Skip to main content

tv   Worldwide Exchange  CNBC  October 21, 2014 4:00am-6:01am EDT

4:00 am
welcome to "worldwide exchange." i'm wilfred frost. >> and i'm carolin roth. these are your headlines from around the world. >> killed in an air crash in moscow, russian investigators say the driver that caused the accident was drunk. apple shines again. sales of the new iphone six smashed company's forecast. down but not out, china's gdp growth slows to 7.3%, its
4:01 am
lowest level in almost six years, but still beat forecasts. the ceo tells cnbc, stress tests would send a strong signal to the market. >> hopefully, we've seen that these stress tests are for real and that the european banking sector has to be -- to clean out their bad loans. that would be a signal of strength and that could help the sentiment in the market. . >> announcer: you're watching "worldwide exchange," bringing you business news from around the globe. >> hello, everyone. i'm seema mody. coming up on the show, senior hong kong officials sit at the bargaining table are protesters, but we hear from one person who says don't hold your breath for a compromise. strong chilling ways on earnings as ae is the hos tries to avert sales slowdown. will the recovery efforts pay
4:02 am
down? we will discuss. and is we ask whether headwinds in china and russia will eat away at the bottom line. >> announcer: you're watching "worldwide exchange," bringing you business news from around the globe. >> so, carolin, everything is calm in the markets. >> i've been away for a couple of weeks. i had to go on holiday. you have to do that a couple times a year. but it's good to back back on this show. it's good we're seeing modest gains in these markets. you have to wonder why. is it really just a bounceback that everyone was expecting to see or is it all about apple, seema? that's the big news today. >> apple could potentially provide a boost to the tech heavy nasdaq. apple beating street
4:03 am
expectations. but wall street focused on the stronger than expected guidance, expecting a big jump in holiday sales, despite the iwatch not coming out until next year. >> absolutely. and we will be diving into apple earnings and all of the other market stories in just a couple of minutes. but first, our top stories. vladimir putin has sent his condolences over the death of the ceo of total. russian investigators say the driver of the pilot that caused the crash on the runway during takeoff was drunk. the french president says he was shocked and saddened by the death who says he has big ambitions for the oilmaker. stephane now has the latest. >> good morning. france has opened an official investigation and will send a team to moscow to assist the russian investigator team. france has the right to do it, given that the plane was operated by a french company and
4:04 am
was built by french manufacturers. therefore, france has the right to send a team to moscow. it will organize a board meeting as soon as possible without further details about the exact schedule. total will appoint another ceo. two potential candidates, phillip -- hthe other nate is patrick puen, the head of the refinery in europe. he assisted krzysztof de margerie. . christophe de margerie was a
4:05 am
strong defensor of russia. he said globally speaking, the need for oil companies to work and all the countries even when the stress of sanctions or conflicts makes it difficult. so the question is whether the next ceo of total will use the same strategy. the plan for total is to double the production out of russia by 2020. at this time, russia should account for more than 10% of its global portfolio. we shall announce that shortly. over to you. >> stephane, thank you very much. >> let's have a look at markets. quite a lot of green behind me. markets opened basically flat, but they have strengthened a little bit in the last 20 minutes. the stoxx 600 is up 0.5%.
4:06 am
let's have a look at the stoxx 50, as well, which is up pretty much exactly the same amount. we have a little bit of impetus in markets so far today. not totally surprising, given the huge amount of volatility and the negativity that we had last week. as you can see, a bit of strength across the board. the ftse 1 is 00 just shy 0.5%. germany, italy, france just ahead 0.5% in the green. let's have a look now at some individual stocks. in the news today, apple is up 2%. all eyes on u.s. trade, how will apple open when we get there? arm is, in fact, flat now. shares were trading higher despite the designer reporting disappointed revenue. they were high off the earnings of apple.
4:07 am
actelion raised full year guidance for the second consecutive kwarder. 6.45% in the green. swedbank posted better-than-expected earnings. michael spoke to the ceo about his view earlier about the bank's upcoming stress tests. hopefully we see that the stress tests are for real and that the european banking sector has to clear out their bad loans. that would be a signal of strength and that could help the sentiment in the market. >> now, yesterday i was saying the ten-year treasury just settled around that 2.2% mark. a little bit more yield compression, perhaps a little more negativity out there yesterday. the germans, 0.84%. and the uk yield continues to have that impression. let's have a look at forex, as
4:08 am
well, and the u.s. dollar. 128.24. it's given up some ground today against the yen, 106.54. let's have a look quickly on asian markets, as well. sri, stick with me on this update. the nikkei giving up 2% today. yesterday it was up 4%. but it's basically a risk off trade today. we've got china off 0.75% following that china gdp print. data out of china, we'll be breaking that down for you later when we're joined at 9:30. hong kong is basically flat as is australia. >> absolutely. let's try and make some sense of the market. >> it seems as though there's
4:09 am
some bargain hunting going on. last trade days, the european response was a bit delayed. a lot of people are trying to call the bottom. >> i would say, i represent a company whose investors are long-term investors. right now, i see no reason to change that and i've been suggesting more. as many commentators have said, there's no real solid reason for this sell isoff. therefore, at these levels, when you can get decent yields on global equities around 276%, 2.7% on the ftse level, absolutely, especially it's the real worry really is deflation. and low yields for longer, so why not buy some yields on equities? >> a lot of people would agree with you. and that's exactly what worries me now because a lot of people
4:10 am
say you should be buying on the dips. this is the strategy. no one is telling you to take risk off the table to buy gilt right now. >> you've really got to divide the long-term client investor. so the optimism, all that triumph over history. so then you've got to be buying on dips. you've got to be optimistic about eks. it's hocus-pocus. who knows where it's going in truth? on report my money on the fact that markets will recover. if we are in a period of long-term low growth, low inflation, you see buying the
4:11 am
high yielding part of the equity markets. markets are going to turn up because of growth in the u.s., perhaps europe might recover. either way, i like equities. >> higher sectors saying investors should put their money with specific sectors. would you recommend -- >> if you believe in the low growth low inflation, the central bank unable to produce any inflation, obviously, you're the -- you would want pharma, tobacco. dare i say sort of big tech. the more defensive, not the software. anything that looks like it can continue to generate safe earnings and you don't want to be in growth dominated sectors that would fall asunder in a period of structural low growth. i'm not entirely convinced that
4:12 am
we are looking at low growth. >> despite the worsening situation in germany, germany has continued its me fairty. >> i'm totally amused by germany's stunt. it's like it's gotten into the euro without appreciating what that means. it's reluctant to create political and fiscal union, the political and economic system. the ball is very much in germany's court to embrace the concept over the euro and its totali totality. when they set it up, they knew very well that one thing was intended to lead to another with the political and fiscal union. >> isn't that a little harsh?
4:13 am
they bank rolled the existence of the u.s. since 2012. on top of that, when you have companies like ireland coming out with austerity saying, look, we're doing a lot to save the euro. these countries that have had to go through issues like ireland and greece, they're showing signs of recovery. >> it was always intended germany would bankroll the euro. that's the replay. >> so you think without political unions, then they're being short sided? >> yes. and a political union would give them the leverage for institutions in brussels to have some say on how that bankrolling, that support for the periphery was spent. at the moment, they down have that. it legitimizes that it's the only way you can keep the euro afloat. >> okay. we'll be back with more from our investment strategist. before we go to break,
4:14 am
you're looking at live pictures of the courtroom with oscar pistorius where he's expected to be sentenced. we'll bring that verdict as soon as we get it. breaking up is hard to do, especially when $54 billion at stake. we discuss the collapse of the abbvie/shire deal. that's coming up after this break. when change is in the air you see things in a whole new way.
4:15 am
it's in this spirit that ing u.s. is becoming a new kind of company. ing u.s. is now voya. changing the way you think of retirement.
4:16 am
a single ember that escapes from a wildfire can travel more than a mile. that single ember can ignite and destroy your home or even your community you can't control where that ember will land only what happens when it does get fire adapted now at fireadapted.org
4:17 am
the tail end of a hurricane gonzola reached the british isles. winds are expected to reach 70 miles per hour in coastal areas. here is a story catching the attention of wall street. microsoft says the ceo nadal la was paid more than $80 million in the company's last fiscal year. most of that comes from restricted stock tied to microsoft's performance against other companies in the s&p 500. nadella won't be able to get those shares until 2019. microsoft says he was the biggest beneficiary of a
4:18 am
retention plan the board put in place last year when steve ballmer announced he was stepping down. microsoft shares, by the way, up about 28% over the past year. and what do you think about microsoft's ceo payback? if you want to join the conversation, get in touch with us, worldwide@cnbc.com, @cnbcwex. and our personal handles are on the screens. that is a fantastically high number. if it is based on equity stock optiones and over the long-term, he doesn't get them until 2019, if the performance justifies it, perhaps it's justifiable. >> but regardless of that, the timing couldn't be worse. last week, the awkward comment coming from him about how women should -- to get a pay raise, it's difficult for him to justify this package right now. >> absolutely. and gender equality has been a hot issue, not just in the workforce, but specifically in siliconealley where you're
4:19 am
seeing fewer women on average and on top of that being paid less than men. >> send in your comments to @cnbcwex on twitter. billion offer investors bill ackman said valeant was discredited. he made misleading statements about valeant and ignored outside advisers when he called valeant's offer problematic. allergen has been working for months but all efforts have been rejected. carolin is going to tell us more about this deal. before we get to that, carolin, a big deal for shine and this break-up. >> shire's ceo has been
4:20 am
officially terminated. abbvie is blaming the treasury for the dealing. meanwhile, allergan shareholder policy is stepping up pressure on the bow textmaker to make its own offer for shire. you've been following this story for as long as it's been on our minds for the last couple of months. how much money is going to change hands now that this deal has fallen through? >> well, we've got $1.6 billion which is payable to shire by the close of business today. but that's not really where this story ends, i think, because you're seeing so much more action from these activist investors. we've got john paulson who is better known for making great calls in 20307. who is coming in, he's a big shareholder in both allergan and shire. he's not apparently urging them to make a tie up, which would
4:21 am
obviously mean that is valeant/allergan deal may not happen. and this is something, which is why we've seen shire's share price recovery slightly this morning. we will wait and see what the next move is here. it doesn't look like the trend for contoll addition is over yet. >> it's a long way from consensus of getting something pushed through on this topic. are companies moving too soon with the deal? >> there has been a lot of speculation that abbvie was overly cautious in this particularly when there had been a move even since the deal with a announced on the 22nd. there had been a deal where they said this is still going through, this is still attractive despite inversion. and i think it will mean that deals for which tax inversion is the main focus probably won't go
4:22 am
through. but there is still some room for consolidation. there's fear, there's a lot of recovery companies, there's a lot of cash in balance sheets. we could see quite a lot more. >> i want to bring you back in here. tom elliott, international specialist at debeer group. a lot of deals have fallen through. yesterday, we saw the highest number of deals that has fallen through since 2008, not just abbvie and shire. t-mobile and illiad, as well. this could be hitting the maa & streak that is predicating much of the gains. do you think that's a big risk for the market? >> yes, i do. and i think we could look at two things. you've obviously got the u.s. congress want to go clamp down on this inversion theme ahead of the election. and then you've got markets
4:23 am
wobbly the last couple of weeks. a lot of dealmakers are nervous. what is the price they should be paying? put that together and that's on itself to bring prices down. i think what's really interesting here is will this drive the u.s. to reform its tax law or after all this has groan over, will we still be in a crazy position where it's more efficient for apple, for instance, to borrow large sums of money in order to pay dividends rather than use the cash holdings it has overseas to bring those yields to pay the dividends. i'm personally doubtful that the american tax system will change. i think you're going to continue to see these strange things going on. >> but before we go this change, do you think the termination of the abbvie/shire deal will lead
4:24 am
to other companies trying to grow revenue organically? >> certainly from america, yes. i don't know that much about the pharma industry, but economies of scale matter hugely for the late stage trial and progressing drugs to the market. and so anything that actually hinders that would be a pity. >> if we put aside the tax angle for a moment, we're now seeing valuations come down. this should be a sleek spot for m&a. >> it is built for the reasons we've given. if the other part of the balance sheet, the working asset, have a
4:25 am
question mark over their valuation. you can understand why markets are up. but i would like to reiterate, ultimately, this is a time when investors should be looking to pin the market and the large cash on balance sheet, good dividend coverage, generally, and i go back early to my pro equity position. >> research shows you tend to see a drop in m&a. do you think if volatility continues to move to the upside, we could see m&a drop going forward from here? >> almost certainly. but the volatility index is notorious. what is it now, 16? 18. >> but it did go above 30 last week, well above the historical average of 20. that indicates a lot of fear in this market. >> yes. my hunch for what it's worth,
4:26 am
and who knows where we are going, but we will see more money at the markets. that will help to settle markets over the coming months. >> tom elliott, we will leave it there. and before we go to break, just a reminder that you're looking at live pictures of a courtroom where a judge is due to sentence oscar pistorius for his culpable homicide of his girlfriend, reeva steenkamp. we'll bring you that when wealth it. and still to come on the show, we cross to beijing for more on the company's gdp reading. that's coming up next. don't go away.
4:27 am
4:28 am
4:29 am
sgroo paris prosecutors open an investigation into the plane crash that killed total ceo christophe de margerie.
4:30 am
down but not out, china's gdp growth closed to 7. %, the lowest level in three years, but still beat forecasts. shares of softbank closed higher than expected. >> hopefully we see that these stress tests are for real and that the european banking sector has the ability to clean out their bad loans. that would be a signal of strength and that could help the sentiment in the market. >> and we're just getting some data out of the uk. the september public sector net borrowing was expected at plus 10 billion and it came in at plus 11.8 billion last year it was 10.3. and the public sector net cash
4:31 am
requirements was plus 17.7 billion versus 6.7 billion a year ago. so both those numbers ticking up. let's have a look at cable. how is that iraqiing off the back of these numbers? it has -- well, it's not really moved in the last couple of minutes. cable is basically flat for the day. and let's have a look at european market. what we're seeing today is a bit of a technical downside, but it seems as though this is still dragging on. there is too much conviction under it. the ftse 100 up 0.5%. the xetra dax higher by 0.7%. and the cac 40, despite the death of the chairman of total is up by 11%. arm getting a little bit of a lift early on. we've got a host of corporate earnings that were better than expected today. let's have a look at the bond markets because the stoxx europe 50 is up by 0.7%.
4:32 am
i was going to talk about the bond markets. let's have a look at that right now. we are seeing treasuries higher in yesterday's trading session with the yields continuing to fall. they have been falling for five consecutive weeks. the ten-year german yield, 0.84% and the ten-year gilt yield at 2.15%. we're seeing some pressure on the periphery once again in part because of the chinese numbers that we got out today, even though china's economy grew by 7.3% in the third quarter. it was still the slowest growth in about six years and we've got the stress tests coming you up later this week. i get a lot of investors sitting on the sidelines this week. let's get back to the china numbers. >> it's the big story. in march, the lowest growth in almost six years and it raises a question of whether beijing will decide to introduce more stimulus. let's bring in eunice yoon, who is live in beijing. eunice, 7.3%, much better than a
4:33 am
lot of the advanced economies growing at subpar 3%. but given that this came in lower than expected, do you expect china to introduce measures to boost growth now? >> well, it depends on what kind of measures you're talking about. if you're talking about big stimulus, probably not at this stage. but if you're talking about targeted measures, that looks more likely. we can gleam that from when the government said today around those numbers. so like you said, the numbers that came in for china's q3 came in at 7.3% growth. all things considered, it looks as though the government is relatively comfortable with that rate of growth. it's not as good as the last quarter, what, 7.5%, but it still is better than what the market was expecting at 7.2%. in terms of the official commentary around that, there was a lot of focus on the employment figure.
4:34 am
they said that employment was looking stable. they said that some of the measures that they put in place, even for the property sector which, of course, is one of the weakest sectors right now in the chinese economy, they said that the property sector looked as though it had some positive momentum in september. so in terms of the overall growth for the quarter, they called it reasonable. and then their outlook for q4 for the fourth quarter, they said they saw fast growth or at least relatively fast growth going into the fourth quarter. so just from the commentary, it seems as though it really suggests that the government authorities aren't necessarily concerned right now and, in fact, in their open words, they said that they're just going to continue with some of this fine tuning and that they're -- you know, with the economy. so, again, that suggests that they're just going to continue to plot along on this path.
4:35 am
>> we'll see how china reacts to that number which did come in higher than expected. thank you, eunice. >> and we're going to bring you live pictures from the pistorius trial. we're hearing from reuters that the judge sentenced pistorius to five years in prison. that is the verdict from the judge. of course, he was convicted last month of culpable homicide of reeva steenkamp, his girlfriend. according to reuters, he's been sentenced to five years in prison. >> so i guess he gets five years in prison, but the defense was asking for a noncustodial verdict. had that gone through, reports say there would have been a lot of anger on the streets of johannesburg and all over south africa because a lot of people thought this act was so terrible, he really needed to get the prison sentence. they were asking for ten years. i guess five years is smack in the middle. >> exactly. and the maximum, as i understand it, for culpable homicide was 15. the defense was pushing for much
4:36 am
more lenient sensance, which the judge has come out and said the sentence proposed would not be appropriate. she then asked pistorius to stand and has guven him five years in prison, that's according to reuters. pistorius reportedly wiping his eyes after the judge handed down that sentence. a lot of emotional in the room, as you can see. am shares moving higher in frankfurt, up about 1% the last time i checked. this after the tech giant -- wall street estimates. josh lipton, our cnbc reporter, has been taking a closer look at apple's earnings. he filed this report. >> apple reporting and besting estimates, the tech targeting reporting eps of 142 on 42.1 billion. that was enough to beat on both the bottom and the top. i did have a chance to speak to apple's ceo, tim cook, to get his read on this report. looking through the product categories, iphone shipments, 39.3 million.
4:37 am
that was up 16% year over year and besting estimates. i asked cook specifically about that new iphone 6 and 6 plus. this quarter included nine days of sales in ten countries for those new iphones. cook telling me demand for the 6 and the 67 plus was in his words, off the chart. on the other hand, the ipad which still accounts for about 20% of the company's revenue, ipad shipments, 12.3 million. that was down 13% year over year. however, cook saying he remains bullish on the ipad. he talked about the new product, of course, they introduced the new ipad air 2 last week and those new partnerships you mentioned, that collaboration they have with ibm, finally maces, maces represent about 12% of the company's revenue. mac shipments, 5.5 million. that was up 21% year over year. that is the best quarter for the mac in apple's history. a lot of that had to do with the back to school season. cook saying that back to school season was, in his words, a blow out.
4:38 am
i also asked cook about apple pay. that's a mobile payment service launched today. apple right now isn't providing details about how exactly it's going to make money off that service. when you talk to apple executives and they believe it's going to be very popular, you know, be another reason people go out, they say, and buy these new iphones. josh lipton, cnbc, kecoopertino california. apple did see a bigger than expected jump in its iphone 6 and iphone 6 plus sales. that could help holiday sales as they approach the november and december period. but, again, ipad sales slowing. remember, apple was the one who created this product category, since then it's become a highly competitive market with the likes of amazon and amazon entering the tablet space. maybe they don't even care about the ipad any more. in a way, they can simply forget about it just because the iphone is still the biggest revenue
4:39 am
driver out there. very well people whoof expected that, but after years and years of more innovation, it's still a key driver. >> and we were saying yesterday, what the early signs of the apple iphone 6 are showing is that their superior pricing is meaning that will be defensive. that going very well. i think that will help the stock price today in particular. despite the disappointment for me, we get a significant improvement in apple tv. we've been two product releases and we haven't seen that little bit of a disappointment. >> they said apple's new things over-shadowed by the old things. so maybe the old things sometimes they do work a lot better than the all new things that we put too much focus on. by the way, a lot of people think that apple shares are quite cheap right now. they're trading at 14 times forward earnings and carl icahn saying the stock could go 200 or is it right now just above 100. >> put more money that's cash to use, expand the purchase program
4:40 am
as well as its dividend. but it's important to note after we got that better than expected return from apple, analysts upping their price target. goldman sachs raising their price target to $115. the street clearly likes what apple had to say. >> so all eyes on apple when the u.s. market opens in a couple hours' time. texas instruments beat forecasts on margins. the company's ceo says this contrasts recent concerns about a possible throw down in chips. shares rose 2% in after hours, up about 2.7% so far today in frankfurt. >> barclay's tlird quarter estimates rose 57% on menu price hikes to offset higher food costs.
4:41 am
same-store sales rose nearly 20%. the chain is warning sales could slow in the coming years. chipotle fell 5% in after hours trading, currently off by 4.4%. wow. still to come on the show, the pronunciation of the group's name divides opinion here at cnbc as much as its possible for growth. we'll delve into the latest earnings after the break.
4:42 am
4:43 am
4:44 am
oscar de larenta died on monday after a long battle with cancer. he was 82. he was born in the dominican republic and was part of a group of designers who helped put the u.s. on the map. first ladies laura bush and hillary clinton wore his gowns to inaugural balls. shares in jumped as much as 5 4% this morning. the retailer reported a 14% dip
4:45 am
in annual profit. total retail sales growth 27% on a currency basis to 955.3 million pounds. joining me now to discuss those numbers, steve mater, digital retail director. steve, good morning to you. i want to talk about the currency impact. this has been one of the major headwinds for asos and other companies in the uk the last couple of months. now, these numbers, they reflect anything up to august 31st. but since then, we've seen a drastic depreciation of the pound/sterling. do you think as a result of that we'll get a restatement of profits just for the next couple years? because the outlook at changed quite dramatically, hasn't it? >> yes. it's always difficult for a technology company and it's the technology company that tells a fashion categories. and they're investing heavily for growth. when you're investing heavily for growth, you're always going to be tiptoeing around the profit line.
4:46 am
currently fluctuations are always going to impact that greatly. especially when you consider asos has a significant portion of the overall revenue coming from international markets. i don't believe that they'll have a restatement. but i do think it will help boost short-term profits in the next couple of quarters. >> and results have been taken well today, it follows a lot of profit warningings throughout the course of the year. but when you take a step back and look at their offerings, do they have quite so much products? >> i believe in the uk they're being hit by their promotional tendencies. even though we've seen the uk increase at 35% in this year to the mix between international markets and retail markets is shifting towards the uk. that's a discount heavy market which would impact profits. >> when you look at the growth rates across europe, the uk is seen as somewhat of a bright spot. is that being translated into
4:47 am
retail sales, as well? >> absolutely. but what we are seeing is more of a polarzation between really good retailers and really bad retailers. and when we're seeing this type of -- it is positive growth. it is starting to weed out the retailers which the business model may not be just a positive. >> there's been so much speculation over the last couple of weeks that amazon or ebay could be buying asos. do you think that would away strategic fit for amazon right now? surely they could afford something like asos. but now after we've seen that rise in the shares, maybe it wouldn't be so cheap any more. >> amazon could easily buy asos if they want to. we're of the opinion that the strategic position isn't there. >> why not? >> they want to acquire businesses that they don't have category expertise in. asos doesn't see any of those at the moment. >> you say you're seeing a big
4:48 am
divide in the uk of really good retailers and the not so good retailers. is it as simple as the ones that are as good as e-commerce? >> absolutely. not just e-commerce, but overall digital as being a very good box to hit.. we start looking at medium to long-term survivability. there's a huge amount of -- especially in the super market sector, a huge amount of on movement towards an undifferentiated middle. >> of course, asos one of the first movers in that space in the uk. but competition has spiked massively in this state. it's the first mover advance is now relevant and it's now really down for the technological offering that they have? >> they are going to continue to get shift away from some of the more perhaps faster retailers. however, we see asos investing heavily to disease, putting up distribution centers into
4:49 am
some -- into germany as well as into the u.s. and investing in china. that will minimize the time it takes between actually purchasing and receiving your items. >> steve, thank you very much for joining us. now, government officials and student leaders are meeting publicly for the first time in hong kong in an attempt to diffusion democracy protests. police are standing ready for any disruptions around the area. joining us on the phone, peter from reuters breaking news. peter, thanks very much for joining us. of course, it does appear on the headline that there's progress being made, given that there are talks taking place. both sides are still miles apart in terms of reaching an agreement. >> yeah, that's right, wilfred. it's an achievement, i suppose, that after almost four weeks of protests, they've managed to sort of get into the same room. but they're a long way apart. essentially, the government has
4:50 am
made it very clear that any kind of negotiation has to start with the framework for the elections that we've handed down by beijing a month or so ago. and the students and the protesters have made it clear that they really reject that framework. so it's very hard to see, really, how this discussion can lead anywhere or what kind of compromise might be possible. >> how -- is it particularly for the foreign international community that we see an eventual peaceful ending to this conflict, given there is so much potential across china particularly in the west for further social uprising for the year? if this is not ended peacefully, does that not spell disaster for the future of china? >> i think it's very important for the people of hong kong and for hong kong as a financial sector. i mean, i think -- and also probably the way in which it eventually gets resolved, you
4:51 am
know, hopefully sooner rather than later will tell us about how china is sort of going to handle these things in the future and how it sort of sees its position in the world. but i think the longer it drags on, it's becoming, really, sort of increasingly a local dispute. and i mean, the worry in china is obviously if it gives ground here, that it will then spill over into other areas and other places might also demand similar treatments. and that's why it's unlikely china is going to bend much. but that also makes it hard to see kind of how this -- how this gets resolved in a sort of -- in a short time frame. >> all right. peter, if you stay on the line for a little bit, i want to bring in bernie lowe who is also in hong kong. bernie, what can we realist cannily expect from the talks today? i think expectations have been quite low. but is there anything that we could expect to make any head way within this regard?
4:52 am
>> well, hopefully. i mean, after the last more than three weeks of something but melee and chaos, there are high hopes that even as an opening move, the two sides and the government are sitting down is already an achievement in itself. i did hear you talking to your guest about how the increased localization of the issue has come into play. you know, beyond the historionics, we now begin and im bark on, you know, talk of constitutional legalese and the minutia of what the basic law had in mind and what they intended and what now, how it's being interpreted 17 years after the handover. we are still yards apart in principal between the protesters and the administration.. the chief executive has in recent days upped the crescendo saying there is no chance of
4:53 am
revocation of the decision by the committee of the national people's congress to rescind or revoke that decision. but the administration has been maybe baiting, testing the waters, suggesting there is room for some sort of negotiation or compromise when it comes to the composition of the controversial 1,200 members of the selection committee, also known as the nominating committee, will and carolin. that will be maybe sort of this will be the beginning of that, and as they hopefully progress to a second round or a third round, they'll be able to at least take some steps forward. at this point, nobody knows what either side is going to say, which is why it's of such great interest in the whole community. it's going to be broadcast across the territory and all stations here. sure to be a blockbuster here. >> bernie lo, thank you so much. i want to get back to peter. we did get a bad gdp number out of china at 7.3%.
4:54 am
do you think that's enough to get investors excited about global growth again and also subside those fears around a slowdown in global growth? >> well, i think it's -- i mean, the gdp number was sort of more or less as expected. i mean, it's clear, sort of reinforces the idea a that what we're seeing in china is definitely a slowdown, but not a hard landing that some people are worried about. and it also seems that we're talking very much in the chinese economy is that the slowdown is being led by the property sector. we've seen falling house prices in some cities. we've seenly -- developers getting into trouble. the other thing is that the authorities, as far as we can tell, seem to be willing to take some small steps around the side to kind of maybe try and help the property market a little bit. but aren't doing anything dramatic to ease up the funding or to pump liquidity into the
4:55 am
economy. so the impression so far that the authorities are kind of sort of willing to see a slower growth in china for the time being rather than taking sort of drastic measures to pump it up again. >> we'll leave it there. thank you for your time. yesterday, i caught up with the aol ceo in london and found out whether he thinks the tech sector will be affected by the threat of slowing growth in europe. listen to what he had to say. >> i think aol is a company that's been growing for six quarters in a row. we own the property tech crunch here. 1800 people here all start up building the world's best technology. aol has been a company since 2009. we have 407 companies that have participated in battlefields and a whole ton of them have gone on to either exit or gone public and we've created about $4.5
4:56 am
billion of market cap value on this one event alone. i'd say probably not known globally, but aol is one of the best companies in technology and leadsing technologies right now. >> very interesting. let's talk about europe because europe is the only way to -- how does that impact you as the ceo of aol and your operations in europe? >> yeah. one of the things, we have a board meeting later this week in new york and i'm heading back for it after the event today. we're talking about investments globally for 2015. europe is one of the places we see opportunity, but we see opportunity very specifically in the tech sector and in the changing course of media. so when you think about the future of media and technology, europe has a big role to play in the last fewer years in europe and specifically in the uk, there's been 500,000 companies registered start-up. so while the overall economy in europe may be up and down, and i think it is up and down right now, the tech sector is very strong. and it's a great example of that. >> i know you just got off a
4:57 am
plane here in london. any start-ups here that you're keen to look at today? >> yeah, there's a couple. this weekend, we have a number of things that are live video caps from this event. and i saw some start-ups that did the hack-a-thon this weekend that i was interested in. there's two or three down on the battlefield that i walked through once. i'll spend some time talking to. this is a fantastic company here. >> and you think there's great value in terms of finding opportunity in europe? >> yeah. if you're looking for hundreds of companies for the most passionate entrepreneurs in europe, this is the place to be. i think this is the best event in europe for technology and entrepreneurs.
4:58 am
4:59 am
5:00 am
welcome to "worldwide exchange." total's ceo killed in an air crash in moscow. driver of a snowplow that caused the accident was drunk. and south africa's judge hands oscar pistorius a five-year sentence for the culpable killing of his girlfriend, reeva steenkamp.
5:01 am
down but not out, chinese gdp growth slows to 7.3%, its lowest level in almost six years, but still beats forecasts. >> you're watching "worldwide exchange," bringing you business news from around the globe. coming up on the show, hong kong protesters and administration sit down for talks. we hear from one investor slugging off all volatility. she says now is the time to buy. as mcdonald's serves up earnings before the open, k we ask whether china examine russia headwinds will eat away at the bottom line.
5:02 am
>> announcer: you're watching "worldwide exchange," bringing you business news from around the globe. investors will be focusing today on that china gdp number of 7.3%. still the lowest that we have seen since 2006. >> absolutely. it meant that the shanghai composite is up about 0.7% today. that feels a big risk on today yesterday. it's certainly in focus as will more of the earnings story coming out of the u.s. today. although, before we focus specifically on markets, more on our top stories for the day. carolin. >> a paris prosecutor has opened an investigation after total's owe christophe de margerie has died in a plane crash in moscow. the driver of a snowplow that caused the crash on the runway during takeoff was drunk. french president hollande said in a statement he was shocked
5:03 am
and saddened by the death of mr. de margerie. let's get out to stephane who is following the reaction on the ground. safe to say the country is shocked, isn't it? >> absolutely. france has decided to send a team of investigators to russia in order to assist the local group given that the plane was operated by a french company and it was built by a french company. on the ground, total said this morning it's going to organize a board meeting as soon as possible without the schedule. the head of the new energy division, the head of the refining unit seen as a potential success to christophe de margerie. is it going to change the whole setup of the institution?
5:04 am
they insisted on the need for oil companies to operate in all the countries. even when the threat of sanctions for conflict make it difficult. total is one of the most exposed to the russian market.. the company is planning to double its production out of the country by 2020 which should bring its total russian output to more than 10% of its global portfolios, a significant percentage. so the question mark now is about the new management team to know if it will continue on the same -- with the same strategy. >> thank you so much for that. let's change gears and have a look at the markets. how are we looking in terms of futures? >> let's take a look at what they're looking at right now. futures indicating a slightly higher open on wall street, this after stocks did rebound in yesterday's trade. the dow locking in a gain yesterday after falling as many as 120 points in the early session. the dow, by the way, has posted a triple digit swing in 21 of
5:05 am
the last 25 trading sessions or 84% of the time. in yesterday's trade, ibm had the most negative impact on the index due to weak earnings, whereas apple will be in focus today given that better than expected report. on that note, let's take a look at the european markets to see where we're seeing the action. apple, the big mover in frankfurt. up about 2% in yesterday's trade. right now, the ftse 100 up about 34 points or 0.5%. germany, which was a big loser in yesterday's trade, down about 1.6%, putting it well into correction territory. staging a little bit of a comeback today. france in focus, up about 36 points. in italy, we're seeing a triple digit gain to the upside, 220 point gain for italy. carolin. >> it's interesting. we're seeing a bounce back in european markets. but still, there is the safety of it out there. that's pushing trends higher. we're still seeing some buying of bunch. the ten-year treasury yield at
5:06 am
2.17%. it's worth noting that goldman sachs and jpmorgan, they still expect a bond sell off this year. they're cutting their year-end forecast to 2.5% from previously 3%. where it's quite a long way away from that right now. jpmorgan cutting theirs to 2.45%. even though we have to rally over the last couple of weeks, we're still expected to see a bit of a sell-off later on this year. i want to take a look at ten-year gilts, yield at 2.15%. we had some borrowing numbers out this morning, they surprisingly rose 1 1.8 billion pounds in the month of september. this is puzzling given that we have seen this recovery in the uk. so a lot of head scratching going on here. let's move on to the forex markets where we're seeing the dollar coming up a little bit of pressure today, specifically against the japanese yen. in turn, we're seeing the japanese equity markets fall, as well, as we're seeing that yen strengthening.
5:07 am
euro/dollar, seeing a little bit of upside at 1.2808. no surprise, the dollar is softening, given that yield is so depressed. the aussie/dollar giving a little bit of a boost given the in fact that the chinese gdp came in a smidgenon higher than forecast. even though it is the slowest growth rate in about six years. and a quick look at the asian markets today, we're seeing a bit of a -- picture. t off by 0.75% in chishanghai. hang seng, up modestly. we're focusing in on the talks between the protesters and the government. and the nikkei 225, we're seeing some profit taking. there was one minutester who poured cold water over the hopes that the government pension funds would be allocating significantly more money to equities. so the nikkei 225 off by a little bit more than 2%.
5:08 am
>> joining us now, david, the way that markets have slightly rebounded friday and monday and perhaps later today, does that remind us of the main lesson that we've learned over the last 5 1/2 years which is don't bet against the fed? they changed their rhetoric halfway through last week. markets finding their sentiment to move upwards on. >> yes, they changed the rhetoric, but still, their actions that they plan to take from most of the fed president seems to be out of qe3 by the end of this month. i think, you happen, short-term, this is all about earnings. you know, as you know, 12 of the 30 dow components are reporting this week. if most beat expectations, the next week or two will probably be a good week for the market. if there's some major surprises to the downside, more ibm, we could continue to see increased volatility. >> so when it focuses on individual company earnings, you
5:09 am
do think that good news from them will be good news from the market rather than relating to what it means for monetary policy? >> shush, it will be good news for the market. i was here in this time slot and i said not only did i think we were going to have the market definition of a 10% correction, but thought a 20%, 25% correction was going to happen at some point. what we've seen in september and october doesn't surprise me. last wednesday, we had a 400 plus intraday swing. yesterday morning was a good example of that. i was doing my morning ritual of cardio and watching this program. when the bad news on ip about m came out, i saw about a 140 point swing downward on the dow futures.
5:10 am
i was doing the calculation in my head quickly and i said, wait a minute, ibm represents 7% of the dow. mathematically, it should have -- the dow by 60 points. but because the market seems to be nervous right now in making emotional decisions, instead, it dropped by 140 points. and i'm referring to the dow futures. >> absolutely. david, of course, we like that you wake up watching our show. let's talk about volatility. we did see the vix drop about 15% in yesterday's trade after breaking 30 last week, well above its historical average of 20. from speaking to investors out there, is there less fear in the market or investors expecting further volatility to rise?
5:11 am
it seems as though they've had quantitative easing, the market has gone up and come down. that is why what i call big money is affecting this volatility. >> what exactly should the big investor be doing right now? you say they're nervous and happy right now. you say that volatility could be rising further. should they just be staying on the sidelines or is there more money to be made if you bet on an index by the end of the year? >> well, the bear minimum, i believe they need to be cautious right now. especially if it's money they plan to use in any way, shape or form sometime in the next ten years. and the reality is that, you know, if you look back at market
5:12 am
history, what we saw in 2013, breaking above the levels from 2000 in the market and 2007, this is mof this were a permane recovery, first, it would be the first time we recovered after 15 years. second, it would be the first time we recovered without having three or more cyclical bear markets or drops within that secular bear. and lastly it would be the first time we recovered from a secular bear market before p/e ratios got down into the single digits. now, i know the economy is better than it was by a good margin in 2009, but i don't believe it's that good to make the claim that this time it's going to be different. i highly encourage smaller investors to be cautious. >> and keep up your morning routine. sounds good. david scranton. let's get you a rundown of what to watch this trading day.
5:13 am
september existing home sales are out at 10:00 a.m. eastern, forecast to rise by 0.1% to an annual rate of 5.1 million. it's another big day for earnings with five dow components reporting before the opening bell. co coca-cola, mcdonald's, travelers and verizon will be in focus. we get numbers from harley davidson and lockheed martin. after the close, we turn our attention to yahoo! and what marissa meyer has to say about advertising. oscar pistorius has been sentenced to five years in prison bay south african judge for the culpable homicide of his girlfriend, reeva steenkamp. he's expected to serve just 10 months of that term in jail where the rest will likely be spent under house arrest. the former olympian was led away by police to a holding cell after the ruling. the cdc has issued new guide lines for health care kafr workers treating ebola patients. the rule has called for patients
5:14 am
to be fully covered. they should be monitored by a prfrs when putting on and taking off protective gear. microsoft says ceo nadella was paid more than $84 million in the company's last fiscal year. most of that comes from a previously disclosed grant of restricted stock tied to microsoft performance against other companies in the s&p 500. nadella won't be able to get those shares until 2019, though. we've been asking you what do you think about microsoft's ceo's pay package? join in on the conversation here on "worldwide exchange." get in touch with us by e-mail, worldwide@cnbc.com, @cnbcwex or the handles that you can see on the screen. this comes at a time just about 11 days after nadella made those soont visual comments about females and getting a raise in the workforce. >> very awkward timing, isn't it? james wrote in and said for someone who has not been a ceo for a public company prior to
5:15 am
its microsoft promodification and who has not generat a tangible result other than terminate 18,000 workers, the compensation is outrageous. wow, those are pretty harsh words coming from jim from seattle. do send in your comments and your thoughts on this very story. we would appreciate it. still to come on the show, beijing's growth comes in at we will break down the numbers by crossing live to beijing next. [coughing] dave, i'm sorry to interrupt...
5:16 am
i gotta take a sick day tomorrow. dads don't take sick days, dads take nyquil. the nighttime, sniffling, sneezing, coughing, aching, fever, best sleep with a cold, medicine.
5:17 am
5:18 am
welcome back. china's economy grew by 7.3 the% in the third quarter, compared to a year earlier. it marched to the lowest growth in almost six years and raises the question as to whether beijing will introduce more stimulus. eunice, would they be introducing more stimulus rather than any targeted stimulus as they had been doing over the last couple of months? >> the economy for the third quarter came in at 7. -- 7.3%. 7.3% for the third quarter. so we could see, also, the comments that were coming out
5:19 am
around that signature were actually very indicative of how the authorities feel. they said the economy is relatively stable. they said fourth quart quarter, they saw fast growth, relatively so. so those comments are very positive. some of the main factors that we look at for the gdp is how is the employment doing? because the policymakers factor in employment for their decisions. well, the job losses, or at least jobs look like they're holding up. the government expects a lot of confidences in that. another factor that we look at is property. a lot of economists, and we do, as well look at the property skter and see how strong it is. today, government officials said
5:20 am
they start to see some positive signs in the property sector in september, which sthaugs they would continue along these lines of these targeted measures and fine tuning instead of any big, dramatic move. >> mortgage loans actually ticking higher in the month of september. maybe some bright spots there. thanks so much for that, eunice. before we go to break, let's give you an update on the headlines. am easily beat estimates in the fourth quarter, selling a report number of iphones. total's chairman and ceo has died in a plane accident at a moscow airport. and oscar pistorius is sentenced to five years in prison for the culpable homicide of his girlfriend. great rates and safety working in harmony. open an optimizer +plus account from synchrony bank. visit myoptimizerplus.com to open an account.
5:21 am
service. security. savings. synchrony bank engage with us.
5:22 am
5:23 am
the nasdaq and the s&p 500 witnessing its three-day winning streak, the first time in one month. the dow transport many times so he seen as a leading indicator for the market. as you can see across the screen, we are waiting a higher open. s&p 500 up about 2 points. dow jones up about 5 in premarket trade. nasdaq holding up a gain of around 10 points. it puts a lot of focus on apple after that better than expected report. joining us now to talk about markets and where to invest, catherine wood, founder and ceo of arc investments. catherine, thanks for joining us this morning. really interesting looking at your investment, arc investment
5:24 am
management. you focus on disruptive technologies, 3d printing, robotics, alternative energy investment. but i have to wonder, given the rise in volatility and the fear in the markets right now, typically investors stay away from risk averse technologies given that they tend to underperform the markets. >> well, what we've seen right now is a shift from the old world to the new world. and i think a really good example of that is ibm's report, sap's report. oracle's report to some of the innovators, some of the companies like salesforce.com. they are taking huge share now that corporations have decided on that to moch to the cloud for competitive reasons. so i think there are a lot of reasons to invest in the sector right now. >> but if you had to pick one sector? >> well, we -- our themes are
5:25 am
cross sector. alumina reported last night, a fantastic quarter showing growth rates in the mid 30s, faster than they've been since 20111. and we think this trend has just begun. so in that says, alumina is a marquis name. in the webb space, which is everything internet, athena health, if you parsed through its earnings, its underlying growth rate is accelerating into the 30s, 30% range. these are fantastic growth rates. and then in netflix is another one which wag beaten up after its quarter. they are going to be one of the few winners going forward. finally in our industrial innovation theme, yes, we like the 3d space, we like tesla in the space. these are high octane stocks, but they're gaining tremendous share and innovating and making
5:26 am
a big difference in the world. >> catherine, the etf industry is very, very competitive, isn't it? even though your etfs are actively management. don't you think investors are had still flock to some of the etfs still out there? >> yes. in ours, we're positioning our funds to be satellite strategies around the core portfolios. we know that i.r.a.s have done a great job because of the last 15 years of volatility in terms of diversifying their portfolios. we are holding stocks that are not in indexes. many of our stocks are not in indexes or they're very small parts of indexes so that our correlation of relative returns with theirs is either very low or negative. we're a great diversifier. >> catherine, i just wanted to jump on one of the points you made in your notes.
5:27 am
you were pointing out that europe is still hobbled by a big intractable debt problem, you say, but ratherly has europe been an engine for growth in our investment lifetime. but it's certainly weighing on markets at the moment, isn't it? >> yes. we are looking at europe the way we look at japan in the early '90s. i remember thinking, oh, my gosh, we're losing the second largest economy 2349 world. and it had been an engine for growth. and if you remember, the 90s were some of the best years we had in growth. so the global economy can work around some of these depressed situations. >> catherine, thank you very much. and coming up on this show, we get to the core of apple's 20% earnings growth. stay with us. don't want to miss it.
5:28 am
5:29 am
5:30 am
welcome to "worldwide exchange." >> these are your headlines from around the world. title ceo christophe de-margeria was killed in a crash in moscow.
5:31 am
the driver of the snowplow that caused the accident was drunk. oscar pistorius is sentenced to five years after the culpable death of the killing of his girlfriend, reeva steenkamp. >> china is down, but not out. growth came in at 7.3%, it slowed, but still beat forecasts. . >> announcer: you're watching "worldwide exchange," bringing you business news from around the global. >> if you're just tuning into "worldwide exchange," thank you so much for joining us. we did see a rebound in u.s. stocks yesterday. the dow transports index witnessiwitnes witnessing its strongest five-day winning streak since 2011. if you take a look at the s&p 500, it did break above 1900. that's where it's trading right now, indicating a move to the upside in wall street. we also want to take a look at the biggest movers. the largest gaim gainers on the
5:32 am
s&p 500 yesterday was tuscilla and the largest decliner was ibm on the back of that weaker than expected earnings report. diving into european market, we start today session in negative territory, but since then, markets have regained momentum. today, though, a little bit of a rebound, up about 97 points or 1.1%. yesterday, apple was a big performer, up about 1%. apple had its best growth in nearly two years. the company sold a record 39.3 million iphones. the new iphone 6 and 6 plus were only on sale for a few days at the end of the quarter. the ceo says demand is close off the chart. the best growth in almost three years. but i pat sales fell for a third
5:33 am
straight quarter. in frankfurt, up by 2.3%. let's talk more about apple. joining us now, lawrence londy at frost and sul advance. lawrence, it's very tough to find faund in these numbers, isn't it? >> it is. everything else is fantastic, ae was expected, i think. >> focusing on mac sales, will the pc continue to be a source of revenue for apple despite this consumer shift to mobile that we're seeing? >> i think they now have a
5:34 am
portfolio that has a computing device all the way from an iphone up to a mac. i think some people prefer the mac and some people prefer the ipad. the tablet might get squeezed, but i think it's a strong growth stgfo growth story for the enterprise. >> it seems that should be defensible for at least the next year or so. >> the mac has been roughly the same price for the last five or seven years. especially when you consider the range at which they're able to provide ipads and iphones now across the board.
5:35 am
>> we have the news of the iwatch. that won't hit shelves until 2015. will that be a big hit? >> i think the key is the battery life. that's why we're still waiting. they need to get the battery life correct. it needs to be over a day. if not, i think hold on a little longer and make sure we can get the product right, which apple has always been good at. >> i'm curious to hear what you think. do you think that after these numbers samsung has definitely lost out to apple or can it still regain? they could easily outpend the markets. >> sure. i think the issue is after every result we sort of see growth conclusion of one way or the other. and it's a long battle. samsung was successful in the smartphone business. what they have been unable to do is to have a defensible, sustainable position.
5:36 am
they never controlled the software. so this is a problem for samsung and it will continue to be a problem as they have chinese manufacturers eating their bottom growth for those guys. at the top end, that is where apple is tale taking the market share. it will be a real problem for samsung to catch up from now on. >> does apple still have that brand equity, that millennials try to gear towards? >> and they're investing that. even when you saw the apple watch and they were giving grews for "vogue" and "vanity fair," they see the luxury brand. i think that's the way to go in the long-term. >> tlanks for your time, lawrence. news now relating to the ecb. these flashes reported by reuters coming from source, they're saying the ecb is considering buying corporate bonds. they're saying that the work on buying corporate bonds already well under way.
5:37 am
new details, the council could discuss corporate bond buying as soon as december. this a reuters report citing a source. there's also another flash come out saying the spokesman has saying the governing council has made no such decision. nevertheless, the euro/dollar has responded to them, even though the ecb has deposited it. the euro/dollar, as you can see, moving down sharply in the last 20 minutes or so. but it is flat for the day. >> that would be quite a big step, wouldn't it? they've covered bonds, they're buying adf. corporate bonds, that's a whole different animal webs isn't it? that's a market that is a lot more liquid so it has a different effect. >> it would be a big step, but the reason, i suppose, is this is just cite ago source and that an ecb spokesman said the governing california made no such decision on that. let's move on with earnings.
5:38 am
texas instrument third quarter profits rose beating forecasts. the company's ceo says business is healthy. recent concerns about a possible slowdown and demand for chips. the fourth quarter outlook topping forecasts. shares did rise 2% in after hours trading. in frankfurt, they're currently up by 2.7. >> let's stick with tech and take a look at some tape yesterday. i caught up with ceo tim armstrong yesterday and found out whether he thinks the tech sector will be affected by the threat of slowing growth and deflation in europe. >> i think aol is a company that's been growth for six quarters in a row and we own this property here and one of the things that are amazing is that 1800 people here all start up building the world's telling. and aol has been a company since 2009. we have 407 companies that have participated and a whole ton of
5:39 am
them have gone on to be exited or gone public. i'd say probably not known globally, but aol is one of the best companies in technology and leading technology right now. >> very interesting. let's talk about europe because europe is the weak growth as well as inflation, how does that impact you as the ceo of aol and your operations here in europe? >> we have a board meeting later this week and i'm heading back for it after the event today. we're talking about where we're investing globally. europe is one of the places that we see opportunities, but we see opportunities specifically in the tech sector and in the changing course of media. so when you can about the future of media and technology, europe has a big role to play in the last four years in europe. specifically in the uk. there's been 500,000 companies register start up. while the overall economy may be up and down, the tech skter is
5:40 am
very strong and i think this is a great example of that. >> mcdonald's releases earnings before the opening. [ male announcer ] some come here to build something smarter. ♪ some come here to build something stronger. others come to build something faster... something safer... something greener. something the whole world can share. people come to boeing to do many different things. but it's always about the very thing we do best. ♪
5:41 am
5:42 am
5:43 am
prosecutors have opened an official investigation after ceo of total died in a plane crash. the driver of the snowplow that caused the crash on the take off was drunk. nearly 130 s&p companies report earnings this week, which does include a big consumer name and that company is mcdonald's. it's announcing third quarter werings as well as same-store sales. analysts will be looking for growth in emerging markets, despite a health care in china in emerging markets. so far, though, it's had a tough time. in that case, same-store sales in the u.s. have been falling and the street is expecting another decline this month, as well. just take a look at this charge. this really tells the story. it hit a peak in may and since
5:44 am
then, the stock has been declining about 5.6% year-to-date. and if it wasn't enough to watch today, wilfred, russia could be a wild card. >> absolutely. we will keep an eye on more news on that. 6/. >> now, abbvie and shire officially calling it quits. kate joins us with more from cnbc hq. >>. >> on monday, the maker officially called things off. abbvie will pay share a 1.6 billion break-up fee. ceo richard nadal sought the
5:45 am
company's position of strength. he took a parting shot at regulators saying the rules do nothing to solve the fundamental problem with the american tax code making american companies less competitive and discouraging investment in the u.s. treasury officials had no comment, but treasury secretary jack lew has acknowledged the need for reform and said president obama wants to work with congress to change the tax code. abbvie is launching a stock buyback and is boosting dividend. shares this morning were trading higher, but 1.5%. the executives have looked for new jobs, expecting the merger to go through. meanwhile, valeant and bill
5:46 am
ackman says ackman is trying to discredit their bid. he called valeant's offer progress attic. aller gn has repeatedly rejected ackman and valeant takeovers. apple easily beating estimates in the fourth quarter, selling a record number of iphones. >> the chairman and ceo has died on a plane accident at a moscow airport. >> oscar pistorius is sentenced to five years in prison for the culpable homicide of his girlfriend.
5:47 am
5:48 am
5:49 am
welcome back. let's have a look at european markets. as you can see, quite a lot of green there. they opened the day basically flat, went up a little bit, but they gained more strength in the last 20 minutes or so after reports from sources saying that the ecb possibly considering buying corporate bonds. the ecb's governing council came out quite quickly to deny that. nonetheless, talk about what would be a monumental step has given markets a little bit of stimulus, denied at this stage by the ecb's governing council. france up 1.6%, germany up 1 is.3% and the ftse 100 up 0.7%. the euro/dollar was trading slightly up on the day. now the euro is down 0.2%. again, roently more ecb action, just given the euro a bit of negative movement downwards despite the ecb denying that. the u.s. dollar has weakened a
5:50 am
bit against the yen today. 106.79. usessy -- dollar is at 0.8804. let's look at bonds. the u.s. ten-year is now at, again, 2.2%. it's hovering around that level, having last week gone much lower than that, 1.8% briefly on wednesday and finished the week, as we said, at 2.2%. nonetheless, the story of october has been one of yield, more bearishness pushing bond prices up and yields down. the ten-year in germany, 1.876%. gilt in uk, 2.18%. what does this mean for the u.s. open? seema. >> this coming in after all ten s&p sectors ended up on the day listed by consumer staples and materials stocks. earnings will very much be in focus. let's give you a run jan of what to watch this trading day.
5:51 am
existing home sales are out at 10:00 a.m. eastern, forecast to rise by on 0.11%. it's another big day of earnings. before the opening bell, you have coca-cola, mcdonald's, travelers, united tech and verizon. we get numbers from harley davidson and lockheed martin. after the bell, yahoo! will dominate earnings. >> how do you make money in these markets? here is what some of the experts have been telling us this morning. take a listen. >> we've seen good performance in the last few days. it's still a market with demand, supplies, commodities. >> as we see a weakened euro, which we think will be down at 1.20 by the end of next year. >> all lower? >> all lower. i think it's clearly to overshoot. i think that starts to give germany an advantage.
5:52 am
>> it's an argument on both hikes. if we are in a period of long-term low growth, low inflation, anyone can be buying a high yielding part to the equity market. if this is just a little -- going on and markets are going to turn up because of growth in the u.s., perhaps europe might recover from its currentdown turn. then you want to be buying cyclical and you go back to the argument. either way, i like equities. >> a lot of volatility in the markets over the past couple of weeks. let's get more market perspective with jeff kilburn. jeff, thanks for getting up early with it. >> how are you? >> hey. let's take a look at the bond markets, jeff. how closely are bond traders like yourself watching the move in the german bund yield? it did dip below 0.8% last week.
5:53 am
that was a multi year low. because of a report on ecb bond buying, we're looking at the german bond yield right now, reversing the fall hitting session highs at around 8.7%. what do you make of that? >> well, seema, the german bund is providing leadership for the u.s. treasury market here. in these treasury pits, the beat has changed. go back to last wednesday when we saw that huge move down. now we're back up at 1. 2%. during that type of volatility, very saw extreme volume, record volume, here, actually, at the cme group. then we're seeing the ten-year looking pretty cheap. as long as the message from the fed is that rates will be lower longer. >> of course, as you said, we've moved away from the ultra low yields of 1.8 last wednesday. but none of that. september was more 2.4% to 2.6% range in the u.s. ten-year.
5:54 am
2.2% this month is still pretty low. >> it is pretty low, wilfred. you look at what everything was thinking at the beginning of the year. everyone was poised for that 2.3%. a lot of people got caught offsides to see this yield. we always like to say the bond traders are the large guys in the room. but the bond is selling a different narrative in the market. right now, we're focused on where the volatility in the markets are. the one take away a lot of traders here on the floor in chicago like to think is that you cannot have volatility in the asset crunch. go into the credit markets, coming in in the stock market, we don't think it's a one week snapshot of volatility. we think we have sustained volatility, especially with the vix above 17. >> what we've seen over the last couple of days is a despaispari between the stock markets and the bond markets. we've seen a rebound in stocks. which asset class is right?
5:55 am
>> we think the bond market. why did stocks rally? it was fed president bullard. he said they were going to -- more purchases. we think that is a political suicide. if the fed here tries to re-ignite qe4, we don't see that happening here. they're supposed to be independent. so we think as we see rates normalize, which will take longer than normal at the stock record, naturally, and in a healthy manner has to come back. but i think that unwinding, that normalization process is going to be volatile. >> mixed economic data over the last week. we have that house number due today. if that comes in weaker than expected, could we once again see the u.s. ten-year note dip below 2%? >> yeah, it's a great point. we're all about the consumer here. we're trying to get a better feel for it. what do consumers do? they wait. they hold back on purchases either via housing or personal consumer purchases. we're really going to take a
5:56 am
look at that. the ten-year does the the ability to go lower. we think we're stuck in a range. it will be quite some time before we see that 3% in the ten-year. >> i know you're slightly focused more on short-term. if you were a long-term investor, would you generally consider buying a ten-year bond at 2.2%? >> well, actually, i am long toerm in some regard. we have a longer term xhushl fund. but i think you're right, buying bonds here, what does that mean? i think we have to rethink the typical 50/40, long 60% stock bs with long 40% bonds. that modern portfolio is not going to work like it used to. it has been a nice run. but as you see rates normalize, there will be an exit out of the bond market, so it's not going to be a great move. >> jeff, thank you very much for joining us, jeff kilburg. that's all we've got time for on today's show on "worldwide exchange." i'm wilfred frost. >> i'm carolin roth.
5:57 am
>> i'm seema mody. "squawk box," next. see things in a whole new way. it's in this spirit that ing u.s. is becoming a new kind of company. ing u.s. is now voya. changing the way you think of retirement. ♪ introducing synchrony financial. bringing new meaning to the word, partnership. banking. loyalty. analytics. synchrony financial. engage with us.
5:58 am
5:59 am
. good morning and welcome to "squawk box." a surge in iphone sales, apple sees stronger growth to follow. the ceo of french oil giant total killed in a plane accident. private plane on a moscow runway. and a fashion i conthat dressed movie stars and first lady hes over the past couple of years passes away at the age of 82. it is october 21st, 2014, and "squawk box" begins right now.
6:00 am
>> good morning, everybody. welcome to "squawk box" here on cnbc. i'm becky quick along with joe kernen and andrew ross sorkin. it is a big morning for the markets. lots of moves from apple to china's growth. plus another round of quarterly results this morning. we have prized dow components expected to report during "squawk box" this morning. those names including travelers, united technologies, coca-cola and mcdonald's. we'll have those numbers and instant reaction as soon as the numbers are released. and the big story this morning, growth the china. gdp coming in at 7.3%. that was slightly above expectations. but it was also the lowest reading since the first of 2009. we'll have a live report from beijing later in the show. let's find out how the futures are performing at this hour. you can see right now, futures for the dow up about 50 points below fair value. s&p up by 7.5 points. andrew, over to you with the apple

73 Views

info Stream Only

Uploaded by TV Archive on