to rise this morning. as you might expect, euro-dollar slightly firmer. dollar kren just nudged up. aussie dollar trying to move away from six month lows. >> let's take a quick look at what's happening today on the agenda here in the u.s. atlanta fed president dennis lockhart is in hong kong to speak about monetary policy at about 6:15 a.m. eastern time. at 7:45, wells fargo. existing home sales for april expected to rise nearly 3% and we'll have a chat about the housing market coming up in just a little bit, as well. turning to the imf, saying dangers to the uk economy are large and mainly from the escalation of the euro crisis. also saying that the uk recovery will gain pace, but there is risk of lasting damage from a
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persistently large output gap. saying they should ease policy further through a cut in interest rates or more quantitative easing. the government has scope to rejig austerity, do more wage cuts to fund infrastructure projects and that the government should ease its fiscal consolidation measures if recovery fails to take off. >> osbourne welcomes the imf support, but i'm not so sure he'll ever say he wants to reduce -- -- well, reduce the deficit cutting plan. there's one plan in the uk and that's it. >> this is the second set of headlines out this morning. you have to look at how the rhetoric is shifting. >> and all the pressure is on angela merkel. does she change her tune or not. that is tomorrow night, it is a
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dinner. plenty ahead of that. meanwhile greek banks set to receive much delayed recapitalization funding. by by friday, the country's top four banks will receive 18 billion euros as part of the original bailout glanted edgra eu and imf. says greeks banks are being propped up by 100 billion euros in emergency liquidity assistance. central bank secretly backing the measure. >> julia is in athens with more on the story. now, julia, to what extent are greek politicians commenting on the report about the secret assistance from the european central bank? >> i just lost you there, but what i think you were saying is to what extent are we seeing any kind of commentses on this. we're not other than the confirmation nat bacon fi
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confirmation that the banks will be given the 18 billion. they can't get access to ecb funding. so whether will the banks are insole vent, they're not deemed solvent enough to use ecb liquidity. that's not new and that's one of the things that we just need to wait it for. we hope these banks get that money finally. another part of the plan is the privatization program. and that's why i'm here. but the talk is on hold until after the election. but it's the largest shipping industry in the world. it represents about 16% of global capacity. arguably it shouldn't take much pr and china invested $4.2 billion in the industry. they run one of the ports known as pier 2. also investing in a third.
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volumes have increased, so arguably they're doing something right. but the shipping industry really has struggled. some data show the number of vessels and the number of companies here has actually increased in 2011 from 2010 levels. there are a number of factors potentially at play here. greek shippers make the point it that they understand the cyclicality it of the business and they put money aside in the better times. the question is whether that comes back to the consumers here. >> julia, thanks. we'd like to shift and give you live sound from christine lagarde speaking in london. >> the authorities also well understand the challenges and opportunities of policy choices in a world where what happens in one country affects all others. it is therefore welcome that the uk authorities policy approach has reinforced credibility at a
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time of intensified global uncertainty it. chlt government is implementing strong fiscal consolidation to reduce fiscal risks. the bank of endemand has been nimble in easing monetary policy to support growth. the policy mix, and just for one second you have to appreciate that we do not examine orvalidi policies and policy mix to us which is really one of the reasons why the policy mix in our view has been good. i just want to get back to my text because that has been drafted very carefully. so the bank of england has been nimble in easing monetary policy
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to support growth and the policy mix helps rebalance the economy toward external demand. unfortunately, the economic recovery in the uk has not yet taken hold and uncertainties abound. the stresses in the euro area affect the ufk through many channels. growth is it too slow and you said unemployment too high. policies to bolster demand before low growth becomes entrenched are needed. i'm encouraged that prime minister cameron emphasized the need to use the government's balance sheet to help the economy grow. i'm also encouraged by the outcome of the g-8 leaders summit last week and resolve to promote growth and jobs while supporting sound and sustainable fiscal consolidation policies. hence my position a couple weeks ago thin zurich that growth vers
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austerity is a stale and false debate. >> christine lagarde -- we'll continue to bring you her comments ands george osbourne. but meanwhile, we want to bring into the conversation john heness. we're looking at a shift in rhetoric and that rhetoric seems to be from austerity to growth. what is the implication of that? >> it's probably where we should have been in the beginning. if you go back, what's pretty amazing about what we see is how reactionary everybody is. so we heard about austerity for so long and you had so many very smart people saying what austerity does actually causes economic decline. so when you're in the middle of an actual economic decline and you add on top of that spending cuts
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nowe elections it that have occurred all across europe and a major change in the way that maybe not the way the public looks at it, but at least the way that the politicians are starting to look at it, we're now seeing yees oig may leagree we have to stop that, we have to move away from austerity and we have to start to look at some way to spur growth. i think the issue we'll have is would he still have major political issues, so we have greece -- i'm sorry, we have germany sitting there saying, wait a second, we like austerity, we want you to put your fiscal house in order before we start to give you anymore money. but, yeah, basically everybody else now in the eurozone saying that's not good enough, we need to start spurring growth now and to do that, we have to get rid of these austerity measures. so i think what we're going to have is a lot of rhetoric. i'm not sure how much change we'll have very quickly. i think we have a lot of danger
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that greece may leave the eurozone and i think if it that happens, there's a lot of dangers to not just the european economies to continue their massive declines, but also what happens in the u.s. >> the thing is i suppose fiscal stimulus to spur an economy just isn't a viable plan. they have to actually come up with some real supply side reforms which is a much bigger challenge. >> i couldn't agree more. the challenges that europe faces are huge. and they're huge because what you have is a continent and obviously different nations are worse off than others. they do have to get their deficits under control and their debt under control. but you can't do that very quickly because if you you do, you get what we've seen. it's just big economic decline. so you need to do it in tens. and the first step is you have to try to find a way to bring
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jobs back it will continue to hold back growth and also causing major social issues that are going on. so you need to do it in steps, you need to start to give people hope that things can get better and then as time goes on and you start to see growth, you can start to reduce deficits and get the continent back in shape. i just think with europe that will take a very long time and i think they'll see a lot of pain for the next several years. >> we want to bring you the headlines. fitch has downgraded japan to a plus with an outlook negative. it says that it reflects high and rising public debt ratios. japan remains among the highest in the developed world. they are downgrading japan to a plus from aa again with outlook negative. they say that japan's gross general government debt is projected to hit about 240% of
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gdp by the end of the year. they say japan can still fund itself through low nominal yields thanks to private sector savings. a lot of this reflects what we know about japan, but more pressure on the government to potentially respond and we'll bring you more of those headlines. >> still to come, law makers get set as to grill the sec on jpmorgan's trading losses. [ mechanical humming ] [ male announcer ] we began with the rx. ♪ then we turned the page, creating the rx hybrid. ♪ now we've turned the page again with the all-new rx f sport.
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>> the oecd slashing its forecast and warning the crisis could derail the global recovery. >> losses at spanish banks should reach 260 billion euros. >> and congress grills regulators over jpmorgan's trading losses. >> dow would open lower by 5, nasdaq by 3, s&p 500 implied to
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open just barely higher. we have fitch downgrading japan, lagarde making comments about growth. we have germany saying it will set yields at sooe rop. >> they're effectively at zero anyway. >> futures pointing to a slightly negative stock because european stocks are up. so we snapped a five day losing streak yesterday. up three quarters of a percent for the ftse 100. bond yields, we're moving around a bit on that. >> a quick look at how they're doing. seeing a bit more risk in the market today as spain and italy yields are falling. spain at 6.13, italy at about 5.8%. meanwhile in france, we're looking at 2.8%. german 1.47%. pretty considerable move from the lows. >> euro-dollar move slightly
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higher. 1.2649. euro sterling slightly weaker. inflation came in a little bit weaker than expected. annual rate 3%. copper prices are up. they will boost production. and coming up, we'll take a quick look at capitol hill. republicans and democrats ratcheting up rhetoric. will congress be able to bridge the divide or move closer to that point. we'll debate that coming up.
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the first technology of its kind... mom and dad, i have great news. is now providing answers families need. siemens. answers. christine lagarde saying the eurozone must do more on fiscal liability sharing. the sort of thing germany is desperately trying to avoid.
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>> fitch has downgraded japan from aaa to a plus. they've cited concerns gross public debt will reach 240. and we have the finance minister saying japan will make efforts to achieve social reforms in response. i'm not sure how that will play. take a look at what's happening to prices of japanese government debt. they reached fresh lows. just astonishingly low. japan of course trying to get back to a point where it's running inflation consistently and not deflation. but we'll check in on how those are reacting to the downgrade. the finance minister has no comment on the fitch move and i believe his comments were
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actually just that they were going to continue fiscal reform. not necessarily respond directly to the downgrade. summer doesn't officially begin for another month, but the heat is already rising in washington. republicans want more austerity, democrats want more spending and tax hikes on the wealthy to raise revenue. >> the whole premises is to preempt austerity by getting our borrowing under control, tax reform and preventing medicare and social security from going bankrupt. that preempts austerity. the president, his budget, the fact the senate hasn't done a budget in three years puts us on a path toward european like austerity. >> if we're going to compromise and give the american people an answer instead of a political speech our sound bite, we have to get back to the same basic
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bowles-simpson principles. >> john, focusing on the u.s. for a moment, the fiscal cliff potentially being a risk to global growth, do you expect congress to reach some sort of compromise to forestall these expirations that would otherwise happen at the end of the year? >> i don't see much hope of something happening before the elections occur, but i think it will be austerity by inaction. we'll have mastiff tax increases, cuts to the medicare and taker and we'll have a debt ceiling debate that will come to fruition. so if we don't do anything,
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we're just going to have austerity. and that's a really terrible thing. my son asked me once when he was studying about the titanic if about they knew about the icebergs, why didn't they go around them. and that's what i see now. i don't want so-to-have the same question from my son coming up when he says we saw that fiscal cliff coming, why did we walk over it that cliff. that's really where we're headed. and the real i think shame in all this is that there is an answer. and you can hear all the political rhetoric on both sides of the aisle, but we have the simpson-bowles plan that's out there and that should be a starting point and it should have been a starting point last year for negotiations. but what we're it talking about here is doing a massive restructuring in the juunited states on the entitlement programs, on the balance sheet, but it's something that we have. it's a plan that we have that's in front of us that we can negotiate and both sides should be able to come together, but we're headed down towards an election, nothing will happen until november. the hope is that we can have a
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plan in place so that something miraculous can happen and our political leaders could get together and put us on a path where -- >> i don't know, just on that, obviously nothing will happen until you're the election, but if you have a new president elected and he doesn't take office until january, does that complicate things? >> hugely. and that's why there's a huge risk that we do have austerity by inaction as opposed to a deal that gets in the lame duck congress. but the hope has to be that at some point our politicians will come together for what's best for the country. i know i sound naive saying that that could be a glimmer of hope. but we have to hope. and we have to hope that as we continue to push and have reasonable people pushing and saying we don't want to fall off that fiscal cliff, it that we can get our politicians together
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to actually lead. and again, there is a path to get this done, there's a path that it gets it done with not -- there will be pain, but at least the pain could be limited. and we could have a short term, medium term and long term plan that puts the united states in position to grow as opposed to becoming europe because we have austerity by inaction. >> john, good to see you. thanks for joining us. still to come, the latest from jpmorgan's trading loss. the state of the u.s. housing market. futures a little bit mixed this morning.
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welcome to "worldwide exchange." if you're just joining us, these are the headlines from around the world. equity markets in europe firmly in the green as leaders battle it out over crisis fighting measures. >> and the bank industry iif has warn that had loss it is for the country's lenders could amount to 260 billion euros. >> and u.s. lawmakers putting jpmorgan under the microscope as congress gets set to grill regulators today on the bank's trading losses. >> and fitch downgrades japan's sovereign rating by one notch citing low progress in the consolidation efforts.
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u.s. futures all in the red. dow would open lower -- actually, if you take fair value into account, they might open a little higher. dow up a few points, nasdaq roughly flat, s&p would just barely be higher i believe. take a look at what's been happening in europe overnight. globe 300 up about 0.3%. ftse 100 up 0.9%. xetra dax 0.8% fp ross, some
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rebound you'd hope would be expected at this point. >> loss of spanish banks could reach 260 billion euros according to the international institute of finance. the estimate comes as goldman sachss has cut the price target on a raft of spanish lenders. carolyn is with us in madrid. we've been looking at greek banks. how far away are we from getting to the bottom of exactly the amount of losses and provisions we need on spanish banks? >> analysts tell me we're still far away from finding out how big the losses are. an estimate yesterday, worst case could be 260 billion euros.
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again, this is the worst case scenario. but the iif says it's likely because unemployment keeps rising and housing provides haven't bottomed yet and the bank's provisions for the losses are insufficient. and this mainly concernses smaller banks because the bigger banks have better ability to raise capital. very quickly just want to mention the t-bill sales, the demand was pretty strong, but the costs continue to rise. back to you. >> thanks very much. comments out from a major upin greece this morning said they did ask the bank of greece for direct refinancing and the group is facing major crisis.
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all the major greek banks of course are now -- only surveying because the ecb is giving them funds. >> so you can imagine the concern that they have about funding access to either the central bank of degrees of gree. >> chris it teen are a guard saying we need much more fiscal tis c sharing. >> one of the few still talking about theusterityausterity. still to come, mortgage rates at record lows in the u.s. and home prices may have yet to bottom out, but is that enough to spur americans to put down 20% for a down payment? we'll get a fresh snapshot on the u.s. housing market next. optionsxpress, where you can trade your favorite products,
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earlier in the show, our guest host said he thinks gold could reach $2500 an ounce. it's currently hovering around the $1600 mark. one you viewer wrote into say that he's been calling for that since gold breached $1800. and i think it's peaked unless
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we see something else major happen. in fairness, our guest were implying that something further would happen. but another you viewer says, sure, maybe in 2025. if you want to join in the conversation, tweet us or e-mail us. copper firmer today. biggest miner saying they expect chinese demand for copper to improve in the second half. some putting the brakes on. gold a little firmer this morning. pot surprise 1574. more comments out from chinese state newspaper which talk, now talking about we might get more
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stimulus plans in china. that had lifted brent up. now slightly down. we were up 1.09. other factor in play talks ongoing with iran. there have been early snaps in the last half hour suggesting talks have started progressing fairly well. but saudi arabia, comments coming out they've been pretty happen with $100 a barrel. they wouldn't at all change the budgets. it if you're just joining us, you're watching worldwide exchange and these are your headlines. eocd slashing it eurozone growth forecast. the iif meanwhile expects losses to reach 260 billion euros. and congress gets set to grill regulators over jpmorgan trading
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losses. angela merkel says she will continue to press for who are banking regulation. more importantly, she's saying fiscal pact is the first small step toward a fiscal union. >>. >> who have l. have the authority, who will have the impetus. so many different questions. >> you need a european banking authority. >> she's saying this needs to be or is going to be a closer
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federation of europe or there is not. so people in europe don't want to go that way, it won't. >> plenty more online about all of this, and an article on whether you should bet on the success the eurozone is intact. that stroers on >> u.s. investors will get the latest report card on the housing market as april home sales will be out at 10:00 a.m. forecast expect to rise about 3%. joining us is sherry crist. you buy and sell a lot of homes. do you think the market there has bottomed? >> well, it's difficult to say whether it's would theed or not, but there certainly is a lot of optimism. we've had nine straight months of month over month increase. we have had the strongest first
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quarter since 2005. so those are good indicators of a bottoming out of the market. and we're cautiously optimistic. >> talk about cancellations. because we've seen pending home sales or contracts signed seem to be doing reasonably well, but the actual report, numbers don't quite measure up because a lot of people end up cans liceling. why are is that happening? >> we believe cancellations are lower than some of the stated numbers. a number of things happen of course. so in short sales that don't close, in regular sales where buyers can't get the gfinancing that they thought they were going to get there, are cancellations. but i don't think that that's as big a problem as some people might think. >> we've got all-time low mortgage rates.
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you've also got very cheap stock in terms of prices. is that attempting any new buyers in, can they get the mortgage finance to take advantage? >> when we look at the sales itself and break it down into different categories, the distressed market, distressed sales a year ago accounted for 40% of all sales. if in february, 34%, march 29%, that speaks to the beginnings of a more balanced market and regular booifers coming in and being able to qualify for mortgages. when we look at the first time home buyers market, that is still in the low 30s. when you consider the first time home buyers market, the 18 to 34
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age group accounts for a third of the population. >> what kind of deposit to do you need to put down to get a decent deal? >> you you can put down 5%, 10% to get a decent deal if you're going to occupy the home. but there are still a lot of cash buyer, investment buyerses and also the buyers of luxury real estate are paying cash. >> and are you seeing the investment buyer continue to be a real source of commademand he the housing market? >> we do. and if we look back at numbers, in 2010, 17% of all sales were investment buyers. in 2011, that was 27%. so of course that's something we're watching closely in 2012.
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but as i talk to our better homes and gardens real estate brokers across the country, what they're seeing is a more balanced type of sale which means regular people starting t. and that speaks to the beginnings of a more stabilized real estate market. >> okay, sherry, thanks so much. >> many people think it has bottomed, so beel hawe'll have . reuters says the move by its internet analyst is unusual during an investor road show, but the problem used to be that analysts were too go-go about the offering. so the fact this comes out after
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facebook amended its file willing, what's wrong with that? >> the pressure has been on it them to be more realistic. private equity firm reported a $1.6 billion stake in formula one to three investors including black rock. this is according to sources close to the deal. we have a an expected ipo of formula one. should value the entire enterprise at around $9 billion. >> black rock got in there and the norwegian sovereign fund is also we believe part of that deal, as well. >> uncorrelated trade, maybe that's what it is. >> vodaphone cut its targets after slowing growth. it that lead to a drop in net profit it for the period, but we saw this morning shares up a little bit despite -- >> do you remember when it used to be the growth story and now they're just a cash generation
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for dividends. plus south korea's president says greece needs to accept the terms of the international bailout. he thinks the terms greece is facing are very reasonable. >> he of course having come through -- asia's own financial crisis back it in the late '90s. still to come, we'll be speaking to bank analyst on the jpmorgan loss. he says the stock is a buy. in here, great food demands a great presentation. so at&t showed corporate caterers how to better collaborate by using a mobile solution, in a whole new way. using real-time photo sharing abilities,
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we've snapped some losses today following gains in asiand at u.s. there hasn't been too much done yet to spur a stronger mood on wall street. opening about flat on the day this morning. >> so if you have just tuned in, plenty of conversation already today on cnbc around the globe. this is what some experts have been telling us about their trade ideas. >> it really need as huge statement from the bank of japan in order to turn around. >> so you wouldn't sell yen now? >> wouldn't be selling yen now. >> a three week rally to come before the next big move. because nothing moves in a
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straight line. >> i think the physical demand is booming. we see the power shift of the supply delivery into the east which means the west will have lower stops. >> gold has got everybody going this morning, right? >> because it has been such an interesting story. people describe it as a safe haven play or way to kind ofky diversify and yet it's gotten hammered over the last couple weeks. >> you can't upset the gold bugs. you say, look, if you told me to go at $1900 and now it's $1500, you're still telling me it's good. >> the senate banking committee holds a hearing at 10:00 a.m., expected it to question sec on jpmorgan's trading losses. obama administration official says regulators will use the real life example of jpmorgan to
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help will shape the volcker rule. joining us on the line to cover this and more is richard bove. so this morning, you you put out a note last week after the jpmorgans losses came to light saying you stand by them, you think they have a strong management team and your price target of $58. are you standing by all that? >> well, we've lowered the price target because the market will take the multiple down on the stock simply because of a lack of the same degree of conviction about the company. however, this is clearly close to being the best bank in the united states. it's one of the best managements in the industry. you know, you have to remember that there are only five companies in the united states that made more money than jpmorgan last year. and also if the numbers that i look at are correct, the pretax income of jpmorgan last year was greater than the pretax income of any other bank in the world. so to assume that because they made one trading error that this
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company, which is staggeringly successful and staggeringly profitable is now in trouble is a farce. the company will increase its dividends 20% this year and its earnings will be higher than they were last year. and they'll be up another 15% to 20% next year. so it seems to me that we've overdone the selling by more than a little bit. >> they have canceled their share buy back program. we couldndon't know when that w reintroduced, but that must change your measurements. >> as i say, i reduced the price target because i think the stock now will probably only sell at 75% of stated book value. and the stock buy back elimination which we predicted last week would happen is certainly part of that. but remember the fact that the company is not buying back stock does not hurt the ability of the company to make money. it enhances the ability of the
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company to make money. stock buy back is a way to manipulate earnings per share. it is not a way to get more profits from a business that you're operating. >> dick, very briefly, the president now saying bank too big, they need more regulation. i assume it's predictable politicians would get on the train. is there tohere follow-through? >> of course they'll have follow-through even though what they're saying is entirely absurd. it owes $15.5 trillion and it only uses 7 american banks and 14 foreign banks to raise the money. if it they want to slihrink the size, are they going to a credit union in phoenix and say we got to raise $17 trillion to repay -- roll over the existing debt and to put on the new debt? you can help us out? i mean, the united states needs big banks. >> we got to let you go. thank you for joining us. we'll have more tomorrow. "squawk box" is next.
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not getting any better for facebook. you saw what happened on 23ri. and yesterday's action, you could have predicted. a less than stellar introduction and the stock gets hammered in one of the biggest screw ups in ipo history. the u.s. and japan are leading a global economic recovery, but the oecd warn it is could be blown off course if the eurozone doesn't shape up. plus, new rankings of the world's top brands. "squawk box" should be way up there. if you want to know which name tops the list, here's a hint. it's the power of the i.


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