tv Worldwide Exchange CNBC October 17, 2012 4:00am-6:01am EDT
hello, this is today's edition of "worldwide exchange." i'm ross westgate. >> and i'm kelly evans. these are your headlines from around the world. >> it was fight night in new york. president obama and mitt romney much more confrontational in their second debate, tussling over libya, taxes and the deficit. spanish equities bucked the trend. >> shake-up at citi. the company is still being mum about the specific details around his departure.
>> and a surprise rate cut from the bank of thailand is hitting home in yet another emerging economy. er you're watching "worldwide exchange," bringing you business news from around the globe. >> good morning to you. so much to get to in today's program. kelly is a little bleary eyed this morning. >> it's because i watched the debate this morning. >> you just happened to wake up at the exact moment that debate started? >> i thought i'll just watch it for two or three minutes to get an idea of what's g 90 minutes later. >> and your initial thoughts? >> i saw the first one because i was in the u.s. for it. it did come off as dour. this one was livelier. but i don't know whether there was necessarily -- the narrative is that president obama did
better than last time around. whether it was as much of a game changer i think is still up for debate. in any case, president obama and mitt romney have one more debate next week. they may have left it all out on the mat last week. they were much more confrontation confrontational, repeatedly bouncing off their schotools an over the moderator. the president accused romney of selling a "sketchy deal" to fix the economy, while romney says the middle class has been crushed under obama. >> if the unemployment rate was 7.8% when he took office, it's 7.8% now. but if you calculated that unemployment rate, taking back the people who dropped out of the work force, it would be 10.7%. >> governor romney says he's got a five-point plan. governor romney doesn't have a five-point plan. he has a one-point plan. and that plan is to make sure that folks at the top play by a different set of rules. >> both men will be back on the
campaign trail. romney will visit the battleground state of virginia. the third and final presidential debate is coming up on monday in boca raton, florida. >> that's your battleground, virginia. >> the number of campaign ads on the airwaves, it gets to the point where you don't want to watch tv at all. in iowa, they're shaving minutes off a lot of their tv programs to make room for the campaign ads. it's reaching a fever pitch. whether there are any undecided voters is up for debate. >> how the results will affect the polls at 11:30 a.m., about an hour and a half from now. first we'll head to singapore. >> we'll break uk unemployment data, that's in 25 minutes. we'll also discuss the latest
from the latest meeting. >> the euros hit a one-month after after moody's said it would not downgrade the credit rating. talks between greek officials and the international lenders have been suspended. greece claims it will run out of money next month. outcries from greek coalition partners. a general strike in greece is set to take place tomorrow. spanish yields have fallen to their lowest since early april. this morning, the ten-year down to 10.57. joining us is bill blaine, been talking for a couple weeks about how the big event was going to
be moody's. we thought they'd go sub investment grade. the fact that they haven't is clearly causing a reaction. what's going on now? >> it's been very interesting to see what this has done. it's changed the perception of so many international investors who have to follow indexes. spain remaining investment grade. only just, but still avoiding junk. >> still a negative outlook. >> but the fact that it is there, that's caused many of the accounts, the big investors who are sitting on the side saying okay, we know that spain has rallied. we've missed that rally. we're not going to get involved because we fundamentally doubt spain, but now this affirmation coming in means they have all had to go oh dear, capitulation, catch-up time. >> are they choosing to, or do they have to? >> if they want to match the indices they benchmark themselves, which still contains spanish debt, many of them are expected to go in.
on the other side, though. we know that the spanish market has changedmassively. only 20%, maybe slightly more, of spanish bonds are now held internationally. most of the market is repatriated to spain. it's not a fundamental belief that spain is going to be fixed. >> an official bond buying as well. all of that is presumably good risk for appetite generally. bad news for bundes. >> what we've seen the last three months, an increasing strengthening of the market expectation that's going to happen in the face of doubts. now, many investors, many hedge funds are staying out of the market, waiting for the collapse and they're getting more and more worried every day because it's not happening. >> so what happens now? you look at these yields, for the spanish government, it's
looking increasingly comfortable. >> well, on terms of -- >> comfortable is not an expression to be using. >> is 5.5% that far from a reasonable place for spanish debt? >> we're right at the levels now where if spain can maintain 5.5% and lower there is a chance that they'll actually start to see some improvement in their budget numbers. they get to that stage where they're just getting interest rates low enough where they can start to put together a very small budget surplus. as that rate comes down, it becomes more and more sustainable. on the other hand, all it needs is a very slight knock for rates to go above 5.8, i think it is. and they're back in the danger zone. >> what have we heard people say after the plan was outlined, most people said okay, we're going to see the market force spain's hand here. we're not seeing the market
force spain's hand. if it's not happening now, will it ever? >> cds down to a 15-month low. >> let's just think this through. bailout, the expected ont bailout is the thing that's persuading investors. it's the thing that's persuaded moody's this morning. if it doesn't happen, that perception, of course, will change, and at that point, the spanish will then turn the game around again by accepting it. it may be -- there was a very interesting article in bloomberg yesterday that just made the point and bold headlines. >> i don't think i know who you're referring to. >> i have no idea. >> i've never been there in my life. this article from an alternative news wire suggested that the spanish government could well play for worse market conditions so they can get easier bailout terms. now, that sounds counterintuitive, but that is the way you play poker. >> it could be a game theory issue. it's interesting that the talking about these programs has
caused a significant problem. >> all you need is the possibility of rescue to assume that you're going to get rescued. also have to look at all the other things that are going on, like banking union. everyone thinks oh this is so important. we have to have banking union. to me, the banking collapses have already happened. they are not going to be bailed out. so what we're talking about is future bailouts for banks. so that fundamentally doesn't change much, except create further debt mutualization potential. >> which is why bottom line the pressure is on german bundes at this point. >> when we talk about germany, we're talking about a whole series of things. when we get this by the market kind of mood that we're seeing, then everyone comes out the safe asset. so that partly explains it. but we're also seeing a growing realization across the market. the germans say we don't want to accept any debt mutualization.
well, they're already up to their necks in it. we take a look at these famous balances of payments problems in europe, the target to, i think that's gone from 200 a year ago or 18 months ago to something like a billion against germany. then there's all the money they've invested in the bailout programs. then there's all the money they've earmarked for bailouts. it is getting to get noticed. we saw one of the swiss ratings agencies actually downgrade germany from triple-a. i can't even remember their name. >> but it happened, nonetheless. >> bill blain, thanks for stopping by this morning. if you want to respond to anything you've heard on the program, you can tweet u us @cnbcwex. just over an hour and ten minutes into trade here in europe and we're pretty even
stephens so far. the ftse 100 just up a point. the gains just talking about it in spain, the ibex, up, as you can see, 1%. italian at the lowest since march. and the latest unemployment state. as far as euro dollar is concerned, still above 1.21. aussie/dollar, back up to 1.03. sterling/dollar also getting up
high as well. so it's certainly some risk on for the euro. li sixuan has more for us. hi, sixuan. >> thank you. after a day of trade, the shanghai composite eked out minor gains. gold minors shined. we saw weakness across in media stocks. in hong kong, research majors helped the hang seng rise to a seven-month high. the nikkei ended higher by another strong 1.2%. financials led the game as goldman sachs raised earnings expeckations. autos and minors also
outperformed. south korea's kospi closed higher, helped by technology shares and blue chips ahead of next week's qe-3 earnings. in australia, bhp gained 1.2%. other minors also rallied. the asx 200 ended at a 15-month high. hcl technology shares hit a more than 12-year high, following up beat earnings helped by large contract wins. ross, back to you. in today's sign of the apocalypse, a new company called fame daddy would offer top mothers celebrity surrogate fathers. so called sperm of celebrity actors, athletes and politicians will be available to purchase
for 15,000 pounds. there apparently is a market in everything. i'm more interested if you think this is a good idea. you can tweet us and reach us individually. ross? >> yes. just a big sigh on that one. coming up next, we'll discuss the guest who says they were thrown the mother of all hospital passes.
some other corporate stories surrounding banks. the bank says it will have paid around 2.5 billion pounds to participate in the insurance scheme which capped losses on its most toxic assets. rbs paid around 1.5 billion pounds for liquidity support. bankers could be debarred. the british bankers association is also sketching out plans for a standard qualification, which would be needed to work in the city. the proposals would mirror
similar standards set for doctors and accountants. shares in citigroup closed up 1.6% after pandit unexpectedly resigned yesterday. reports suggested there were tensions between the former ceo and current chairman michael o'neill over pay and strategy that led the 55-year-old to quit. citigroup stock has lost 10%, but as the former ceo all to blame for the poor performance? pandit was, in fact, handed the mother of all hospital passes when he took over the helm at the end of 2007, and stuart kirk, head of the lex column, joins us. first you have to explain to me, at least, what a hospital pass is. what do you mean by that? >> that's being the thrown the ball. >> it's a rugby term? >> it is. >> this shows my lack of knowledge about rugby. >> it also shows he took a pile
of rubbish. >> it was in free fall when he became the ceo and kept on falling to the bottom. >> city has trailed competitors over the period during the recovery where he can't necessarily blame where he inherited. or can he? >> also underperformed a lot in the rebound as well, and i don't think it's really his fault. i don't think anybody else could have done any better. i think he did the sensible thing as well. i've met him lots of times. i think he's one of the good guys, to be honest. i think he's fairly humble, pragmatic and was given a really, really tough job. >> it sounds like michael o'neill coming on to the board with a history of interviewing for the b of a job where he wanted to shrink the bank, break it up. maybe citigroup viewed it as a similar strategy. do you think that has something to do with the tension that ultimately led to him leaving? >> but then you've got this strange conference call last
night where the new ceo and chairman said it's business as usual, which begs the question, why did you get rid of the guy, if indeed that's what happened? vickrum suggested to us that perhaps like an original elder just decided to go off and walk into the desert. >> it just doesn't wash. because if that was the case, you just don't do it on the day after. >> if the board had been talking about this for a long time, which was suggested in some of these articles, to do it the day after the announce seems peculiar. >> the day after a earnings release that seemed to cheer the market. >> although the other interesting thing, share price move-wise is that when vickrum announced he was leaving, the share price didn't really rally, which is probably not what the board wanted to see. >> but on the other hand, i think there was a knee jerk selloff. does that actually confer basically a positive judgment in terms of investors' point of view on the whole thing?
>> i think investors expect very little more from city than that. i mean, vickrum has been very consistent in his strategy for the group for the last two and a half years. and it's not a bad strategy. it's a strategy copied by hsbc, and hsbc's share prices have been outperforming citi. >> when do you think we'll actually find out what really happened? are we really any closer to finding out? >> i don't think we are. i guess it's water under the bridge now. now investors need to decide whether citi is more of a buy today than it was two days ago, and i think new ceo doesn't necessarily make it so. >> where does this leave the investment banking unit? >> well, i think i'd be a little bit vulnerable if i was in investment banking, much like if i was an investment banker at
barclays. i don't think investment banking is in the new ceo's dna necessarily and i think there's a worldwide push to try and make banks like citi and like barclays more friendly, fuzzy, consumer-friendly, politically friendly and less master of the universe like. >> it certainly seemed as though the fed's decision was part of the reason why the board was pretty unhappy. in terms of strategic moves going forward is that one o'of the key ones? >> whether you pay a dividend or not doesn't change the valuation of a company one bit. i think the whole idea whether a bank can increase its pay outratio five years after a financial crisis is a little bit silly. >> you don't think that makes the bank more attractive to investors? >> no, not at all. otherwise you would say that vickrum was fired because he didn't lower the capitalization by the company. you'd never say that. i think the dividend is a sideshow.
what's important is can he make the investment bank perform better. citi has fallen in a lot of key areas. the other big question is can they make it work internationally. but costs are high. do they want to become hsbc-like or not? >> stuart kirk is head of the lex column. >> in some wayings, he's got less room to fail. good to see you. thanks for joining us. americans may be ready to shop this season, but not until they drop. consumers plan to spend an average of $749, up just 1.2% from last year. it would be the smallest increase since the 2008 to 2009 period, which followed the financial crisis. and best buy is getting into the crowded tablet market. it will start selling its own
device called the insignia flex on november 11th. it runs on google's android software, is about the size of the kindle fire and the mini ipad, which apple is rumored to unveil next week. >> it should be bendy. >> do you think that's going to be the secret sauce? a bendable tablet? >> kind of like paper. >> wouldn't it be interesting if we came full circle and what we came out in five years time was basically a digital newspaper. >> can you make a newspaper digital? >> that's effectively what's happening. >> fast retailing expecting to post record sales this year. its founder likes to say the best retailers are the ones that thrive. >> a little star power every now and then doesn't hurt either.
>> reporter: advantage, djokovic. it expects to sell five times more than it expects next year, and most of it overseas. the u.s. should push into the black in two years. >> another key market for you is china. you had to close 60 stores because of the protests. in the last four weeks, how is all your stores in china compared to last year? >> translator: they are a little weaker, but it's starting to recover. i can't give you an exact figure, but it's not as bad as people think and we will recover in one or two months. we will continue to open as many stores as possible in china. >> reporter: it's a bit ironic because 70% of your clothes are actually made in china. but what about diversification? why aren't you in india yet?
>> translator: we are thinking about it. we need a partner. unfortunately, in india, if we were to bring clothes made in china, the terrorists would be very high. we need to manufacture an india or a neighboring country and that will take time. >> reporter: is this recession going to take longer than the last recession you experienced? >> translator: in retail, the companies that really grew did well during the recession, so the recessions are opportunities because people become much more selective about stores and brands. >> reporter: they sell basic clothes, a big contrast to rivals. this can sometimes make brand building a challenge overseas, and that's where the tennis star comes in. >> i even learned to say the word in japanese.
so it's a very cool brand, very young brand. the brand that develops very fast. >> game, djokovic. >> love that. love any tennis story. >> and the end of season. andy murray could get number one if he wins it. we need to talk about this. >> i'm there. we'll get the latest uk jobs figures. don't go anywhere.
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we're back, we've got breaking data out of the uk. clay mccount and boa minutes as well. the bank of england voted 9-nil to keep the key rate at 9%. some have questioned the impact. a considerable scope for stimulus. agreed expand by expanding growth in october. commodity prices suggested inflation may pick up. the omt announcement helped cut risk of a sharp economic
slowdown and they say their surveys suggest -- well, the growth is weaker than the bank of england's august forecast. signs on the funding for lending scheme for the mortgage market are encouraging. >> speaking of encouraging, we actually have a pretty encouraging report on the jobs market in the u.s. the claimant count falling versus no change expected. the employment level rising to a fresh high. the unemployment rate at 7.9% compared with 8.1%. it's always remarkable how similar these rates are. nevertheless, average hourly earnings were at 2% year on year roughly in line with forecasts. but again, 29.6 million workers roughly speaking. that is a new high. you can see the sterling rebounding against the dollar. it had earlier in the session reached a four-month low against the euro. this after the weaker inflation data yesterday. we're likely to see a rebound there. jeffrey dicks is around the
table. jeffrey, your interpretation of these figures? >> well, i'll start with the policy, if i may, because that's what really interests me. i'm surprised that david miles didn't vote for some more qe this month. you said it was unanimous on qe as well as on the interest rate decision. a month ago, he was flagging, or we assume it was him, was suggesting he was getting very close to voting for more qe, but i guess he's stayed with the committee and they'll look at it again in november in the context of their upcoming forecast. then we're most likely to get another round of qe. >> under what justification? >> the minutes there are saying that they suggest the outlook for the real economy is weaker. we're in a very peculiar position with the bank of england, because despite yesterday's good inflation data, the average was above what they
thought in august. q-4 isn't going to come down again as they expected in august. but instead of -- we used to think with the taylor rule that if inflation was above target, then that would lead to a monetary tightening, or at least rule out a monetary easing. but now because inflation, as the obr in its assessment in its own forecast performance said yesterday, inflation is the biggest drag on the economy. every time inflation cops higher, the outlook is weaker and we get more policy easing. >> which may not be helping or not. hasn't had much of an impact on sterling, funny enough. if sterling were to weaken, it would drag the economy even further. what's interesting is the employment picture is still getting better. another 50,000 of the three-month ilo number. the employment numbers at a record low. claimant count down. it's very hard to square. can you square the employment figures with the gdp numbers?
>> no. nobody can. people have come up with some extra nations, including not believing the official data for gdp, and we'll get the third quarter next week, and that should be reasonably okay, because it will include the bounce from the jubilee and the olympic effect. the employment numbers themselves are probably still being boosted by a small effect from the olympic games, but even so, they continue to defy what you'd expect from the gdp numbers. >> i suppose we have to get a real breakdown here of what's seen as temporary hiring and what's full-time. i suppose we might need to see a breakdown of that. what is interesting is that they still think there's a justification for more qe with a fat employment picture. and as you say, the inflation outlook. >> but the earnings numbers are good. they've done nothing, have they? they've averaged something like 2%. >> yeah average earnings up 2%.
>> if they think the underlying rate of growth of productivity when we get back to a normal medium term situation is something like 2%, then wage cost inflation will be zero and it will be too low. of course, we've not had anything like that over the last several years. they ignore everything that's going on at the economy at the time. >> what do you make of this, signs on the funding for lending scheme encouraging. >> they said that last month, didn't they? >> actually get some hard data? >> we won't get any hard data on the quantity side, but they were looking at interest rates, and there were some early signs that the lenders -- and i think there's more of it that some of the lenders have been lowering their key mortgage rates. >> should the bank be looking at broader aspects of qe? is there still this idea that we've still got repaired credit and we need to clear off what we
should be doing as far as buying other as pets besides guilt. what do you think? where do you lie on that argument? >> i'm a qe skeptic. i'm with the obr in their assessment. the main problem is inflation. if anything, give us a bit higher inflation. kingman said it was a vindication of our system that we've taken a 25% devaluation of the pound and still only had an average of 2.3% inflation. well, where did the 25% devaluation come from? it didn't come from thin air. it came very in large part from the monetary policy decisions that they've taken. >> obr said that the fiscal tightening had had a bigger impact on growth than they had thought. is that going to be seized upon as a justification for easing
up? >> i think everybody is looking at the multipliers. came out with some slielgtly higher numbers. i don't know the answer to that question. i think they have to -- well, he has to live with that. >> always good to see you. jeff dicks, chief economist. it was fight night in new york as president obama and mitt romney were much more confrontational in their second debate, tussling over libya, taxes and the deficit. >> spanish equities buck the trend after moody's keeps its investment grade rating. >> shake-up at citigroup, nearly 24 hours after the surprise resignation, is the company still being mum about the specific details? >> and a surprise rate cut from the bnk of thailand signaling the global slowdown is hitting
home in yet another emerging economy. we've seen guilts extend their losses. sterling continues its appreciation against the dollar. european stocks have been very flat. just up slightly after good gains yesterday. the ibex at one and a quarter percent. moody's maintaining spain. but that has caused yields in spain to the lowest level since april. >> that's right. >> and on currency markets, euro/dollar just at a one-month high. there's sterling. that's up at a fresh session high. . pan, prime minister know da may be planning another round of stimulus.noda may be planning another round of stimulus. here is the story.
>> reporter: the prime minister called an extra early cabinet meeting earlier today. the new round of stimulus is expected to front load some policy steps proposed under its economic growth strategy compiled in july. that includes measures to accelerate growth in the environment, agriculture and welfare sectors. to avoid a parliamentary vote on a supplementary budget, the government is considering funding the measures with $11.5 billion set aside in the 2012 muj et for economic emergency sis. in that case, the size of the actual spending would be limited and thought to have less impact on the economy. noda hopes to finalize the details as early as next month. some analysts see the move as a strategic maneuver by noda and his democratic party of japan to shore public support ahead of a general election that must take place by next summer. back to you, kelly. >> thanks very much for that.
just want to mention, japan's chief cabinet secretary is saying there is a need to quickly end deflation and accelerate the economy so we're likely to see that on investors' minds today. central banks surprised the market cutting its key rate to 2.25%. the decision was split. they voted for more reason to support growth. the thai economy is expected to expand this year. but growth is expected to be lowered because of global pressures. robert, good to see you. thanks for joining us. i'm not sure if we were expecting the rate cut, but how much pressure is this part of the asian economy under? >> well, not a huge amount. to be honest. monetary policy is already very loose. the policy rate is 2.75%. fiscal policy is extremely loose
in thailand. the domestic economy is recovering quite sharply. the governor last week gave some comments suggesting that he was worried about the strength of credit growth there. so all in all, actually quite a significant surprise. actually, i wouldn't be surprised if the governor was outvoted on this one. the makeup of the mpc there has changed. that may well have been influential in this fairly uncharacteristic dovish decision from the bank of thailand. >> yeah, which suggests for all those reasons maybe it will be reversed fairly soon. what's interesting here is you've got this view this the region that although they're cutting, others might even start thinking about raising rates. >> yes. i mean, asia really -- we need to -- we should not think about as one region. in some ways, it's made up of
countries that are performing very differently. such as thailand, but also malaysia, philippines, indonesia. indonesia in particular. are going very rapidly. they've been able, very unusually, to decouple their domestic economies from the weakness of exports for various reasons. and those countries, i think if anything, would require stable, if not higher rates. indonesia in particular i think is in danger of overheating and needs higher policy rates rather than lower policy rates. but then you've got the giants of japan and asia. china and india, which are clearly suffering right now and do require some further policy easing. then you've got another group of countries which includes singapore, but also korea and taiwan that are struggling, and that require interest rate cuts. it's very much a mixed bag and i think we need to be careful not
to lump asia together in one. they're usually unsynchronized. >> what's also unusual or perhaps just telling is to think back to the role that thailand played as a catalyst in the late '90s. now it appears like this area is almost in some ways a source of strength or at least not an area of contagion. what do you think is primarily responsible for that? >> these companies have completely thrown off the problems with the asian financial crisis. about time, too. it has taken these countries a good ten years or so to really recover from that asian financial crisis, which could be a potential lesson for the west as well. but they have thrown it off now. they are seeing strong domestic demand fueled by generally very easy policy conditions.
obviously inflows from the west have helped. thailand is benefiting from significant flood -- post-flood reconstruction. they had a devastating flood towards the end of last year and are rewriters guilding from t-- rebuilding from that right now. i think monetary policy has been too loose for too long in indonesia, for example. in the philippines, it is more sustainable. there's more justification for arguing for structural improvements in that part of the world. but so the reasons vary a bit from country to country. malaysia finally has benefited from a so called economic transformation program designed to encourage investment. and also, of course, some preelection spending there as well. >> well, to your point, the singapore dollar has just broke an key resistance level against
the u.s. dollar, rising to -- i'm sorry, the u.s. dollar falling to 1.21, which is the lowest since about this time last year. perhaps more pressure on the central bank. thank you for joining us this morning. let's take a quick lack at what's on the agenda in asia tomorrow. it's a super china day today. we'll get third quarter gdp, retail sales. and corporate earnings are ramping up. china state construction will be the latest hong kong listed companies to report. we'll also get quarterly results from two regional exchanges. the sgx and singapore. and executives were in taiwan for the world federation of exchanges annual meeting. they are working extra hard to keep their clients and to offer new services to bring in new growth. here's what a couple executives had to say. >> i think the issue for
participants has been one where we've seen fragmentation of markets, increased costs, increased regulatory burdens, but at the same time, we've experienced this downtown in equity volume. so we look to new products that we can deliver to our market to try and boost growth. >> at the end of the day, i think any stocks will use the best market, so unless we offer a high quality and transparent market to the client and investors as well as the corporations, we'll use our positions. hong kong, singapore, new york. >> and just a quick programming note. be sure to tune in tomorrow. we'll be speaking with charles li, chief executive of hong kong exchanges & clearing. also still to come on
welcome back to the program. lackluster sets of numbers by tw of the world's biggest technology companies. ibm reported lower than expected sales, while intel saw earnings drop 14% in the third quarter. john fort has this report. >> ibm and intel both reported after the bell, and by the time those earnings calls were over, both stocks down better than 3%. let's take ibm first. looking for revenue of $25.7 billion. ibm turned in 24.7. eps was just about in line. at least operating earnings per share. wall street wanted $3.61. ibm turned in $3.62. so what was the revenue problem? let's start with software. that was a bit lighter than the street wanted. software very important. that also contributes to overall earnings. ibm has had a couple of big deals fell out at the end of the
quarter, in september, in the americas, that hit their numbers. they hope to get those deals in in q-4. hardware was down 13%. hardware not a huge part of ibm's business, but when it continues to be down as it has been over the past several quarters, that could put a bit of a drag on revenue. let's take a look, though, at the overall services business, which along with software, a very important part of what contributes to ibm. the overall services backlog head steady. that was up 1%. and another important number, services signings. those came in $13.3 billion, a bit better than what wall street was looking for. moving on to intel, some disappointments here. we had been expecting a weaker quarter because intel warned back on september 7th that it would be -- the quarter they turned in was a bit better than expected. $13.5 billion in revenue, versus
the 13.23 that wall street expected. the reason why it was down a bit, guidance. intel got it to 13.6 plus or minus half a billion dollars and said growth margin is going to take a hit because they're trying to deal with some y issues. they'll deal with capacity utilization. they're going to be in 57%, 58% territory. nonetheless, the intel ceo saying they're hopeful about what windows 8 will do but also implied that they need to get some costs down before touch is really in that sweet spot as far as consumers buying in. that's what the earnings looked like. >> you can take a look at the reaction of intel shares,
they're down nearly 3% in frankfurt trade this morning. growth margins are certainly a key issue. staying in the tech sector, larry paige made his first public comments in months. he spoke yesterday. he says he's hopeful google can work with antitrust regulators to resolve probes. paige, who lost his voice earlier this year wouldn't elaborate on his health. he also didn't say whether google would launch a maps app for the iphone after apple dropped google maps from the new iphone 5. pandit's resignation has taken the banking world by surprise. some point out that the bank's board is anxious to turn page on its losses and now looking for growth. what quality should the new man at the helm of citigroup have? joining us is the co-founder --
this is a disparate, diverse, big company. what skills is he going to have to really be good at? >> well, i think you really have to be a well-rounded individual. not only does he have to be inspirational internally in term of managing his teams and bringing together really strong performing teams but also he needs to think about his shareholders, consumers, the board, and pull that together. that takes a lot of skill. it needs skills which are around listening, really good listening skills to make that work really well. >> it's interesting, speaking of being well-rounded, here's a guy who was football quarterback for harvard, who started basically a company bidding for manual labor contracts, who is apparently quite well liked throughout his career. so it almost seems jamie dimon-esque. >> he comes with quite a high reputation.
i think there's a lot of expectation on his leadership skills because of that background. i think what's interesting is who he'll bring in to form part of his top team. we've looked at bob diamond, there's pandit and john havens. they've brought in people they've worked with before. i think the true question for him is going to be of course you need people where you have strong relationships, you know how to work with them, but it's really about what that core team is there to do. and what are the rules that they're going to set. so you've got to be really clear about what the rules are in the classroom. >> should the person that you hire as your operating officer or your number two or three be a person that has skill sets that you don't have? as a rule. >> generally, yes. i think that number one, number two position tendlimenta complimentary. i think you need a ceo who has a good sense of the big picture. >> you say that the ceo needs to
listen, he needs to manage his relationships, but at the end of the day, he's also got to lead. so when is the point when you stop listening and say, okay, thanks very much, this is where we're going, and you've all got to follow me? >> i think that's the sign of a good ceo. they have to be decisive and know what they're being decisive about. it's a few things actually. it really sets the cultural tone. as we know, it's an industry where the culture is changing dramatically. i think he's already made a few decisions about what he wants to change, or what he's going to look at. i think that's a good sign of a leader. you need to be decisive and very clear. >> do you achieve most of what you're going to achieve in the first six months of becoming ceo? i mean, is that -- there's this theory about if you don't get things done in the first period, that's it. i mean, you're not going to -- it's not going to happen for you. >> well, we've worked with ceos, asked them what they've done differently. a lot of them have said they'd move faster. pace is really important. i think setting that cultural
tone really early on is very important, too. it sometimes takes far longer to get these things done depending on how big the change is. but some would say faster is better. >> lay it out in the beginning. >> and make sure there isn't uncertainty in the organization as well. >> sounds like the european debt crisis. take the pain, avoid uncertainty. certainly some parallels there. a tough couple of months ahead for the new ceo of citigroup. >> got to listen to a lot of people. got to do it quickly, though. >> moving right along. >> thank you very much for joining us. co-founder of maxxim consulting. still to come, who came out on top, obama or romney? >> we'll get exclusive views on the second presidential debate and see how results may affect the polls coming up. stick around.
after moody's has kept the rating on the country's sovereign debt. >> you're watching "worldwide exchange," bringing you business news from around the globe. we're actually in the red here for a change with regard to u.s. futures. the dow is expected to shed nearly 30 points at the open. the nasdaq and s&p are under some pressure as well. as we just mentioned, european equities have performed a little bit better after moody's decided to keep its investment grade rating on spain. that may have allowed or propelled now some inves fors to get exposure to spanish equities. the ftse 100 is adding .2 of a percent. the ibex 35 as mentioned, the outperformer this week. 1.2% just over that 8,000 level. >> the ibex doing pretty well.
spanish bond yields are down to the lowest levels since april after moody's came out and kept its investment grade rating. we thought they would be downgraded to sub investment grade. yields at the moment 5.5. italian fields at 4.82%, the lowest since mid march. guilt yields are higher this morning. we saw minutes 9-0. and there was a bit of a discussion, some thought we might get more qe in november, but the employment picture much better than expected again in the uk. that's pushed sterling up to its session highs, 161.46. also total employment figure at a fresh record high of 29.59 million as well. those numbers better from where expected. aussie dollars today, dollar/yen
87.72. those are the markets here in europe. that's how they're trading. sixuan's got the details for us on the asian trading day. >> thank you, ross. most asian markets ended higher as promising u.s. earnings and increased confidence in the eurozone cheered investors. the shanghai composite eked out modest gains. nuclear power related stocks surged on the back of beijing's $13 billion investment plan to upgrade its nuclear facilities by 2015, but we saw weakness across media stocks. the hang seng gained for the fifth straight session. elsewhere, the nikkei extended a strong rally. developers, autos and minors also outperformed. south korea's kospi closed
higher by .7 of a percent, helped by technology shares and blueprints. over in australia, bhp added 1.2% after sticking with its output guidance. other minors also rallied with fort skew gaining nearly 6% on the rebound in metals prices. the sx 200 closed at a 15-month high. india trading flat right now. hcl technology shares hit a more than 12-year high as earnings beat forecasts. ross, back to you. >> okay, thanks for that, sixuan. president obama now and mitt romney still have one more debate to go, but they may have left it out all on the mat last night. they were much more confrontational, speaking over each other and the moderator. they clashed over issues like taxes, the deficit and foreign policy. the president accused romney of selling a sketchy deal to fix the economy, while romney says the middle class has been crushed under obama.
>> if the unemployment rate was 7.8% hen he took office, it's 7.8% now, but if you calculated that unemployment rate, taking back the people who dropped out of the work force, it would be 10. %. >> governor romney says he's got a five-point plan. governor romney doesn't have a five-point plan. he has a one-point plan. and that plan is to make sure that folks at the top play by a different set of rules. >> both men will be back on the campaign trail today. the president travels to iowa, while romney visits the battleground state of virginia. the third and final presidential debate is scheduled for monday in boca raton, florida, and coming up, we'll debate the issue with the former aide to president george h.w. bush. >> full breakdown of the implications of that debate. right now we turn to banks. moody's and s&p are both cutting their outlook to citigroup a day after the surprise resignation of vikram pandit.
here is the latest on the shake-up. >> reporter: good morning, ross and kelly. an abrupt resignation from vikram pandit after five years at the helm of one of wall street's biggest and most challenged banks. but just one day after a positive earnings report showed some signs of life for citigroup. during a tuesday conference call, chairman michael o'neill said the board had been preparing a succession plan for two years and was delighted to hand the reins to mike corbett. but according to sources familiar with the situation, board talks of replacing pandit escalated the last several weeks amid several issues. the bank's disappointing performance on the federal reserve stress tests in march of this year, the following month shareholder outcry on specifically pandit's compensation, an issue that still remains unresolved. finally, a contentious negotiation with morgan stanley over the smith-barney brokerage
unit, that caused city to write down over four billion in losses. a key pandit lieutenant president and ceo john havens also resigned yesterday with no successor, though the company confirmed that brian leach had committed to say. as for the plans of the incoming ceo, he asked for a little bit of time in the chair to take a fresh assessment of the bank, its strategy and its operating met rix. analysts across wall street have marked the move a positive, but still many left wondering what happened. o'neill's pointed response to that question, "what happened is vikram offered his resignation and we accepted it." kelly and ross, back to you. >> yeah. are we any clearer? the european banking editor at "wall street journal" is with us in the studio. lynn bloom joining us. welcome to you both. what did happen? i mean seriously, that
question -- i still don't have an answer. >> i think we do, for what it's worth at this point. there's been tension building with the board for basically since the start of the year. the board viewed vikram as not particularly communicative. his strategy was not terribly clear. and as your reporter just said, three blow-ups over the course of the year, the morgan stanley thing being the most recent. >> so why now? why does that come out yesterday? why this sudden appearance of a sudden departure? >> well, the timing is a little bit unclear. we know that the board -- i think it had something to do that vikram was in asia for the imf. that gave the chairman of citigroup the time to gather up the last remaining supporters onboard to really be able to go to vikram and say look, you have a choice, you can either be fired or you resign, pretty simple choice. vikram obviously chose the latter. >> even knowing they were about to come out with what would be a
decent quarter? >> i don't think the problem here is so much a financial performance issue as much as it is a cultural issue at citigroup. michael o'neill is a guy who has been -- basically a commercial banker, and most recently before joining citigroup was running bank of hawaii. he and a number of his colleagues were put on the board at the behest of regulators who felt that pandit and his team at citigroup basically didn't have the experience or the expertise needed to be running one of the world's biggest global banks. >> interesting, it follows not only a decent quarter, and then on a call win ves or the with night. >> citigroup has never been one for communication on this stuff, but there was a regularly scheduled board meeting, so i think that was part of the catalyst. >> len, what happens now? they say nothing has changed, business as usual. but if it was business as usual, why did they get rid of pandit?
that doesn't make any sense to me. >> i agree with the three reasons. i think that pandit has pretty much worn out his welcome with the board. i mean, if we go back to april when o'neill came in as chairman, we've had the fed telling pandit that he can't give out a dividend. we've had the -- what is considered a botched sale to morgan stanley. we've had the shareholders voting 55%, a resounding no to vikram's pay. and on top of that, in the five years that vikram's been in office, the stock is down about 90%. and, you know, some major bank indexes are down much less than that. >> he inherited a big leaking ship, though, right? we had stuart in, and said who actually would have done better? >> well, you know, it's interesting, let's take a look at vikram's tenure.
when he first took the reins, he looked like an improbable candidate to run a big commercial bank. even we at westwood capital said he's rearranging deck chairs on the titanic. but he got the joke. he figured out that he has to shrink the bank. it's incredible shrinking bank-like the dinosaur sponges you get when you're a kid. citigroup is the exact opposite. it's the incredible shrinking dinosaur. so he's done a lot, and, you know, a lot of times when you get through a crisis or hopefully through the crisis, investors want to see a new face and they're not particularly thrilled with vikram. i don't think we're going to find out the truth from the board or from vikram because they're probably both contractually prohibited from saying anything about this other than vikram resigned.
>> i just want to get dave in here for a second and talk about the future, too. michael o'neill interviewed for the job who potentially would have wanted to shrink or break up that bank. now we see him potentially clashing with pandit over the future of this model. we've heard sandy wile say he's not sure it's the way to go. is this bank going to shrink? >> it's certainly going to shrink. the new ceo, his job was getting rid of all the junk that citigroup had acquired. so he certainly is in the get smaller mentality. i think what you're seeing here, though, is, the fact that o'neill is now picking his guy to run this, is that there's a realization that some of these banks are not only too big to fail, but also too big to manage. and definitely smaller is in vogue right now. i think this does introduce a lot of strategic things that maybe weren't on the table under vikram, who was very quick to embrace citigroup's existing
model. >> what's the next thing to watch for now? >> i don't know, that's a good question. i think there are likely to be a number of other -- a lot of speculation about senior people resigning, like mora, who runs the u.s. and latin america retail bank. jamie farice, both of them have been approached, we've heard, about taking john haven's job, which is president and c.o.o. >> the stock closed up in the end of trading yesterday. does that mean anything? >> they say the proof's in the pudding. in wall street, the proof's in the price. shareholders are happy about. this and it probably does mean a much smaller bank. i think for all four big banks, the demise of glass steigel was a very bad thing in that it created these universal banks that are not only too big to fail, but way too complicated to regulate. at some point, people are going to do what sandy wile is
suggesting and break them into their constituent parts. it's the only thing that makes sense in the too big to fail problem. citigroup is the poster child. >> thank you both so much for stopping by this morning. >> thanks, guys. >> if you have any reaction to the news of pandit's departure or anything else you've heard on the program, you can e-mail us. the world's leading spirits maker says today -- it's just reported its 5% organic sales growth. these numbers were delayed, supposed to be about three hours ago. north american orbegganic sales this morning. in africa, up 11%. asia pacific net sales growth 2%. the stock just falling, as you
can see, a little bit on those organic sales numbers. i think the asia one will be the disappointing one potentially. we'll take a short break. up next, we're joined in the studio by an entrepreneur who got a pretty big shoutout from david cameron last week. find out why next. i want to tell you briefly about one business that is really seizing.
these are your headlines, president obama and mitt romney come out fighting in their second debate. >> the company still mum on specific details. >> ibm and intel are feeling the heat for the pullback in spending and the slumping pc market. starbucks has signed up with mobile retailing. google has launched google wallet and apple has its own version, passbook. it's picking up so much traction that papal has predicted that by
2016, customers will no longer need to take traditional wallets to go with them shopping. the european commission green lighted a british scheme called project oscar, a tie-up to launch a cross-network mobile wallet. british-based firm monetize has seen its numbers quadruple to 17 million worldwide. joining us al lukies, the largest provider of u.s. mobile pays. am i right saying you are the only listed pure pay mobile payments banking provider? >> i think that's accurate. >> all right. so here's the thing. i mean, there's a difference between mobile banking and mobile payments, right? this world is exploding. where are you sitting in the middle of it all? >> morning. hi, kelly, hi, ross. it's a space that's just getting
unprecedented coverage, investment dollars, hype, and like any technology bell curve, we've srt of been through that first hype cycle, a trough of disallusionment, where everyone got really disappointed because it didn't quite work. consumer appetite wasn't ready. technology wasn't ready. now people are seeing applications that consumers really want in their millions and tens of millions. so it's tangible, it's real, but it's very busy. and to answer your great question, about what's the difference between mobile payments and mobile commerce, what is it? the answer is it's all of the above. one of the big challenges in the space is getting people to see the wood for the trees. if i'm using my phone to make a payment in a store, i can do that like going through terminals at the tube station. if you're just checking your balance on your phone, that's great, but i can do that on the internet or by ringing my bank.
>> what is it that you guys do in the midst of that? >> all of the above really. we have an enabling platform. if you think of the analogy of the gold rush. we're not trying to compete with anyone. we're a switzerland type platform. banks use our technology to get closer to their customers. it's a very robust system that we run today. we're just there to bring functionality to life. >> so does it matter if -- square launch, does it matter that google wallet -- are these threats to you? or are you helping their infrastructure? >> at the end of day, most people are trying to fight for the consumer ownership battle. and for what it's worth, i think they're missing it. a bank might say we want as many people on our app as possible.
the end of day, in 2012 as beyond, consumers decide. the companies that recognize that a couple wants to be able to act says their information or their money with their favorite interface i think are going to do very well. so square is a brilliant service, but it's a merchant acquiring terminal. very innovative, but it's not enabling you to check your balance before you make the purchase. it's not enabling you to send money to your family and friends. it's not enabling you to get special offers from your favorite retailer. so there's lots and lots of things that need to integrate to make this sort of nirvana end to end proposition work. >> the point is you're imbedding yourself with the bankers, ie we're still going to have bank accounts of some sort, so you suit yourself with them. >> sticking with the theme of the day, because you seem to be talking about banks a lot for some reason. look, we're great believers --
kicking banks at the moment is the favorite pastime of everyone. we're great believers and i think the regulators have proven this beyond any shadow of a doubt, having a robust retail banking ecosystem is very important for consumers. looking after people's money is not an easy thing to do. visa is our biggest shareholder. ultimately when you're talking about 2.2 billion bank consumers on the planet, regulators will want that money to be stored in a safe place, so we think that's the most sustainable part of the ecosystem. after this break, we'll take a look at cable hitting a new high. details ahead, stick around.
we've seen sterling strengthening after uk employment numbers hit a record high. the rate remains steady at 7.1%. i think it was 7.9, actually. unemployment also fell to a 15-month low. another 50,000 people in work. meanwhile, the government has highlighted the importance of start-ups in fostering job
growth, new scheme offering small eyes to get business owners off the ground. david cameron spoke directly about today's studio guest. take a listen. >> there are so many opportunities in this world, and i want to tell you briefly about just one business that is really seizing them. it's run by a guy called alstair lukies. he and his partner saw a world are almost six billion mobile phones, but just two billion bank accounts. they saw this huge gap in the market, and they started a mobile banking firm, helping people in the poorest parts of the world manage their money and start new companies using their mobile phones. alstair has been with me on trade missions all over the world and his business is booming. don't let anyone tell us that britain can't make it in this world. we are the most enterprising, buccaneering, creative, dynamic
nation on earth. >> it's not often the businessmen get the shoutout from politicians but you did last week, al. how far behind is the uk than the u.s. you're now in the u.s. a lot. what's the difference between start-up businesses? >> i think there's this ecosystem that people talk about, particularly in the valley, in silicon valley, where for many yoors now it's not been uncommon for someone to take a technology idea from standup to, you know, billions and billions of dollars worth of market cap in quite a short period of time. that fosters belief. that fosters lots and lots of people in coffee shops talking about the fact they are going to be the next zumer berg or the next larry paige. that ecosystem exists. one of the great challenges i think we've had in the uk for a
long time is there's not many people we can point to. there's branson, but we know the establishment made life pretty hard for him. there's guys like charles dunston, but we tend not to celebrate that stuff so well. >> do you feel the pressure of being almost a role mcdonald nel that sense? >> no, not at all. i think what happened last week, one of those amazing flattering moments that you never believe will ever happen to you. more than talking about monetize, i think it's fan that's they can this government is genuinely taking the whole thing very seriousism but monetize is still right in the foothills of the pir these with the opportunity. we're a 500 million market cap company that employs 700 people. when i talk about game changers, i'm talking about oracle, ibm, facebook, google, e-bay, apple, these sorts of companies. and people try and come up with a top down solution to that. how do we create these companies? you can't create these companies. you have to create the trading environment where the ecosystem
and the entrepreneurs believe they can create those companies. >> so you're the foothills of the pyranese. do you need to bring in a lot more u.s. investors? >> the uk is changing. we've relied on an enormously strong financial services capital to prop up the economy. and we've lost sight a little bit of that engineering entrepreneurism. the uk produces a brilliant entrepreneurs, great ideas people. the capital, what we call genuine growth and risk capital is the challenge. >> so it's not financial capital. it's human capital. >> i think it's both. you have a lot of people that are more than prepared in the u.s. to leave their day job, fail three times and do it
again, and everyone gives themselves ughs. in the uk, you fail once. >> on the financial capital side are you going to list with nasdaq? >> we as a public company, like any public company, say what's the best environment for us to grow the business. we evaluate that on a weekly, monthly, quarterly basis. we talk to people like visa and say where do you think we should be to build this company optimally? >> that's a no for the moment, i think. good to speak to you. thanks very much. would president obama shout of -- >> they often single out people, not necessarily entrepreneurs. but to alstair's point, it's becoming common to hear the entrepreneurs being singled out. >> we need people to grow business and create jobs. thanks very much for that.
on the subject of entrepreneurship, g to our website, i think it's more important to do it than say it. go to our website for a story where businesswomen have a different vision of success. that's on cnbc.com. >> on a programming note, cnbc has a new show, "the business class," and it kicks off tonight. james kahn is coaching entrepreneurs to help them through challenges facing businesses today. here's a highlight from tonight's show. >> we have a two-tiered business where we generate revenues of our affiliate sales. our challenge now is to to maximize pr and ensure we're driving traffic back to the website. >> i would encourage them to do interesting quirky social media activity, really get that sort of social media buzz and do quirky thing haas the big guys can't do. the joy of being small is you're quite nimble and can turn things around very quickly. >> blogging, media, marketing,
and make sure that we get that revenue flowing in, because when you're looking to raise money, you're raising money on rural value. >> that show starts tonight, it's on wednesdays, cnbc in europe. it will also be on the website as well. >> and if you're just tuning in, this is world world. a reminder that these are your headlines this morning. it was fight night in new york as president obama and mitt romney were much more confrontational in their second debate, tussling over libya, taxes and the deficit. >> shake-up at citigroup 24 hours after the surprise resignation of vikram pandit. the company still keeping mum about the specification. >> tech shares could be under pressure. more on the presidential debate and a look ahead to the trading day when we come back.
we are seeing u.s. futures try to tick into the green. we're still looking at a negative open for the time being. the dow to shed about 20 points at the open. the nasdaq and the s&p are also pointed lower this morning. we did have some positive moves across european stocks, especially when you look at the ibex over here in spain. this up nearly 1.5% and it follows moody's last night,
reiterating that spain's debt is viewed as investment grade. the fact that it didn't move that to sub investment grade has some investors getting exposure to the index today and we've seen the knock-on effect. the ftse 100 adding .3 of a percent after employment figures in the uk jumped to a new high. the unemployment rate, as ross knows, 7.9%. >> yields in spain down to lows since april. president obama and mitt romney have one more debate next week. they may have left it all out on the mat last might. the men were much more confrontational during their first meeting, repeatedly bouncing off their stools and speaking over each other. they disagreed on several issues. the president accused romney of selling a sketchy deal to fix the economy. romney says the middle class is being crushed under obama. >> if the unemployment rate was 7.8% when he took off, it's 7.8% now.
but if you calculated that unemployment rate, taking back the people who dropped out of the work force, it would be 10.7%. >> governor romney says he's got a five-point plan. governor romney doesn't have a five-point plan. he has a one-point plan. and that plan is to make sure that folks at the top play by a different set of rules. >> joining us now for more, mary jo jacoby. and aaron task. good morning to you both. mary jo, your thoughts from the debate last night. it was seen as more of a win, i guess, for obama given his underperformance last time around. >> it was a real slugfest. they got their punches out there. i think romney sort of waned towards the end. they both came out swinging. romney in a more measured way at the beginning. but i think -- >> is it telling that we're focusing on styles so much here? even the last time around, it
was almost as if there was some substantive talk, but so much of it seems to be about who can communicate or has the best presence when it comes to these debates. >> well, it's a televisual presentation, and that's very important. and the audience isn't the audience in the room, although it was undecided voters, allegedly. it is the television audience, and it's moving that 7% of undecides out there. so style does count a lot. there were a lot of facts thrown around last night. and a lot of, shall we say, misrepresentations on both sides. >> misrepresenting? extraordinary, isn't it? >> isn't that shocking? i'm shocked, i tell you. >> what was most significant moment in your view? >> two significant moments. i think the most significant was the whole benghazi thing. and candy ycrowley really did help the president. the president ended up with about three more minutes time than romney. she reinforced the president's
position that he did declare the act in benghazi as an act of terror. i fact checked it and that's not entirely true. he referred to the attack and subsequently referred to acts of terror. and it isn't clear if he was referring to the specific attack as an attack of terror. >> what was the second moment? >> the second one was the whole economic thing. i think that romney really does have the higher ground on the statistics. >> on that, let's bring in aaron, who is editor and chief of yahoo! finance. they may have talked a lot about the economy, but did they talk about things that mattered? have they talked about rising energy prices? how to fix housing? did they talk about the role of the fed? >> that's a big one that they've been missing now for all three of these debates, including the vp debate, the fed is playing such a huge role in our economy right now and it hasn't been discussed at all, not even in passing, which is pretty
astounding to me. people might say it's too wonky. the american people know that a zero interest rate policy is not normal and that they're getting nothing on their cd and money market funds, that something is not right here, or at least it's not usual and we should have a discussion about it. >> we did have actually quite a big discussion about this around the time when ron paul was still in the campaign. there were debates, i remember quite well, where the fed took up a lot of air time. i wonder if it's because mitt romney isn't forcing the issue. if he knows that's not going to resonate with voters right now, perhaps he's just choosing to stay mum. >> i think politically speaking, mitt romney is missing a great opportunity to reach out to the ron paul supporters who are incredibly enthusiastic and saying listen, i know your concerns about the fed, about what's happening with the dollar, and at least speak to it. he has said he wouldn't reappoint ben bernanke, and now we haven't heard anything more
about it. but who would you appoint? who do you see as the role in the fed. >> we did hear romney talk about the dollar last night. he said the first thing he was going to do when he got into office would be to label china a currency manipulator. so seems to think that message, at least goes over well with the base. >> it goes over well with trade you know-ones, who are obama's base, because of the perception of anti-competitive behavior by china. he's not talking too much about the fed and ben bernanke because every time he does, it sends shock waves through wall street. so it's there, he said it. he will reinforce it one or two more times before november 6th. >> aaron, what also struck you last night? were there any moments from an investor, from a wall street point of view, that did matter? >> well, there was a very subtle thing where mitt romney was referring to himself as a businessman and i've held businesses. and barack obama referred to him as a successful investor.
i think that was a subtle dig by the president to an electorate that is feeling like the people on wall street are the big reason why we got ourselves into this mess in 2008 and beyond. i think most americans like businessmen but they don't like wall street and people who just make money by moving papers around. that's what i think the president was trying to portray mitt romney as someone in that category, not a real businessman. >> aaron, have you seen either candidate come up with a credible business economic plan? am i asking for too much to expect any details? >> i think you're asking too much. the president has had four years. he did inherit a mess. he's done a lot to get us out of that hole. but i don't know that he really has a plan to really grow the economy. and mitt romney is talking about lowering the tax base by 20%. he wasn't able to give you specifi specifics about how you're going
to do that without blowing up the deficit. pick a number about where he's going to cap deductions. at this point, let's have some meat on that bone. >> okay. we'll leaf it theve it there. aaron and mary jo. i wonder if we should get mary jo's views on citi. still to come on today's show, no recovery in sight for the pc market after disappointing numbers out of intel and ibm. more when we come back.
welcome back to the program. president obama and mitt romney come out fighting in their second debate, tussling over libya, taxes and deficit. nearly 24 hours after the surprise resignation of vikram pandit, the company is keeping mum over specific details of his departu departure. ibm and intel are pulling the heat from the pullback in spending and the slumping pc market. let's recap that now. ibm's third quarter profit was flat. revenues fell short of forecast.
big blue reported declines, including a double digit percentage drop in hardware sales. saw particular weakness in north america. ibm says business became more challenging in september, but is confident deals will be completed in the fourth quarter. >> the chip maker issued a weak fourth quarter outlook as it continues to feel the impact of the slumping pc market. intel plans to take half a billion dollars in charges for excess capacity, as consumers shift spending towards tablets and businesses, cut spending on computers. >> it's pretty similar to what we saw in q-3. a little less than seasonal, but some growth. our expectation based on the order patterns that we're seeing from our customers is that they'll continue to manage things very cautiously. >> intel shares have spread 2.7%
in frankfurt trade this morning. >> shares in asml holdings are trading sharply lower. the semiconductor equipment maker announced it's buying the u.s. group. below estimates for the third quarter. the group says that q-4 sales will also be towards the low end of expectations. >> pandit's departure at citigroup has taken most by surprise. next, bethany mcclain says the move smacks of a coup. stick around for that.
as we continue to look at the fallout from vikram's resignation. b of a down 79%. jpm down only 8%. there's speculation that what city was really looking for is another jamie dimon. >> yeah, but he's not available, right? and the citi shares up 250% since that march 2009 low. what about the new man that's taking over, mr. corbet, he's been at citi since 1983, so this is a longtime employee. graduated from harvard university. the key question, of course, is with the chief operating officer also going with mr. pandit, who will his new team be? the ceo at the moment is staying together. but still plenty of questions, particularly surrounding the timing of this announcement. one day after the earnings results. and will they get into legal problems? >> this perhaps the biggest question. joining us is bethany mcclain,
columnist at reuters and cnbc contributor. we just want to know your gut feeling. why the unusual timing? >> it sounds to me like there definitely was a coup going on. let's get out of the way the fact that pandit says he resign of his own volition. i'm sure that's technically true, but it doesn't look like he had much choice this the matter. when you piece together what various people have said about this with michael o'neill, the chairman of the board saying that he'd been talking to kor bit about this for a couple months, kor bit was in new york, not in london where he's faced. you have this remarkably swift purging of all things pandit, where the new guy's pictures are up immediately, and it seems to me like this was in the works for a while in a very secretive way but i don't think pandit w knew about it in the last moment. >> it was in the works, but you wouldn't plan it to do it that way. it suggests it was in the the works -- maybe vikram caught wind of it and said i'm off now. you wouldn't plan to do it in the way that it happened one day
after the earnings announcement. >> precisely. so by in the works, i mean that there must have been some kind of discussion going on between o'neill and corbett about what might happen next. but the timing is still incredibly odd. what happened didn't help citigroup's reputation for being a well managed firm. this was not a well managed transition. >> what's interesting is you did see shares respond positively, so if you were to just go on that cue, you'd have to say despite the fact that it was messy, there's something investors like here. >> i think what investors like is the idea of change. pandit had a really tough job. so looking at citigroup stock price decline during his tenure, he was brought in as mr. cleanup. it's not fire to ascribe the decline to him. but investors didn't regard pandit super favorably. he wasn't regarded as a jamie dimon type. people had questions about his
strategy, his charisma, and the number of missteps that happened under his watch. and of course the compensation issue. i don't think there is anger or fear in the investor class. there's just a sense of come on, citigroup, couldn't you handle this a little bit better? >> if there's talk of that shrinking or divesting assets, now having a firmer group at citi, what that would imply for valuation. >> well, that gets into this whole interesting question, this renewed speculation and push about breaking up the big banks, and you obviously had a couple of people who were instrumental in assembling the big banks, to sandy wile come out this summer saying we've got to break these things up. and this isn't so much a sense of right or wrong or are taxpayers still on the hook, it's really a question of where shareholders' interest is. interest has certainly added to the debate of would you get more
value if you broke these things up. there's long been a saying about citi being too big to manage. if you break it up, maybe you could turn it to something that could be more well managed. >> kol plecompletely overshadow goldman's report. where does this leave the other guys? >> both jamie and lloyd have better reputations as executives than pandit ever did. dimon is obviously the king of wall street, the most successful ceo in the wake of the cry circumstances and he's a guy unlike pandit with immense personal charisma and i think you can't discount the importance of that in this job. you've got lloyd trying to get out there and put the same stamp on himself that dimon has. a big move at that firm. i think they'll be pressured to break up the other banks, too. >> bethany mcclain. that's it from kelly and i.
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good morning, today's top stories, the bulls battle back. the dow and the s&p 500 are again in the back for october. another session, another round of tests. quarterly results from bank of america, black rock, and others. plus, economic data on the housing market. and your money, your vote. president obama and mitt romney go toe-to-toe literally in a town hall style debate last night. among the topics, the economy, taxes, energy policy, immigration, and women's rights. it's wednesday, october 17th, 2012, and "squawk box" begins right now.
♪ i want candy good morning, everybody. welcome to "squawk box" here on cbc. i'm becky quick along with joe kernen. there were sharp exchanges of the candidates. among the most notable, a disagreement about energy policy. >> in the last four years, you cut permits and licenses on federal land and federal waters in half. >> not true, governor romney. >> so how much did you cut them by? >> not true. >> how much did you cut them by? >> governor, we actually produced more oil -- >> no, no, how much did you cut license and permits on federal waters? >> here's what we did. there were a whole bunch of oil companies -- >> i had a question and the question was how much did you cut them by? >> i'm happy to answer the question. >> and it is? >> here's what happened. you had a whole bunch of oil mp