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tv   Worldwide Exchange  CNBC  January 2, 2014 4:00am-6:01am EST

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. you are now watching "worldwide exchange." i'm ross westgate. the headlines today from around the globe, the less than stellar start to the new year for european stokes after trading muted weak pmi numbers. eurozone pmi data is out now. the italian giant of the auto world is gaining focus with chrysler on a $3.5 billion deal paying less than the market had expected. >> samsung is down to a low,
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missed earnings forecast amid unfavorable currency moves and shrinking margins. john lewis rings in a record christmas season, but the cfo resigns following a profit warning earlier in the week. >> announcer: you're watching "worldwide exchange," bringing you business news from around the globe. . >> and a warm welcome to the first "worldwide exchange" of 2014. we kick off the data out of the eurozone. manufacturing pmi, 52.7. that was in line with the flash number a few weeks ago. it is the highest since may 2 1 2011. we did see producers reporting further growth of new orders, exports and backlogs of work says market for a good 2014 which compiled the pmi.
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the one concern will be france, struggling italy and spain showing signs of a brighter year ahead. the recovery may be held up by a sickly french manufacturing base. france has been back in recession. we'll have to see whether that was the case in the fourth quarter or not. nevertheless, european stocks just over an hour into trade in the new year. 6 to 4, decliners currently outpacing advancers at the moment. the ftse 100 was up some 15%. basic resources sector is up this morning. the ftse 100 is up 18 points. the xetra dax is currently off 0.1%. the cac 40 is down 0.4%. the ftse mib trading higher 0.8%. fiat struck a deal to take
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control of u.s. automaker chrysler. we'll see fiat around the 41.6%. we'll get more details in a few minutes. the ceo of debenhams has announced he is going to resign from his role. the retailer, which operates 240 outlets in its domestic markets suffers poor trading. the stock still up 0.8%. as far as the eurozone pmis is out, we had china pmi. that came in at 50.5. in december. unchanged from the earlier flash reading and down slightly from 50.8 in november. another indicator that the rate of growth in china's manufacturing output is easing. new orders up at a fractionally lower pace while few export orders declined for the first time since august last year.
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shanghai didn't have a brilliant 2013. it's down another 0.3% at the moment. the hang seng was up marginally last year. it's up 33 points. the s&p/asx was up around 15%. it's up about a quarter. the kospi in korea down 2.2%. talking about korea, it's worth looking at what's going on with samsung. shares trading lower on a weak earnings outlook because of smaller margins in its display business. samsung reporting fourth quarter earnings next tuesday. as far as bond rates are concerned, it's all about treasury gilt levels. treasury this morning, still above that number we hit towards the end of 2013. gilt yields at that level, as well. we have ism manufacturing coming out today in the united states, as well. on the currency markets, dollar/yen, five-year lows, 105.41 towards the end of last
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year. 105.31 is where we trade at the moment. euro/dollar, 1.3730, just below that. the aussie down 15% against the greenback. it did rally a little bit this morning on the china's pmi numbers. we hit 1.6592 during the trading session since august 2011. talking about trading currencies, these are the thoughts of the principal of ceo investors. >> emerging markets are growing even if they're growing more slowly. but i do think it's going to be very bumpy. emerging markets, i think if you buy them in 2014 you'll do well on a five-year view. but at the end of 2014, it could still look a bit rough. they're going to accumulate on weakness whereas the u.s. is up to wait. those are my favorite areas for
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next year. >> joining us now with the program, lota. happy new year. >> happy new year to you. >> you got a break, right? >> i did. >> you're now fully refreshed ready to come in and saying we can't possibly repeat the gains we had in 2013. i don't know. what do you think? >> it will be a bit tough to repeat those gains in 2013. let's face it, 2013, the market did price in and anticipate a lot of the growth that hopefully we'll see in 2014. so if 2013 was the year where the confidence returned, 2014 will have to be the year where the corporate profits have to return. >> are they? we'll see. >> what do you do ahead of -- what are you doing now? you sit on these gains? >> we're certainly not going equity overweight. so we have a slightly muted expectation for 2014 equity returns. but we're watching very closely what the corporate cap ex
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picture is, how much are companies really going to invest, are they joining in or continue to go be just the -- >> it becomes a self-fulfilling longer legged recovery is what we're looking for, right? >> well, that's what we're hoping for. >> particularly in the uk, amongst others. >> yes. >> so when you say we're not adding more to equities, what do you do with the fixed income space? >> well, the fixed income space, we have been completely out of bonds since 2013 and we are nervous about it. we're not comfortable with that, but definitely on a relative value basis, on the release -- >> where do you go for extra diversification? >> well, there is not very much to go to at the moment. it's more of a bar bell between cash and high yielding bonds. that's all you can do and keep your fingers crossed that nothing goes wrong during 2014.
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>> we'll look at what may or may not go wrong over the next hour. meanwhile, before you dive into the market, head to our website and find out why some professionals advise one key resolution don't get cocky. meanwhile, we want to know what your new year's resolutions are. e-mail us,, @cnbcwex or @rosswestgate. share them with us as long as they're all within reason, of course. still to come, should eu leaders be banking this year? all changed for latvia. the lat is being dropped in favor of the euro. at 10:30 cet our guest says the nation is politically and economically astute so drop the currency. and 2013 may have seen the best annual gains for the dow in
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nearly two decades. but where should investors be placed as the new year begins? we'll get into all things equity in the second hour of the show. consensus may have won the day stateside in the latest budget battle, but with another debt drama on the horizon, we're going to be in d.c. at 11:30 cet for the political outlook for this year. will it be better than last? all that to come. first, fiat shares are rallying. the italian automaker steals a $4.35 billion deal to buy the rest of chrysler. it will be paid by both karrmakers. chrysler has committed a further 7.3 million to be paid over three years. it values chrysler at 10. 5
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billion dollars. autos are quite an interesting sector in europe this year, up 38%. what do you think of that? >> i'm not sure that's necessarily sustainable, given the overcapacities that the european car sector has. >> resources, the worst performer, down some 40%. are we going to do better, do you think, for resources? >> i think they can do better, but we've got a very odd on situation in resources, haven't we, because the monetary easing or that extra liquidity pumped up resource prices and gave the wrong price signals. now we've got an overproduction, if you like. so if we get the significant pick up in the global economy, resources could do better this year. >> but this desire we have central bank liquidity helping and global growth slowing, which is a negative. this year, we might get a reverse, we might get some better global growth. >> yes, that's true.
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so the central banks should retract and pull back, but the thing is, with so much private money still parked on the sidelines, we may see liquidity surge nevertheless as more money comes back into the market and replaces that central bank money. >> mean wile, india has strapped a $770 million deal with mechanic mechanica. defense officials said they canceled the deal after bribery allegations. they're being tried in italy on fraud and draft charges in connection with the deal. finmeccanica shares are currently flat. still to come, we put questions to the ceo of societe generale. we'll hear what he has to say
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when we come back in a few moments. welcome back. how is everything? there's nothing like being your own boss! and my customers are really liking your flat rate shipping. fedex one rate. really makes my life easier. maybe a promotion is in order. good news. i got a new title. and a raise? management couldn't make that happen. [ male announcer ] introducing fedex one rate. simple, flat rate shipping with the reliability of fedex.
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societe generale confirmed
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its target of 10% return on equity by the end of 2015. the ceo said the bank is now entering the coming year with a robust balance sheet and a brighter looking global economy. >> i think it's a progressive improvement. of course, in particular in the eurozone where we expect slightly better figures. but also in the u.s. the fed has just actually increased its outlook for the economic activity. and we should also have reasonably good activity in the emerging markets. so as you see for the world as a whole, slightly better figures and i think what is important is that we had effectively the beginning of the tapering at the end of 2014. we had disagreement on the budget so we will avoid, again, a big discussion on the shutdown. it means to me a reasonably good
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environmental 2014 and beginning of the year. >> how do you think societe generale will perform in this environment? >> i'm very happy with what we've achieved in 2013. as i have said in the past, we are turning the pace of the solvency. we are entering 2014 with a robust balance sheet having met our objectives in terms of the robustness and the capacity precisely to allocate to the businesses, more capital, more liquidity. and personally, we are now entering, of course, the new european banking union. it's a big change for all european banks and a positive one. and a period of growth. now the focus is on further transforming the businesses and growing. >> how do you see the evolution of the monetary policies in 2014 now that the fed started its tapering process? >> let's say it was expected and
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it's a good thing. we need to progressively come out from these exceptional situations which can be risky because it creates perhaps distortion in the asset prices. so it's good to see the fed starting to reduce progressively the liquidity it is providing. the very positive thing is the fact that the market did not overreact, but to keep more positively because behind this decision the market probably sought more comfort in 2014 for the u.s. economy. and so i'm happy to see -- to have seen this decision implemented. again, it is behind us. we know probably that the fed should, he month on, reduce further the amount of purchase it will do. we could expect the end of the qe asset purchase at the end of 2014 .hopefully have that kind of progressive adjustment of the
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markets probably with a slight increase of long-term interest rates which is normal. and it's a good thing. >> what do you expect from the central bank? >> the european central bank has done a great job. the first major objective is to implement the banking union. you should not underestimate the operational challenge, which is to create a new regulator, recruit close to 1,000 person. may i say i'm very -- daniel louise, the new regulator, she's a very seasoned, very experienced, very talented regulator, so i think she will put in place something that will be, again, robust, but it's a big task. my priority for the european central bank is the check up which is the asset quality
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review so that we enter in 2015 a new world, positive european banks given fluidity for the financial markets in europe. >> do you think the banking union will give enough support to the sector in europe? >> the banking system is in much better shape than a lot of people think. a lot has been done. the transformation of the balance sheet is amazing. we are now looking at growth, allocating capital, transforming the businesses. and i think the bulk of the system is like this. so you might have to deal with one or two situations, but overall the system i think is able to deal with financing the economy. we still need -- and i hope that the banking union will do that, reduce the distortion between i would say france and germany on one hand, northern europe and, of course, the countries where the lending might be more
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expensive today. that's a key for success going forward. but i think the european banking union will reduce the gap and, overall, yes, i think that the ecb has done a great job to regain confidence to help the market regain confidence in the system. when i look at the access of large european banks in the market, it's really good. >> policymakers have been trying to reduce the mutual exposure between banks and governments in europe. do you think it's a major issue? >> banks did not increase at all their exposure. we remain absolutely disciplined in that. so on, yes, probably some perhaps smaller banks, again, try to make some more profit, to rebuild the capital base. of course, it cannot be a long-term policy. if you wish, you could imagine that for a short-term period that, again, is longer term.
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banks need to make money. we have businesses, we have clients, households, corporates. so going forward, it's probably good to reduce limit when it's something excessive the amount of sovereign debt in the banking balance sheet. the banks are not the most natural holders of sovereign debt. the natural holders are investors like insurance companies, asset managers. so that will be part of the qr to look at it and say how to progressively reduce that reliance, if it exists, within sovereign banks. but i don't think it's the general paradigm. >> oudea speaking to stephane in paris. lotto, what do you think about the banks now as investment? >> i think banks in europe are still lame ducks holding back the european economy because they're not actually prepared to
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lend vibrant organizations and they're very much suppressed by regulations. a and, tlf, i'm not a long-term investors in european banks. >> any movement in the -- in banking union or not? >> those things are very long-term development. if we see any benefits from them, it will be a decade down the line. what we might see to improve european banks this year is if the global economy really does well and helps europe to improve, as well, a lot of the bad loans or semi bad loans or loans that might go bad on their balance sheet may not and, therefore, that might improve them. >> but the banking system doesn't appear to be any stronger to support a european recovery? it's very anemic in growth. >> it is. in a way, the good news for
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europe is that even the european companies have big cash piles. big companies don't need the banks that much. smaller companies rely bank finance and that's just not there. >> do you expect any more ecb action? >> i think if anywhere the ecb may be forced into more action compared to the u.s. but it's only a 50/50 chance, i think. >> what actions? >> further actions around lending making it easier for banks to get from. the eurozone and the rules do restrict the ecb as to what they can do. draghi has been very good
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compared to the past. >> i'm sure you were very again russ generous with your christmas. the top wealthiest donors gave more than $3.4 billion to charity. the biggest gift was from the facebook ceo mark zuckerberg and wife, priscilla chan. they announced they were giving $18 million shares to the silicone valley foundation. it's the first time a if philanthropist under the age 30 has given the biggest donation, but then he probably still had the most money, as well. latvia becomes the 18th country to adopt the euro as the single currency celebrates its anniversary. we'll discuss the ripple effects for the newest entry. v
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a less than stellar start for european stocks after trading in asia's muted weak pmi numbers. shares are up more than 13% for fiat as they gain control of
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chrysler in a $14 billion deal. samsung, is it a four-month low because of fears of messing fourth quarter earnings and unfavorable currency moves. and it's all about retail, as well, in the uk. john lewis, different christmas experiences. manufacturing pmi in december, slightly weaker than the consensus poll. manufacturing new orders index 60.4 versus 63.9 in november. manufacturing output grew by more than 1% in the fourth quarter. so growing less quickly than expected in dooe december, but the sector is still on track for
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strong growth. let's get a reaction from loti. the uk has had a growth surprise for 2013. does that continue, do you think, this year? and what are the implications if it does? >> well, i think the uk will continue to grow well. this pmi number is encouraging, 57 is not bad compared to many other countries. but let's face it, our manufacturing sector isn't that big in the uk, so it hasn't got that much of an impact. >> do you have concerns on sustainability? a lot appears to be leaning on
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housing again. >> we think interest rates will only rise if we have some marked improvement in take home salaries, others, the uk can't afford rising interest rates. >> it's sort of consumption led more than anything else. we have raised concerns about it, but on the flip side of strong sterling, you know, is that it does actually help with that squeeze on real income a little bit, one would think. >> it does in that it makes the imports just a little bit cheaper. >> yeah. and also dampens down what imported inflation on the thing. >> it is. but, obviously, it doesn't help the exports and the competitiveness of the uk economy. so it's a little bit of both sides. >> we didn't get much of a
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benefit from the weaker pound, anyway, on exports. we should be competing on higher values. >> the services sector comes back in, let's not forget we're exporting with a lot in the service sector. it is important that we stay competitive on our pricing there. so the bank of england will be watching this very closely. >> all right. european equities, meanwhile today, first trading day of 2014 and we're down a little bit. the ftse was up 15% last year. it's down 0.3%. the xetra dax was up 26% last year. it's down 0.5%. the cac 40 is down 0.6% and the ftse mib is up 0.3%. gilt yields have been tracking around that 3% mark. they're still there and they are higher today on the session. ten-year treasury yields still above 3%. on the currency market, slightly off of that number. indeed not by much. still not far way from the august 2011 hit in the sector
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today. the yen perspective, 105.39. eu euro/dollar, 1.3728. two countries have a combined population of 29 million with an estimated 2 million living in spain and italy which had no restrictions. the eurozone project, meanwhile, is welcoming a new member. latvia has become the 18th country signing up for the currency moving away from the lat. the prime minister said it is an opportunity, but not necessarily a guarantee of wealth and urged the country to continue with its tougher policy. it is the first country to join since neighbors estonia became
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members in 2011. andrew is now joining us, journalist from the "wall street journal" column. happy new year. >> happy new year to you, too. >> it looks strange for a country to join the euro vite now, but from latvia's point of view, it's a small country, 2.3 million people, heavily reliant on exports. they've had a turbulent time in their economy over the last few decades. a massive boom. and then the financial crisis leading to a big crunch. part of their response to the financial crisis was to peg the lat to the euro, anyway. so they've effectively been a member of the euro for the last few years in that sense, so why not just join in? >> the big problem with joining us the euro was if they had rates too low for them and caused booms, unsustainable
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booms. if you're joining post the financial crisis, it's the view that you've already had whatever boom -- >> exactly. and the feeling was prior to the financial crisis, a small, open economy is very vulnerable to hot money inflows and that's what you saw and the economy grew by about 90% in the first seven years. then it was followed by this massive contraction of about 20%. one of the biggest contractions that we saw in europe after the financial crisis. since then, they've implemented quite aus tear policy and the economy starts to grow. >> why is that, bearing in mind that they've had this austere policy. a lot of people looking at the latvian experience and going, what's going on here? >> yeah. it's been very interesting. a lot of economists have been debating this. it's hard to argue against the fact that this austerity and the
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euro has been pretty successful. yes, the economy is still about 10% smaller than it was back in 2007. but remember, that was based on a pretty unsustainable credit crunch. what you've seen with the fiscal austerity is, you know, there's been credibility in economic policies. the peg has been maintained. and slowly by surely latvia's economy has become one of the eurozone's success stories or the eu success stories. >> well, small countries have little choice, haven't they? they need to build trust with their external trading partners and those who might invest or might not invest. they haven't got much choice of austerity. that's why it might have worked there, although i'm still a bit baffled why you would want to cement that to the eurozone and lose your ability to adjust your currency when you're such a big exporter. >> the aspects, of course, we haven't mentioned, there's the
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political aspects of this, too. you look at what's going on in the ukraine at the moment and how, you know, relations with russia are still very important and a country like latvia wants to escape the shadow of russia. it's joined nato over the last few years, joined the eu. the euro is a logical political step if you're trying to -- >> and having already joined nato and the eu, which the euro doesn't -- jointing the euro doesn't make any more difference. >> well, it comments latvia's policy making. and i think that combined with the economic argument that it's better for a small economy like latvia to be part of a big eurozone trading block and part of a big currency area has meant that -- >> it was already part of the eu, it was part of that trading block, wasn't it? yeah. but if you have the same currency, you you a void all
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those transaction costs. >> and avoid the ability of lotto to say they have a cheaper currency. >> but the interesting thing about the sxrns with the fiscal authority is that internal devaluation has worked. productivity has increased in latvia over the last couple of years. so without that deevaluation explicitly, the country has turned around its economy. last year, it grew by 5%. this 2013, probably 4% growth. >> who is going to be next? >> estonia is already a member. it's going to be those countries between western europe and russia. >> an rue, good to see you. thank you very much for joining us. author of the "wall street journal's" herd on the street
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column. now, numbers are due on tuesday for samsung. the korean won and smaller display will be weighing on earnings. cherry kang has more for us for the first time in 2013. hi, cherry. >> hi, ross. happy new year. this has been in investors minds how samsung electronics will continue growing despite margin pressure. it takes up two-thirds of its operating profits. investors, especially the foreign names where they came back to work put this stock into action right before, of course, like you mentioned, its earnings guidance due out next tuesday. and markets outlook does not hold strong. remember, the third quarter of last year hit a record.
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many local brokerages are talking about missing that threshold this time around. why it's premium has been selected. that's why the chairman had to call for new ways of thinking and moving beyond hardware in his address today. and, two, like you mentioned, a stronger won. this currency factor weighed on the main overall index kospi as well as other major blue chips over here. the $1 pair breached that level in today which is a 29-month high. the samsung does earn 835% of its sales from outside its home market. ross, samsung does have its network business, auto application component business, but many of these are mostly due
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to be and it looks like it really needs to communicate that a growth potential more actively to the market or show some growth coming from other businesses, as well, really fast. now back to you. >> chery, good to see you. thank you very much for that. despite a gloomy christmas season for many retailers, john lewis sauce a 2.7% in holiday retail sales thanks to rising demand in items like coffee houses and coffeemakers. but on the down side, the ceo has announced his resignation while the department store issued a post profit warnings. the search for herrick's replacement continues.
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could teenage shoppers bring a much needed boost for companies which have yet to target the younger market? courtney reagan is telling us why teen retail is the one to watch and why most will come from online sales this year. teen retail is right for reckoning. it's like blood in the water for activist investors in 2014. shareholders, the 15 retailers like aeropostale and abercrombie and fitch are looking at alternatives, from buyouts to shake-ups. the cash flow, solid balance sheets and deterioration makes the group a key category for activist investors in 2014. most of 2014's retail growth will come from online sales, which means mall traffic will continue to decline. retailers may be able to protect some sales by offering an attractive online option, but mall operators, particularly
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those with lower quality malls in their portfolios will take the hit. former department store equity dan nippen says it could be a scary year for those invested in low quality malls. traditional malls will continue to suffer in 2014, but outlet malls will see traffic and sales pick up. as a result, retailers will less their leases expire in traditional malls, while pursuing space at the country's outlet centers, but not discount form. for cnbc, i'm courtney reagan. >> that's the retail view. also, tappan investment management, you talked about the consumption patents for this year. >> i think it's interesting at the moment. this boom that we've seen, that's all been retail demand driven. in the current setting, it is unsustainable because it's been based on a return of confidence with the retail shopper and
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that's great. but we haven't seen salaries grow, real incomes grow and that's what we need to see for this boom, for this development to be more lasting than just -- >> but the salaries for real incomes or for salary toes grow, that's something that the bank of england would have to react to and shell out interest rates a bit and -- >> well, that would give them the ability to increase interest rates. >> i think it will be more of a function of real salary increases, real increase -- >> well, that's when inflation isn't -- even if we see the economy is doing really strong and unemployment dropping below
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7%, that's not really the function that's going to drive up interest rates. >> how much higher do the yields go before there's a concern with equity investors? >> i think we will see a steepening of the anchor curve right now. i can see the ten-year yields rise easily to 2% or 10% or more by the end of this year. >> that won't be an impediment? >> a big steepening is not necessarily going to be an impediment. >> all right. if you have any thoughts or comments, e-mail us.
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before we head into break, here are the top stories trending on 2014 is set to be another interesting year for bitcoins. bitcoin increased nearly 6,000% in value over the course of 2013. check out our website for a full rundown of what could bolster the economy in months to come. ford has developed a concept model that runs primarily on solar power, which is expected to be unveiled next week. take a look. head to still to come, plenty more on how to position yourself in to 2013. here is a look at how cities around the world rung in the new year. welcome back. how is everything? there's nothing like being your own boss! and my customers are really liking your flat rate shipping.
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european banks are under the microscope in 2014 with the
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stress tests. can the bank expand while the banks are under the microscope? >> i think this is the biggest problem for the eurozone economy at this time. but i think it's a bit comparable to late '08, early '09. also then a lot of problems in the banking system. also you get some form of at that point forced recapitalization through government involvement. and the quality of what will be done next year in europe is obviously still in the debate and maine maybe they executed in a much poorer way than they did in the u.s. but at least i would argue it is a move in the right direction. and i think that's the key. there's a lot of stretch of volatility in europe. but it seems that on most of the problem areas we're moving in the right direction and markets trade on change. they don't trade on levels. >> is it really? the u.s. had the top. they had a back stop for these banks to recapitalize them.
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we have a real situation here in that we're not going to have a coordinated back stop for these european banks. we're going to have to recapitalize assuming we find the gaps necessary. and the countries will be on their own to do that. why should they? >> they're working hard. it's still a big, big political challenge to set up something which is really credible if needed at some point in time, it's going to be very clear that they're going to be looking at the markets first, then they're going to be looking at the expected sovereign. and in the end, there will be some form of back stop. we're seeing t still a very difficult negotiation game going on here. i think there will be some form of a back stop and then the question is is it solid enough? is it credible enough? and we'll need to see. >> i think we're heading in the same direction here. i don't disagree with your basic scenario. i'm not persuaded yet of your timeline. i don't think anything very much
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is going to happen in europe before the european parliamentary elections which stand to be quite an unpleasant shock to the system. let's think about your own country and his reliance. and then the germans are going to continue to move slowly in my view. i don't see anything much happening before the ecb reports back with these important stress tests. so i'm looking at your scenario maybe into 2015 rather than next year. >> i think it's not going to be happening over the next week or months. but as long as there is some form of disability on something of a solution, i think markets see enough positives or less problems to worry about moving in the right direction. and it is making european alliances. at some point, maybe you could say it is still very much alive and kicking. >> well, yes, i guess you could say that, but i think the kick moren than the alive is what i
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would put the emphasis on it. i think one point which is very much in your favor is that markets don't necessarily need to see a better comfortable performance in the eurozone in order for stocks to continue to rally. europe has been an underperformer. >> the likelihood of at least an improved cyclical outlook for europe, this is about the structure of balance sheet problems and recapitalization issues in the banking sector. but the cyclical jute look for europe is widening. that will help europe with stronger growth. >> is the u.s. still going to lead the global recovery? >> yes, i think that will continue. and if the global economic recovery picks up more speed and momentum, you will want to be in
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equities rather than fixed income. that's the point to make for this coming year. and then the other one is how do you position yourself within those asset classes? that's where it gets interesting. because tun wind of this biggest monetary experience that we've ever had means that we are in this new normal situation where things are going a bit different to how you would potentially -- >> we're going to be volatile than we were last? >> not necessarily more volatile, but perhaps more surprises. so at the moment, everybody is talking about the emerging markets on the basis that the hot money flows will not be going there any more and there will be stars of credit. well, i'm not so sure. if the global economy does a lot better, than certain emerging market economies, the bigger exporters are going to continue to do well. and quantitative easing may be
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an issue. all of that may lead to a surprise in emerging markets. >> the second half, what do you think? >> it would probably be a second half story, yes. >> still a question of how fairly valued emerging market currencies are and the swing around that. >> yes, it is, but to me, it's more a function of the global economy. at the moment, there are too many assumptions about what happened. because we haven't got any experience about it, there may be some misconception and -- >> but the weighted money is to the developed world, yeah? >> it is. but as more money is coming back from the sidelines from cash from the global bond markets, who says it's not going to flow back into the emerging markets. >> what do you think of japan this year? the nikkei well over 56%, whatever it was.
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the yen, though, has declined some 20 odd percent. >> it has at the moment been very much a function of the yen and that can't really continue in the longer term. japan is certainly one to watch. but overall, i'm positive for the economy. i think that the stock market is pretty fairly valued where it is at the moment. i'm glad it reached the 16,000 hurdle i predicted in the summer last year. but i haven't got too much hope or too much high expectations for japan at the moment. >> good to see you, as always. thanks very much, indeed. >> thank you. >> see plenty more for you over the course of the year. now, how the wealthy andwise likes to spend their fortune this year, here is robert frank with his prediction.
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>> this has been the biggest party for the wealthy since 2007. the question for 2014 is whether the music will play on or whether the party crashes. the rich can thank the stock market for good fortunes in 2013. spending everything on diamonds and ferraris to francis and bacon paintings exploding. next year will be a bumpier ride if financial markets become more volatile. millionaire investors will play it safe, keeping a lot of cash and not adding much to their stock portfolios. the big theme for 2014 will be hard assets and collectibles. the wealthy want value they can enjoy. expect new record prices for wine, vintage cars, jewels and, of course, fine art. real estate will be the favorite home for rich people's money next year, especially high end
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properties in the most exclusive cities like hong kong, london, san francisco and new york. luxury spending will shift from the east to the west as china's economy slows. but the big spending will be in cars, electronics, and health and beauty as well as traffic and experiences. for cnbc, i'm robert frank. >> and a reminder on "worldwide exchange," we want to know what your new year's resolutions are. share them with us,, @cnbcwex or direct to me @rosswestgate. still to come, our next guest tells us there's a bright future ahead for u.s. equities. we'll find out where your money should be in 2014. a second hour of "worldwide exchange" coming up right after this.
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welcome to "worldwide exchange." shares up more than 13% for fiat after taking full control of chrysler. paying less than expected. and old man winter has arrived. residents in the northeastern u.s. bracing for the first form of the year with snow and high winds expecting to cause major
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travel delays. plus, the new year and a new test for oh bam incare has the u.s. health law goes into effect. but insurer are still working through a backlog of paperwork. a very warm welcome here to cnbc and "worldwide exchange." welcome to the start of your global trading year, if we can put it like that. as we started the year, stocks are down on this first trading session. declineers outpacing advancers around about 7 to 3 on the stoxx europe 600. the ftse last year was up some 15%. it was a laggard compared to many others because basic resources. it's down around 0.5% two hours
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into the trading day in europe. manufacturing pmis a short while ago came in weaker than expected for the month of december. they're still pretty high, though, still suggesting a 1% quarterly growth for the uk. the xetra dax is down around 0.6%. the cac 40 down some 0.8%. and the ftse mib is up 0.1% being helped by fiat closing out that deal with chrysler. we have hsbc's china pmi today, coming in at 50.5 in december, unchanged from the earlier flash reading, as well. it was down slightly from the 50.8 in november. it's another indicator that perhaps the rate of growth in china's manufacturing output is easing, the orders up at a fractionally slower pace while export orders declined for the first time since august last year. to recap the asian markets, the first time they've traded this year. the shanghai xos onnit down
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0.3%. the hang seng is up marginally. it's up around 33 points today. the s&p/asx is currently up 0.2% and the kospi in korea down 2.2%. samsung has seen its shares fall today, as well. trading lower on a weak earnings outlook is due to the korean won exchange rate as well as smaller margins in its display business. samsung is reporting fourth quarter earnings next tuesday. now, no futures trading this morning. we'll recap what's happened as far as the equity markets are concerned over the course of the year. dow up 26.5%. the s&p up some 29% over the course of 2013. the best performance since 1997. and the nasdaq, as well, up 38%, that's the best performance since 2009.
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so what can we expect from u.s. equities this january? dominick has been taking a look at the probabilities. >> the folks over at the spoke investment group crunched the numbers on how stocks fare in the month of january each year. they looked at the dow industriales and found over the last 1 hurn years, the index has positived an average gain of 1% for the month and it's been positive for january for the dow 64% of the time. over the last 50 years, the dow posted an average better gain of 1 is.3%. and it's up 66% of the time. that means january ranks as the third best performing month of the year for the dow behind april and december. we then decided to broaden out our universe a bit to the broader s&p 500 in how certain sectors do in the market in january. our data team here at cnbc found over the most recent bull run in the last three years, investors have liked the cyclical stocks. on average, over the last three
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januarys, industrials, financials and energy stocks have done the best as investors have bet on a recovering u.s. economy. and they're all up around 557% for the month on average during that time frame. now, the worst january performer has been telecom services, which is down around 2%. it will be interesting to see if that near term pattern holds this coming month. back to you guys. >> that's a breakdown of what's happened. as far as bond markets are concerned, we kick off the treasury yields above 3% on the ten year. gilt is above 3% on that mark, as well. so we'll see what happens over the course of 2014, how that impacts us. on the currency markets, dollar/yen is near five-year lows, but 105.35. 105.41 is where we've been. 21%, the dollar up against the yen. euro/dollar at 1.3894 is what we hit last friday. currently at 1.3730.
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the aussie/dollar, down 15% last year against the greenback. meanwhile, the pound, 1.6552. this morning, we hit 1.6592. the high since august 2011. joining us for the first time in 2014, daniel morris, global strategy at tia crest asset management. daniel, happy new year to you. >> thank you. happy new year to you. quite some performances we've had, daniel. we can't possibly repeat that, can we? >> well, it would be nice certainly quite unlikely. if anything, the returns that we had last year at this point were probably a bit better than we would have liked. generally, fundamentals were good and earnings were growing, but nearly 30% return is a bit too much perhaps. so you've got to wonder how much of that we're going to be able to keep into the next year, so consequently modest expectations for equities in 2015. >> we've discounted an awful lot
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of growth nein earnings with th 2013 performance. >> exactly. and you think it's a combination of growth and earnings which was still quite good. increase in valuations, equities at this point are not cheap. they're probably a bit above averages in terms of pes and then, of course, whatever the effect is from the liquidity from quantitative easing. that's the big unknown. as that dissipates and increases, we have to wonder how much air out of the tire that's going to take. >> what do you think in terms of economic growth, what have we sort of priced in with these performances? >> well, i think in terms of economic growth, 2.5% to 3% for the u.s., certainly less for europe seems reasonable. but, again, we don't want to tie stock market performance too closely with gdp growth. sometimes they're quite out of sync. i think the interesting contrast that you see at least between the u.s. and europe right now is that earnings expectations are
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rising steadily in the u.s. whereas europe it's much more mixed, bodily still a bit of a downward trend. i think that's going to be the biggest challenge for european stocks this year. >> they attracted quite a lot of money, daniel, in the second half of the year, european stocks. are you saying that was wrong for that money to flow into europe? >> no, not at all. we've got to appreciate that a lot of money flew out of europe in the proceeding year, so probably overall investors were underweight europe. i think part of it is a rebalancing. we think that the u.s. will probably still do better, but european stocks also should do fine. earnings growth not as strong as u.s., but valuations not quite as high. so on balance, still positive. but we think the options are still a bit better for the u.s. and europe. >> and why do you think, look, what happens with the growth gdp won't necessarily feature back into equities and you can have quite a disconnect.
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it does feedback into presumably what happens with yields and, you know, the pace of fed tapering. so what is going to happen there? at some point, that must feedback into -- the cost of money, that will feedback into everything else. >> sure, absolutely. much more tight correlation there between yields and what's happening with gdp growth expectations. we're looking for probably at least 3.4%, 3.5% on the ten-year treasury by the end of the year, potentially could be higher. if you look at what the range has been even over the last five years, where we have inflation, that is feasible. i think we don't need to worry too much about what the effect of that is going to be on the economy. that's still going to be relatively low in terms of real yields. that should be a determining factor in how quickly the economy can grow. we're getting back even know to best the average real yields and with average real yields, the u.s. economy has grown at 5% during expansion periods in the past. i don't think that by itself is going to be a hindrance.
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certainly a bit of an adjustment, but i think fundamentally it's not going to be a drag. >> and daniel, there are lots of other things to talk about. have you got any new year's resolutions? >> well, investment. i think what we need to more importantly is to keep an eye on what are the negative effects for quantitative easing. everybody to some degree has been on bubble watch. i think we have to try and er s ascertaer a ascertain what are going to be the positive effects, the negative effects, i think that's what we should be most focused on. >> stay there. more to come from you. the reason i ask that is because we want to know what our audien audience's new year's resolutions are, as well., @cnbcwex or @rosswestgate. i actually haven't made any new year's resolutions.
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maybe i should make one up by tend of the show. we'll see. meanwhile, what's on the agenda today? jobless claims are out at 8:30 eastern, forecast to rise by 7,000 to a total of 345,000. just before 9:00 a.m., we'll get the final report on u.s. december manufacturing pmi. at 10:00, the ism manufacturing index is expected to drop about 0.5 point from november. at 10:00, we get construction spending for november, it's forecast to rise we 1%. fiat has agreed to a $4.5 billion deal to acquire the rest of chrysler. it will be paid by both carmakers. chrysler further committed $700 million to the deal.
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fiat shares today up nearly 13%. daniel is here in europe with the best performing sector last year. we saw a huge increase in auto sales, as well, in the united states. what do you think with the sector for this year? >> well, i think overall the interesting contrast in how you might look at the difference in the performance of auto sales in the u.s. versus europe is going to be the ability of the u.s. economy to restructure, to re allocate labor and capital more quickly, more efficiently than in europe where there's a tendency to try to flute out some of the did sruptions. so i think the outlook is probably a closer alignment to sales. it will be a quite before europe gets to that point and whether we have strong enough growth to match the sales that you've seen in the u.s. >> do you think we're going to get more m&a? >> should do. i think it's a good environment in terms of private equity of a lot of investment that's taken
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place and taken place prior to the crisis that's looking for an exit. obviously with markets not necessarily rising as much, but even if they're broadly positive and not declining, that's an opportunity for exits and i think generally speaking you have a lot of cash that's looking to be deployed. and i think the other key thing that's going to be a driver and that has hipderred things so far is ceo anxiety and enr uncertainty about the future. that should contribute to more m&a activity. still to come, more on that storm, as well, that's heading towards the northeast. we'll get all the info from the weather channel. see you in a few moments. ♪ [ male announcer ] this is the story of the little room over the pizza place at 315 chestnut street. the modest first floor bedroom in tallinn, estonia and the dusty basement at 1406 35th street. it is the story of the old dining room table at 25th and hoffman avenue. the southbound bus barreling down i-95.
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...and the second floor above the strip mall at roble and el camino. ♪ this magic moment it is the story of where every great idea begins. ♪ so different and so new where those with endless vision and an equal amount of audaciousness believed they had the power to do more. time and time again. ♪ and then, it happened at dell, we're honored to be part of some of the world's great stories. stories that began much the same way ours did. in a little dorm room -- # 2713. ♪ this magic moment ♪
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if headlines today, fiat takes full control of chrysler in a $4.3 billion deal and a major storm heading for the northeast u.s. is expected to cause major travel delays. the first winter storm for 2014 heading for the northeast in the united states. this is a video from michigan where the storm dumped around half a foot of snow on new year's day.
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parts of england and new york state could see up to 18 inches of the white stuff. mike seidel joins us from boston for more. mike, nice to see you. how bad is it going to get? >> it's going to get pretty bad, ross, here tonight and tomorrow morning. right now, it's light snow across boston and parts of southern new england. but the worst of the storm will take place after sundown this evening to about sunrise friday morning. some spots will get over a foot of snow. the difference with this storm, it's just so cold. right now, we're running at about 19 faparn height. but by tomorrow morning, we'll be around 8 to 10 degrees fahrenheit. the windchill will be below zero. we've got blizzard warnings for long island, east of new york city, and part of our coast in cape cod where we could have wind gusts up to 40 miles per hour. these going to create whiteout
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conditions. it will create a big problem not just driving around, but getting around. a lot of the schools have said forget about it, we're taking the rest of the week off and there's already been a lot of flights canceled. >> how much travel disruption are we expecting, mike? >> it's going to be significant. right now, new york international has canceled departures and arrivals over 360 flights for today. they have canceled over 140 for tomorrow. these numbers are going to skyrocket. we can guarantee that as we go through tonight the airlines are going to start slashing flights. so if you're flying from london over here, check with your air carriers to see how things go for international departure us out of heathrow. but domestically, this will ripple through the whole system. and until the snow ends, there's going to be a huge backlog because of all the flights canceled, all the passengers stuck in airports. this happens anytime we have a big storm in the northeast.
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it's going to be a big one, not as big at last year on february 9th and 10th. nasty cold. saturday morning, below zero fahrenheit, the coldest weather in many areas in over ten years. ross, we'll send you back to london where it's just liquid and not white. >> mike, thank you so much for joining us. zero degrees fahrenheit, that's about minus 17, minus 18 in celsius for those of you who work on that one. thanks for that, mike. that's almost as cold as it is in davos. now, u.s. regulators are trying to figure out why oil from north dakota's shale deposit is exploding. this follows three fiery train accidents in the last year. on monday, several cars on a bnsf train exploded following a collision with another train west of fargo. crude oil, while flammable, is rarely cited in explosions.
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it's being probed whether additives or mislabeled liquids contributed to monday's accident. before we head to break, 2014 is set to be another interesting area for bitcoin. some are predicting a wider adoption of currencies, overall. check out our website for a full rundown of what could bolster the virtual currency in the month. plus, are we one step closer to an everyday vehicle not dependent on traditional energy sources? ford has developed a concept model that runs primarily on solar power, which is expected to be unavailable next week. take a look at we'll have more with daniel morris as soon as we come back. [ children yelling ] [ telephone rings ] [ shirley ] edward jones. this is shirley speaking. how may i help you? oh hey, neill, how are you? how was the trip? [ male announcer ] with nearly 7 million investors... [ shirley ] he's right here. hold on one sec.
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[ male announcer ]'d expect us to have a highly skilled call center. kevin, neill holley's on line one. ok, great. [ male announcer ] and we do. it's how edward jones makes sense of investing. ♪
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u.s. futures are trading. that's the good news. implied at the moment is not very much. the dow crawled up 6. the nasdaq is -- actually, they're not trading at the moment, i don't think. no, they're not. sorry. i thought that was surprising. right. meanwhile, google is cutting the price of its flagship moto x smartphone by about $150 in the u.s. to $399 without a wireless
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contract. and that's makes it significantly cheaper than samsung galaxy's s4. the move could be aimed at spurring slow sales of the motox and at overseas markets where customers tend to buy phones without wireless contracts. google's stock up some 19%. the syrian electronic group that supports assets says it hacked into facebook and twitter accounts on wednesday. it post ed microsoft's steve balmer's information. hackers, meanwhile, have reportedly posted user names and partial phone numbers of 4.6 million users of the popular photo sharing app snapchat. a website called snapchat db says said it got the information
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through a recently identified security hold and was making the information available to beef up privacy measures as of wednesday night. snapchat's db site had been suspended. my final thoughts from daniel morris this morning, he's in new york. daniel, the nasdaq was up, what, 38% in tech stocks are going to outperformance again? >> i think it's going to be kind of two questions. one, you have to look at the performance of the consumer sector and then look at business software and hardware. the consumer sector is going to be challenging. a lot is going to depend on apple. i think the best potential perhaps is on the business and software side. we know there's still a lot of potential for businesses to pick up their investment. going to still be looking for ways to improve productivity and i think investment technology is going to be part of that. i think those are probably the sectors you want to look at. >> let's talk about emerging markets. there is this view as yields rise in the united states, that
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will original emerging market investors and we've seen flows out of this country. but there must come a point when the.underperformance provides a compelling valuation case, particular lit if the global economy improves. >> absolutely. i think on a fundamental basis, you think about the reason you like emerging markets, all those reasons are still there. you know, better productivity gains, middle class growth and so on. but it has been a difficult macro environment for emerging markets and i think that's going to continue for next year. people with a slightly longer term view, though, as you said, should be looking for valuation. i think what's interesting about emerging markets, especially some of the markets in asia is you could say they are arguably cheap and there's not a lot of equity markets in the world today that you can say are cheap. so i think people should be looking at some of those, appreciating there will be volatility this year, but specialing maybe there will be more bargains. >> do you think we're going to get more volatility as a whole, as we wonder about what tapering means b and we run through, you
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know, the data? >> sure. to go back to your earlier questions about resolutions for the year, i think people's resolution should be to stay calm, if you will. stay calm, stay invested. we've seen what can happen when, say, the fed miscommunications, you know, the turmoil that we had in the summer when taper was first discussed. if we get a few more of those over the course of the year as the fed figures out its policy, how it's communicating, how it's going to go through the tapering, we should and will see some volatility in the equity markets. the important thing to keep in mind is that fundamental earnings growth is still good. gdp growth is good. even if you see that volatility, stay invested because i think the outlook is still better for equitien than it is for bonds. >> daniel, always good to see you. i hope to see more of you over the course of the coming year. we'll take a short break. still to come, the new u.s. health care law has come into effect. will it bring a brighter year for obama care?
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just by talking to a helmet. it grabbed the patient's record before we even picked him up. it found out the doctor we needed was at st. anne's. wiggle your toes. [ driver ] and it got his okay on treatment from miles away. it even pulled strings with the stoplights.
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hello. you're watching "worldwide exchange." i'm ross westgate. fiat purchases chrysler for less than expected. old man winter arrives. residents in the northeast united states are bracing for winds, snow and major travel delays. and a new year and a new test for obamacare. as the new health law goes into effect, insurer are still working through a bag log of paper. >> announcer: you're watching "worldwide exchange," bringing you business new from around the globe. and a very warm welcome to 2014 if university justify joined us this morning in north america. hope you had a great new year's eve night. no futures trading yet in the united states. one of the couple of days a year when we don't get futures
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opening this time of morning. european equities are down. the ftse 1 00 off 0.5%. the xetra dax is off 0.6%. cac 40 is down 1%. it was up 17% last year. the ftse mib is just about in the green, being helped by fiat which has concluded buying out the last part of chrysler that it didn't already own. we'll have more on that fairly shortly. knew, the u.s. health care law went into effect on new year's day with more than 2 the million people enrolled in private plans during the signup period. hospitals, corporations all taking steps to adjust to the new system. walmart is offering a month's supply for certain prescriptions for those who signed up for obamacare. they're not getting information on enrollees to process the applications.
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joining us now, greg, happy new year to you. >> same to you, sir. >> nice to see you, greg. look, obamacare is now up and running, but we still have more problems with it. how damage has this been for the obama legacy, let alone his ratings? >> i think it will be damaging, ross. i think that there's sticker shock coming. i think there's hidden taxes. we still haven't ironed out all the bugs on the computers. but there is one big plus for investors. i think this makes the republicans less likely to precipitate another budget crisis, debt ceiling crisis. why should they? they have the greatest political story in the world, bashing obamacare, and that means no crisis on the budget. >> that is the good news. how does this frame up the midterm elections later this year? >> i think you've got to say the
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house stays republican and it's now looking like the republicans could gain a few seats. a year ago, we all thought the democrats had an outside chance to take the house. the more interesting story is in the senate where the republicans are almost certain to gain seats base odd who is up. they need six to take the senate. i think they can easily take three or four. six might be a stretch. but the bottom line is both houses a year from now will be more conservative than they are now. >> and the implications of that, greg, with regard to more budget deals and debt ceiling discussions and everything else? >> i think fiscal restraint is still in place for another year or two or three with the republicans controlling congress, having the ability to revive a sequester down the road or block any new spending. so i think the fiscal restraint
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will be an issue. >> the numbers, whether it was durable goods or personal income, really, really good numbers towards the end of the year. leading to some belief that the fed might speed up its tapering. i just don't see that for one major reason and that is inflation. there isn't any. as long as inflation is this dormant, i think the fed is going to really take its time on winding down the asset purchases. >> greg, stay there. we'll come back to you. still to come, find out why mark zuckerberg has been in a giving mood lately. the facebook ceo heads a list of top donors to charity. more on his efforts in a few moments. [ male announcer ] this is the story of the little room over the pizza place on chestnut street the modest first floor bedroom in tallinn, estonia
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and the southbound bus barreling down i-95. ♪ this magic moment it is the story of where every great idea begins. and of those who believed they had the power to do more. dell is honored to be part of some of the world's great stories. that began much the same way ours did. in a little dorm room -- 2713. ♪ this magic moment ♪
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now, for some of the world's wealthiest people, it was much better to give than receive in 2013. a new report is shedding some light on their charitable efforts. bertha has more for us. bertha, a very happy new year to
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you. >> likewise. i was doing my own karatble giving here at the end of the year, but i think it pales in comparison to some folks. the top wealthiest donors gave $3.4 billion to charity last year. about 34% of that game from a single donation from mark zuckerberg and wife priscilla chan. they announced last month they were giving $18 million shares worth $990 million stocks to the silico silicone fund. nike founder and chairman were the second largest down yours pledging $500 million. former new york city mayor bloomberg was third giving $350
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million to johns hopkins university. and there were 14 people that gave at least $11 00 million. the donations still aren't back to prerecession levels with 4.1 billion given in 2007. colleges and universities are the biggest beneficiaries of all this good will. the report shows 12 of the top 15 donations in 2013 went to higher education. charles johnson, the former chairman of franklin templeton investments has pledged $250 million to yale for new buildings, full disclosure. that clums looks like columbia rather than yale. however, real estate developer miami dolphins steven ross is giving $250 million to the university of michigan. other representants include stanford and columbia business school. and i kind of know about yale, ross, because that's where i went. >> well, you know, it's all about what you can do.
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isn't it? >> exactly. >> mark zuckerberg gave the most because he probably has the most. >> that's true. my stock isn't up as much as his. >> and i don't know whether my present to you yet has arrived via delivery percentageon or not. >> i will check the mailbox. >> do that. >> well, yeah. maybe it's the alternative mailbox you need to look at. bertha, good to see you. thanks for that. have a good day. a recap of the headlines today, no fireworks or stocks in europe as indices start the year mostly in the red. fiat takes advance of chrysler is a $4 billion deal. and a storm is heading to the u.s., expecting to cause major travel delays. welcome back. how is everything? there's nothing like being your own boss! and my customers are really liking your flat rate shipping. fedex one rate. really makes my life easier.
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ahead of the u.s. open, the european stocks are down. the ftse 100 and xetra dax off 0.5%. the cac 40 off 1%. the ftse mib is up helped by fiat. the u.s. futures are going to resume at 6:00 a.m. eastern. there's only about two occasions when they're not trading. but the dow having its close of the year on the last dey trading day of 2013. what are you supposed to do with these performances we've seen in 2013 in 2014? >> the year as a whole, i would say it's probably a 20% year for
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u.s. equities and probably zero give or take on european. now, if it turns out to be another monthout year like last year, european equities will be dragged up. if it sounds like a break even year for the u.s., i'd expect the europeans to be down. but kind of a scaling relative thing. >> and the -- what is that, 4% of the outset for europe to come back in. so, you know, it's a slow argument there. you catch it on the relative decision of the bank, the ecb and of the u.s. fed. and, you know, my view would be that the ecb is probably going to be moving around least of this year. that's the function of economic weakness, but the anticipation of that is going to be obvious.
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>> the abe-nomics has to kick in with more structural reforms. so japan is certainly one to watch. overall, i'm positive for the economy. i think the stock market is pretty fairly valued. and the first major winter storm of 2014 is heading for the northeastern u.s. today. this is video from michigan where the storm dumped around half a foot of snow on new year's day. the weather channel's mike seidel joins us from boston. mike, how bad is this going to get? how cold is it going to get? >> it's going to get pretty cold. right now we're sitting at 19 fahrenheit. that's 7 degrees below celsius. later tonight and tomorrow morning, these winds will gust as high at 20 miles per hour.
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long island and new york, sussex off to the east of new york city, those areas will have the higher wind gusts. by tomorrow morning, temperatures will drop down to around 7 or 8 degrees above zero fahrenheit. that's about minus 12 or 13 celsius. but the real chill will be on saturday morning, down below zero fahrenheit. that is the first time we've been below zero fahrenheit here in boston in about three years. and the windchills tomorrow will drop down to about 25 below zero celsius. so very cold air. and that's the distinction with this storm. usually it's not this cold when it snows. so the ratios are very high. it's a powdery snow. you get the same amount of liquid, you'll get snow. fortunately the storm is not going to be a blockbuster. still serious impacts because it's going to be more progressive and move on out as we roll through the middle part and afternoon on friday. airports will be seriously
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impacted, already new york city and newark have canceled about 375,000 flights. but, ross, ruk bet your sweet quid that as we go throughout the night, the airlines will be canceling and canceling and canceling. >> it's best not to travel, i guess. enjoy the first part of the year without traveling. well done for getting out there this time of the day in the snowstorm. now, u.s. regulators are trying to figure out why shale oil is exploding. on monday, several calls on a train exploded following a collision with another train west of fargo. crude oil, is flammable, but rarely cited in explosions before it's refined.
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probes are looking at whether additives contributed on monday. fiat sealed a $4.35 billion deal to acquire the rest of chrysler. chrysler has committed another $700 million to be paid over three years. it should close by january the 20th. it values chrysler at $10.5 billion. joining us with his thoughts for the first time of the year, phil los angeles b lebeau from chicago. is this a better deal? >> i think this is a better deal for everybody all around. at the end of the day, you have a deal that gives sergio merceoni what he desperately wants, which is complete control plus the cash flow from chrys r
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chrysler. and for the truck, they didn't want to go down the road of an i on. as much as they talked about we want to be fairly valued and make sure we're getting everything we can, for the 41% stake in chrysler, an ipo would not have done any good for either side because you would not have gotten as much valuation as they have gotten with this deal here. so for all parties involved, this is probably the best outcome. >> yeah. i've got to close fairly quickly, phil, as well. how well is the chrysler doing at the moment? how well is it going to do this year? what's it gots got up its sleeve? >> well, it's doing well. for 20 13, sales were slightly better than an industry as a whole. the big issue here for chrysler
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is that it is a regional automaker. strong in north america, but very little presence in europe. virtually no presence in asia. you can look at that two ways, ross. you can look at that and saying, you're paying $10.5 billion is what the value is for chrysler. so fiat paying $2.4 billion here. you have the jeep brand, the potential in asia gentleman and europe, and you've got that cash flow which is critical for fiat. you put that altogether and a lot of people look at this as being a critical component for sergio marcione to take that next step so fiat is not just limping along hoping to eventually restructure its operations and become a true global automaker. >> phil, before we let you go, we're asking people their new year's resolutions today. you've already broken yours, which is not to be on the phone before 5:00 in chicago. but anyway, have you got any
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others? >> the only other one is that i spend a little more time with you guys in europe this year covering the auto industry. >> let's do it. let's do it, fill. that's an excellent resolution. good to see you. thank you, phil lebeau on the phone from chicago. now, as far as the agenda stateside, weekly jobless claims are forecast to rise by 7,000 to auto a total or 245,000. just before 9:00, we get the final report on u.s. manufacturing pmi at 10:00. expected to drop around 0.5 for november. at 10:00, we get construction spending forecast to rise 1%. still with us, greg talia. greg, thanks for your patience. now we're back with you. >> sure. yep. >> where do you think the
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surprises might come from this year? >> i think, ross, the easy call is that the economy surprises to the upside, that unemployment gets to 6% a year from now. there are two more intriguing calls, though. the first one is i think the keystone pipeline gets approved. these accidents that you described a few minutes ago in the dakotas, the horrible accident in quebec earlier in the year leads to a solution that a pipeline is necessary. and i think the white house will approve it. the second big surprise, i think people will be talking about we 20 servi 2016, the budget will be close to balanced. >> obama is closing in on keysto keystone. what's the deal that gets done on that? >> i think the republicans will have to extract something to get their approval on the debt
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ceiling increase later in the winter or early spring. and they're not going to get the death of obamacare or deep new spending cuts, but i think keystone will be the bargaining chip that gets that deal done. >> all right. we'll see what happens with that. meanwhile, what are the first priorities now in january, greg. >> sure. next one, next monday, the center will pass unemployment benefits. while house republicans would like to extend the benefits, they want to pay for it and no one is quite sure how that would be done. beyond that, we have a budget that will get approved by january 15th, no shutdown. then we'll all wait for january 28th, the president's state of the union address in which he'll unveil a broad agenda that will go nowhere. >> yeah. and it will go nowhere because
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he won't be ambitious? >> it's the house. if there's any new spending, new federal programs, the house will reject it. this is an election year and i think election year 34ri9s poli going to affect everything, especially the big issue, which i think is immigration. >> yeah. you talk about heading it towards elections. what do you think the fortunes of chris christie is going to be? well, he's not in the lead with the base. the republican base is suspicious of him. they feel he's not conservative enough. there was a story in the "new york times" about christie being a bully against his opponents and his allies in new jersey. and i think he's going to be careful not to get a reputation that he's a little too harsh, a little too crude. so he doesn't have this wrapped
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up by a long shot. i think if paul ryan wants to run -- and it's unclear whether he does -- i think ryan would be a big player, as well. >> yeah. is this the year where the democrats focus themselves on christie? that's if the other parts of the gop don't? >> yeah. i think the democrats are going to gear up in their criticism against christie, against his demeanor, against his style. i think the other big story would be hillary. it was really interesting yesterday bill clinton in the swearing in for deblasio in new york city seemed to embrace a much more aggressive agenda. i'm sure he talked to hillary before that and i'm sure they're going to move up to sewing up the party. >> fooij finalinally, we've bee
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people what their new year's resolutions are. doug tweeted resolutions are to watch more cnbc and write another book about cnbc. that's it. 2014 is under way. yeah. everybody knows that. did you know there is an oldest trick in the book? what? trick number one. look-est over there. ha ha. made-est thou look. so end-eth the trick. hey.... yes.... geico. fifteen minutes could save you... well, you know.
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good morning and welcome to the 2014 edition of "squawk box." a brand new start for the markets after that bull run in 2013 where the dow had its best year since the mid 90s. fiat makes the first big deal of the new year, buying up the rest of chrysler. and the east coast is bracing for a big winter blast. blizzard like conditions are coming. it is january 2nd, 2014. 20 sh 2014 on your checks now,
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although i haven't written a check in 15 years. good morning, everybody. i'm becky quick here on cnbc along with joe kernen and andrew ross sorkin. the question of the morning is can the stock euphoria carry over into this new year? the dow and the s&p ending at record levels. advances were led by consumer discretionary stocks with that secretarior up more than 40% in one year. if you want to measure sentiment, it's worth noting that the volatility index fell 40% in the last 12 months. the futures this morning on this very first trading day of the year, they are indicated lower. dow futures down by about 43 points, s&p off by 5.5 points. take a look at the "wall street journal." it has an interesting profile and some of the


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