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tv   Worldwide Exchange  CNBC  April 10, 2013 4:00am-6:00am EDT

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>> you're watching today's edition of "worldwide exchange." here are headlines around the world. a strong start to trading. a record close on wall street and focus turn to the fed minutes released later today. so stocks are light around the globe. this after u.s. first solar surprises investors with an upbeat guidance. a surge in imports signals the domestic economy is alive and kicking. and south korea and japan are on
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guard after reports that pyongyang is going to launch missile tests pretty soon. >> announcer: you're watching "worldwide exchange" bringing you business news from around the globe. >> all right. welcome to the middle of "worldwide exchange" of the week. kelly is recovering. we have industrial production out of italy this morning. we have an auction coming up later. february industrial output minus .8% on the month. down 3.8% on the year. it was seen down 4% on the month. that's weaker than expected. only down 4% on the year. we have an auction later. selling 8 billion of one-year bill and 3 billion of three-month bills as well.
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we'll bring you that data as we get it. euro/dollar is up. south korea stepped up surveillance on the north as tensions on the korean peninsula show no sign of abating. we'll be in seoul with the latest coming up in just a few minutes. lloyds is saying the massive insurance gap across europe provides a major opportunity. italy returns to bond markets when it auctions 11 billion euros. we'll break down the results just after 11 cet. and rockefeller foundation is leading the charge for ways to finance projects around the world. the group's president will join us on set in just over an hour. and it's budget day in
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washington. they have been a while without one. president obama is officially rolling out his spending plan two months past the deadline. we'll have political insiders to break down that plan at 11:30 cet. all right. let's bring you up to speed on where we are on the global markets. an hour into the trading day. european stocks getting the benefit from the dow closing up at a fresh record high. the dow at .4%. s&p not far from interday record highs. ftse 100 up. we're crawling back last week's losses. italy up 1.2%. more discussions about how to get on with electing a new president now going on in italy as well. some of the pharma stocks in focus today as well. let's just run through some of
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these. n novartis is flat. not sure that we're showing the right walls. we'll get more in a few moment's time. as far as bond markets are concerned, the key point is looking at italy later today with the auction. 4.32%. treasury yields a little bit higher again at 1.76%. as far as currency markets are concerned, dollar/yen not on that 47-month low for dollar/yen. 99.43 is where we stand at the moment. euro/dollar 131.10 is up against the greenback.
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that's where we stand in european trade. >> a mildly positive day as investors shrugged off tensions in the korean peninsula. some say the weak external demand is already known factor. investors look out for more data due out later this week to get a better gauge. we saw profit taking despite strong q-1 profit but gas producers left support with expectations of a hike on natural gas prices. a positive finish on hang seng. look at commercial properties. stock surged four-fold after being suspended for more than a
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month. and in japan, the nikkei back on track of a rally. exporters and financials were broadly higher. consumer stocks higher. south korean kospi remained resilient despite more rattling from the north partly due to hopes by a rate cut tomorrow. and billabond shares rallied and sensex trading along the flat light. back to you. >> more on that 14% jump in march imports in china leading to a trade deficit of nearly $1 billion but exports came in below forecasts.
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the numbers confirm that china's domestic demand picked up but weaker external demand could hinder the recovery. joining us for the best part of the first show, best part of the show today, chief international economist at barclays. nice to see you. what do you make of this? data this week out of china. is it changing any of your thoughts? >> not especially. my bottom line would be that china is actually of course growing. it's not growing especially fast. and q-1 was not therefore especially strong. it's all a bit clouded as you know with lunar new year effects that affected january and february numbers. with march data we hope to get a nice clean read on things in terms of yield and year comparisons. at the same time if you do try to adjust the numbers, it's a hazardous exercise. if you do look at the trade numbers, to be honest it's not looking quite as strong as
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perhaps it sounds and the chinese export numbers on the weaker side in seasonally adjusted terms. on import side i would say it's mixed. there is evidence of stronger imports coming out of the united states which is an encouraging sign for the u.s. from china. on the export side as well it should be noted that in terms of numbers it's made extra hazardous because there is a effect where people are generating exports that aren't really material. exports in order to claim tax benefits and i think that is inflated the export data. if you compare the chinese trade numbers and what china says it's getting in relation to other countries and then you look at those countries imports from china, there is quite a big mismatch that opened up in the last few months which seems to be something to do with what's going on in terms of trying to obtain tax credits in china. i think in all it's quite hard
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to interpret these numbers. if you look at the business confidence numbers, they are not especially strong at the moment in china. if you seasonally adjust numbers that we had out last week for example, they are running in the low 50s. china is growing. at the same time it has seen a rebalancing process. at the same time it's very important as you mentioned that the bank of japan is taking such aggressive action here. >> i want to come onto that. here sits china. the u.s. is still -- got their qe program in. ecb talking about additional measures. bank of japan launching this huge experiment. how are chinese policy makers going to react? >> china has tended to be quite conservative. not least because it's been generating large trade surpluses and those have been invested particularly in the u.s. treasury markets. it is going to be concerned
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about measures which ultimately in long-term could generate inflation outside of china and erode value of bond holdings and there's a big problem when china is trying to keep currency steady in relation to the dollar that it ends up generating a lot of inflation through its inability to sufficiently control liquidity continues in china itself and therefore it can lose competitiveness in that respect as well. it's very challenging i think for all economists globally to try to understand exactly what are the long-term consequences of this. we can say that central banks are becoming bolder and certainly more aggressive and that's true of the united states federal reserve and that is of course now very true where we have had a shift going on in the case of japanese monetary policy as you mentioned in europe. it remains to be seen and it doesn't really seem like there's going to be a lot of very
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radical changes there. suddenly we are seeing dramatic changes and particularly in the case of japan which are going to certainly -- we can have no doubt they are going to contribute very significantly to global liquidity and to financial market performance in the near term but probably lead to higher invasion risk in longer term. >> stay there. we'll come back to you in a second. staying with china, officials there say two more people have died from the virus raising the death toll to nine. 28 people from eastern provinces have been infected with the strain. world health officials are focusing on two family viruses. >> delphi is putting off china investor day in shanghai planned for later this month until september and they cited bird flu concerns. a live shot of the security
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checkpoint on the south korean side of the border that leads to the kaesong industrial park. a number of missiles have been moved to the east coast in preparation for a possible launch. with more, jim maceda joins us now from seoul. jim, what do we know? >> reporter: hi, ross. well, what we know is that all eyes are focused now on north korea's next move. intelligence sources say that it could launch at least two medium range missiles at any time and these missiles are locked and loaded on mobile launcher and fully fueled. in theory they could reach u.s. bases on guam in the pacific but north korean sources say this would be a test launch of previously untested missiles but allies in the region are on a very high state of alert.
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japan has deployed patriot anti-missile batteries around tokyo saying it will shoot down any missile or debris headed for japan even by accident. however, even a test launch, ross, would be another provocation as well as a violation of u.n. security council resolutions. kim jong-un, north korea's young leader has said that his goal is to procure nuclear weapons arsenal so each successful missile test for him is another step in the right direction. the launch could happen today or any day as we approach april 15th. that's the birthday anniversary of kim un-song. they would determine if it is headed to sea if it's a test or whether it's headed inland in
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which case a decision would again be made within seconds to intercept that missile or not. meanwhile, with all of this going on, there is still no apparent panic or anxiety either in pyongyang or streets of seoul. people say they are used to this cycle of provocation. it always ends up with at least in the past with north korea backing off for a concession like money or aid. kim jong-un has never been tested and no one knows what to expect. back to you. >> thanks very much. jim maceda in seoul. g-8 foreign ministers are meeting in london talking about how to respond to north korea. speaking ahead of the g-8 talks, foreign ministers from germany and japan stood united saying rhetoric threatens world
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stability. >> the policy of rhetorical escalation poses a serious risk to peace and security in the region and also to the entire international security architecture. >> president obama will send his 2014 budget to congress today, two months late. the white house blames the delay on the lengthy negotiation oeve the fiscal cliff. the budget arrives at 8:00 a.m. eastern. the president will speak at 11:00 a.m. and the public will get their own copy available at 11:15. there will be further tax hikes which angered republicans and cut entitlement programs like social security and medicare which has democrats up in arms. do you see anything on the table here that's going to get us closer to an agreement? >>. i think it is going to be difficult kind of process
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really. there are many difficulties, challenges going on with different views here. >> yeah. i mean, several attempts to reach an agreement with tax increases have failed. prospects for a grand bargain remain dim. if we don't get any near term budget agreement, what difference does it make? >> i think you are seeing general level of progress coming through on the deficit side, which is obviously something that the markets are welcoming here still and we're clearly in an environment where there are risks around the geopolitical level and that is still continuing to generate flows going into the bond market there. so i think this is just one of those issues where from the financial market perspective we just find that investors are willing to give those involved
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in the discussions the benefit of the doubt at the current stage given the more general climate of uncertainty that's been developing globally. >> stick around. more to talk. meanwhile, it's been called a bubble waiting to burst or a real alternative safe haven asset. they managed to break the $200 barrier doubling the value in more than a week. should you buy or avoid it? go online and find out what experts are telling us. plus, goldman sachs says a slow down in lending could hit bank earnings as u.s. banks get ready to post quarterly profits. more on that on cnbc.com. and a severe banking crisis and deep recession despite recent reforms according to the latest economic survey of the country. details again on cnbc.com and you can follow us on twitter.
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>> a number of price targets for the biggest pharma stocks. >> good morning to you, ross. shares in switzerland are not benefiting from the price target increases. and roche is only up by a tenth of 1%. keep in mind that roche reports first quarter sales tomorrow morning and analysts at jeffries expect a 3% increase in first quarter sales. jeffries including price targets for a number of european and global pharma companies raising price target from 230 to 250 and it has rose the target for novartis. growth will be fueled by the oncology franchise. and strengthening dollar will
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help. roche is facing a benign patent. shares are slightly underperforming today. credit suisse up by 3%. back over to you. >> all right. thanks for that. catch you later. a meeting yesterday between center left and center right has raised hopes that a deal could be reached and italy could form a government more than 40 days after the election. according to the spokesperson, the two leaders only spoke about the issue of choosing a new president. the tenure ends on may 15th and formal process to elect his successor begins on april 18th. two parties didn't discuss names but agreed on criteria for someone they both trust to take them out of the political deadlock. brazilian prime minister admitted that her country's banks are problem number one.
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she insisted her government can solve the issue on its own and that nonperforming loans will be transferred to a bad bank in june. comments came ours after a report was issued saying the government may have underestimated the cost of cleaning up banks. how much money is needed to sure up the banks? >> three to five billion euro or somewhat less will be enough. it's difficult to say precisely. it's up to the government to act. minister of finance and we think they are willing to solve the problem. >> speaking at the center for financial studies in frankfurt, the famed billionaire investor said the decision to tie the country's bailout to unprecedented tax on bank deposits doesn't bode well for
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the european financial sector. >> in the bailout of cypress germany went too far. what happened in cypress undermine the business model of the european banks which relies heavily on deposits. >> do you agree with mr. soros? >> there are so many issues where we don't have the certainty on the euro area side. obviously we had the greek debt write-down and haircuts on depositors in cypress and cypress threatening the euro. that's the closest we came to the euro ceasing to exist in the form it was intended to be. i think there were many, many uncertainties. we hope that by june there will be the next summit and that will be able to make some kind of progress on banking union because that clearly is very important. i realize that cypress was a special case here and there were
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particular problems with a lack of capital in the banking sector and very high nonperforming loans in relation to bank capital. there were perhaps some special reasons for cypress. the concern really is that policy is being created on what seems to be a rather ad hoc kind of basis and that creates uncertainty here. i can see where europe was coming from with respect to cypress but it has been taking large risks and it becomes urgent to get the banking union now running in a smooth way. >> soros says eurozone governments guaranteeing each other's debt was the only way to restart growth and he further blamed austerity measures. >> germany is imposing the wrong policies on the eurozone. austerity doesn't work.
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you can't shrink the debt burden by shrinking the budget deficit. >> he was giving this speech in frankfurt. this is a german audience. essentially saying you either have to approve euro bonds and mute ual debt sharing or it ain going to work. >> this is a long standing view of george soros that there has to be this frame work. we'll get there but it is very difficult because germany is demanding very large number of reforms both political and governance reforms and economic reforms and adjustment in things like external balances and fiscal consolidation and the debt deal and bank recapitalization and it's a very long process and i think as german finance minister was commenting yesterday, it is very difficult given the particular
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nature, political process that you have at work in the euro group and at the eu level. this is coming. i think to be honest if you were to really ask chancellor merkel privately i suspect she would accept that euro bonds are going to emerge at some stage but it's just a question of the sequencing here. believe it or not, i was looking at these numbers today. in the euro area, domestic demand last year fell by 2.2%. now, in 2009 we remember what a horrible year that was. in that year domestic demand fell by 3.1% so we had domestic demand terms for the eurozone last year a contraction nearly as bad as it was in 2009 which was the worst contraction we had seen in domestic demand since the war basically. things have been exceptionally weak. in that sense there has actually been a lot of adjustment already
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and i think we're going the way but it's still a very painful process. >> to say the least. good to see you today. thank you for joiningus still to come, solar stocks on fire after u.s. based first solar delivered an upbeat forecast for the company.
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these are headlines from around the globe. a record close on wall street and focus now turning to fed minutes released later today. solar stocks are up around the world after u.s. first solar surprises investors with upbeat guidance. a surge in imports leads to china to signal the domestic economy is alive and kicking. and south korean and japan remain on guard after new reports suggest pyongyang may be preparing to launch missile tests any day now. all right. we're an hour and a half into the trading day in europe. you can see we're up a two-thirds of a percent for the
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ftse 100. it follows another record close for the dow last night. u.s. markets up around 0.4 of 1%. s&p close to an intraday record high. italy are low. we're looking ahead to an auction of 8 billion of one year and 3 billion of three-month bills coming up. we are waiting for the minutes today. on the currency markets, keeping eyes on dollar/yen. a whisker away from the 47-month high we hit yesterday. and talking about the euro, 500 euro bill should be scrapped to help boost the eurozone economy. that's the view of the bank of
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america merrill lynch. he was on the channel earlier to explain his idea. >> what we're proposing is if you do this you will weaken the euro. this is good for the economy. it will support the eurozone economy more generally but more importantly we believe it can be done in a way that will tax illegal activity. >> so we want to know should the 500 euro note bill be scrapped in if you want to join the conversation? get in touch with us. e-mail us worldwide@cnbc.com. south korea has raised its surveillance alert level in the north on reports that mid range missiles could be tested in the next few days amid tensions pyongyang saw unemployment level drop in march. job data comes ahead of tomorrow's expected rate cut by the central bank. we get the latest out of seoul.
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>> hi, ross. let me just talk about the market's reaction today. some analysts explain this upside we saw today citing investors bet on a rate cut by the bank of korea this time. in fact, tomorrow morning korean time so not so much of a resilience that kospi has demonstrated reaction to north korea's previous provocations but still the bank of korea's potential rate cut is playing a bigger role than north korea related tensions here. the market for the most part is expecting a cut this time because the south korean government is in the process of trying to perk up the slowing economy. we have much anticipated extra budget out sometime this month. do note the government lowered its 2013 growth forecast for korea from 3% down to 2.3% earlier this year and actually the bank of korea is widely
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expected to do the same this month as well. lower the growth forecast. of course there are some still betting on a freeze this time citing that north korea related tensions here and plus there are some say things are not that bad in terms of the korean economy. data out this morning for one shows that korea's jobless rate actually fell last month and this 3.5% is the highest level since february last year but of course a cut or not the north korea factor is in the picture. do note the kospi is just picking up from its lowest point so far this year. now back to you. >> thanks very much indeed for that. we'll have more on the situation in korea political-wise after the break and still to come, a rate cut last month.
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we'll focus in on the political situation out of north korea. joining us on the phone from
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london, jake, how would you assess the risks in korea in terms of things getting out of control? >> i don't think they're going to get out of control. that's the most important thing to say. obviously on the surface it's very alarming. you have south korea raising its alert stakes. you have all of this rhetoric coming out of pyongyang. but i think the important thing to state here is that we have been here before and this does conform to a pattern of north korean behavior and general s t threat escalation on the peninsula and that gives us reassurance this won't spawn out of control. both sides know where each other stands. >> so how does it pan out then? >> well, i think it will be probably a little bit more room
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for escalation on north korea's part and of course what we're looking for is a missile test and again that's happened before. i think the main point about the missile test is it would probably be into the sea of japan, no real threat to any civilian population at which point north korea then has the option to deescalate so i'm not by any means saying this crisis is over. i think we'll still see another week or so of rattling but we are confident despite threats flying around that it will be contained. >> one risk here is of an accident or a misstep or misinterpretation of an action. >> yes. that is exactly what could precipitate something much more serious. and again we have to take comfort from the fact that the steps that north korea is taking
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we have seen these before. we know how it operates. south korea certainly is very well acquainted with north korean brinkmanship. so, yes, you're right, that is the catastrophic scenario but in our view it's actually an unlikely one because everything is fairly well calibrated. >> all right. thanks very much indeed for that. good to speak to you. thanks for that, jake. let's focus on the polish economy. the national bank of poland is due to announce its monthly interest rate decision later today. analysts expect benchmark rates to stay on hold today near a record low after last month's surprise cut. not a single analyst polled predicted a half point cut. a second cut may come over the next month as the polish economy continues to slow down.
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some people called the cut last month as sort of a shocker of a move. why was it so badly communicated and what are expectations today? >> the expectations today as you point out is that there will be pause in the cycle according to analysts that i talked to it would be just delaying the inevitable. as you mentioned, the monetary policy council is quite unpredictable recently. it has raised rates in may, which shocked the markets and then there was a cycle of cuts, five in a row, deeper than expected but according to central bank's governor the latest cut was supposed to complete the easing cycle. it has already been hindered as
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we have said. the monetary policy council is capable of surprising the markets. we'll be watching very closely. the decision which is due around noon bsd time they never precommit even in terms of timing of the decision. no rate cuts today most probably but further cuts would be unavoidable as the economy weakens. i will give you just one number. poland has a consumer recession which makes the inflation subdued. it's forecasted to stand at just 1.1% in march. but today most probably the government will receive some good news as central banks 2012 profit is estimated at 5.3
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billion which is over 1 billion euros which is much more than hoped for by the minister of finance and that money will go to patch up the widening budget deficit so two big stories today expected from monetary policy council and central bank of poland. first the decision about the interest rates and secondly the level of profits from 2012 from national bank of poland which would support the ailing polish budgets. back to you. >> all right. thanks very much for that. meanwhile, over in italy we have an auction today around 20 minutes time they'll look to raise up to 3 billion euros in three-month bills and 8 billion
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in ten-year bills. what are risk rewards of being long btbs? >> risk reward is still quite good. we have technical levels we need to reach before the market will start looking saturated. i think the market is not correctly pricing in the whole array of political and fundamental risk at the moment. the market is in the mood of following the trend. it's not necessarily a market that we are used to. if you look back the last five years have been dealing much more fundamentals than right now and i think the right way to look at it in context is more from a technical point of view and from a trend point of view. >> literally trading on price action. how long will we ignore fundamentals and the political impasse? >> i guess we need to have an
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accumulation of risks probably fundamental, political, probably we need rating action as well. not necessarily in italy. we can have rating actions elsewhere. we haven't seen this yet. if we look back again 2011-2012, we saw this in the second quarter of the year as q-1 data got published and the realization is the economy is not on track. >> what's your end view of what happens with politics now? are we going to get a president in quick enough to have an election before the summer? >> we need a president before the summer. >> whether we can get one in. >> i think we either get that or we get some sort of political situation whereby they will try to have a government to make some sort of performance and then after summer they'll reconvene for new elections. i firmly believe we need new
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elections. the current political situation is not stable in italy. >> after the new elections it may be less stable. >> as we look at pulse right now it seems that there would be a majority but these things change. >> stay there. we'll come to you in a second. pimco increased holding of u.s. treasuries. the pimco total return fund which holds $289 billion in assets increased holdings to 33% in march from 28% in february. the manager said he turned bullish because the bank of japan's action would drive japanese investors to seek higher returns in overseas markets and aggressive stimulus from central banks made investors such as himself and warren buffett for having to rethink the way they made money. because of the bank of japan
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action, will we get a return to the carry trade and therefore jase investors seeking yield overseas? they buy mixed income and not equities necessarily. >> not just japanese investors but asian investors and central banks have been buying assets in france and buying assets in high grade european and government bonds over the course of the last year. i think if we look at the composition of assets right now we can reasonably say the banking sector in japan is to some extent long. government bonds in eurozone. what we need to understand, i think is how far there is rotation in assets in pension fund industry which as we know is heavily underweight equity and is heavily overweight domestic fixed income assets. >> will italian or spanish bond yields benefit from japanese flow? >> i don't think we are at the
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stage yet. japanese investors -- >> might it happen? >> it might happen. decisions will have to be taken at a high level. investment committee. we are not there yet in terms of fundamental analysis and flow that we have seen do not substantiate this view. >> how would you -- where else do you see bank of japan policy leaking out? >> i think it's a generalist trend toward trying to reinflate economies with the wrong policies. as we know looking back again at history, there's no evidence that quantitative easing, aggressive, not aggressive, super aggressive, would lead to desired results. what it leads to is a redistribution of thinking. that's clear. >> thanks. by the way, as far as the auction is concerned in italy, no problem. thanks for that. shares in solar companies
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trading in germany and hong kong are higher today after first solar surprised with an upbeat forecast for the coming year. the shares jumped 45% during yesterday's trade. assistant vice president of utilities at cimb joins us now. mike, thank you for joining us. everyone seems to be surprised by how upbeat the outlook whas. what do you make of it. >> hi there. i think it's been not really a surprise to the market but then we think that the market generally especially in china is still bleak and we are not out of the woods yet. the industry has been quite upbeat with first solar expectation and then we have rumors about investment in sun
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tech solar but then we think the solar industry especially in china capacity problems do exist and it won't go away any time soon. >> you say not a surprise. they came out and said earnings and revenues for the next three years will be well above wall street estimates. >> we see the general market is improving. but then we have a problem especially for the chinese companies. it doesn't mean it will help the bottom line at the moment. >> do we need a sort of technology shift for solar or are we close to sort of the next generation? >> we're seeing a shift. for example, people are more favoring high technology and high quality products.
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in the past people have been using the products and now shifting to high efficiency and more powerful efficiency and we think that there's a trend going on and also along with technology, the costs have to come down also and this is going on. >> we have seen the price of solar panels down dramatically in recent years because of manufacturing capacity in china. what happens with that now? >> we see consolidation in the market going on but it's not going to end any time soon. consolidation is in process but only china alone can have offers of the whole world right now so we think that we need more
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consolidation and then for the markets to clear up inventory and demand goes up and we can see a recovery but then for now we see that coming in. >> thanks for that. mike joining us from cimb on the telephone from hong kong. after months of anticipation, malaysia picked a date for its general election. may 5th. opinion polls point to a victory for the ruling coalition but the margin will be narrow. the prime minister is under significant pressure to regain the two-thirds majority his ruling coalition lost five years ago. he's going head to head with an opposition alliance led by a former deputy minister in the tightest contest the country has seen since independence. the president of toyota is giving a thumbs up saying japanese manufacturers
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appreciate the government's quick steps to tackle deflation. the yen slipped more than 14% so far this year boosting exporters bottom lines while tokyo's share price surged by one-third. blackstone is reportedly talking to several tech companies about possibly joining its bid for dell. reports say any firm that teams with blackstone would likely be involved in dell's strategic direction and have a financial role. the private equity firm has discussed several scenarios with perspective partners including taking in equity stake and debt financing. blackstone's reportedly been at dell headquarters this week conducting further due diligence. global firm kmg amid an fbi investigation of alleged insider trading. they are investigating allegations that a former senior partner passed inside information to a share trader.
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bertha coombs has more. >> this story not just rocking kpmg but wall street as well. federal investigators in los angeles are looking at former partner scott london on allegations that he leaked nonpublic information on companies that he was auditing. the revelations made for high drama at the opening bell. shares of herbalife and sketchers halted after the start of trading after announcing that kpmg was stepping down as their auditor because of the probe. they issued a statement saying they could not serve as impartial auditor after a leak of information of the firms involved. sketchers cfo saying he was informed of the news yesterday reading a prepared statement that said senior audit partner in southern california was under investigation for selling nonpublic information over the course of several years.
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kpmg said they admitted to doing it and was cooperating with federal investigators. no one other than the lead partner was under questioning. sketchers says certification of financial statements are withdrawn for two years under london's auditing. the company doesn't believe reporting was misstated and was getting set to report positive first quarter results. herbalife was told it should not rely on audited statements for fiscal 2011 or 2012. the company's accounting and business model have been the source of major debate on wall street. most notably war of words between short seller bill ackman who famously called it a ponzi scheme and activist kacarl icah with stake in the company.
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we don't know who that is. meantime, the withdrawn audit reports could pose a bigger problem for the nutritional supplement company. an analyst who has been the bull on the stock cutting his rating today from a buy to neutral. also slashing his price target saying he continues to believe in the company's story and growth potential but "it will be a serious problem to be out of compliance through no fault of their own with nyse requirements because of those audits being withdrawn and potentially breach their loan covenants."
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welcnew york state, where cutting taxes for families and businesses is our business. we've reduced taxes and lowered costs to save businesses more than two billion dollars to grow jobs, cut middle class income taxes to the lowest rate in sixty years, and we're creating tax free zones for business startups. the new new york is working creating tens of thousands of new businesses, and we're just getting started. to grow or start your business visit thenewny.com
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you're watching cnbc's "worldwide exchange." here's a recap of headlines today. strong start to trading after a record close on wall street. a surge in imports signals the domestic economy is alive and kicking. new reports that pyongyang may be preparing to launch missile tests any day. also, it's signed, sealed and about to be delivered. president obama sends his budget to congress today with democrats
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and republicans objecting to his plans to cut the u.s. deficit. >> announcer: you're watching "worldwide exchange" bringing you business news from around the globe. you have just joined us, a warm welcome to the program stateside particularly to the start of global trading day. dow closing up a fresh record high yesterday. we are firm again. 32 points above fair value. nasdaq was up 0.4 of 1% yesterday and currently is nine points above fair value and s&p 500 close to an intraday high during the session up currently 3.5 points above fair value following gains for european stocks. take a look at the numbers. ftse 100 up.
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as far as bond markets are concerned, an auction right now in italy. they should get fairly decent support ahead of that. we're a bit higher in yields for treasuries 1.76% as we wait for fed minutes to be released later in the session. on the currency markets, we keep our eyes on a weakening yen. europe three-year high. dollar/yen 99.40. just below 99.67 we hit yesterday which was a 47-month high and quick reminder of euro/with trade data a focus. that's where we stand in european trade. we'll recap the asian session now.
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>> asian markets eked out some modest gains as investors shrugged off the trade deficit and tensions in the korean peninsula. with the choppy trades in the greater china region as a price jumping imports cost china to log a trade deficit last month. investors are unconvinced about the recovery and more key data due out later this week and shanghai composite ended on a flat note and hang seng ended higher. chinese aluminum giant jumped from a sell to hold and in japan the nikkei 225 continued to ride on momentum of the aggressive easing steps. exporters and financials were broadly higher. consumer stocks also got a lift as spending will be spurred through the central bank's
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stimulus drive and south korea's kospi remained resilienresilien. and look at shares of billabong. sum tumbled. back to you. >> thanks for that. let's remind you what's on the ajae agenda in the united states. we'll get the minutes from last month's meeting. dallas fed president richard fisher speaks today and we get earnings from carmax, family dollar, progressive and bed,
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bath and beyond. president obama will send his 2014 budget to congress two months late today. the white house blames that delay on the lengthy negotiations over the fiscal cliff in december and sequester in march. the budget arrives on capitol hill at 8:00 a.m. eastern. the president will speak at 11:00 a.m. and the public will be able to get their own copy in print or digital form at 11:15 a.m. the plan aims to get the deficit through a combination of further tax hikes, which has angered republicans, and cuts in programs like social security medicare which has the democrats up in arms. must be a good budget if it is pleasing no one. lloyd's insurance market returned to profit last year as costs tied to natural disasters fell significantly after 2011 despite a 2.2 billion hit from superstorm sandy. they were up from a loss in the prior year.
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joining us for the next part of the program, john nelson, chairman of lloyd's of london insurance market. odee you. thanks for joining us. a drop in natural disasters. what's the ongoing fallout from sandy? >> i think in certain sectors of the insurance market it has so in the united states it has certainly firmed a little. some of the other sectors which we cover geographically which were affected deeply in 2011 also hardened but the general picture in premium rates for general insurance is relatively subdued and the reason for that is that with interest rates very low, investment return very low, the insurance market is attracting capital and that is keeping a fairly subdued picture for premium rates. >> i was going to ask you what
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happened with capacity and capital. >> as i speak there is no shortage of capacity to put it bluntly. on the other hand i think we have to be very careful that in the kind of insurance that lloyd's writes, which is specialists, it's b to b and catastrophe related. you get a great deal of volatility. 2011 was one of our worst ever years. second worst ever year. we paid out over 20 billion in claims that year. and then as you say 2012 we weren't cap free. we had sandy and one or two others and paid out around 16 billion. and there you get this sort of high gearing in terms of profits. we shared a loss in 2011 of 500 million but that was a good result in the context of the 2011 loss wes we sustained and 5
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billion of profit in 2012. that was good. >> you talk about because yields are low so you are attracting capital. i wonder what happens with your own investment performance. we had calmer markets. what's happened to your own investment return? >> the lloyd's market basically invests its assets. we have around $80 billion worth of assets in liquid form. a third in cash. a third in corporate bonds and a third in government bonds. and that is really because we hold assets to pay claims. we have to keep very liquid. some years ago adopted a very careful cautious strategy in terms of our exposure. our exposure to eurozoneparticu will remain. in terms of actual returns we shared 2.6% return on our assets
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last year which was relatively pretty good but the outlook is subdued. so the absolutely fundamental message for insurance is we have to concentrate on underwriting line. we won't get help from the investment line. >> i'll recap this for viewers. they sold three-month 3 billion of three-month bills. average yield on that lower than in october. .243% versus .267%. and they sold 8 billion 12-month bills. average yield on that down from march. .92% versus 1.28% we saw in march. we have a new government in italy. doesn't seem to impact really. demand or appetite for italian paper. we'll take a quick break. john will stay with us. still to come, south korea ups
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surveillance alert level on fears of a missile launch from the north. we'll be in seoul to bring you the latest right after this. welcnew york state, where cutting taxes for families and businesses is our business. we've reduced taxes and lowered costs to save businesses more than two billion dollars to grow jobs, cut middle class income taxes to the lowest rate in sixty years, and we're creating tax free zones for business startups.
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the new new york is working creating tens of thousands of new businesses, and we're just getting started. to grow or start your business visit thenewny.com
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south korea stepped up its surveillance of the north as reports suggest that pyongyang could test its mid range missiles in the next few days.
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a number of missiles have been moved to the east coast in preparation for a possible launch. nbc's jim maceda is with us in seoul. we seem to be getting new information about where these threats are coming from. what can you tell us? >> reporter: that's right, ross. everyone has been speculating about why the level of rhetoric has been spiking in recent weeks. it may have a lot to do with a little known but clearly very ambitious north korean vice marshal who has been trying according to the times of london to make a name for himself. he's 62 years old. and is behind the threats of nuclear war and destruction that we've been hearing almost every day which it must be said few here are really taking seriously. meanwhile, all eyes are on north korea's next move. intelligence sources say it could launch at least two medium range missiles at any time and
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these missiles are now locked, loaded and are fueled and ready to be launched. in theory they could reach u.s. bases on guam in the pacific but north korea is saying this is just a test launch of previously untested missiles. still, allies in the region here are on a state of high alert. japan has deployed patriot anti-missile batteries around tokyo. they say they'll shoot down any missile or even any debris headed toward japan even by accident. it's really tense times for u.s. allies in the region. kim jong-un, north korea's young leader, says his goal is to get a nuclear weapons arsenal under his control. each one of these missile tests if they're successful is another step in that direction. ross, back to you. >> jim, thanks very much for that. that's the latest from south korea. john is still with us. chairman at lloyd's insurance market. when you have a market that's been around for hundred of years, it's gone around a lot of
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world wars and a lot of action. how does the market deal with political risk like this? >> well, as the world has developed so the kind and lines of risk that lloyd's covered has evolved. started with marine and aviation and you then have growth in other specialist lines like bringing us right up to date, cyber risk and political and terrorism risk is something which is a line that we provide for businesses. remember, we are mainly a b to b market. we're dealing in specialist risk and political and terrorism is one of them. >> all right. economic growth in china and other emerging markets continues to outperform. lloyd's is warning that insurance coverage is not keeping pace. there are $168 billion insurance deficit shared by 17 countries. eight of which are in asia.
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how much does that translate into opportunity for underwriters and how are you remember measuring? >> let's start with overall picture. roughly 70% of the world's gdp comes from developed countries. 30% from developing countries. that is going to invert over the next 30 years. it will become 30% from old countries and 70% from the new. by in large insurance follows gdp. what's happening, which is not surprising, is is that as these major developing countries develop their economies and they commercialize, china, brazil, india, the degree of underinsurance is high to start with. what actually happens and is happening and we can see it in our own numbers is that the insurance growth rates in premium exceed the gdp during
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that developing period as the underinsurance gap closes because businesses and communities and government policy recognizes that insurance is vital to secure growth and indeed to protect growth and to protect communities and businesses and encourage stability. you have seen good signs of it or good examples of it recently in places like thailand where the thai floods because of those industrial parks were insured, the thai economy got itself back on its feet remarkably quickly. in some other countries which are seriously underinsured where it is government insurance, it takes a lot longer to get those economies back. that is a lesson that governments have learned all around the world. >> where is the commercial opportunity here? >> the commercial opportunity for lloyd's being very lloyd centric is 40% of our business comes from the united states.
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20% u.k. 16% continental europe. both of the rest from the english speaking world. business is growing in these developing countries. if you go from the west, you talk about brazil, mexico, africa, eastern europe including turkey, india, china, southeast asia, that's where growth communities are and we recently launched vision 25 which is a strategy and vision to make sure that lloyd's really increases its footprint. >> how do you do that? you rely on a network from that country back to lloyd's. how do you persuade an underinsured to say insure with us rather than going to a global reinsurer. >> the insurance market is highly competitive.
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lloyd's has a number of advantages. one is we're not a company. therefore we have a huge concentration of underwriting skills diversity in the lloyd's market and indeed in our oversea hubs in places like singapore and shanghai. we push lloyd's out into those markets with hubs like singapore and shanghai and the other which is the tweak we adjusted our strategy to in the last year or two is to attract trade capital, high quality insurance capital from those developing countries into lloyd's with people and with franchise into the london markets. we internationalize the london market much more than it is to reflect the underlying demographics in the world and a good example of that is china coming into lloyd's in the last year. that's a very good example and then we have other examples of
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one of our biggest customers. >> good to see you. thanks for joining us. john nelson, chairman of lloyd's joining us exclusively on cnbc. a recap of the headlines you just tuned in as well. president obama delivers his budget to congress today. more than two months overdue. south korea and japan remain on high alert amid fears that north korea may launch new missile tests and european stocks follow wall street higher as they welcome a drop in italian yields at an auction just moments ago. still to come on the program, rockefeller foundation has a way to finance social projects. we'll talk about investor interest in impact investing. [ male announcer ] how can power consumption in china, impact wool exports from new zealand, textile production in spain,
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arrival. with hertz gold plus rewards, you skip the counters, the lines, and the paperwork. zap. it's our fastest and easiest way to get you into your car. it's just another way you'll be traveling at the speed of hertz. the new york metropolitan museum of art is about to get a big donation. a renowned collection of art work. 78 pieces including paintings by picasso and estimated to be worth more than $1 billion. the gift is truly transformational and will fill a critical need in the museum. the collection is expected to be on display in an exhibition opening in the fall of 2014.
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one of the world's biggest organizations, the rockefeller foundation, is looking at changing the way projects are financed around the world. they aim to generate financial and social returns. according to rockefeller, the area enjoyed a boost as governments pursue innovative ways to fund social projects. good to see you. thank you for coming in. give us a quick summary of impact investing in the way that you guys look at it. >> impact investing is for investors who wish to seek a double bottom line. they are looking for a financial return but they also want to have a social impact with their investments so they are willing to invest in environmental projects, water and sanitation projects, infrastructure of all sort and social prevention
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projects as well. the critical thing is financial return is a part of this. >> both profit and social good. how much do they camp out profit over the social good? >> the investors go across the whole spectrum. some are financed first but some social good all of the way to a bit of money but a great deal of social good and it's in all asset classes. it's debt, equity, private equity, venture capital. what's interesting about it is whatever investors' appetite is, that investor can find something. >> does that mean more projects setting themselves up for limited company arms so there's a vehicle for investors. you have to set up a vehicle alongside for investors to put money into. >> sometimes it's fund to funds which make impact around the
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world so you can find whatever your geography and appetite is but it's also the case that lots of companies now almost 600 around the world are registering as b corporations. companies that are for profit but really are concerned about shareholders, about their employees, about the environment, so that impact investing fund can look to invest in b corps. >> how do you then direct the rockefeller money is going? what are you looking for? >> this is great. the role is to do what others can't or won't do so we saw this inry starting to take hold. we reckoned it would be 20 years until it accelerated on its own so we invested in the catalytic infrastructure in creating the impact investors network, the platforms that they use, the metrics often we heard financial guys said to us i know how to do
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financial due diligence but not social due diligence so we created social metrics and helped to organize scaffolding or plumbing that's making the field really go. >> stick around. i imagine one of the reasons this is sort of progressed is because we get cuts in the ability for governments to channel funds as well. stick around. still to come, it's a big day in washington as the obama administration presents its budget for 2014. will the president get the grand bargain he's hoping for? we'll talk about it when we come back. a reminder of where futures are trading. a record close for the dow yesterday. we could get another one today.
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you're watching "worldwide exchange." a recap of headlines today. european stocks pick up following a record close on wall street. action now turning to fed minutes released later today. a surge in imports leads china to signal the domestic economy is still alive and kicking and south korean and japan remain on guard. new reports suggest pyongyang may be preparing to launch a missile test any day now. sign, sealed and about to be delivered. president obama sends his annual budget to congress today with
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both democrats and republicans objecting to his plans to cut the u.s. deficit. >> announcer: you're watching "worldwide exchange" bringing you business news from around the globe. just joined us stateside, good morning to you. be aware of the record close on the dow last night up .4%. the dow is up 41 points above fair value. nasdaq is 10.5 points above fair value and s&p close to an intraday high yesterday is currently somewhat 4.5% above fair value. european stocks reacting to what happened with that u.s. close. they put more meat on the bone. up near the best levels of the day.
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spain up 1.2%. a solid italian 12-month auction a short while ago. yields on that coming down from the last time we had auctions in march. despite we don't have an italian government, no impact as we see on the costs of italian funding. with a record close in new york on the dow last night, what are experts telling us today? here's a recap of some thoughts we already had on cnbc. >> bonds will remain more supported for a longer time. >> i think that it's going to be the top rate. again, as long as you see japanese yen flow into bond markets, you can't trade against the australian dollar.
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it's too expensive short and therefore we stay to it. >> how do i hedge my euro exposure since i think europe will have a series of problems like cyprsie cypress this year surprising as it might be in context of the u.k., currency can have those characteristics. >> meanwhile president obama will send his 2014 budget to congress today. two months late. the white house blames the delay on the lengthy negotiations over the fiscal cliff in december and sequester in march. the budget arrives on capitol hill at 8:00 a.m. eastern. the president will speak at 11:00 a.m. and then the public will be able to get their own copy in print or digital form at 11:15. get it in digital form and print it off. the plan aims to cut the deficit through a combination of further tax hikes. that's angered republicans and cuts in entitlement programs
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such as social security, medicare which is also got democrats up in arms. joining us from new york is director at hamilton place strategies and in washington, ben white and judith is with us as well, president of the rockefeller foundation. thanks for joining us. tony, let's kick off with you first of all. is there anything that will form the basis for wider agreement on the deficit or not? >> well, look, maybe the suspect getting credit for putting forward in a formal way the cpi and social security and trying to make a middle path here. it's sort of in this environment kind of middle path to nowhere given where both democrats and republicans are in congress and where they are from their own budgets. hard to see that. at least it gives for the president's purposes a rhetorical path going into the summer and those fiscal debates.
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>> what do you think, ben? >> i agree with tony. it's a nice phrase. middle path to nowhere. i don't think this is headed toward grand bargain or piece of budget legislation that actually gets passed on capitol hill. what he's done is made a move to put himself between democrats up in arms about cuts to medicare and social security and republicans who say absolutely no new revenue all we want is cuts. we want to balance the budget in ten years. that gap is too far to bridge right now for a grand bargain on the hill behind me but i think at least in terms of allowing obama to say i'm the guy in the middle willing to take on the liberal wing in my party bring republicans in, have dinner at the white house with republican senators and trying to build good will there. it makes sense politically for him probably but he may lose support on the left. it won't get a grand bargain done i don't think.
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>> where does that leave us? i understand the president is talking to both sides. we're trying to shift lightly. >> where it leaves us is we need to come up with another short-term deal to raise the debt ceiling later this spring or into the summer when we hit it when treasury runs out of room with emergency measures to increase our borrowing limit so at some point later this spring after we get past the immigration debate and gun control debate we'll get together at the leadership level and with the white house to come up with something that allows for an increase in debt ceiling and maybe cpi gets in there and maybe it doesn't that increases the debt ceiling and takes more out of deficit reduction but 4 trillion over ten years sweeping deal that takes these issues off the table for a while. it will be another short-term fix. >> at the end of the day are republicans going to have to accept again higher taxes and the democrats are going to have to accept cuts and make changes in inflation to the way social
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security payments are made? is there any alternative to that at the end of the day? >> if you want a grand bargain deal then those are the elements of it, ross. it's just really hard to see how either side goes that far. if you look this morning just on cpi alone, i'm a big believer and any economist is a believer in getting cpi measurements right to index taxes an spending in the federal government. all we're talking about is counting accurately. you have arp and others coming out strongly about any changes in cpi. if we can't agree to count accurately, it's hard to see how we get agreement on any of these other elements and also remember that everything that we're talking about, tax increases, entitlement reforms that result in either benefits being scaled back or spending lower or entitlement cuts they result in pain to somebody and it's hard
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to see who winners are that would allow an agreement to go forward and get done in this environment. republicans feel like they already have done what they can do on taxes and it doesn't seem like there's a lot of real initiative to get something done on entitlement spending. we're stuck with this well into the summer and the president will let republicans and democrats negotiate with each other over the debt ceiling and stay away from that debate. >> you talk about pain with tax increases. we were talking earlier. how does that impact you? >> they are hurting because when people's tax dollars are affected they give less so we start to see social services getting reduced but there's a huge segment of the american population unlike what's happening in washington that really believes that the tax code could get reform and split down the middle of some of these
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problems. right now they are picking tax increases or cuts in social services as a way of mobilizing a base rather than focusing on what we see as the large segment of the middle of the american people really do see a way forward that somehow isn't being seen in washington. now that's why we have been focusing on how you bring the private sector into this. often public/private partnerships are a way to really solve some of these problems where resources seem to be at the base of the debate. infrastructure banks which have been popular in europe and canada now are beginning to be developed in the united states and out of the glare of washington actually many very forward looking governors -- i was in illinois yesterday announcing a new social impact bond with governor quinn. the west coast governors are coming together in a west coast infrastructure exchange and
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they're creatining the regional policies that crowd public sector funding. >> it's an interesting point that the impasse is people just go to be creative. >> there are lots of tup opportunities to be creative on efforts like infrastructure spending. remember that the federal government does a lot of it on its own with lowest borrowing costs in the world. we don't want to discount what the federal government is doing on that end of it contributing to it. i would like to ask the guest also from rockefeller foundation is people talk about shared sacrifice and ways to get some of this stuff done like tax reform. one of the big elements of tax reform if we're going to get rid of what people call loopholes is uncharitable giving and what the foundation thinks about that and other foundations and whether that would hamper their efforts. >> there are many organizations that do still take funding and
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some of those are the largest ngos in the world like unicef and clearly that would impact their funding. rockefeller foundation doesn't collect anymore money. we're fortunate to have the resources of our founder so we're in the position of being able to give it away. >> you have to generate. you have to generate 8% return. you're not earning a lot of u.s. government debt i'm guessing. >> absolutely not. in order to give away 5% a year or 5% on rolling five-year average, they have to pay out at a rate of 5%. given inflation that means we have to make at least 8% a year in order to stay even. now, one may ask is the goal to stay even? clearly we go up and down and that's fine. we're trying to respond to some of the world's greatest needs.
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>> that's a good challenge delivering delivering 8% a year when you can't stay in treasuries. >> you certainly can't. that's a good point to get back to what tony was saying about the likelihood of getting a grand bargain and looking at treasury rates and where they are. there's a lack of urgency right now in washington to get this done. there's talk about long-term outlook for entitlement programs and crisis that awaits us a couple decades down the line. near term the deficit is coming down as a percentage of gdp. we did the 2011 deal. we did the fiscal cliff. raise the 600 billion in revenue cuts. cut spending. so i think in terms of forcing a grand bargain, those treasury rates and fact that we are bringing down the deficit as a percentage of gdp means there's no forcing mechanism. that's why you get another more short-term debt ceiling increase negotiated on capitol hill with the president coming in at the end to sign off on it.
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it's hard to force washington when there's nothing out there in treasury rates or equity market or in the near term budget outlook that's forcing their hand. >> good to see you. thanks for joining us. great to see you. thanks for joining us. we'll take a short break. allegations of insider trading are rocking one of the big accounting firms. we'll have the latest on kpmg right after this.
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welcnew york state, where cutting taxes for families and businesses is our business. we've reduced taxes and lowered costs to save businesses more than two billion dollars to grow jobs, cut middle class income taxes to the lowest rate in sixty years, and we're creating tax free zones for business startups. the new new york is working creating tens of thousands of new businesses,
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and we're just getting started. to grow or start your business visit thenewny.com here's a recap of the headlines. president obama delivers his budget to congress today more than two months overdue. south korea and japan remain on high alert amid fears that north korea will launch new missile tests and european stocks follow wall street higher. one of the big four accounting firms kpmg is reeling today from allegations of insider trading by one of its partners. seema mody has more for us in the united states. what's going on? >> that's right. the former kpmg partner fired friday for allegedly selling
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inside information about two clients, herbalife and sketchers says he regrets his actions. scott london was former head of the practice at the los angeles office. london was the first identified by sketchers cfo on tuesday. he joined the firm in 1984. according to his linkedin page. he started passing tips a few years back to help out someone whose business was struggling. he said it was done by phone and everything he provided was in the form of a suggestion. london says the person traded on the information but he's not aware of how much he profited from the tips. london says what i have done was wrong. against everything that i had believed in. he said kpmg bears no responsibility. they resigned as the auditor on tuesday and the firm says they have no reasons to believe financial statements for either company have been misstated.
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sketchers says there's no disagreement over the accounting. herbalife says it has nothing to do with accounting practices or the integrity over the management. there have been fights by activists. shares which were halted briefly on tuesday closed down nearly 4% on the day and sketchers was also halted but managed to close up more than 1% on tuesday. any controversy over kpmg's practices could hurt the firm's reputation. it avoided criminal charges by agreeing to pay $456 million in a settlement over the sale of tax shelters. partners have been the only ones from the big four so far to be sued by the s.e.c. in connection with the global financial crisis. ross, that's the latest. back over to you. >> a lot to dig into. thanks very much for that. some of the other stories we're following today. blackstone is reportedly talking
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to several tech companies about joining its bid for dell. reports say any firm that teams with blackstone would likely be involved in dell's strategic direction and have a financial role. the private equity firm has discussed several scenarios with perspective partners. blackstone's has been at dell's headquarters this week conducting further due diligence and meeting with executives. dell stock down around half a percent in frankfurt. yahoo! and apple are reportedly in talks to expand their relationship on the iphone and ipad. the companies are discussing ways to get more yahoo! content preloaded on those devices. da data from yahoo! finance are on the ipad. reports say yahoo! has discussed ways it could provide web search results to apple so it could rely less on google although nothing is imminent. yahoo! up 2%.
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apple flat today. and taylor morrison priced ipo at $22 a share. the company sold more than 28 million shares raising $628 million. just latest of a number of housing related ipos. taylor morrison will list under the ticker tmhc. coming up, wall street rally rolls on. we'll preview the trading day ahead. are you still sleeping? just wanted to check and make sure that we were on schedule.
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just worth pointing out,
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this is the main manufacturer of apple. it's posted a 27.3% fall in march sales from a year earlier. that's rather disappointing. we'll see if that impacts apple share price later today. it could be that apple is getting more for the price. we'll see how that reflects apple later. european stocks ahead of the u.s. today are firmer up near the best levels of the day. we have just under 100-point gain. ftse is the lagger today. the treasury releasing the monthly federal budget statement at 2:00 p.m. eastern. at the same time big focus today minutes from last month's meeting. minneapolis fed president and
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the dallas fed president speak today and on the earnings front we get results from carmax, family dollar, progessifro prog bed, bath & beyond. record close on the dow last night. this is where futures indicate we are. we are currently around six points higher for the dow. nasdaq is just over ten points over fair value and s&p 500 at the moment is about three points above fair value. joining us is chief market strategist in new york. thanks for joining us. >> it is new york. >> i can tell by the picture. another record close on the dow. what's taking us higher? >> you know, i think it's a lot of money coming from overseas and a lot of folks that have been short this market who have been waiting for some type of pullback or correction or whatever you want to call it.
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people have been sort of waiting for this to develop and it hasn't developed and i think part of the reason is the money is coming in from overseas. the federal reserve, the bank of japan, you know, it's pumping money into the money supply. it's supporting this market. folks are giving up and the folks that have been waiting on the sidelines are afraid of missing out and they've been moving in. you've seen a lot of this market being carried by the more defensive sort of chicken plays into the consumer staples, utilities, telecom, but i think recently you have seen some folks looking for opportunities. things in basic material and even in the industrials. technology. and so i think the market is still primed for a pullback. when it comes it will probably be all hands on deck. people are going to feel like the world is falling apart. i think it's going to be rather short lived. you're going to see between 3% and 7% and it's an opportunity
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to really step in. >> you mention the fed there. we have minutes out later today. if there's anything in there that suggests a slightly more hawkish consensus and they might withdraw policy earlier, what impact is that going to have? >> i don't think it will have much of an impact. the market got worried earlier last week. you had fed presidents coming on saying we're probably -- we have to start thinking about when we'll pull some of this liquidity back. it makes sense. will they start to pull it back? most likely not. i don't see it happening before the end of the year. they want to see unemployment down around 6.5% or whatever it is. and we're at 7.6% but it's not because people are finding jobs. it's because people are giving up. i think the fed continues to be out there pumping money into the money supply and supporting the market and that will continue to help support us as well. >> robert, thanks for that. have a good day over there in new york. that's it for me here in london. coming up next, "squawk box."
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the countdown to the opening of markets stateside. whatever happens, we hope you have a profitable day. zap tech. departure. hertz gold plus rewards also offers ereturn-- our fastest way to return your car. just note your mileage and zap ! you're outta there ! we'll e-mail your receipt in a flash, too. it's just another way you'll be traveling at the speed of hertz.
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good morning. we'll get minutes from the last meeting today. investors hope the notes clear up mixed signals from the policy makers of late. and on washington watch, president obama set to release his budget proposal this morning. it might be doa any way. stocks are still on a hot streak. the dow closing at record levels yet again. it's wednesday, april 10th, 2013. "squawk box" begins right now.

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