tv Worldwide Exchange CNBC November 29, 2012 4:00am-6:00am EST
. welcome to "worldwide exchange." i'm kelly evans and these are your headlines from around the world. europe follows asia higher after a pop on wall street. president obama and congress make positive comments about avoiding the fiscal cliff. and uk banks brace for possible new rules on capital and lending as bank of england governor mervyn king prepares to unveil
his financial stakt reporbility. and the search is on on for the winners of the pow ball ticket as two tickets matched all the numbers in the $580 million drawing. we're getting a lot of green on the heat map and not a lot of red. sur enough, the stoxx 600 is up 0.8%. we can take a look in at the bourses and almost a mirror image of yesterday. ibex 35 adding 1.6%, cac 40 up more than 1%. the dax adding 0.8%. and we just got german unemployment figures. plus the foot city 100 up 0.8% this morning. so pretty much a strong session across the board. again, following what we saw in the u.s. yesterday. take a look at the bond wall here of course we have an italian auction coming up later and italy's ten year, below 4.5%
this morning. so price rising. that yield falling. spain also benefiting. that yield down to 5.2%. bunds creeping back up to 1.4% level. let's key in on currency. the aussie dollar despite the broader risk-on attitude a weaker. dollar-yen moving higher 82.13. and the nikkei is adding to its string of gains throughout the month. euro-dollar rebounding off yesterday's trading session to add 0.1%. let's check in on how the asia trading session went overnight and for more, deidre wong morris joins us from singapore. >> well, it was a very good session over here, as well. headline driven. but a good session on the back of that optimism for fiscal
cliff talk. all except this glaring spot of red. shanghai composite finishing lower for yet another session. it keeps falling further and further. doesn't seem that there is anything that policymakers or investors can do to lift sentiment in this market. different story in the hang seng, rebounding up about 1%. so a tale of two very different markets. hang seng up nearly 20 percent year to date. if you're playing china in both markets, very, very different views. the kospi is up 1.2%. asx 200 up 0.7%. major miners in focus. bhp and ceo coming out with comments that we'll talk about later. we have the japanese market continuing their rally. it's been quite the rally over the last few week.
topex you might want to watch. goldman sachs year's target up by some 8%. there is still up side of about 20%. you could see some gains if they are correct. but the knee he kay 225 recouping losses from yesterday to continue on that rally. up 1%. sharp was in focus today on talks that they may be signing some investment deals with dell and other companies. up about 3%. so nice pop there. also the japanese markets very much trading on politics. opposition leader expected to be elected as the next prime minister on december 16th, i believe, and he has been very aggressively talking about monetary easing. so that has really driven down the yen against the u.s. dollar. so the dollar as you mentioned is getting against the yen as we speak. >> that sea of green only highlighting the underperformance of the shanghai composi
composite. for now italy is on track to meet its funding target for 2012 with the sale of 5 and ten-year debt today. the treasury is scheduled to auction up to 6 billion euros and those results will be out at just after 11 central european time. the key vote tomorrow in greece. called to approve the latest tranche of aid for athens. silvia is in berlin ahead of that vote. we weren't sure whether it could happen as isn't as today, but it looks like tomorrow. >> yes, exactly. if anybody is wondering why i'm there a day early, it's because we were really sort of touch and go because actually the debate and stro vote was scheduled for today, but the opposition got their
heck he wi heckles up and said where's the rush, gives us time to study the papers. and i suppose they have a point considering the fact that i think it took them a year and a half to not decide whether seeshl securi social security recipients should get 50 more euros a month. if they hand out the 40 billion, maybe they should debate that a little longer. and the other argument of course they had was everything that we're signing up for now in terms of the greek deal things on the greek buy back program which is supposedly supposed to be finished before the eu summit on december the 13th. so before that, none of what they decide now is relevant except on paper anyway. but as you said, they finally agreed after the budget committee and the capital markets committee and the finance committee met yesterday and were briefed on all these
measures and had a debate about all these measures. they decided to go ahead with the vote tomorrow. we should be done more or less by lunchtime. and then there will be a great sigh of relief at least for merkel and schaeuble that they can go into the next euro group and ecofin and the summit with a decision under their belt. but no denying the fact that the air is getting thinner. the opposition is getting a little bit more exasperated by the salami tactics. >> even as you're discussing this, want to bring the news that the spd leadership has advised the party to vote yes on greek aid. any quick thoughts on that? >> the thing is they don't have any problems with the greek aid. that's the curious thing about it for merkel. they have problems with being rushed. they say this is not a democratic process. there are very complicated measures that we have to look at.
by yesterday morning, they didn't even have a translated version of the agreement that had been hacked out in brussels after several all-night meetings, i might add. and it's a very complicated deal. you have to give us a chance to look and make up our own mind. other than that the opposition is behind helping out greece. but they want a bit more openness and a bit more maybe truth from the government. >> silvia, thanks for your thoughts on all of that. if more year joined by julian. welcome. you're out with a view on your next year that doesn't sound too rosy. you talk about the economy contracting half a percent. challenges in the core countries. so walk us through how important the german vote is tomorrow and whether greece gets its aid as to the more broad brooutlook. >> the outlook is not improving. it's deteriorating for the
eurozone. economic fundamentals are getting worse particularly in the countries of germany and france. these are the countries we revise down the most. in the periphery, there are signs that the recession is stabilizing. we're below the consensus. typical view is that the economy will broadly stagnate next year, we think it will continue to shrink and the ecb will continue to cap interest rates and perhaps at shall point the bond buying program will be in spain. >> and so when we talk about the sequence of events that markets are looking for the next couple of months, the main one still seems to be when spain asks for aid. pushed into the first quarter of next year now in your view? >> i think there are two windows of opportunities really. the first one stretches in to the first few months of next year. you can call it the first quarter as an example. after that, the window will
close. it will be more difficult to ask for help. it that window might reopen, but only after the electionowar year end. so there are two windows. one market pressure doesn't seem to be there and the other is political pressure. >> we were just showing the chart of the ten year in spain. 5.2%. can it continue without spain asking for aid in if i'm spanish minister, i'm saying why should i sign myself up for further austerity measures when conditions are moving in my favor. >> that's an important point. it is true that the mere existence of this wih back stop safety net have made movements less volatile. there will be ups and downs, but it appears to be smoother. >> and i wonder, too, about germany's response to all of
this. we've seen the intransigence when it comes to the banking union, mutualizing debt. how much have those concerns been allayed without actually having to trigger the brprogram? is it more of an issue next year if and when countries need help from the eurozone institutions? good this wil >> this wille a long process anyway. it will be important next year. if you look at our alter in a sif a n alt alternative scenarios, progress toward banking union not to mention will fiscal union, if we have a u turn, that will bring fresh down side risks. >> is the biggest risk factor the german elections, evolution of growth in france, something else? >> right now in the near term, the biggest risk is the slow
down in core europe. more broadly really is policy and politics both when it comes to the longer term response and the near term response. should it happen, it will introduce fresh down side risk. >> and perhaps a buying opportunity. but we won't get into that just now. thanks very much no yofor your this morning. starbucks has introduced its priciest brew yet. and you'll need to shell out $7 for a 16 ounce cup of the new limited edition companihe haedi. it's made from a rare hard to agree varie grow variety and makes us ask the question whether you would pay $7 for a cup of skroe. and with the exchange rate over
tim geithner will head to capitol hill today to meet with congressional leaders on, yes, the fiscal cliff. geithner's president lead negotiator in the budget talks. he'll meet first with harry reid at 10:00 a.m. and then with house republicans including speaker john boehner, eric cantor and paul ryan. geithner will lunch with mitch mcconnell and then house minority leader nancy pelosi. president obama is signaling he's flexible on on where tax rates should go for the wealthiest americans. a return to the clinton era tax rates would have households pay between 36% to 39%.
the president met with a group of 14 ceos wednesday afternoon. they offered support for resolving the if i can crisis with a proposal for higher taxes for those who make more than a quarter million dollars a year. sdl bo >> both sides have acknowledged that there will be revenue concessions and sbilgtment cent concessio concessions. i'm not a master of the political art here, but i would say if you have these point of views in a business context as close as they are, i would say a deal would be in reach. >> ford chairman bill ford junior agrees with blankfein saying he's confident the obama administration can reach a deal with congress to avoid the fiscal cliff. but speaking with reporters in bangkok, he says the automaker is prepared for any outcome. cnbc has learned the completion of the so-called volcker rule is being delayed until the end of the first quarter of next year instead of the end of this year.
the rule which is named for paul volcker bans banks from proprietary trading. but it's proven difficult for u.s. regulators to define and high volume of feedback has led to push back, repeated push back, of that deadline. mervyn king will release financial stability report today. there's been speculation in the report that king will raise capital requirements for banks and introduce new banking regulations. for our uk viewers, we'll bring you live coverage of the bank of england's report in just over an hour. for thousannow, chris wheeler j. what is your sense of what he could say? >> if we look at the uk banks, perhaps lloyd and those that have the biggest issues despite all the work, i think they're on a glide path to get to where they need to for ring fencing.
but the question is whether they get there quick enough. given the risks that still exist in the bargain eet, there may be -- >> what kind of tool is the financial stability report in the first place? is this an effort to just express what he thinks is in the best interests for banks? it's a bit unusual because it would be the equivalent i think in the u.s. of hearing in ben bernanke setting capital ratios. >> yeah, i think you hit the thal on the head there. this is an opinion being put out into the market and then it's clearly up to the regulator to make a decision as to whether they want to put increased pressure on the banks. but this is causing some confusion because the banks themselves can't answer the question, certainly can't tell the market ket what they think they need to do because that there's not been a clear delineation exactly what they have to get to when. and it's adding much more uncertainty. >> and we've heard from one of the bank of england governors
who has been vocal about his displeasure with the way the rules are revolving. is there tension within the bank of england as to the best way to move forward and as we see mark carney who has been an advocate of the process take over, what is that likely to imply for these banks? >> the problem here is that every time there is somebody who puts their hand up and says that doesn't cover all the risks. the big art is the calculation of assets but still quite arrest kin. and the view is why don't we just look at a very simple equity to assets ratio and then the big debate is u.s. gap versus -- >> what do you think about that idea of just looking at that more sim police it tick benchmark? >> i'm delighted because when i started in the banking in the
80s, that's what we did. but i think it's one of a number of measures. credit we saw the fed talking about european banks having to increase not just their capital, but the leverage or include the leverage position of their businesses in the united states. and i think increasingly we're looking at if you want a basket of measures, to measure the str strength of the bank. >> how much can we trust that anyone can decide what the rate level is for a variety of gauges? >> i have one client who tells me we should do away with all the regulation and get back to the regulator sitting next to the bank and looking at exactly what they require. the problem with that is then the market can't say are we in good capital position, bad capital position. but if we go back to regulation 30 years ago, it was much more
like that. much more the regulators saying we have our banking system under control because we're sure we understand the risks and what they need to have to cushion themselves against those risks. we need to have a lot more as to what that is in terms of ratios. >> we showed earlier that uk banks are doing quite well in the session today. looking forward to 2013, how well positioned are they and is a sector they want exposure to. >> so many things coming out of left field. the new strategy on the 12th of february. going through asset sales. and obviously for the asian banks, a lot of talk about the slowdown in asia. but i think if you look at retail banking, we're seeing some encouraging signs around the mortgage demand that's out there, encouraging signs about the level of loan quality. and i think also about funding
costs for the banks because i think having run very hard to include their fund, it was becoming quite an expensive issue for those banks. now we're seeing retail funding costs flip back a little bit. all of that a will benefit margins. so the the third quarter could be encouraging in terms of the basic uk business. unfortunately all the other noise around it will -- >> we've seen financials so deeply discounted. some of the concerns as you've mentioned remain cost of capital, also return on equity going forward. >> the last four years, i seem to have left my life banging my head against the wall about capital rules. i use goldman sachs as an example. earning over 30% in 2006, now trading at less than one times
book because it's only earning a short 10%. so that's the kind of problems banks are facing in the difficult markets. >> and one reason why even if there are stricter capital requirements, a hurdle for banks, but the more broadly the question earnings power. so hard to see them getting over that hurdle. >> and we don't know what the earning power of banks are thousand because we have to think about what was going on pre-crisis not just in the investment banking world, but in the corporate and retail world. people are borrowing more money, leveraging up more. to what extent will they go back to that. will credit card balancing bulge again. so not just the fact that we won't have a lot of cdls out there. it goes much deeper. >> thanks for your time this morning. appreciate it.
and again, that you news there mervyn king will be out in just over an hour's time. in corporate news, standard chartered is reportedly close with a settlement over dealings with iranian clients that may have violated u.s. sanctions. the bank will pay a fine of about $300 million to end probes by the justice department, fed treasury and manhattan district attorney's office. back in august, standard chartered pay $340 million to settle charges by new york state's top financial regulator that said the bank acted as a quote rogue institution. shares there responding positively joining the rally up about 1.7% in the session today. the world's biggest mining giants are in cost control mode. rio tinto will plan to save $5 billion in operating costs. rio says it's still pressured by weak commodity prices and the high australian dollar.
the firm is unlikely to boost difference tend because it may restrict growth. a buyer for steel works in northeast france has been found. it added the government was prepared to move ahead with a temporary state takeover if the deal was out of reach. yesterday we spoke with france's finance minister and asked him for his take on the dispute. >> due to commitments taken a few years ago not being fulfilled right now and this is why we are facing a specific situation and maybe also specific solutions. >> we want your thoughts on this. firstname.lastname@example.org. we're also hearing from those of who you have no problem paying $7 for a cup of coffee. so keep those thoughts coming, too too.
still ahead as investors count down to the new year, we're taking a look at your best trades for 2013. having you ship my gifts couldn't be easier. well, having a ton of locations doesn't hurt. and a santa to boot! [ chuckles ] right, baby. oh, sir. that is a customer. oh...sorry about that. [ male announcer ] break from the holiday stress. fedex office.
europe follows asia higher. president obama and congressional leaders making positive commentses about the likelihood they'll strike a deal to avoid the fiscal cliff. mining giant rio tinto plans to reign in spending by $7 billion, but still promises to beef up iron ore output. uk banks bracing for possible new rules. and hitting the jackpot, the search is on for the lucky winners of the power ball lockry as two tickets matched all the the numbers.
look at the yields falling to 5.22 and 4.5% respectively. italy was town break the 4.5% mark earlier. euro-dollar is rebounding. dollar-yen also moving higher. aussie dollar was an underperformer. gold prices have stabilized. what did the volatile prices mean? we're joined by scott evans. scott, welcome. the extra ordinary move yesterday in gold wasn't so much the decline as the nature of it. we saw a sharp falloff in gold and other commodities. broadly speaking, volatility when it comes to the metals, is it an important part of the
thesis for mining stocks? >> i think less so. it's more of a short to medium term call. it's much more to do on with a positive on rios, as well. if you look across the uk listed mining sectors, you come up with a reason not to buy most of them. and too much government intervention. positive impact on the weak in the real, but it for rios, it's very much a bottoming out of earnings. you have at least a positive view coming from china. voolation is very much on its side. a slight admission here that my view is you're going to start to see a bit of sector rotation going into 2013. worst performing sector in 2012, basic resources. they all had a terrible time. and i'm not saying it's a bad
time. they'll turn around and outperform. but if you're looking for a bit of sector rotation, earn i thinkings have bottomed out. i think the chinese situation in terms of growth will be better than expected. i think rios is the place to be. >> and why? >> i'm more positive on the iron ore side. and china and value ace and growth plans. look today in terms of what they've stated in their investor day in australia. they put us pretty clear outlook for what their growth patterns in terms of capex and cost production. bhp is very much a much more diversified miner, a lot more expensive. still remain as difficult investment given corporate government. a more positive view on mining
always leads me into rio. >> 4.2% today in trade. certainly looks like they're trying to reduce expenses in order to avoid some of these concerns that you mentioned. >> they're not actually pulling away the growth plans. they're making quite a commitment in terms of reducing capex, but a substantial growth plan over the next two years. so i didn't think because it was up 4%, i picked it last night. >> so this isn't reactionary to what we're seeing but you'll take it. to talk to about some of the other sectors, if you're talking about maybe better global growth next year, where does this lead them in the mix? >> i don't think i've ever recommended airlines ever as a sector before. i'm not saying rush out and buy as a long term investment. this is very much a slightly trading sector. and i still have a more positive view on the low cost airlines,
the ryan airs, who continue to take market share and operate in a more difficult economic environment much more so than the flag carriers. however starting to look at the flag carriers again, in particular lufthansa. the iberian side of it will drag earnings down for quite a long time. air france still has significant employment issues. and if you're looking for a relatively undervalued, company which is taking itself and do significant cost cutting which i think it will bring through, you have conglomerate discounted lufthansa. it makes it a more interesting stock. >> at a time when europe doesn't have a lot of demand strength, if we're talking about reducing capacity, that means higher
ticket prices and perhaps germany being one place where businesses can afford to pay up. >> i think that it's an element of probably relatively small part of overall. these are global businesses. they need to have global growth. but that is an interesting point for next year. >>'s most important for global demand then? >> with airlines it's about oil prices, in terms of capacity and reduced capacity. and i think that's the real important thing. because all the carriers are going to capacity growth and they've shrunk back from that. >> we've seen it in the airline strikes. >> i think more so with air france. >> i think you mean i'm going to have to pay more for my airline tickets. >> i think you probably are already. >> that's very true. scott evans making a recommendation on some of these airlines. thanks very much.
italian police have once again put google in their sights over unpaid tax. authorities confirm the internet giant is the subject of a flesh investigation over a probe no to tax dealings between 2002 and 2006. google says it will cooperate fully with the latest investigation. eeliving social set to cut about 400 jobs. earlier in year living social put off plans for an ipo based partly on the bad experiences of groupon and facebook. the company did report a third quarter loss which also weighed on amazon. the company own as 30% stake in living social. and the hunt is on on, someone has a lot more money walking around this morning as two winning tickets were sold in last night's you power ball drawing, without in arizona and missouri. the jackpot soared to $580 million and people scrambled to
plunge down 2 bucks for a chance at a giant pay day. winning numbers 5, 16, 22, 23, 29 and the power ball was 6. if winners elect to at that time one time cash payout, they'll split the $380 million pot. stick around. still to come on the program, two of the world's top miners say they have to tighten their belts in order to sustain growth into 2013. more on how they plan to do that next.
#. the ldp continues to maintain its lead in the latest opinion polls. these out just two weeks ahead of elections. the hawkish restoration party is also still in second place and the dpj in third. today ldp president said tokyo and the boj should work together to achieve a 2% inflation target. and the restoration party has reportedly vowed to cut corporate income taxes. two of japan's top high tech firms have decided to join forces in a bid to power up overseas rivals. more live from tokyo.
in respect. there will be a joint venture by january 2014. the integration will cover gas turbines and power systems mainly for thermal power plants as well as business but it will not include nuclear power operations. am sales of the new company is estimated to total around $13 billion, a close third in the global thermal power market. infrastructure demand continues to grow worldwide. shares surged following the nikkei report just before the bell. and that's all from me. back to you, kelly.
>> thanks very much. samsung may have found a way to get a leg up defense japanese rivals on on the digital camera front. cheri has the details from seoul. >> yeah, samsung today took the wraps off its new android powered digital camera. the camera that has a smart phone like tendencies allows users to upload their photos to their favorite social networking site wirelessly. that means you can connect without hooking it up to a computer. this may not be a break through technology, but remember, samsung is getting serious about its digital camera business when it merged its digital imaging business under its mobile umbrella. analysts say they expect a huge smart phone style marketing blitz that will in the words of samsung's mobile division chief, quote, open a new channel in
visual communications. it is big business. the sector is expected to be worth $46 billion by 2017. back to you. >> thanks very much for that. staying with cameras, will i ahmadinejam is in london to launch his first product. it's designed to turn your iphone into a super camera. the man himself has been showing off the gadget. >> i think of skins or a strap as accessory. it doesn't really have any technological components to it. because there's technology on our product, it's not an accessory anymore. i would call it a processory. >> do you think there is such a thing as recession-proof items?
you you spoke a little bit about this before. we're concentrated very much on business and on finance and the world economic crisis, things like that, and we keep looking at these consumer electronic devices thinking can we withhold another down trend. >> technology has weathered that storm. it actually created jobs. and when it comes to our schools, we're not investing in education so that tomorrow we could be innovative to create new innovative platforms that could weather the next one if there is to be one. so we could learn from what's happening now to protect us in the future and that is education and investing in science, technology, engineering, mathematics and schools. >> there's speculation that you'll be doing a tv show to find the next steve jobs or the next bill gates for an example. you can really find the bill
gates through a television program? >> you can find the next bill gates through a competition. whether the competition happens online, in a fair, on tv is not important. but the competition is important. the challenge and the ob kestac and tools is important. >> you talk a lot about fashion and technology and incorporating the two together and there seems like there's a lot of focus on that. >> like that scarf you have, it's nice. but other than keeping your neck warm it doesn't do anything else for you. and in this day and age, it can do a lot more. it can tell you your temperature, it should be able to tell you how much calories you you burned, it should be able to tell you -- just by
looking at the scarf. so fashion has not been brought up to speed with today's technological capabilities. it's as if for one introduced them. that can serve more than just keeping your neck warm and being pretty. it can do a lot more. >> somehow i read this as a sign of the apocalypse. speaking of which, a 13-foot tall, weighs four ton, meet japan's robot. no particular purpose according to its inventor other than to shock and awe. it has a system that includes a gun which can shoot thousands of water bullets in one minute. it can also be fired when the pay lot is strapped in just smiles. $1.3 million. stunning. okay. coffee giant starbucks has introduced its priciest brew
yet. $7 for the 16 ounce cup of the new limited edition coffee with a long name. the brew is made from a rare hard to grow variety. we've been asking if you would shell out $7 for a cup of joe or what the most is that you've ever spent. and be honest. email@example.com. @cnbcwex. it's a literal mine field for rehe owe continue toe and bhp billiton. they've had to navigate through slumping commodity prices, slowing demand and strong aussie dollar. deidre huang morris has the details on how the two are planning to keep up growth. >> yes, rio tinto and bhp giving comments addressing investors. cost cuts war common theme. no surprises there given
declining demand as well as fallen commodity prices and rising operating costs. tom albany said the company seeking more than $7 billion in spending cuts and savings. we caught up with him in sydney and here's what he had to say. >> we should expect growth to be less than in the past and we should take the time ourselves, look at our own cost structure and roll back some of the cost increases we've seen to something that is actually more sustainable. >> meanwhile bhp said that it was remaining cautious about prices for iron ore and coal in the near term given the global economic challenges. now, another common strain in both the comments from the ceos, it was china of course. and china's economy has slowed this year putting pressure on commodity prices. but both ceos were optimistic. and they were optimistic by the way on the economy of their largest customer.
so have a listen to how bhp's ceo put it. >> china's gdp growth is expected to be between 7% and 8% in the coming years. and while this is lower than the double digit growth rates we saw over the last decade, we should understand that this growth is off a much larger base and, therefore, this growth will still underpin the growth in commodities demand. >> rio's tom albany says that he was cautiously optimistic on the chinese economy. so, kelly, there you have it, both ceos fairly optimistic about china, but i can't get that image of the robot you you just showed on air, so maybe in everybody owned those, their business would be doing just fine. >> we want to get more on the sector from chairman of cef holdings. warren, thanks for joining us. if we look at the shares of miners, re's continue toe up
more than 4% in the market. how much further might it run? >> i think it's probably going to be pretty limited, kelly. that's a nice knee jerk reaction. the fact of the matter is that these are costs that should come out of the business as a natural management tool that should be and ongoing program. it shouldn't be announced with great fanfare as a great chief the. these costs should come out as a regular operating control mechanism. so i think ultimately we'll have a little bit of a comeback here in the price. >> warren, this is dee in singapore. you're sitting in hong kong, so let me ask you about the china side of things. you're quite optimistic about china's growth saying in 2013 it will be minimum 7.5%. but this new leadership is coming in, they'll take the reins in march and the government has long been trying
to ship the source from growth from investment and the massive spending plans on infrastructure to domestic demand. so if that happen, how do you see the effect on commodities? >> first of all, i think that it is an admirable goal, but it is going to be a bit of a challenge. i think at the end of the day, the economy will probably continue to grow as it has in the past in the foreseeable future for the next two, three, four years. so as long as we have growth in the 7% to 8% range, that's still going to be very bullish for commodities. certainly in the longer term as we move more to consumers, that will have an impact on the mix of metals and perhaps we won't be growing quite as strongly in coal and iron ore and more in shall we say second and third wave metals. and he mentioned titanium
dioxide for example as an input that will increase in demand as this switch to consumerism grows. but in the near term, i'm not expecting that much of a shift. i think we can rely on copper and iron ore and bulk materials to be the beneficiary of china growth. >> so maybe you're a little bit skeptical about that shift happening anytime soon to domestic demand. but let me ask you about corruption because the government as well has had an eye on corruption and there are many that are skeptical that they can do anything about this. but an whying story saying mining companies will have to conduct public surveys before they can start projects. so a lot of public backlash in china, some environmentally cautious citizens also protecting their land rights. do you see this as a potential problem for the mining industry in china? >> i think that's a great development. obviously virtually everywhere
around the world you have community engagement when you're launching -- the goal is susta sustainable development and you have to have local communities on side in order to develop long and the project has to benefit the local community, as well. so in terms of having more public engagement, more grass roots ensganlgment with the public in china as with everywhere, this is a good thing. >> the sharp selloff in commodities yesterday that we saw during the session in the u.s., and the extreme underperformance of the shanghai
composite on a day every bourse across the globe is up, it's still in the red. >> the shanghai composite is a challenge not only for the chinese economy, but for the central government. i would expect that we will continue to see some moves in terms of stimulus in order to support that market. clearly there is no at great deal of investor enthusiasm at the grass roots level in china. but i must say in the mining sector, shareholders have felt somewhat hard done by over the last five years in terms of feeling that not enough of the higher prices have come to benefit them as opposed to money being put back into the ground for long term project development. and what you saw with rio tinto today and bhp was a continual address of that main point which is let's reduce capex, reduce
opex as much as we can and try to return more to shareholders. >> we'll leave it there, warren. thanks so much for your time this morning. dreer dra wo deidre, we'll be back with you in a little bit. we know you'll run out for your $7 cup of coffee. china gdp, a report claimed per capita expected to exceed $10,000. that would be a doubling of last year's figures. the official said this is partly because of the country's rapid development in its central and western regions. which is helping to boost incomes. let's take a quick look at what's on the agenda in asia tomorrow. japan will post a batch of key october data including inflation household spending and industrial output. india will report second quarter gdp figures. and one of china's oldest software developers king soft will announce it profit results.
attendees are arriving at the qe-2 conference center in central london ahead of the presentation of lord justice levinson's report on uk press standards. you can see live shots of the arrivals. the long expected and wide ranging report into the culture practices and ethics of the press will be published at 1:30 p.m. london time. that's about 8:30 in the morning eastern time. it will be laid in both houses of parliament at that time and we'll be live outside the conference center later in the show. also still to come, pension funds seeking fresh investment ideas are turning to the credit market. what it means to retirement next. can i help you? i heard you guys can ship ground for less than the ups store. that's right. i've learned the only way to get a holiday deal is to camp out. you know we've been open all night. is this a trick to get my spot? [ male announcer ] break from the holiday stress. save on grounipping at fedex office.
welcome back. ross west gate is away. i'm kelly evans. and these are your headlines from around the world. europe follows asia higher. president obama and congress make positive comments about avoiding fiscal cliff. rio tinto plans to rein in spending by $7 billion over the next two years but still promises to beef up iron ore output. the bank of england governor prepares to unveil his financial stability report. and the search is on for the
lucky winners of the power ball lottery as two tickets matched all the numbers in the record $580 million drawing. u.s. futures, dow jones trying to grab back the 13 thurks level by opening higher this morning. 68 points for the time being. nasdaq and s&p also give you sense of the sharp risk.morning. 68 points for the time being. nasdaq and s&p also give you sense of the sharp risk.opening. 68 points for the time being. nasdaq and s&p also give you sense of the sharp risk. global 300 up half a percent and we rarely see it move that much. ibex 35, up 1.3%. pretty much a mirror image of yesterday. even the cac 40 up better than 1%. xetra dax adding 0.7%. the ftse 100 up 0.9%.
this one supported both by banks and by miners. rio tinto adding more than 4% this morning. now, take a look at what's happening in bonds and the level on spain and italian ten year debt. italy will be out with it at auction later, but for now, its ten year is below 4.5%. in spain the ten year is now yielding almost 5.2%, so the rally in the wake of the deal in greece continues. yields in the u.s. and germany. so more of the core are moving up a little bit in response. a quick look at forex. euro-dollar in particular, seeing a rebound after yesterday, now adding a quarter of a percent nosing back towards that 1.30 level which is remarkable in the light of things. aussie dollar continues to underperform. down 0.1% in an interesting development as again we've seen this broadly speaking better tone. one other area of weakness overnight, the shanghai composite in the red even though
asian markets broadly are were in the green. the shanghai continued to shed on that index. a quick look at commodities. we saw huge and interesting moves in gold and some of the precious metals yesterday. today spot gold down 1% just about. silver holding up a little bit better adding there after falling sharply yesterday. brent and nymex both up. $110 is the level on brent. nymex still below 90%. deidre wang morris has plenty more details from singapore. >> shanghai composite continuing to bleed. this index was this positive territory just slightly for most of the session. but in the last hour gave up all gains to end down half a percent. what's interesting is we had news in the last hour of trading
that transaction fees for trades would actually be cut. so i don't get it. investors found reason to sell. but there were a few bright spots. saic motor up on the session after its joint venture partner in china gm announced that they were building another factory. and elsewhere the hang seng up to the tune of 1%. we were also looking at a chinese automaker here and actually it was down i should say, this is after goldman sachs said it was selling its stake. however shares have doubled this year. so kospi down 1.2%. we have the asx -- i think i said down. it was up 1.2%. i know that in london rio tinto is gaining some 4.5%, but not nearly as strong here. below 1%. the same for bhp billiton. but those miners were in focus as well as providing some support for this market.
we had better than expected numbers out during the session. moving on to the japanese markets, these have been rallying over the last few weeks. took a pause yesterday. but continued right back on that rally today. the topix is one to look at. raised target by 8%. nikkei 225 gaining 1%. however, we did have some disappointing october retail sales numbers. that could not stop the rally here. also a quick mention of sharp, a major gainer in japan, up more than 3% after talks that it was in a deal for some investment in dell and some other firms. so kelly as you can see, a very good session over here, but doesn't seem to be as good as the one you're seeing. back to you. >> deidre, thanks very much. what we're seeing in terms of the italian and spanish ten years also get something headlines when it comes to shorter yielding debt. the french five year bond now fallen to a euro era low of
7.3%. the belgium yield doesn't want to be overlooked. its ten year has hit a fresh euro era low. remarkable. u.s. treasury secretary tim geithner will head to capitol hill today to meet with congressional leaders on the fiscal cliff. geithner is president obama's lead negotiator in the budget talks. he'll first meet with harry reid at 10:00 followed by john boehner, eric cantor and paul ryan. geithner will lunch with mitch mcconnell and then he'll meet with house minority leader nancy pelosi. president obama is signaling he's flexible on where tax rate shoes go if the wealthiest americans. return to clinton era tax rates would have house holds playing between 36% to nearly 40%. the president met with a group of ceos wednesday. they offered support for resolving the fiscal cliff crisis with a proposal that
includes higher taxes for those who make more than a quarter million dollars a year. >> at this point both sides have acknowledged that there is going to be revenue concessions and there will be entitlement concessions. in fact if you listen to it, again, i'm not a master of the political art here, but i would say if you have these point of views in the business context as close as they are, i would say a deal would be in reach. >> interesting. bill ford jr. agrees with blankfein saying he's confident the obama administration can reach a deal with congress to avoid the fiscal cliff. but speaking with reporters in bangkok, ford says the automaker is prepared for any outcome. and it seems there's been a bit of a panic among retail investors in the credit market amid pointing fears other the fiscal cliff. our next guest says that could create buying opportunities. he's brian reynolds, chief
market strategist. brian, good morning or good night, i guess i should say, depending on whether you've been to bed yet. >> good morning, kelly. >> thanks very much to joining us. talk a little bit about what we've seen in the credit market as the fiscal cliff approaches. should the nervousness be actually a buying opportunity here? >> it is a buying opportun especially from the perspective of the large state pension plans that drive the majority of the activity in the credit market. we saw retail investors panic a little bit, they sold some of their junk bond etfs, premiums narrowed a little bit. but in general, the credit market hasn't flinched at all. we did see the equity market put a little bit of panic in in november. but skred flcredit flows have b strong. we've sold 160 billion of new corporate bonds even while they were equity jitters. that's a record. so credit investors are acting
as if the fiscal cliff is not a problem at all. >> so what then accounts -- because we have seen a bit of a selloff in high yield in some areas of the market. so there does seem to be some reaction. that in your view reflects moore nervousness perhaps among some of the retail buyers? >> it's just retail that we've seen the panic in. and retail is only a very small component of the credit market. the main action is driven by our large institutions like pension funds and insurance companies. and every time this month that there has been weakness from the retail investors, those large institutions have stepped up and bought more corporate bonds. and that's putting a ton of cash into corporate balance sheets. so if there is somewhat of a panic in case they don't reach agreement on a fiscal cliff, that means companies will step up and buy back their stock. so this is very much like the negotiations in the summer of 2011. it's a politically created event. it's subject to the whims of politicians. but at the end of the day once
the dust settles, the credit market will be okay and that will help lift stock prices back up. >> and also a point about how much money pension funds are putting in to the credit market. this is a group that traditionally was invested in equities. now they're looking at credit. all the money will go somewhere. pushing people ultimately into the stock market next year. how much further is this going to run? where are we in this cycle broadly speaking? >> we're probably only in the fifth inning. pension funds have an almost insatiable demand for more. paul volcker chaired a commission this summer, he estimated that the pension gap for public pensions is $3 trillion. there's only $5 trillion of investable corporate bonds. so that tells you how strong this credit boom is. it's trestretch like the one th lasted '03 to '07, only this one will be much longer duration because the need is even greater
now than it was five or six years ago. >> that's remarkable. you're staying with us. we want to get a few more thoughts. first, though, a quick check on what else is on today's agenda in the u.s. we'll get the weekly job last claim figures at 8:30 a.m., expected to drop 15,000 as we continue to work through hurricane sandy can disrupgss. gdp growth expected to be revised higher. and 10:00, october pending home sales. and for earnings, kroger, tiffany, barnes & noble. now, the british are taking chicago by storm. we'll take you to the windy city next for the unveiling of burberry's new flagship store.
iberia labor unions have confirmed they'll call a six day strike in december. it will start december 14th and last through december 21st. this comes amid the airline saying it will slash about a quarter of the spanish airlines workforce and cut capacity as part of a restructuring plan. air freight traffic slowed to 3.8% year on year growth and just under 2% month on month growth for the month of october. passenger air traffic was up 3.2% this october, but it did actually decline in october by 0.2%. so a cautionary sign there for global demand. moving on now, costco is just one of the several u.s. companies deciding to issue a special one i'm cash dividend to shareholders. the new is aimed at helping investors stay ahead of automatic tax increases that will take effect in congress fails to resolve the fiscal cliff. in a twist, the retailer is
issuing $3.5 billion in new debt to pay for it as a trait up payout would have exlahausted mh of its cash reserves. brian, the news with troor italy, it has gone to auction and raised a total of just show of 3 billion euros. ten year yield 4.45%, bid to cover did come down. the five year yield 3.32%. also lower bid to cover, but a total of $3 billion for the five year, just about $3 billion for the ten year. that's consistent with the rally we've been seeing. ten year at 4.5% there. yield lowest since november
2010. now, moving back over to the corporate side, brian reynolds is still with us. i want to talk about the trentd of companies borrowing in order to pay out dividends. it would be one thing if they were putting the cash piles we know they have to work. what do you think about them tapping debt markets for the purpose? >> as i said earlier, demand for corporate bonds is insatiable. they're willing to buy anything that any company will issue. so if you are a ceo of a company and rates are at historic lows, it makes a lot of sense to tap that unlimited flow of capital. that's very similar to what we saw from '03 to '07 where these outsized needs, they buy all these bonds and it puts tons of cash on the corporate balance sheets. so rather than deplete your cash reserves, if i was the coe of costco, i would do what he did and just borrow the money at a very low interest rate and give to the shareholders. >> absolutely.
makes a lot of sense from the issuer's point of view. but what does it mean from the investors point of view. when you're talking about releveraging the balance sheet to pay out the dividends, does that z. it make the investment fundamentally less attractive? >> the first few years of a credit boom, normally see balance sheet repair. and companies have put a lot of effort into repairing their balance sheets. so corporate leverage has gone down. now we're kind of at an inflection point where leverage will start to creep up. credit cycles always end badly, but given the demand for corporate bonds, that probably won't happen for another two it five years. so while we're in this credit boom, it makes sense to do that. eventually credit booms end. they always do. but right now with yields at an all-time low, you're going to see more of this type of activity go on. and also for buy backs. buy backs have done almost a
trillion dollars. and that activity is going to accelerate given that the corporate bond market will get better and put even more cash into corporate treasuries. >> this certainly is an opportunistic move, but is there any sense in which it will undermine wealth generation, wealth creation down the road if this is ultimately what companies are doing with their money? >> ultimately if you borrow to buy your stock down and you leverage up too much, that eventually turns bad and you get into a bear market. that's what happened in 2007. that bear market lasted until 2009. eventually leverage will rise to a point people will overdo it, they always overdo it. but while they're doing it, it's a positive for share prices. net-net, it's a negative overtime. the stock market hasn't done anything the last 15 years because we've done the boom-bust cycle investing on behalf of the pensions. this is the third time we've
done it in 20 years and the stock market hasn't done anything for the last 15. >> it's remarkable because what you're basically saying is history will repeat itself and by the way this credit boom will be bigger and badder than the last one. so it's almost like get out on the dance floor and dance while the music is still on because it will end so badly again. >> exactly. it's a game of musical chairs. it's great while it las, but while the music stops, it will be really bad. when this credit cycle ends, we'll probably have more leverage than we had at the end of the last cycle. so the next bear market is likely to be worse than the last one, but that probably doesn't happen for the next two to five years. so stock prices are probably going to go up very significantly the next two to five years, but when the credit cycle end, you have to get out. you can't own stocks in this environment, you can only rent them. >> oh, my gosh. brian reynolds, fascinating point. we'll have you back on repeatedly in that two to five
year period. brian, thanks. stick around, flex we'll talk oil prices and the outlook for 2013 with a guest who says fundamentals are still soft. and this is a shot of the christmas flee rockefeller center. now lit and a lovely looking shot there as we head to break. i always wait until the last minute. can i still ship a gift in time for christmas? yeah, sure you can. great. where's your gift? uh... whew. [ male announcer ] break from the holiday stress. ship fedex express by december 22nd for christmas delivery.
welcome back. u.s. futures are looking to rebound quite sharply this morning. dow jones implied to add about 66 points at the open. this follows strong trading in europe and asia with the exception of the shanghai overnight. bp has been banned from winning any new federal contracts in the united states. the u.s. government suspension is over the energy giant's role in the 2010 deepwater horizon oil spill. you can see bp shares this morning still adding almost 0.2%. but underperforming the market. for more, we're joined by kneel atkins atkinson. this move seems pretty extraordinary. in your view, is it unusual for the u.s. government to respond this this aggressively in this case or do they have a basis for doing so?
>> i think the u.s. government will never pass up an opportunity to basically kick bp when it can because bp has become the boogeyman of the last 2 1/2 years. ever since the original explosion, i think we've all been expecting that bp would find itself in great difficulty when it came to getting further exploration contracts in the gulf of mexico and indeed elsewhere in the u.s. >> it certainly wouldn't be surprising that they have a hard time getting the contracts even if they had come out the week or the month that this happened and said you're now sus pinneded until we sort this all out. what strikes me strange is the timing. we're two plus years after this event. why now? >> because of course the doubt come of the case a couple weeks ago where bp was found to be criminally liable, where the huge fine was levied on bp, where three individuals were the subject now of criminal charges. so in a way it's understandable why it might be happening now because of the outcome of those cases. but it's not a permanent
explosion of course. it's the on ongoing litigation continues until we reach more settlements further down the road, at which point bp may be told, okay, you've served your punishment, you're back in the game. bp is still necessary in the u.s. >> that's what's also interesting. can bp challenge the decision? >> i suspect even if it could, it won't. it's an administrative measure rather than a pure legal thing. the problem for b about p is simple. 20% of its production comes from the u.s. it has to stay in the u.s. but on the other hand for the u.s. government, bp is a major supplier of products, aviation, fuel, diesel fuel to the u.s. military. i may be wrong, but i think it's the biggest supplier of oil products to the u.s. military. and it isn't easy for the u.s. government just to turn around and say you're no longer supplying to the u.s. military because somebody else has to
have the logistical capability do it. >> i just wonder about -- maybe it's unfair to call it vague -- but to sort of accuse them of having this internal culture that they're concerned about. you mentioned they were found criminally liable for what happened with the oil spill. that points to major problems. but again, are you concerned at all about the basis on which the u.s. is making this decision or the press department that it might set? >> i think it is a very dangerous precedent and i am concerned about it. but i think the political realities here are paramount because there is still ongoing litigation at federal level, at state level and local level. and i think in a way it makes some sense politically for the u.s. authorities to say to bp you've been called criminal in court, we're now moving you there your ability to participate in contracts until you purge yourself essentially by showing us that you've changed. >> how long will it take for all of these various lawsuits?
>> i've read, and i don't know much more about this other than what i've read, but they're talking about a period of about 1 months. but it could be shorter and again depending on the outcome of the main litigation, it could be longer. >> and just quickly, we're seeing a rally in crude this morning. what's your view into 2013? >> i think oil fundamentals are relatively soft. there is plenty of supply out there. we have more production from saudi arabia, from iraq, from the united states itself of course. and on the demand side, we're constantly cutting back our projections for oil demand growth because the economic outlook is not as rosy as we might have expected. so i believe in 2013 we'll see the price for brent hovering in the region of $95 to $110ish. and the u.s. wti price somewhere in the region of $20 to $25 below that range. >> we'll see what it means it
for producers. december 12th is the next meeting. nooem neal atkinson, thank you very much for your time. still to come, luxury retailers enjoyed black friday. investors in the high end chains aren't feeling quite as well off. we'll have a live report from one of america's top luxury retail districts, chicago's magnificent mile.
welcome back. i'm kelly evans. these are your headlines. europe follows asia hire after a pop on wall street. president obama and congressional leaders make positive comments about the likelihood they'll strike a deal to avoid the fiscal cliff. siof a for the eurozone, italy sees its borrowing costs to two year lows at auction as french and belgium yields hit their lowest since the adoption of the euro. uk bank lending to the real economy falls at the fastest rate in more than two years. bank of england governor mervyn king is about to speak about the financial stability report. and the search is on for the lucky winners of the power ball lotto as two tickets matched all the thumbs.
. bank of england has unveiled its latest report. here are some of the headlines. some fighting words from the bank of england. it says uk banks need to raise more capital or, quote, restructure their businesses. says they may have understated likely futures losses on loans. mervyn king, are the bank of england governor, is talking. do we want to listen in? let's take a listen. >> -- still required in the euro area. inevitably that has implications for our own banking system and economy. against that background, the financial policy committee's primary concern has been to ensure that uk banks have sufficient capital to underpin the resilience of the banking system so that they are on a solid footing to support economic growth. the danger to be avoided is that of inadequately capitalized banks holding back our recovery.
over the past year, the pbc has emphasized the need for banks to continue to build and maintain capital buffers against unexpected losses. for example, arising from euro area investigations. and uk banks currently report substantial buffers over the minimum required level. but in judging whether banks are adequately capitalized, we need to ensure that reported capital ratios do in fact provide an accurate picture of bank's health. at present, there are good reasons to think that they do not. that uncertainty around capital adequacy is in part responsible for low investor confidence in banks whose equity is valued by the market at on average only two-thirds of its book value. investors need confidence banks have adequate buffers against stress in order to be willing to
fund them at the low rates necessary to support a recovery. >> so stated levels of uk bank capital are misleading. mervyn king there delivering his financial stability report. the uflt k feed will continue to take his comments live. we want to focus on the reaction that we're seeing across banks and markets. we can take a quick look at those boards. futures are still poised to open significantly higher. not too much of a hit in the u.s. market still looking about 67 points it to the up side for the dow jones industrial average. if we can show uk banks when we get the flashes up, those are pairing their losses a little bit from earlier this morning, although whether it's rbs, barclays, almost 1% respectively, hbc and lloyds up better than 1%. that's helping bolster european market which is are seeing strong rallies.
for more, we're joined by chief investment officer at aegis capital. we're turning our attention to the u.s. trading session. any initial reaction, though, to what we're hearing from the uk with regard to bank capital not being sufficient? >> it's a concern. again, like our budget, it all has to do with row informatipro how long the long portfolios will perform under stress. and we failed pretty miserably on stress tests over the years. so i'd be concerned about it, for sure. >> and as we start looking in to 2013. >> i think financials have some pressure. obviously there is still a very low interest rate environment. previous guest alluded to what i think is a bond bubble that's kind of formed. and it's really synthetically
engineered by the central banks keeping rates what would be artificially low. so as long as banks can come to the window for almost free money, they can do a carry trade and rebalance themselves and shore p up their balance sheets over time. >> do you look into next year and start to see a better atmosphere for equity performance? we were just talking with brian reynolds earlier about strong fundamentals for credit. that about on the equity side? >> well, i'm very concerned about it because we seem to have a difficulty really getting global growth together. there has been signs particularly in the latter half of the year that there has been a globalized slowdown. and i worry about it in relative terms to the fiscal cliff. what bothers me about our situation and the situation in europe is that the political forces and the structure of these repairs take a long time,
they misdeadlines continually, and they only do something when we get to the brink. we had a mechanism here in the u.s. with the sequestration process and everything got kicked down the road. we have a great opportunity to make major changes for the future and see if those pro formas actually work out as they're supposed to. but we've got to tweak it because that exponential function of increasing the deficit and increasing the aggregate debt against the backdrop ofactuarial certainty is really concerning. so the market seems to be very, very much focused on events and is driven by those reactions as we've seen. there's a lot more volatility creeping in. >> and given what we're talking about, all the risks you've laid out, what's getting some attention is the fact that the vix is now not the above 20 for four straight months. the last time we had a stretch
that long was heading in to the early part of 2007. so do you interpret this as a good sign or is this in your kind of reasons to be cautious camp? >> i'd say reasons to be cautious. people forget what the vix is actually about. it really measures future performance or participation. so if you get what we refer to as complacency, you're not seeing very many bets against a downturn or even hedges against a downturn. so if everybody is getting on one side of the trade, similar to what happened with gold last year, when everybody was on the gold trade, we started to get very concerted that almost close it to the top everybody said, hey, if anybody is on the same side of the shapip, maybe the sp is a little unstable. so i do worry about the vix because the vix is a good indicator of more balanced in
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global markets are higher. italy borrowing costs dropped to two year lows. two tickets matched the record $580 million power ball drawing. mervyn king is still speaking. we can bring you the highlights. pretty strong words for uk banks here. he's saying reported capital does not give a good picture of bank's health. the capital ratios are overstated. that he sees material implications for the adequate of banks capital. while the problems are manageable, king is saying banks must give immediate attention to capital problems. the aim of course is to restore investor confidence in uk banks. he says no taxpayer funds will
be needed to raise uk bank capital and that the needs will vary radically from bank to bank. interesting. take a look at the bank board. we'll see how shares are reacting. a little pull back. most trading at or about 1% gains for the morning. now rbs up just half a percent, barclays about 0.4%. hsbc still holding boabove the level, but lloyd just adding 0.8% this early trade. european markets now. we can see adding nearly 0.9% for the ftse. so not changing materially. the ibex 35, cac 40, still up better than 1% this morning. now attendees are arriving at the qe-2 conference center in central london. the long expected and wide ranging report into the culture, practices and ethics of the
press will be published at 1:30 p.m. london time, that's about 8:30 a.m. in this morning. when it will be laid in both houses of parliament. and our very own katherine boyle is outside that conference center live. what can you tell us? >> reporter: thanks, kelly. yes, the next chapter in this saga of the uk media crisis is about to be written today when he delivers his report. and this was originally ordered in the light of the allegations about phone hacking at some of rupert murdoch news corp's newspapers. and let's not forget that saga is also continuing, we've seen rebekah brooks, and another former murdoch executive, in court related to the allegations. now, the levinson inquiry has taken in a huge range of people from all walks of life in the course of the inquiry.
we've seen actors like hugh grant and sienna miller, rupert murdoch himself appear and uk prime minister david cameron to talk about just how close the links were between the media, between the press, between the politicians and between the police officers. for example in the uk. what we'll looking to hear from lord levinson is just how far he'll go in terms of whether there should be statutory regulation of the press in the uk, something which hasn't existed for four centuries here. and in recent weeks, a lot of the key members of the press in the uk here have started almost to panic slightly to come up against any kind of statutory regulations, urge that there should be an independent body to govern them. but that's the key thing we'll look thinking for today. that's what will affect news corp and other companies going forward. >> katherine boyle reporting for us live there. again, that levinson report due
out at 1:30 london time and raising plenty of concerns about press freedom in the uk and globally frankly. now retailers are due to reveal a boost from black friday when they report november same store sales throughout the day. but find out why mother nature could put a damper on one iconic jeweler when we come back. home
expected to show a gain of about 1%. and we'll hear from kroger, barnes & noble, tiffany. u.s. futures are pointed higher. dow by about 67 points over the 13,000 level. s&p 500 over 1400 as it looks at about 7 points at the open. u.s. retailers will report november same store sales giving investors a glimpse at the state of holiday spending. tiffany reports ahead of the opening bell. but hurricane sandy could put a damper on christmas at tiffany's and other retailers. that at least is the view of stacey widlitz.
welcome. let's talk about difference tif. >> it's rounding out retail earnings season here. and we've heard from a slew of luxury retailers that things are decelerating in asia, decelerating in the states. so certainly expectations for tiffany are low. they've basically told us don't look for any growth in the quarter that they're about to report. >> that's extraordinary. >> yes. and they basically also told us put everything in the fourth quarter that's when we'll see growth again. very tough comparisons in this quarter. the comparisons get lighter in the fourth quarter, so we'll see. but the business is tough. >> is that the case for retailers more broadly? >> you are hearing from some retailers that they're saying back half weighted year. that's the old excuse in retail. certainly you never like to here a back half weighted story. >> and it would suggest that they better come in strong. what's the expectation?
>> i think we just rounded out retail earnings. we've heard from most retailers in the past few week. we had a strong black friday weekend. spending was up between 12% and 13% according to the stats that we have out there. and that was certainly led by online spending this year. >> when we talk about november, too, the trouble it will be hard to tell with the sandy impact as to whether that will hurt the headline. any sense anecdotally or your sense of store traffic as to what sandy's impact was? >> i think it was a drag for most retailers. we heard from kohl's sax, that it was a drag. also the tiffany flagship store represents about 8% of overall sales. so expect to hear the sandy excuse certainly as same store sales roll out and as well from
tiffany. >> especially in a year when you expect the push pushes them into the black for the year, actually all the discounting really starting to hurt retailers' bottom lines? >> that's the question. this year discounts were so heavy. so is black friday really turning in to red friday. typically it signifies the beginning of when retailers start making money. but you saw that the promotions were crazy. there were televisions at best buy for under $200. that was a 50% discount. walmart was guaranteeing in stock on ipad 2s giving away a $75 gift certificate. so the question is are they just giving away sales here. >> and that will be something to watch when we he get those figures, too, whether it reflects discounting as much as it does volumes. >> right. >> stacey, thanks very much. and as mentioned, we'll get tiffany's results before the opening bell. the rest follow later in the day. but in the meantime, we want to head out to chicago. there are dark clouds hanging over the luxury sector. it's been a mixed picture for several retailers.
but courtney reagan joins us from the famed magnificent mile. what's the mood there? >> reporter: you know, it's not so bad. it's obviously pretty dark, pretty cold here in the windy city, but when we're talking about luxury, it is a mixed picture. you've got the economic conditions remaining sluggish over most parts of the developed world, the fiscal cliff looming in the krund. but accenture says that over the next six months, still over half of americans plan to buy a luxury item. and there is no better time to do so than during the holidays for many. it's been a rough last three months, though, for a number of the high end stocks. those economic pressures certainly weighing on the high end consumer. but many do think that fortunes will reverse here in the holiday quarter. so when it comes to who is poised for the most luxurious holiday, many analysts are counting on the high end players, the high end department
stores over those pure luxury brand plays. >> i think they are having a psychological effect right now and i think that will cause cautious spending in the holiday season, the last quarter. and if the resolve is made to increase the tax rates of the rich, it will definitely hit the pocketbooks. >> reporter: now, key bank analyst edgar ruma does think nordstrom is perhaps the best positioned. it's a high end department store here in the united states. and it has a good positioning in california where he says macroeconomic is improving a little bit better than in new york when it comes to the tourist spend. that's very important for luxury. and unfortunately, we're just not seeing it like we were in
those new york luxury department stores. with that being said, remember luxury doesn't do door busters really. it's quite the opposite. they go for the price premiums. quality very important to many consumers. in fact 75% of luxury consumers say it is the number one most important thing. but i think what happens out of washington will very much determine how the holiday season shapes up for the luxury retailers. >> that's for sure. courtney reagan braving the cold there for us. really appreciate it. want to bring and you couple news flashes. welcome back our uk viewers who have been listening to mervyn king. keep an eye on crude before we go, up over 1% as the ieae chief is calling for urgency in iran talks. and we'll leave you for the day. here is u.s. "squawk box." we'll see you back here tomorrow. can i help you?
today's to which stories, the looming fiscal cliff. congressional leaders and top white house negotiate tors are set to meet on capitol hill today. the economic agenda, we get a second read on third quarter gdp. and weekly jobless claims -- third read on second quarter. confusing. and weekly jobless claims before the opening bell. and the richest power ball jock pot ever and the second largest top prize in u.s. lottery history. why anyone would buy a ticket when becky and andrew were already going win is beyond me, but two tis