tv Worldwide Exchange CNBC March 4, 2013 4:00am-6:00am EST
hell lowe. welcome to today's edition to "worldwide exchange." i'm ross westgate. >> and i'm kelly evans. >> hesitate are your headlines around the world. >> china's mainland markets knocked off balance by beijing's latest property curb, hitting shares of real estate developers there and around the world. the battle lines are drawn in d.c. after the sequester goes into effect. but for now, the white house and republicans aren't giving any ground. plus, executive pay is in focus across europe with voters overwhelmingly backed plans giving voters more say. >> announcer: you're watching "worldwide exchange," bringing
you business news from around the globe. welcome to today's program. >> and you're headed to italy. >> i am. >> it's supposed to be about emerging markets and global growth and all those sort of issues, but it happens to be in italy where we don't have a government. >> speaking of italy, can we go ahead and show my favorite chart. if you look at what's been happening on market action, we've seen the back up at 4.9%. you have to wonder, oh, look at that. beautiful chart. you just have to wonder if we're heading that toward inversion. usually it's a gauge fof eu crisis risk. promise, plenty more on that on the show later. >> gilt yields down at two-month lows, on the other hand, post the moody's downgrade.
>> exactly. so lots of market chatter to get through. >> and lots to get on today's show. besides that, president obama and congress failed to reach a deal to avert $85 million in automatic spending cuts as the sequester kicks in. we'll be in washington, d.c. as we look ahead to what's next in the budget battle and the potential impact. >> swiss voters overwhelmingly backed voters to get a cap or executive pay. and the bonus battle launched into london's property sector. the talk of capping bank bonuses as a possibility to end central london status as a real estate safe haven. >> clearly not the case in china this morning as real estate developers suffer their worst. how much lower can the index go? we'll ask at 10:30 cet. first, hsbc posted full year earnings just below expectations.
coming in at $20.3 billion. that compared to an average analyst forecast around 23 billion. the bank has pledged to raise its dividend next year's growth and its core asian markets are predicted to boost its capital. shares have had a pretty volatile start to the day, down 2.6%. julius, managing director for uk banking, thanks so much indeed for joining us. what are your thoughts on what we've heard this morning? >> it is a little bit below the forecast, but a robust performance and reflects the fact that hsbc are to some extent ahead of the curb in terms of doing some of the real global restructuring that these groups have to do. >> it's interesting because we're seeing so much strength in the businesses. uk and europe down significantly. where does hsbc go from here? >> well, there is a, you know, too big to grow question mark over any of these groups. hsbc has proved that quite early coming out of the insurance
business in china and pang an. completely out of general insurance worldwide, reducing its japanese food print. what you see is they make clear choices around emerging asian and material markets. they put that into the future. i think the risk for all groups, the sun charts, the city, the global groups with asian aspirations are going to make the right betts in emerging markets. not all emerging markets are going to come up with a tie this time. >> what is the right emerging market, do we know? >> i probably wouldn't have to sit here if i knew the answer to that. indonesia has the right kind of demographics and basics. >> i wonder how much more the uk might shrink and is whether the latest back and forth or the bonus caps that are being discussed out of brussels will have anything to do with that. >> i don't think you make decisions about the structure of your business based on those
factors alone. really, it's fundamentally around demographics. demographics, trade flows, growth potential, and whether the regulatory environment in the round is particularly ba nine on the line. but on one of those issues, we're not going to make a ten-year decision. >> but on the fundamentals which have clearly deteriorated, we get a fresh numbers today with the spanish unemployment. they did not do well in these markets. does that call into question their future operations here? >> well, the whole of legacy european banking, let's call it that, has a return on equity which is currently below cost of equity. so you could say the whole of legacy european banking at the moment doesn't have a future. that could find a way back. >> are you talking about across the sector or just -- >> the whole sector. >> for the whole sector. >> and how much is the uncertain nature of future regulations also going to be a cause to weigh in on sentiment? >> it's a very big factor. every time we get a set of results out, we get a big
restructuring chart from one factor or another. penalties on ppi in the uk, penalties on money laundering. the suv on the horizon looks crazy and uncertain. the icb review for the uk could have an impact of $1 billion to $4 billion per annum. we're halfway through the ppi. we have 12 billion and we may have another 12 billion to go sterling. that's before we get into some of these other issues. >> and stewart grover future? >> he's been restructuring hsbc for two or three years. i don't know what his personal plans are, but i would say he's safe at the helm. hsbc has been a business growing sense 1865 and it shouldn't underestimate the amount of pain you have to go through to restructure that into some businesses. >> i think there's a job in italy that may be open for someone who could restructure a couple dozen units, cut costs,
perhaps you can have a chat down on -- where are you going? ambrosetti? just a thought. julius, good to see you. china's stocks have plunged overnight to their lowest level since 2008, leaving a drop across markets as tightening measures have kicked in to ease home prices. you can see the shanghai composite down there 3.6% today. the government is stepping up its three-year campaign to cool the property market. did i edra joins us for more. what measures are they that are going into effect here and do you expect more? >> well, kelly, the government talks a lot about these measures, a lot of talk about the clampdown on the property sector. it's really confusing because sometimes they say they've never gone to place. but in this case, investors stir. today was the eve of the national people's congress. that is the biggest most important political event in the
country all year and this is the damage. policymakers were probably hoping for stability. they got this, volatility. the shanghai composite was down 1.4% at one point, ending with lows nearly 11.7%. the shanghai composite down 3.7%. beijing has been on a campaign to cool the property sector for the last three years. but we've seen increasing prices as well as sales. there has been rhetoric trt government saying they would clamp down on this sector. higher down payments, higher mortgage rates, that got investors spooked. we saw them limit down. it affected shares in hong kong and affected sentiment all across the region as far as australia and certainly in europe, as well. it will play into your trading day over there. now, all this, as i said, on the eve of the npc where property is certainly to be in focus as well as pollution, corruption, economic reforms. now, the new set of leaders coming in not exactly known for
their political reform agenda. but they are known for their economic reform being a little bit more aggressive on that side. so we are going to be looking ahead and, of course, kelly and ross, as you saw, it had a big effect on the stock markets here. so investors are certainly going to be looking. and you know what? honestly, i wouldn't be surprised the if property shares saw a big rebound yesterday because that's the nature of this market, guys. it is momentum driven. you can see limit down one day and limit up the next. >> deidre, thank you so much. >> let's bring you up to speed with where the implications are for equity. an hour and ten minutes in the trade, weight is to the down side seven to three. we can look at hsbc stock in london and the ftse 11100 off firmly above 6300. the xetra dax off 0.6%.
we see the ftse mib down another 1.4% this morning. what is the china affect? weaker sectors, basic resources down 2%. then we've got banks being dragged by hsbc. defensive and health care utilities up and telecom tt best performers. we talked about the spread between italy and spain narrowing. we're not far away, around 30 basis points. narrow spreads. ten-year gilt yields, now below 1.9%, 111.8%. we're down at fresh two-month lows, as well. on the currency markets, the aussie/dollar taking something of on a hit, 1101.32 is where we stand at the moment. so the aussie get to go an eight-month low. investors spooked by beijing's decision to hit. the property sector, dollar/yen, 93.60. euro/dollar, flat 1.30 mark, as well. sterling is hemmed down at those lows of 1.5042.
let's check in on the rest of the market action, go back to singapore. this time we're joined by sixuan. hi, sixuan. >> thank you, ross. what a day for the china rs bos. the stock market, indeed, not celebrating the two sections of the npc and pccc. the shanghai composite lost nearly 4%, seeing its steepest decline in months. property stocks took the main fall with a subindex slipping over 9%. we also saw broad based losses in property related sectors such as cement and steelermakers, home appliances. so from upstream to downstream took a beating today. the property sector dragging the hang seng lower by 1.5%. shine na's came under pressure. but the nikkei endinging higher by 0.4%. property developers, on the other hand, got a nice boost on
the thought the boj wasn't continue to pursue aggressive reflationary policy. elsewhere, south korea's xosty lost 0.7%. china related stocks such as chemical and steelmakers weighed on the markets. australia's asx 200 fell 11.5% on profit taking ahead of the rba meeting and more economic data later this week. resources lost ground on fears of a china slowdown. india's sensex les than ann an hour from its market close currently trading lower by a modest 0.2%. >> sixuan, thanks very much on that. news on our website, a couple of stories you might want to follow. the italian election and u.s. budget cuts may provide uncertainty. head over to cnbc.com and find out what he has to say about the wave of new money that's actually the driving force behind recent gains. but watch out for the falling oil price. u.s. oil consumption in to 12 hit its lowest annual level since 199637 and despite
potential protection from the upcoming jobs report, others predicting u.s. crude futures could drop below $95 a barrel. might be good news for consumers. tom smith explains how his company is overcoming the challenges of the shipping container industry, often seen as a global gauge of demand and some weakness ahead of what he sees for 2013. ross. >> yep. meanwhile, the battle lines between brussels and the uk on big bonuses have been drawn, but could splashing compensation affect the boosted property markets? according to our next guest, it already has. find out how when we come back. [ male announcer ] let's say you pay your guy around 2% to manage your money. that's not much, you think. except it's 2% every year. go to e-trade and find out how much our advice and guidance costs. spoiler alert: it's low.
welcome back to the program. swiss voters overwhelmingly backed a plan to give shareholders overwhelming authority over beanus pay. and it requires greater disclosure on loans and retirement packages. the proposals now go to the swiss parliament where lawmakers will draw the new legislation and the rules could come into law as soon as next year.
carolin roth is in zurich. are the swiss shooting themselves in the head here? >> well, that's hard to say. a lot of people say it could impact switzerland's competitiveness negatively, though other experts have told me this morning that the fundamental res still in place because switzerland has a very low corporate tax rate, still has the right business environment. now, also, we're going to have to wait and see. to what extent these strict pay laws are actually going to be xwlekted because some people say they could be watered down quite significantly. but what it does ensure, of course, is this, you know, lower extent of short-termism in the swiss labor market. so it ensures that no corporate executive from overseas is coming to switzerland just to get that big signing bonus. but i just want to show you what the reaction has been in the newspapers. the french daily says this is a triumph. and you see his corner office as
being smashed here. now, another paper says this is the historic coop. of course, they're referencing to the person who is behind this idea. the initiator. his name is thomas menda, and he's a politician who has been slobbying for this referendum to take place for more than four years. and he is now being called the new robin hood of switzerland. ross. >> does he run around in green? carolin, thanks indeed very much for that. it's a very big man called little something or other. over the weekend, british politicians described proposals as a moronic piece of economic policy. the prime minister david cameron called for the initiatives to be more flectble. but politician might find support within europe. german and french finance ministers recommending that the eu business finance plan be watered down.
this as we've heard from hsbc this morning. highest paid banker is not a director. he's paid 7 million pounds for 2012, as well. so the highest paid employees were paid 27.8 and that's five of them. >> and that includes 21.5 million in bonuses. so there's basically 20 million in bonuses. that's a -- that's more than one to one. >> yeah. or two to one, which would be -- it is more two to one. meanwhile, british politicians may have an impact on the economy. is it too late for central london's red hot property market? according to a new report, cash sales fell by a quarter last year. there has already been an impact on the bonus culture received.
good to see you. is it cash bonuses having an impact? and how do you separate cash bonuses out from also that duty level, as well smp. >> i think it's a complex situation, really. what we've seen is that last year 75% of properties and prime central london were bought in cash. this year, it's 50%. and that is in the prime central london. so we're talking about the core area. >> how many of those buyers are overseas? >> that's a good question. it's a mix. i think it was overstated because is a banker working in this country here an overseas buyer or -- >> no. i think purely of money that has come -- >> a lot of that is there is caution, but a lot of the overseas money is going to the new build property as well as the other locations. so there is a proportion of that. but i think it's a complex story, really, because, one, there is a little less lump of
cash around. but also, prices have gone up over the last year. prices have gone up over 6% in central london. therefore, if you're buying a 1 million pound property, which that doesn't buy much in that area, sadly, that is on top of that, that is quite a lot of extra money. it's over 50,000 pounds. >> 7% now over 2 million and that has to be paid for in cash. >> absolutely. so we're seeing people buying with mortgages because they need the extra because there's less cash. so they're having to pay more. also, because of property, because of the extra costs, we're are deciding i want to buy for the longer trm. i want to reduce those costs further down the line. so i'll buy slightly more now, therefore mortgage, and there are more mortgages around now. >> they're actually a pretty good value. if you're putting in quite a chunk of deposit, no doubt these people still will. you get some extraordinary
five-year record low rates on the five-year money. >> that's right. light the rest of the money. but some of the high street banks are getting back into that market. >> is this not a lucrative place for them to look now, they're probably a relatively high credit quality. >> yeah. i think the difficulty is, though, we don't quite now how the remuneration structure is going to work in the future. and a lot of banks, particularly high street bank, want something quite simple and -- >> well, the good news is, these guys are going to have much higher based incomes. >> we think. there we go, yeah. if that's how it works out, then everything is fine, yes. i suspect it could be more complicated than that. >> okay. they're going to get higher based income? >> no. it's a great point it's hard for them when you have such a variable income to convince the bank to give thaw -- >> that's why if you wait for the bonus, you -- >> do it all at once. >> if you were earning a hundred
thousand and is then you were getting a 900,000 bonus, it's hard for a bank to work that and that is so variable every year. and then they'll give you a 300,000 pound salary or whatever. a 300,000 pound bonus. >> has it resulted in the changes clients are looking for? >> i think there isn't much property around. so the fact that we've seen less people buying with bonuses hasn't affected the market. we're still seeing prices rise. >> what's the supply like? >> people are not selling, partly possibly because they're being cautious and staying in the market. people are staying put because they can't find somewhere else to go to. >> is it also because there has been an influx of investor buyers or long-term -- i mean, if long -- central london has become a safe haven for int international money, those people presumably stick it there and walk away, right? >> yes, i would agree with that. but lots of that money has got
into property and the flats. let's say they're sort of working finance family looking for. they're looking for family homes and, you know, in these areas and where are they going to find themselves having to move out of villages or further out and further out or we certainly are after town. and given how prices are going to go, by the end of the year, they'll probably be about 10% ahead of the peak in prime central london. and it becomes harder and harder. for a family home that is a good commutable distance. >> and that's if you're a working finance family, not to mention just a typical working family. thanks very much for coming by. >> that's good news. thanks very much for that. yep. let's recap where we are with hsbc share prices. >> we're down almost now 3%. >> 3%. 2.98%. >> and we'll see which one is -- this one is slightly delayed.
hsbc shares not responding well to that news. >> it's an overlay of news, isn't it? they're supposed a bit to what happens to china and china's property, as well. so we have that overlay, as well. meanwhile, has arsenal football club -- have you gone to an arsenal football game? >> i should because i'm in the neighborhood. >> it has become the latest middle east takeover target. there's a 1.5 billion pound target for the team and it's requested a meeting. but the sporting franchise includes the nfl's lui rand has no intention in selling his stake in the club. and don't know your shanghai shenuous from your beijing yuan? that might be all about to change as the chinese football association has named david beckham his first global ambassador for football. beckham said he was honored.
the chinese super league co comprises 16 teams across asia. he's now topped out. >> take your word for it on this one. >> do you know who dennis rodman is? >> i do know who dennis rodman is. former nba basketball star, he's been speaking out about his friendship with king jong un. he was asked about pun yang's right to destroy america. the u.s. state department has criticized north korea for wining and dining rodman while its people go hungry. meanwhile, rodman had his own message. >> i think he's going to change something. it is a different view. i sat with him for two days and the one thing he asked me to give obama something to say and
do one thing. he wants obama to do one thing. call him. >> call him. on that, we want to know, are athletes helping or hurting the cause? are they better diplomates than politicians or do they just interfere? >> i don't know. get in touch with us. e-mail us, firstname.lastname@example.org, tweet, @cnbcwex. still to come -- >> property markets are sent stocks tumbling. what's on the agenda this week? >> more when we come back.
hsbc stocks are down after recording a profit of $20 billion. it has lifted its yearly dividend. shares of real estate developers in china are tumbling. the budget battle lines are drawn in washington after a sequester goes into effect this weekend. but for now, the white house and republicans aren't giving any ground. and executive pay is in focus in europe. swiss voters have opted to give shareholders a greater say.
>> we've got data out. february construction pmi 46.8%, 48.7% in january. the poll was ready to tick up to 49. it's the lowest since 2009. >> that follows the disappoint we just saw in manufacturing. >> and we got the latest on the bank of england's lending scheme. net lending to lending scheme, sure, i have to work this out, kelly. >> negative. >> since june 30th, negative 1.5 billion. >> lenders have drawn down 13.8 billion in the sls since launch. >> and i suppose it's still waiting for that to leak through. >> lloyds has lending of 3.11 billion. minus 3.1 billion. barclay's fourth quarter net lending, 1.49 billion. right.
not helpful. >> we're going to take a walk through those numbers and follow up on this. sterling/dollar, about 0.1 is% weaker. it did bridge the 49 level. not just personally, but jaus just because it's been such a fast move to the down side over the last couple of weeks here. the question is, again, with the latest set of data, we saturday to sit below -- >> 1.50 is not any technical level, but it is deeply psychological. people have extra additionally looked at sterling/dollar trading on a -- >> cable. >> cable, yeah, trading on a purchasing parity between, you know, 1.50 to 1 is.65 is about right, somewhere in that spread. so anything meaningful below 1.50. >> like you said, i does have an impact on psychology and beyond trade beyond whatever the latest chart level might be. >> take a look at the bond space. here is a broader look at what's
happening. look at that, sitting below that 1.30 level. a lot of key levels here today that we're watching. the aussie/dollar is 101 to the u.s. dollar. i think this is a story, if i can point, how about that? look at that. does that work? anyway, the ten-year in spain is falling. the 10-year in italy is 4.8%. i think that spread itself could be used as european crisis stage. the last time we saw spain above italy was a year ago. this time around, will it be different? >> yeah. but then both sets are coming together. here we have spain coming down. meanwhile, the shanghai composite has suffered its -- do you want to look at -- what do you want to look at? european markets. let's take a look at those. >> and now the shanghai.
this is the story, anyway. we might as well just look at it, down 3.6% on the latest move to curb property markets there in china. it's amazing how quickly we started talking about tightening as opposed to last year when concern about hard landing was all the rage. the shanghai composite has suffered its biggest loss in months. limit down today on the back of fresh tightening measures on beijing. for more, joining us from singapore is andrew leon. andrew, there was some suggestion that this was spurred, as well, by a media story in the u.s. last night. "60 minutes" did a story on the chinese property market. the question is whether today is an overreaction to some of these headlines. >> well, i don't think it's an overreaction, really, because we were seeing china with this national people's congress ordered to meetings. it's after it's going to be a kind of equitable change in
china's policies. this is because the policies is an existential threat to its stability. so they'll probably change the economy, they'll probably change the society in order to maintain the stability. economy, as far as the economy is concerned, there's is a huge kind of bubble developing in the property market. and, of course, premier wen jiabao wants to leave a legacy of some sort of credibility policies to maintain the stability in the market. as far as the society is concerned, there's huge inequalities. we're seeing policies which would put more emphasis, more investment in health care, education, infrastructure, to balance the society and balance the economy towards more local consumption. >> if that is an incurving development, why are stocks getting hit so hard? >> well, it's because of the
clamp down on the property market and with the clamp down in the property market, there's going to be tightening of lending. there is going to be a ministry of controls against speculative in flows and speculative investments. and is, of course, these investment res huge. is and so people are looking for other opportunities, for example, they would like to invest more in the stock market. but unfortunately, china's stock market is also policy led. and then with the new leadership coming, although there are some positive signs, still people would like to adopt a wait and see attitude. and all this translates into a more cautious appropriate to investment. >> if we saw this hit to the property sector today and the shanghai xotsit was rallying because people were going to rotates funds out of property and into stocks or because we saw strength in the consumer names, then, perhaps, you could tell a more encouraging story. today they would suggest whatever process spengts for
investment, investors broadly would hinge on what's happening in the property market and absent that market going gang busters, they're not interested. >> well, apart from the property market, though, call for china's economy is driven by something more fundamental. and look at the urbanization story that is going to define the development over the next five years and more in the new cities and also the growing middle class, the policies askew to internal consumption. so you're talking about retail sales, registering were a healthy sign and the building of cities and roads and high speed rail translates into investment in infrastructure. together with transport and all the basic commodities which goes into building of cities. so all these also present investment opportunities. but at the end of the day,
there's no -- it's a no-brainer, sort of putting your money locked up in banks, paying very, very low interest rates. but while there was an asset valuation increase. so money is going to chase after, you know, higher returns. but unfortunately, there are lots of other uncertainties a and -- in the market at the moment. >> andrew, liquidity is one thing you don't want to reduce, liquidity is probably one thing you don't want to do in the property market because it will drive up prices. >> well, of course, the government wants more liquidity to help with the small and medium size enterprises. but as far as the enterprises are concerned, they have too much liquidity and they have a very close relationship with the
big banks. so it's the balance this kind of dichotomy. on the run hand, the china's leadership would like to clamp down on a lot of speculative investments. and in the fact going towards reform of the prices, they want to provide more liquidity to the small and medium size enterprises. >> andrew lung, thank you for that. a ruling in its favorite with the ongoing apple, samsung got a boost. the smartphone will continue and the new trial is being set to determine damages. and joining us from seoul, chery has more on the story. >> hi, ross. the $1 billion victory that a u.s. jury gave apple over samsung last summer was cut by more than 40%, that is for now.
a judge said that the jury, the damage payment was incorrect and is that she needs a new trial to determine the final dollar amount of damage payment that samsung needs to pay apple. samsung was happy about this ruling saying it was pleased about the cuts. but did ask that it's seeking further review as to the remaining award, which means it's looking to further cut the damage payment if possible. this case is not over. we still need to continue watching how the new trial goes, recalculate the damage payment on 14 samsung products and that recalculation of the damage payment in the new trial doesn't necessarily mean a smaller damage payment down the road. plus, we also are eyeing the international trade ruling due out in august on whether they will face an import ban.
basically, we can say whether this is a partial and temporary defense for samsung and that we still have a very long way to go to see the end of this story. ross, back to you. >> chery, thanks for that. sony wants to be number three in the smartphone business after apple and samsung. that pits the japanese company against chinese phonemakers, as well. according to abc, sony came in fourth place last year after wahwei. shares have outperformed the broader markets today. we have the story live from tokyo. >> yes, kelly, the bank of japan's newly nominated governor has told parliament he will take whatever measures necessary to
bring an end to more than a decade of the world's third largest economy. this morning, the current head of the asia development bank says he will work on bold monetary easing in order to achieve bog's 2% inflation target. the time frame in his head is around two years, pointing out that the boj's effort buying scheme had not seen enough in terms of scale and scope. can you roda says he plans increases giving government bonds as an example. the boj currently buys jgb set in sterling one to three years. he also will consider bringing forward boj's plan to introduce unlimited monetary easing which is currently set to start in 2014. now, the tokyo market welcomed the pledge for the aggressive easing and the nikkei 225 even touched the full year end price month high. the foreign exchange market
reacted and the yen started 93 again against the dollar which was a one-week low. the leading party hopes to pass that before the new governor sits down. now, china is to be mum on its military spending plans for now. beijing typically reveals the budget a day before the national congress. but today they declined. the official did say china's defense spending is not a threat to any other country. last year, the official military budget rose 11%. analysts say the actual figure is likely much higher while they've increased spending on the nuclear ars mall. i love that. it's not a threat. >> no, clearly. the world's biggest aluminum produces is feeling the effect
of less prices due to tough market conditions. the result wasn't as bad as some analysts have been forecast b. but sales still underperformed the broader hong kong market down near 3.5%. and let's take a look at what's on the agenda in asia tomorrow. the npc continues. the 12th national people's congress officially begins where the decade transition will take approximately two weeks. australia is expected to hold rates steady at 3%. we have key earnings due from property developer vanke and haitong international. after hsbc's results, you can bet there will be a focus on standard chartered. looks like they're down. but, in fact, everyone else is weakening further. still to come on the show, italian politician beppe grillo
is calling for an online referendum and the latest on attempts to form a government when we come back. [ male announcer ] here's a word you should keep in mind. unbiased. some brokerage firms are. but way too many aren't. why? because selling their funds makes them more money. which makes you wonder -- isn't that a conflict? search "proprietary mutual funds." yikes! then go to e-trade. we've got over 8,000 mutual funds, and not one of them has our name on it. we're in the business of finding the right investments for you. e-trade. less for us. more for you. the fund's prospectus contains its investment objectives, risks, charges, expenses, and other important information and should be read and considered carefully before investing. for a current prospectus, visit etrade.cotualfunds.
italy's president has made comments and is largely pushing towards a technocrat government. meanwhile, five-star leading beppe grillo has been quoted in a german publication asking for an online referendum of the euro. he says he is a fan of europe, but it is the italian people who should have a say on membership. good to see you. the italian yield is spiking up. how much closer is that going to get, do you think? >> we think the italian yields will continue to rise. there is potentially some feel-good effect here if a coalition is announced. during the weekend, there were talking about a coalition between the democrats, pd and
grillo. i don't think that a coalition will last longer. because the parties defer a lot on key issues like tax he, accurating the debt. we have situation short. we took our short off a few days ago. >> grillo is not really a party, is it? i mean, you know, let's look at the people who have been late. aren't they there? they'll vote on issue by issue law by law. >> i agree with you. on the run hand, this could be taken positively by the market. but it will not last long. my view is there will be elections in the next six to 12 months. you first need to elect a new president. you need to wait until may until the new president is elected. and after that, you can call for -- >> what happens between now and
may? >> there is a lingering of two to three months. >> all of the markets push italy's hand during this period of time. do you think they're going to look through it and say, well, we just have to wait a little while for this process to move forward or do they choose this market to attack? >> the markets will test anything that is not a stable majority. during these two or three months, firms won higher. you have a status in the economy. everything is stock. and this makes growth deteriorate even more. >> all right. let's get a couple of other stories, as well. italy's antiausterity vote established a prime minister over a proven techocrat, but could this be germany's fault? find out why that might be the case if indeed it is on cnbc.com. jobless claims up 11.2% in february according to the latest figures out of the labor ministry. that means almost 1 million people were out of work at the
end of 2012. stephane pedrazzi has more out of madrid. not a very encouraging report. >> no. but it was expected. more than 5 misdemeanor people are looking for a job in spain. that being said, it's not the most accurate report. we have to look at the other ones from the national statistics institute, which takes into equity logistics and people looking for german -- nearly 6 million people are actually out of work, which means 26% of the population in spain. the youth unemployment rate is at 5517%, that's a record level, of course, and the situation is unlikely to improve in the next months coming, despite all the reforms on the labor market. we are not expecting any improvement because the spanish economy remains in recession. it's unlikely to get out of a recession until the next year, according to most economists. the spanish gdp shrunk by 1.2%
last year. that was the worst year since the country returned to democracy. on the grown, plenty of countries are planning for job cuts. in order to restore profitability. angry workers today, another week of strikes which is going across siberia. 1 million euros today. back to you. >> stephane, thanks for that. we're seeing the spanish ten-year continue to fall. what gives? >> there's a bit of complacent. everyone that the that the ecb would do what it takes everywhere. when a government does what it's required to do, the ecb austerity is there. in spain, there is good leadership and the deficit and the regions have done --
>> but even that leadership which is stable and pushing forward, has very fragmenting public support. we've seen a series of scandals, but that has had no market impacts the. >> and spain has a lot of improvement on the fiscal side. but growth continues to deteriorate. if you look at exports, there's been some recovery. people are talking about a revival in exports and the declining labor costs. but on the other hand, internal demand is basically collapsing at a much faster pace which means the growth continues to decline. and despite the effort to cut the deficit, this continues to pose a risk for the next two years. >> are you guys short spain? do you think the market is missing something here? >> we're still cautious on spain. one of the things we are concerned about is that the central government has been giving help to regions, to banks, local authorities, to everyone, really, and burdening its balance sheets. so we may have seen the worst. probably we are out of the cliff
affect. but we still have a lot of mountains to climb in the next few years. >> what happens to the ecb if things in italy get a little bit worse and we don't get any growth going in spain? any spot on the ecb or not? >> well, i think the major worry at the ecb is despite theirest, it will probably a back stop. governments don't respond and don't do anything back, which is potentially the case if you don't have a stable government. now, in italy, we had electiones and they're inconclusive. in spain, we had a government with a majority but there is potential risk at the regional level as well as the scandals could destabilize the current majority. we start from a better starting point politically. but a worse one economically compared to italy. >> so are investors questioning the validity? will they be questioning the validity if the politics get worse in italy? >> i think they are rethinking
about how much and how quickly it is applicable if there's no political consensus. as you know, with austerity social unrest rises, we have social unrest in sport tu begg l portugal, spain and italy. the greek economy has been a world concern since 2009. the reclassification from developing market status comes after investments failed key macro risk caps. this comes as officials are trying to determine whether to release the next tranche of aid. >> we're not too worried. they are already in a program and as long as there is a majority government which is pro euro, they are effectively bound to some extent to do what they're required to do.
>> does that include cypress inspect. >> in cypress, we're probably looking at an agreement this month, as announced. >> and that's why we haven't seen the late nest greece and cypress do more to upset the apple cart? >> yeah. i mean, the view remains that there is an agreement without a lot of systemic impact, so without dmofters seeing haircuts. we're much more worried about the two bigger countries, spain and italy, where social unrest derail the trajectory of the austerity and worry the ecb. >> and too big to fail, to some extent. >> we'll see. >> alberto, thank you, credit research at rbs. now, with all the athletes making business headlines this morning, we want to know are athletes -- politicians? join the conversation on "worldwide exchange." e-mail us, or tweet us, @cnbcwex. >> we've had dennis rodman over in north korea and making a talk
show rounds in the u.s. this weekend saying that kim jong unwants president obama to call him. you have to wonder whether all this helps or hurts the diplomatic cause. >> yes. or does it just get lost in the wash? still to come on the show, plenty more in the second hour. >> the battle is on in europe over banker bonus caps. boris johnson is calling them more onic. and we'll bring you the latest overpay when we come back.
welcome to "worldwide exchange." i'm kelly evans been. >> and i'm ross westgate. here are your headlines from around the world. >> hsbc shares are lower after the banking giant misses full year expectations of $20 billion. it does, though, lift its yearly dividend. china's mainland markets knock off balance. real estate stocks tumbling. and the battle line res drawn in washington after the sequester goes into effect this weekend. for now, the white house and republicans are capitol hill aren't giving any ground. executive pay is in focus across europe. swiss voters overwhelmingly back plans to give mra shareholders control over bonuses. >> announcer: you're watching "worldwide exchange" bringing you business news from around
the globe. so is this the week the dow jones industrial average will finally reclaim its nominal 2007 highs? this is, of course, the question. maybe we can ask warren about it. becky quick will be speaking to him coming up in just about an hour's time on cnbc. the dow jones industrial average this morning is going to make that a harder hill to climb. this comes after china in particular saw a sharp sell-off on concerns about the property market, measures to further cool it there, europe not doing much to help turn sentiment around. the nasdaq and the s&p 500 are looking to turn profits around. take a look at what's been happening across europe. also we're seeing indexes reach multi year highs before falling back into the latest couple of weeks. the ftse 100 down 0.5%. we just learned construction joins manufacturing as the sector of surprising weakness in february. manufacturing contracted for the
first time in several months last month. the construction activity is at its lowest level in 2 1/2 years. gilt taking a hit of that. potentially going to retest that level below 1.50. the xetra dax do you know 0.5%. the ibex is adding 0.1%. spain's ten-year is outperforming today, as well. we've had some lending data out of the bank of england. elsewhe elsewhere, no new net lending from it. they re-check the balance and cheaper funding coming through. as far as upon markets were concerned, we're focused here on this spread between spain and italy this morning. now around 27 basis points between italian debt and spain. spanish yields going down. also in the uk, gilt yield, 1.87%. now down at a two-month low. clearly its weaker growth helping to drive bond yields down. it was weaker growth that
moody's cited for the downgrade, but the downgrade knot having any impact on the yield level. we talked about the chinese property curve. they brought in new curves to try capital games. we're down here at 101.34.. aussie/dollar against the u.s. dollar this morning. down to an eight-month low on that basis. euro/dollar at the moment, 1.2990 is where we sand. swish win has the update in singapore on the asian trading day. >> thank you, ross. a big sell-off on chinese stocks aus mentioned. the hang high composite saw its biggest falling 19-month, dow 3.7% today. blame it on the property counters as we just talked about. chinese property stocks trade at
limit down today by about 10% on the back of fresh tightening measures from beijing. we also saw broad based losses and property related sectors such as cementmakers, heavy machinery and home appliances. from upstream to downstream all took a beating today. meanwhile, property shares were dragging the hang seng lower by 1.5%. chinese banks came under pressure after a ubs downgrade. the nikkei managed to buck the downward trend ending higher by 0.4%. property developers in japan on the other hand got a nice boost. this on expectations that the boj will continue to pursue aggressive reflationary policies. elsewhere, south korea's kospi lost 0.7%. some of the china related stocks such as chemicals and fuelmakers weighed on the markets. australia's asx 200 fell 1.5% on profit taking ahead of the rba meeting and more economic data
due out later this week. ru source stocks lost profit on fears of a shine na slowdown. india's sensex ended down by 0.14%. back to you. >> hsbc posting full year earnings today below expectations. it came in at $23.3 billion. that compares to average analyst forecasts around 23. the bank pledged to raise its dividend next year as growth in the market is due to boost its capital. shares have been dipping around 3% during the session. that's exactly where we are at the moment. thanks for joining us. what's your own reaction? >> well, these results followed a well worn path that we're seeing in the larger universal banks in particular. it's a big number, but it's
still short of expectations. but it's obviated by many different large one-off charges and profits. some sales in there sold 47 different operations in the past couple of years. >> we were joking he should go run italy. he has done a remarkable job of slimming this company down. >> hsbc five years ago had sort of lost its way. you could almost imagine that it had a giant atlas and it was just trying to put as many pins into the atlas as possible at any cost just to build this global brand. now, since 1987 they've been refocused on this strategy of this is what we do well, international trade finance and that's what we're going to do. a lot of banks have done that, focusing on what they can make money at. >> are we going to get through the exceptioners? whether it's ppi, other
scandals, continuous trading in regulation, are he we going to get through the exceptional costs? >> it's an interesting overlap. on the run hand, we're seeing the results of the new strategy since 2011. that's proved to be very good. they're ahead of their annual cost reduction. they've done that. that was the old strategy or the old problems or concerns of the market. now the new concerns of the market is how big is ppi going to be? how long is it going to continue? what are the kind of scandals that are going to come out? the more regulation, the more attention you have on banks and how they operate, the more problems we might potentially uncover. >> and the ceo was just coming out and saying the bank was loss making in both britain and the united states? >> yes. well, the united states was an epic episode for hsbc. i believe that the first profit warning in 2007 came from the united states and they distinguished themselves as not being subprime lenders, although
they premuch coined that phrase. >> they've identified some portfolios that he would like to sell when conditions improve the accelerate that runoff. >> they're really sort of refocusing. they point out that over half of the revenue drivers in these results come from the growing emerging markets or the growing markets on record. >> and tell us about what happens with the legacy stuff at home. will they ever be able to achieve its double digit return on capital here? >> well, a lot of people are stuck on this mind-set that after this crisis is over, how many we're going to return to the old levels of profitabilities that we saw on banks. by the fact that regulations demand so much more equity, not capital, but equity capital, that unless you dramatically krez your returns, obviously your roi will be completely diminished and in a completely new range. >> what you think is the most they can achieve at this point? >> hsbc is doing fairly well.
the revenues are up in all the main businesses including markets. which is always a bit of a question mark for hsbc. yes, we know asia is a great driver of the business. yes, we know they're sort of moving to develop their core skills, which is joining us business across the world, providing international trade finance. but, of course, it's not going to turn its back on the bread and butter in the uk and in europe. >> ollie, more to come with you after the break. first, head over to our website and read why one analyst says stewart gull ver's results aren't working. >> comments on the bonus plan salary caps. we'll get into that, as well, in just a second. president obama has reached out to congress seek ago resolution to across the board government spending cuts that went into effect over the weekend. republican leaders are adding little hope to an end to the sequester. the president spoke with a select group of lawmaker toes try to find a bipartisan
compromise. house speaker john boehner, he met with president obama on friday. says that spending cuts will stay and republicans won't raise taxes. >> this is not the smartest way to cut money. the smarter way would be to move a bill that deals with the long-term spending problem. you can't continue to spend money that you don't have. >> we're only going to get the kind of agreement that gets rid of the harmful sequester, that takes away from the credit shutdown and defaults if both sides are willing to compromise. >> congress bases a march 27th deadline to continue funding the u.s. government or face a potential shutdown. yes, another one, a different one. both boehner and senate majority leader mitch mcconnell says it won't happen. the national business of economics is weighing in on the sequester saying a plan is needed to cut the deficit but spending cuts aren't the way to do it.
we'll have plenty more to walk you through what's happening with the sequester, and the continuing resolution at 10:30 cet or about 5:30 for the early birds there eastern time. ahead of that, here is a reminder of what's on the agenda stateside. investors are gearing up for the friday jobs report. janet yellen will be speaking at 8:00 a.m. eastern followed by fed governor jerome powing at 1:15 p.m. the jobs report friday is going to be the main thing people are watching for. lots of central banks meeting this week, as well. u.s. budget cuts may provide uncertainty. one analyst says the stock market will ride it out. head to cnbc.com so often out
who and what is the cause of new money. despite some potential protections from the upcoming jobs report, there is worry that u.s. crude futures could drop below $90 a barrel if those fundamentals continue to change inspect. in your corporate news, meanwhile, north asia's ceo tom smith is explaining how the company is overcoming the challenges of the shipping industry. and they are legion at this point. ross. >> yeah. so what do fat cats and morons have in common? that's a question for you. we'll tell you if you don't know when we come back.
welcome back to "worldwide exchange." hsbc disappoints ininvestors with its full year earnings. shares are down. beijing wraps up efforts to call the chinese property market. and uk leaders speaking out against eu bonus plans. yes, swiss voters have overwhelmingly backed a plan giving shareholders sweeping authority over executive pay as well as giving investors power
overpayout. but the plan pays golden handshakes and separation agreements. it involves greater exposure to loans and retirement packages. likely the rules will come into law at some point next year. carolin roth is in zurich with more. carolin, how much of a setback potentially is this for the big banking industry there in switzerland? >> well, it remains to be seen. we don't know when that law will go into effect right thou. they were talking about 2014. it could be watered down, it could be delayed. we may be looking at an entry date of around 2014. apart from that, spoken to a number of experts this morning and they say no, it's not going to be hitting switzerland's competitiveness. the fundamentals are still in play. you're talking a low tax rate and is stage policy. >> it's too early to say what
the effect will be, but what surprised people is just how clear the vote oak really was. 68% of the swit voters voting in favor of that proposal and keep in mind that these are going to be some of the strictest rules on executive pay in the world. and if they're not being adhered to, some of the managers responsible could be facing up to three years in prison. so i think in large part, this is also down to what we saw happening over at novartis. remember that scandal happening two or three weeks ago when the outgoing chairman was awarded a golden handshake worth $78 million. there was a lot on r of public backlash, a lot of public outcry over that. but it was later canceled. this is in part why we saw a decisive positive outcome for this proposal. >> carolin, thanks for that. over the weekend, british shareholders -- london mayor
boris johnson described it as a moronic piece of legislative policy. the sunday times suggest both german and french finance ministers will reconsider -- or consider recommending that the bonus caps be watered down. we just heard from the hsbc ceo, as well. he said the bonus cap proposed doesn't put moving headquarters to hong kong back on the agenda. they're still assessing the impact of the new rules. that is one of the fears, ollie, is if you can't -- anybody in europe can't pay their guys, it's not even in europe. can't pay their guys in new york or hong kong or singapore, what american banks, local banks be paying their guys? how much of a disadvantage does that put them at? >> i think actually the question is how will it be implemented and how far ranging will it be? this sort of mirrors what we've
seen the ongoing debate since i think september 2011 which is the discussion of the financial transaction tax across europe. and what you see there is that all transactions, both parties to the transaction will have to pay a small fee to the government that they represent within the e you. but it doesn't matter where that is traded. you could be a u.s. bank trading in french shares and you would have to pay the tax, for example. so bringing this back to the discussion of bonuses, which i can't believe i'm talking about with you on air, but, you know, it's still very early, you'd have to see exactly how it would be carved out. you're talking about something that apply toes banks with shareholders, what about banks that don't have shareholders. >> you work in the city, you have friend in the city. are people worried about this or
are they saying there's no way? >> well, again, this is one of many pieces of legislation or regulation that's coming in to change the face of banking, which a lot of people can't really get their heads around. the knee jerk reaction to this sort of legislation is it will never happen. it can't happen. it will kill the industry, etcetera, etcetera. take a step back and think, why are they doing this? i haven't read anything to do with the eu in the past couple of years that hasn't had to do with remuneration in general. look at what we've been talking about in general on ppi or the interest rate hedging products in the uk banks. how is that linked to ferrari scale banking bonuses? >> that is for our next time. >> by 20 to us pounds, you know, and having -- >> on performance and selling products, you could argue that that drives them to more oriented volume activity. as i say, we need to pick up on
this. ollie bank, senior bank analyst at rabo bank. china property stocks have a domino effect on asian markets today. what can we expect during the national people's congress as it kicks off this week? >> when we come back. with the spark cash card from capital one... boris earns unlimited rewards for his small business. can i get the smith contract, please? thank you. that's three new paper shredders. [ boris ] put 'em on my spark card. [ garth ] boris' small business earns 2% cash back on every purchase every day. great businesses deserve unlimited rewards. read back the chicken's testimony, please. "buk, buk, bukka!" [ male announcer ] get the spark business card from capital one and earn unlimited rewards. choose 2% cash back or double miles on every purchase every day. told you i'd get half. what's in your wallet?
major story markets today. china's property stocks plunged to their lowest is levels since 2008. shanghai composite down about 3.6% today. the government is stepping up its three-year campaign to cool the property market. deidre has more from singapore. >> today was the eve of the national people's congress. that is the biggest, most important political event in the country all year. this is the damage. policymakers were probably hoping for a little bit of stability. they got this volatility. thou, the shanghai composite was down more than 4% at one point adding losses of nearly 3.7%. the shenzhen composite down at 3.5%. beijing has been on a campaign to cool this sector for the last three years, but we have seen a revival over the last six months or so. we've seen increasing prices as well as sales. so there has been rhetoric from
the government saying they would clamp down on this sector. the recent news, higher down payments, higher mortgage rates, that got investors spooked. it affected shares in hong kong and affected sentiment all across the region as far as australia and certainly in europe, as well. it will play into your trading day over there. now, all this, as i said, on the eve of the npc where property is certainly to be in focus as well as pollution, corruption, economic reforms. the new set of leaders coming in not exactly known for their political reform agenda. but they are known for their economic reform being a little bit more aggressive on that side. so we are going to be looking ahead and, of course, kelly and ross, as you saw, it had a big effect on the stock market here. so investers are certainly going to be looking. and you know what? honestly, i wouldn't be surprised if property shares saw a big rebound yesterday because that's the nature of this market, guys. it is momentum driven. you can see limit down one day and limited up the next day. back over to you.
now, in other asian news, former nba basketball star dennis rodman has been speaking out about his visit with kim jong un. he was asked about pyongyang's threat to destroy america and its human rights record. while rodman said he couldn't condone it, kim is a human being. meanwhile, rodman had his own message from the north korean leader for president obama. >> it is a different view. he asked me to give obama something to say and do one thing. he want obama to do one thing, call him. >> so are athletes better diplomates than politicians? they might be in d.c. at the moment. we want you to join this conversation here. >> it's not a very high bar, is it? >> no. that's the point, isn't it?
it's not a high bar. everybody's approval ratings are all down. >> public approval ratings and bilateral discussions with other are two very different things. i feel like the presence of celebriti celebrities, whether or not dennis rodman realizes what they're doing, it cannot be seen as anything other than interference. >> mild irritation. do they think it's worse than that? >> i don't know. but i'm sure there's the potential for these kind of trip toes cause greater problems. >> ve working for langley? >> you never know. still to come on the show, the see zester standout continues as the white house and republicans stake out their positions. both sides are convinced they'll be able to avoid the government
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the banking giant is above annual dividend. shares of real estate developers in china leading the tumble. and executive pay in focus in europe. swiss voters vote overwhelmingly to back plan toes give shareholders greater say against a planned eu wide bonus cap for bankers. you're watching "worldwide exchange," bringing you business news from around the globe. lots of speculation as to whether this will be the woke the dow jones industrial average can take out its nominal 2007 highs. today suggests it's going to be an uphill climb. we are seeing the start to the week lower. looking to shed about 35 points or so for the open. we have come off the lower levels this morning just a little bit.
nasdaq s&p 500 also after hitting multi year highs are looking for a catalyst now just for further gains. the cnbc ftse global 300 overnight shows you gave up about 0.2%. we were down, as i said, a little weaker the last time we checked in, about 30 minutes ago. the nikkei helping to bolster sentiment and here in europe, markets have been digesting news flow, negative news on the uk in terms of construction and lending data. nevertheless, markets are trying to stay afloat here. we can take a look at what's happening across the major bourses. the ftse 100 is down about 0.4%. the xetra dax roughly the same thing. the cac 40 is weaker. the ibex 35 is adding about 0.3% approximated we're seeing a rally in its debt levels. >> how should you play what's going on this week? hue are our guest views on the top trades. >> we'll be watching.
you know, that 1.50 has provided support, but how long can that last? if we see easing on thursday, we can be in the high 40s pretty quickly. >> property is a very frustrating market whereby easing of monetary policy, ininvestor cash sitting on the sidelines underpins equity markets. but are we going to have the repeat of january when global equity markets are going to be up 5%? probably not. it's going to be one of these stops. >> it goes back into emerging market, mainly into asia, japan and back into america. took a bit of profit on the mostly defensive sectors and our biggest exposure at this stage is in consumer discretionaries. >> now, prs president obama has reached out to congress seeking a resolution to the across the
board government spending cuts that went into effect over the weekend. but republicans leaders are adding little hope to an economic end. the president spoke with a select group of lawmakers to try to find a bipartisan compromise. house speaker john boehner who met with president obama says the spend cuts will stay and republicans won't raise taxes. >> this is not the smartest way to cut money. the smarter way would be to actually move a bill that deals with their long-term spending problem. you can't continue to spend money that you don't have. >> we're only going to get the kind of agreement that gets rid of the harmful sequester, that takes away from the private shutdown and defaults and all the things holding back economic growth and job creation in our country if both sides are willing to compromise. >> joining us now from washington is jonathan allen, senior washington correspondent at politico. jonathan, good morning. thanks very much for your time. we wake up here on monday morning.
are the lights on there in washington? >> the lights are on here in washington. this isn't an issue of the federal government, though. i think you can see behind me it's still dark across most of the city here, 5:30 in the morning. most people get up, they will go to work, they will have jobs. certainly there is some projection of furloughs in some of the government agencies. but this is actually not as bad as a government shutdown, which you often hear talk of is and is often on the table. a federal shutdown would be a lot worse. >> and jonathan, that's what we're now turning our attention to. today, futures are pointed down. it has something to do with news out of asia and is europe. but there's the sense, too, that just as it looks like the u.s. is going to bolster its recovery, in fact it's weakness at home that is looking at the point. are remembers feeling as though perhaps their bargaining power has improved given that people are shrugging about the see
kweter? >> i think there's a consensus here in washington that the government won't shut down. march 27th is the date. you have about three weeks left to continue government funding through the end of the fiscal year. i think there's a belief on all sides that's going to happen. basically, all sides have been bucking for some sort of meltdown for a couple of years now, and the safest way to do it walls oversee quest ragz. they don't really want to shut down the government or reach the debt ceiling. there will be a few adjustments made to the current course of spending which is a continuing resolution of previously levels and i think what will happen is you'll see more spending for the defense department's operations and maybe some of the domestic agencies will be able to shift the cuts around a little bit. but i expect that by march 27th, you'll actually see an extension of government spending through the end of september. >> where is this leaving -- is
anybody gaping from this in terms of support, jonathan? or is everybody being dragged down? >> to some extent in artisan warfare on the united states, it's a zero sum gain. one side loses a little bit, the other side gains. frankly, i think the whole city has egg on its face right now and the dysfunction is somewhat deleterious for the country itself, but also for america standsing in the world and certainly for markets that want to believe that people can get things done, that they can resolve their differences. >> jonathan, we mentioned off the top about long-term deficit reform, long-term deficit reduction, something to cap ratios at levels that aren't significantly higher than what we're seeing now. are we actually getting that? where is simpson bowles in all
of this and bill passing issues, how much really has fundamentally changed other than some near term hits to growth? >> i suspect simpleson & bowles are somewhat near cameras right now. the dynamics of this haven't changed at all. the white house believes there should be some mix of tax increases and maybe spending cuts to try to get rid of the across the board cuts. the republicans don't believe in increasing taxes to do that. they just want spending cuts. and the truth of the matter is, whether it's done one way or the other way, ultimately, you're trying to achieve the same amount of deficit reduction. i think it's important to remember with sequestration, that that really just sets the levels of spending. and so when they talk about some of these other things, the continuing resolution, appropriations for the year, that's really the question or the details within those spending cuts. so it really is, as you sgd, an effort to kind of cap the spending as a function of --
well, actually, in real dollars, but then also as a function of gdp. >> i just wonder what john boehner, too, is trying to accomplish here in terms of his legacy as speaker. how does he want -- what does he want the headlines to be? what does he want ultimately at the end of the day to have won from this entire process? >> he wants the headline to be that john boehner was the adult in the room and finally got washington to stop spending well beyond its means. now, the truth is, there's still a huge gap, even with this sequestration between wa washington spends and what it takes in in revenue. but i think he wants to be able to say, look, i turned that ship around. spending -- certainly deficits and debt had been announcing for years and years and i think his view is he'd like to be known as the person who reigned all that in. >> all right. we will see if history will be so kind. jonathan allen, senior washington correspondent at politico. still to come,
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welcome back to the program. hsbc's pretax profits fell. the bank has pledged to raise its dividend next year, citing growth in its core asian markets saying its predicted to boost capital. ross, it still doesn't account for some of the weakness it's seeing in its traditional markets at home. >> this is a company, of course, that's been hit by record fines for what's happening on money laundering sites. the stock at the moment, as you can see, down nearly 3%. down 2.6% at the moment, down 2.8% on the week as well. and as far as the sort of six-month time frame is worth, just worth looking at, it's up 28% in the last six weeks wsh as well. 21 billion profit underperforming is what ininvestors are saying. i think analysts will probably
take the view that, look, it can absorb losses better -- not losses, but absorb hits better than any other bankers out there because of where it is positioned globally, as well. if you need more on those hsbc numbers, find out why cost cutting measures aren't working and the results call strategies into question. it's all on cnbc.com as a varied opinion around it. kelly. that the. and hsbc dis appoiappoints inve with its full year earnings selling shares lower. and the sequester kicks in, but the white house and lawmakers making no headway on a deal despite ongoing meetings. and president obama is rallying out his second term cabinet. it's expected to announce sylvia
matthews-burwell to be the next white house budget director. she's currently head of the walmart foundation. she's a veteran of the clinton white house, having served as omb director and dprut deputy white house chief of staff. now, in corporate news, the nasdaq is reportedly executing u.s. stock trades at a loss. the financial times has been using the strategy since last month, betting the move about boost its overall market traction. both nasdaq and the new york stock exchange have been losing market shared competing exchanges, alternative trading platforms and the industrywide downturn in trading. it's interesting the amazon strategies that you might hope to pick up on volume what you might lose on individual possibility. >> absolutely. and, you know, it just shows you how badly they were hit by their own -- >> exactly. they have the industry generally moving against them, volumes goggles where regionally and in terms of products and some of
the concern on the facebook ip last year. > . >> pratt & whitney uncovered fraudulent engine testing scheme. it could affect thousands of engine parts used on business jets and turbo part planes. the parts in question don't pose any safety hazards, but the faa has opened its own investigation. stocks pretty flat. an heightser bush is fighting back. the world's largest brewery has taken out full page ads defending itself against claims it's watering down its beer. consumers have filed a class action lawsuit alleging the company is mislabelling budweiser, bud light, michelob and other brands.
anheuser busch doe naets water to the american red cross and other relief organizations. i just have to wonder about this strategy. why if you're trying to fight this image would you reinforce the image about taking out a national campaign about it and drawing attention to the issue? but i don't run their marketing strategy, so -- >> well, they're meeting it straight on. straight ahead, the dow sets its sights on an all-time high? we'll head to the cme to preview the trading week ahead. e your financial advisor should focus on your long-term goals, not their short-term agenda. [ male announcer ] join the nearly 7 million investors who think like you do. face time and think time make a difference. at edward jones, it's how we make sense of investing.
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about 5 points, just about. fed chairman ben bernanke is defending the central bank's low interest rates policies. he says the fed's policy are mirroring what others are doing. >> inflation is low and stable and given expectations of weak growth, expected real short rates are also low. premature rate increases would carry a high risk of short circuiting the recovery, possibly leading, ironically enough, to an even longer period of low long-term rates. >> bernanke says the interest rates struggle gradually over the next several years, although i wouldn't necessarily take fed
forecasts to the bank as we were in recent years. and the economist forecast, really. even the markets, you can't trust anyone. >> no. warren buffett, you might be able to trust warren buffett. do you think? >> maybe. >> he's called 2012 a subpar year for profits. that's because berkshire's book value were up, both the s&p 500 at 16% growth. in his annual shareholders level, buffett sounded optimistic on the economy urging other investors to invest. he also says berkshire lant done searching for acquisitions. he says, we still have plenty of cash and are generating more as a good clip, so it's back to work. charlie and i have doned our safari outfites and resumed our search for elephants. >> he's been making this met for for a couple of years now. this analogy, i should say. they are searching for elephants and they just got a big one with heinz.
>> they did. it's not the elephant in the room, though. >> elephants that will boost the bottom line. >> buffett will be on "squawk box" today from 6:00 to 9:00 taking your questions. it's a once in a quarter -- once in a year -- he's on a bit. anyway, not that much. e-mail them to email@example.com or tweet them with #askwarren. >> how many times would you actually have an e-mail that's responded to? there you go. >> that's very view. here is a look at what else is on the agenda today. no major economic -- investors are gearing -- are you suggesting he's a first up on cnbc? investors are gearing up for friday's jobs report. janet yellen speaks in washington at 8:00 a.m. eastern and she'll be followed this afternoon by fete governor jerome powell.
u.s. futures are down about 40 points. are we going to climb to 141164? ben lichtenstein from tradersaudio.com joins us now. is this going to be the week, ben? >> quite possibly. if you go for what behavior the market has been exhibiting over the last couple of weeks, certainly, it's been resilient. as we saw last week, a couple tests of lower extremes, key area of support. most recently was friday. the market tested that psychological level on the s&ps, cut a nice bid, basically traded throughout the morning session higher and is side weighs throughout the day and closed them out strong. we've been unable to get up above major levels of resistance. again, unable to get below these major levels of support. recently over the last week or so, while we've been seeing increased ranges, we haven't really gone anywhere for the most part. >> ben, what would you ask warren? >> oh, good question.
i wasn't really prepared for that. i would have sk to ask him how much longer he thinks this low interest rate environment will continue. even amid the activity or the speech we saw from bernanke or the testimony we saw, there was very little talk about continued quantitative easing. so what we're starting to see is investors and traders are starting to feel like we're going to see the next move in the interest rate arena or spectrum, if you will, will be to the upside. that was something that you just mentioned bernanke talking about again on friday, is that in the longer term we are going to see the slow continued increase rate hike but, again, it's going to be slow and the dollar really picked up on that, in my opinion. the dollar had a nice spike, up above 82 even last week. we saw the low currency come back off the 1.30 level. again, i'd like to know and i think a lot of traders out there
would like to know when we're going to start to see that speculative type trade come back into the market, resolving and associated with interest rate increase or cut, but, again, for the most part, there hasn't been that component associated with the trade over the last years. >> i think. the dollar, not a bad week last week. do you think it can still build from here? >> i do. i do, ross. i think with the concerns of the euro is currency, there's been talk of easing there. and i think the dollar right now is seeing continued strength. notable is amid the dollar strength we're seeing, again, still holding up the levels in the stock. we're so used to seeing that dollar rally stock sell-off, there was a bit of that component in the market last week. but for the most part, the market continued to make higher highs and is higher lows, and so did the dollar. we're seeing a lot of strength in the currencies. all the traders talking about gold and the weakness there. but as long as we're about 1500, we're still in bullish type activity.
>> ben lichtenstein, president of tradersaudio.com. >> thank you. >> ben, thanks very much. the question i guess becomes we're seen more people speculate about this, can markets move beyond a knee jerk reaction to europe to sort of comments out of the fed, etcetera, to something more fundamentally sustainable? >> meaningful. >> yes. earnings driven, etcetera. >> it's more imminent this week. the long-term rate, short markets. >> it will be interesting to see what buffett has to say about all of that. >> mr. buffett on "squawk box." it's all starting in just a few moments. get your e-mails in. becky, andrew, joe, they're all there. we hope you have a good day. >> and join us back here tomorrow on "worldwide exchange." have a good one.