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tv   Worldwide Exchange  CNBC  November 19, 2014 4:00am-6:01am EST

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a very warm welcome to "worldwide exchange." i'm wilfred frost. >> i'm seema mody. here are your headlines from around the world. >> the bank of japan stands by its huge package. the central bank will stick with qe until inflation is on target. a vote to approve the controversial keystone pine line falls shoet in the u.s. senate, but supporters are hopeful the project will eventually get the green light. >> it's been on my agenda and
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it's staying on my agenda and i'm going to do everything i can to help america to become energy independent. gearing up of a showdown, the french lower house approves the 2015 budget. coming up, we ask the european vice president if paris will face any punishment. no comment from pbnp paribas on reports that executives have been targeted in an insider trading probe. >> announcer: you're watching "worldwide exchange," bringing you business news from around the globe. and it continues to be the big story of the day. the bank of japan says a continued economic recovery is on track despite surprise data earlier this week that shows the country slipping into recession. the central bank kept its economic view unchanged as
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widely expected. although one member of the board dissented. speaking after the meeting, koroda said quantitative easing would continue until the 2% inflation target is reached. he injecte suggestions that the central bank should have refrained from further easing givenlg the delay in the sales tax hike. kaori enjoji is in tokyo with the latest. >> thanks, seema. this grand experiment that has been supplemented by the bank of japan has been super easy monetary policy with one goal in mind. that is to hit 2% inflation to get japan out of this deflationary style spiral. now, the governor says inflation is about 11%. it might fall below that levels, he says, in the early short-term. but in fiscal 2015 he sees japan reaching that 2% inflation role.
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now, the pressure he faced today at the news conference was because of this. two years ago when the abe nomics plan was rolled out, it was a two-pronged approach. that two prongs were, one, monetary easing when the bank of japan delivered last month and the other side of that was fiscal reform. now, this press conference gave it a difficult time. here, the bank of japan is holding up its own part of the agreement, but just yesterday, prime minister abe has backtracked on fiscal reform by delaying the consumption tax high. >> take horry, how about the timing of abe calling for an election. comes after poor gdp figures which to the outside might suggest bad timing. but at the same time, the nikkei is at record highs.
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are abe's election hopes tied to where the nikkei is at? >> in a way, if you control generally sentiment is more lifted when the rally, despite the fact that, you know, only 20% of japanese households hold equities. but i think to answer your question, i think i should -- the answer to that lies in the reason for calling the election. he will have explained to us that this is a referendum about whether or not the public is on board with his economic agenda. but he didn't need to call this election. he could have just postponed the tax hike. you have to wonder what the real reason is for calling the election. most people i speak to say it is because there's another election happening next year which decides the head of the party which carries with it the premiership. so if he wants to remain beyond
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2014 as prime minister of japan, he needs to win votes within his party. and this snap election that we're expecting is an attempt by the prime minister to create the groundwork so that he can win support within his party to get relethed as premier. >> thank you very much, kaori, as ever. we're going to continue discussing japan now with the comanager at ram active investments. good morning. we now see the bank of japan is very committed to a weak yen. i wonder what that means for japan's neighboring economies. is it bad for -- >> we consider it bad for that, given the depreciation of the yen makes the exports much more attractive and you have a number of industry sectors where they beat directly. in emerging market strategies,
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the current negative earnings trend, part of this being weaker yen is leading to that relatively -- location we have to the south koreans. from a technical perspective, we don't see any majoring back of the japan federation. we currently are equal weight in china. we've been under weight for a long period of time. we don't see any real -- in the disruptment to the japanese economy. >> this inflationary period, what needs to happen to shake of this disinflation? still, consumer prices are falling. hitting a three-week low. what else needs to happen to revive these economies? >> you have lack of demand. you have had a lot of oversupply coming in many industries on the back of thecrisis.
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a number of countries like china have launched stimulus programs leading to large investments. so the support by central banks is asking markets to flow and the boj convention at the end of october in perhaps developed markets, as well, is i think today still. now, we would really need to see much more investment from corporates and, again, more consumption and more revenue growth globally for that reflation not to be needed any more. >> stick with us. we want to discuss the markets more with you. now, let's update ow markets. europe found one system gained yesterday as did the u.s., but overnight, asia has given up its
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early lead. that is the sentiment in the markets so far this morning. the stoxx 600 is down 0.3%. the stoxx 50 is down almost exactly the same amount. no, slightly less, 0.2%. let's look at the individual markets across europe. as you can see, there is negativity there, but it's not too pronounced. it closed about 1% in the green. france is down 0.2%. italy bucking the trend just in the green. let's look at individual stocks. earnings still hit the top expectations.
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there was a drop in pretax profits. the world's largest broker said it was hit by the low interest rate environment. hugo boss is in the red 1.25%. the fashion label earns to broaden its market. the market is not taking its results positively. generale, pretty much bang on flat. it says its ahead of its schedule to hit 2015 targets. now, let's move on and look at bonds. we did see a flirtation with yield compression earlier this week. but we've now settled back to where we've been for the most of november. that is on the u.s. ten-year, with 2.3% to 2.4%. it's interesting to focus on this because we are getting the markets in the u.s. equity
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markets hitting all-time highs. but bear in mind what the bond markets are telling us. it's not all out risk on because we've still got very low yields. 10-year in germany, just below 1.88%. the ten-year in the uk, 2.1%. quickly the forex, we can see that the euro is just flat today. big gape yesterday after that positive present in the german economic sentiment. it's flat today. the u.s. dollar rising about 0.5% against the yen today. we've crossed that 117 handle again. also, worth looking at cable today, 1.5613 at the moment. it's basically flat on the day, but we are getting minutes on the mpc's meeting coming out later today where we expect to have a 1 out of 9 vote rather than a 2 out of 9 vote. we'll bring you that at 9:30 uk time.
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generale is basically flat on the day. claudia joins us with more. >> good morning. the investor day is under way. the stock this morning slightly in positive territory. that's probably due to the fact that there's a turn around on the ftse mib, as well. as far as the numbers go, the news is very positive. the ceo has stated this morning they have reached the objectives planned for 2015. this is an update on that 2013/2015 plan. one of the biggest news is that they intend to go above the 40% payout limit. already in 2014 the payout could be higher than 40%. to 15 wsh in may when they asked to put out a new plan, they were reviewing that ahead of
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schedule. as far as the numbers that they have reached, the cost cutting that they had planned is the 750 million by 2014 and expect to reach 1 billion total by 2016. solvency ratio is above 160%. as for the future, mario greco said they will be going forward without any acquisitions and will be continuing in the transformation that has gone in a simple and constant way.geographical speaking, all of the major markets seem to be doing well. generali will be hearing more out today. but the stock not reacting too too much in positive territory as much as you could expect out from the news. so far today, it's very positive. >> claudia, thank you so much. coming up on "worldwide exchange," christmas comes early for walmart here while you could be snapping up black friday bargains as early as this week. >> it hasn't even hit theaters, but hugger games has sold more advanced tickets than any film necessary theaters. stay right here for a preview of
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what to expect. plus, we look at one industry that is taking off. drones are attracting big investments, but how far can it go? we have a uav in studio. stick with us.
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a vote to approve the key spoetd stone pipeline has failed in the senate by one vote. president obama has said he will not approve the pipeline which could -- which would carry crude from alberta, canada, to the gulf of mexico if it significantly raises greenhouse gas initiatives. he likely would have vetoed it despite the loss, senator landrieu says she's upbeat. >> where i come from, we just never talk about quitting and we don't talk about whining. after the game is over -- and this is not a game, it is very serious. but when i played ball, whether you won on loss that day, you shook your opponent's land, you got up and you went to play another day. so there will be no blame from this senator. >> the senate vote is being taken hard in canada.
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despite president obama's objections, alberta's premier from canada will continue to push for the keystone pipeline. >> he has a certain perspective on this. i don't agree with everything he said. but, you know, he is the president of the united states and this will continue to work through the legislative process. we will try to be constructively engaged, we will continue to advocate our position and we will continue to emphasize that we see this project as being in the best interest of both countries. >> the ceo of the kch that owns the pipeline says it won't give up on the project. now, nancy joins us around the set with more on the story. nancy, might it still get through this pipeline deal? >> absolutely. i think it will get through once republicans take control of the senate. we're expecting to see this bill hit very early next year. keep in mind, there were 14 democrats across part lines that
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supported it this time around. next year, we could even get 67 votes in favor of the bill in the senate and that would be enough to override the presidential veto. >> he could actually use it as bargaining power to get some of his top agenda items pass. absolutely. we're already seeing a big fight against immigration and climate change. that's why he's so reluctant to get immigration through. immigration is important to him as far as his legacy and the last two years of his term. but interesting, senator landrieu herself is -- a game. so in some ways, republicans still win over this keystone
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defeat because it looks like mary landreau will not hold on to that senate seat. >> nancy, thank you so much. and still with us is emanuel hoffman. emanuel, we talked a bit about your views in asia earlier. let's talk about europe. i'm interested that you're very negative in the industrial companies, given the very weak euro. >> what we currently see in germany is a number of industrial companies have high levels of cap ex. we like to play this name because we know we are of great help, use credit spreads, credit conditions worsening in europe
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in the quarters. and it was probably very useful in the markets. >> and you're very negative on france, as well. is that right? >> we're negative on france. there's no real catalyst for high performance, high capital gains on this country. so we prefer -- countries today. we have launched from norway, sweden, denmark. we find very attractive growth companies with an appealing valuation. >> emanuel, go manager at rem active investments. thank you very much for joining us today. india's government plans to announce new ways to cut gold imports, that accord to the country's finance ministry. data this week showed imports of the pressure metal rose by of
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four times in october to $1.1 billion last year. research analyst at ntf securities joins us. mona, great to have you in studio. there's an active discussion around whether one should buy gold given innationary pressures. but given that it's now trading below a technical level at $1 he works 200 answer ounce, do you think it's the time to buy? >> we think it's get ago closer level. we estimate margin and cost of production could be in the range around 11 hundred dollars per ounce. that could obviously constrain supply in the longer term. >> do you think that will have a play or response from the trade
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going forward? >> well, yes. extremely important in the gold market. so in the short-term, b if that is some typical buying ahead of the construction in the longer term. it would obviously have a negative impact on demand. >> give us a bit of an update on the referendum. how might that happen? >> that is difficult in the sense that there's a meesh of the bank where we have five years which is allowing us tons of gold to buy. in the meantime, that turnover and how much of an impact that had was quite minimal.
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that can tringer change in other bank policies witness as well. >> russia has been one of the most active players in the gold market. in the third quarter russia accounted for, half of gold purchased by central banks. why is putin hoarding gold how will that impact the price going forward? >> we think it's going to be an interesting time for gold. the current levels right lane sustainable in the long-term. mostly emerging markets banks, like china, for example. >> any response to what russia is doing right now in terms of raking in on gold? >> russia is actually behaving as much as other emerging markets. so they are encouraging their reserves to -- around the
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currency. so you think it will have an impact in the longer term. >> mona, that you can so much. walmart hats announced it will start black friday discount prices in stores tomorrow. it is the second year in a row the retail giant has tried to get ahead of competitors with the move. new researches suggest most retail stores repeat black friday prices at other times. is it the purpose of black friday? if you want to join the conversation here on "worldwide exchange," get in touch with us, world or at twitter, @cnbcwex. from my point of view, the big shopping day isn't the day after thanksgiving, but it's the day after christmas. i never got involved in it, but in america, it's -- >> well, it's the day when you
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see the highest uptick in sales, but given the research is showing that you don't necessarily need to go out on friday to get the best deals, perhaps you'll get consumers getting more with -- >> i'm with alibaba. i'd like to see a big spending day in the middle of the year when there's nothing else to celebrate. >> and that's why you have cyber monday. that's when you typically see online retailers take advantage of sales of black friday. anyway, coming up around cnbc, an exclusive interview with target's ceo just after the company's latest earnings season. that's today at st k 15 p.m. eastern time. still to come on the show, will fears of a slowdown in europe be one the bank of england minds discented?
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that after the break. plus, later we'll be looking at an industry really to take off. will deliveries actually work? we'll be discussing after the break.
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the bank of japan stands by its tax hikes. votes to approval the controversial keystone pipeline falls shoet in the u.s. senate. but supporters find it will eventually get the green light. >> it's been on my agenda and it's staying on my agenda and i'm going to do everything i can to help america become energy independent. gearing up for a showdown, the french lower house approved the 2015 budget in defiance of the eu deficit target. coming up, we ask jyrki katinein if paris will face in the punishment.
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and we are waiting the bank of england minutes from the recent mpc meeting. let's give you an update on what we're expecting. the bank of england governor mark carney says inflation is on a downward trends over the next 12 months. we did see a tick up of wage inflation. now, we had debated the last couple of days, will mccafferty change his position and, in fact, vote for rates to stay on hold?
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sterling is at about 1.56. any other headlines, seema? >> it's argued will inflation due to stronger currency and cheaper commodities? the forecasted inflation will return to 2% target no sooner than 2017. that's among the comments there. >> there's slightly more evidence uk growth will slow more than expected. we'll get more on this now with turner. as it comes through, some thought it might move to 1 out of 9, br largely as expected. >> largely as spec'd. i think those two members voted to hike clean given the inflation problems coming at this in the he xh.
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we had a pretty strong wage report last week. as they felt the growth in the uk shift positive and is going to continue to move that weight, if core inflation does fall over the next 12 months but we keep wage inflation above that, that's positive for the uk economy. >> it is real disposable income for the uk consumer should hold up pretty well. what's forecasted in the uk can continue to grow at around 2.6% next year, which is still pretty big. >> and last week, mr. carney subscribed to himself was pragmatic. does that mean the only thing we should now be looking at is when we expect rates to rise or is it purely inflation data? >> i think it's a tricky balance in the bank of england. all the time inflation -- it clearly takes the pressure off
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the mpc to raise interest rates. but with that low inflation, if we. to get healthy grow, that will drive the rate lower. that certainly could be building up inflation for the future. with that in mind, i would think that the outlook, what we're seeing, is that we should see a pragmatic central bank would lose to be raising interest rates at some point next year. age is our bright case for the rate rise. >> there's a question whether private domestic spending would remain offset the fiscal policies in place. what are your thoughts on that? >> two key drivers for the uk economy next year. certainly all the indicators suggest there could be some
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nervousness around the election next year which could cause that to stall a little bit. but would he be overly bearish on the list. but leading indicators do suggest that that should be turning at some point in the first quarter of next year. so that drag is having economic growth. >> move away from the uk and discuss other matters. do you think there's a lesson to be learned for the eurozone from japan in terms of don't push ourselves. >> i think that's a very difficult -- the european economies are very different to the japanese economy and we're going through a very different experience. our base case remains that the ecb will refrain from doing outright qe. the reason we think that's the case is we do think that the growth outlook in the eurozone will improve a bit going through next year. we're expecting growth in the euro area of around 1.6% which
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should be higher than what we're seeing this year. but all in all, it's difficult to take lessons from the other economies because there's very different factors in each. >> thank you for joining us, steven turner from ubs. economic data coming out this morning as well as, of course, the bank of england meeting minutes. take a look at the ftse 100 trading just national at the moment. the xetra dax continues to move to the upside. we got that better than expected investment sentiment report out of the zew. markets continue to move higher. we did see a gain yesterday, now a gain of 0.3% in today's trade trends and italy showing a bit of green. taking a look at the euro stocks, across the eurozone, you can see the euro against the u.s. dollar, thanks to better than expected economic data that
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has come out this week. and we continue to see it move higher, up about 0.2% today. but keep in mind, upwards of about 6% over the past one month. bonds, bonds did flirt with a little bit of yield compression earlier in the week, but we've come back to the november norm. that means 2.3% and 2.4% and we're at the lower end of that range now. gilt in the uk, 2.11%. pretty much unmoved off the back of those minutes from the monetary policy committee. let's move on to forex. as you can see, the euro is flat today. seema mentioned the euro did gain 0.7% yesterday against the dollar off the back of that sentiment out of germany. the dollar has moved to fresh year high.
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now, to accomplish that with more than a five-year low today after u.s. safety regulators called on the automaker to expand its recall of potentially defective air bags nationwide. makiko has the story. >> yes. nearly 8 million vehicles with takata vehicles have been recalled in the u.s., but this additional order is expected to add another several million to the years. takata air bags have found they could explode with debris which can kill the passengers or driver. the u.s. senate committee in charge of the problem is scheduled to hold a hearing on thursday. honda, which uses takata air bags for roughly half of all its vehicles has been summoned by
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the committee which is far more than any ear automaker. takata will appear to explain its handling of the problem. and that's all from the nikkei. back to you. >> makiko, thank you very much. in other news, cnbc has confirmed goldman sachs dismissed a currency trader for his alleged role in the forex market while working at hsbc. frank was asked to leave london's offices on tuesday. he jound the bank in 2012 cathill was among a number of unidentified hsbc traders whose conversations were quoted as part of last week's 4.3 billion $settlement with six banks. goldman was not part of that settleme settlement. now, the ahead of the german financial watchdog says they
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must increase laending, but credit remains a problem. good morning, annette. >> good morning. i was talking about the state of the grman banking industry. he was saying that he's seeing also a lot of overcapacities here in the market. looking at the retail banking side of things, their foreign players, as well, and profitability has proved low. in addition to these profitability problems right now, of course you have to see the financial stability discounting its additional offers for the biggest banks among them. of course, deutsche bank. and i had to ask her what she preferred because right now there's a discussion that the additional cap again said assets should amount to 6% after what number she preferred. take a listen. >> 27 more than 16 and i think from our german perspective,
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we've always said we would rather like to see the number in the end to stabilize the higher end. but potentially give the banks more time to achieve it. why did we come up with 16 to 20? coming a bit from the idea that it is need to have funds available is probably a good starting point to say you need to have position funds available to maintain minimum capital requirements. this is somewhere between 8 and 10. so 20 for me is probably the number i'm shooting pore. >> the ecb is trying to make banks lend more by abundancy of unconventional measures. so what do you see? do you see that is spurring lending also here in germany? >> i think it's so lend more to the real economy is clearly a go. because in adjusting lending more and solving the problem
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later is not a solution. so we have all chooting, stable, solid banks. but i think to say banks need to lend more, clearly, we need stable banks. but lending is not just a question of supply. lending is also a kwern of demand. my sense is we need to focus more on having a stable economy so that institutions are more willing to invest. they're looking for more to invest in. just supply is not the solution to everything. >> moving that banking story forward, it will be very interesting to see how the take up after next -- in december will be. the target is long-term refinancing operations by the ecb.
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of course, they're meant to alleviate stress on the balance sheet after the banks in order to make them lend more to the real economy. so that is one part of this story. the other part of this story also, market relevant, is that we most likely see a convertible note issued by the banks. just today, the deutsche bank published the results of the sales with more than 7%. so i kind of like the idea when it comes to those debts. back to you. >> annette, thank you for now. executives at bnp paribas is reportedly being investigated for insider trading. the investigation is preliminary. bnp paribas has so far declined to comment.
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stephane is in paris which is the latest. >> according to the newspaper, the probe is targeting the chairman of the board as well as the chief operating officer and the honorary chairman. they're trying to determine how much they knew about the u.s. negotiations with the u.s. operations. according to corporate document, if share management sold 1.92 million worth of shares in eight transactions last year. but that was before the u.s. litigation story was made public.
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the bank paid a fine of more than 6 billion euros in the u.s. depending on the finding, prosecutors will decide on others to launch a formal investigation or to drop the process. keep in mind all the people targeted by the probe benefit from the trumgz of innocence and bnp paribas did not xhint on that. still to come on the show, france defies the eu by casting a budget that -- deficit targets. after the break, we ask the european commission vice president ketinan and he will be faced with the question what if anything punishment they should receive.
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before becoming eu commission president continues to cause a squire in some areas. a group of skeptics have got together.
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juncker stands being accused of directly responsible for europe's tax haven. while it's fought hikely to be carried without support from the left, they, too, are raising pressure of junker. stephane is in paris with the latest. stephane. >> yes. the lower house of parliament voted the bungts, disguised the abstention from the 37 rebels from the specialist party who decided not to approve the bill yet because of the spending cuts. the conservative party voted against the rises. that is reflecting the growing sentiment that we have in europe that san francisco is not doing enough to reduce its deficits.
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even if it includes 21 billion euros in spending cuts for the next year. it's a significant effort, but it's obviously not proper austerity and it's obviously not enough to miss the original target of a public deficit at 3% of gdp. the government is manning instead for the next year a public deficit at 4.3% of gdp which is according to the european commission. notes that the budget is not fully voted yesterday, to help the senate tomorrow. and the final votes on the national foundation could take place at the end of december. >> stephane, thank you very much. on the same note, we've had flashes out of the same central bank which says they can meet deficit targets in 2014, but operatives for 2015 are looking more difficult. i'm delighted to say we're
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joined now by yorkie ketinan. welcome to the show. >> the question we've got to kick off on is while the macro situation in europe is so tough, do you have to be so lenient with countries like italy and spain? >> or the countries must follow the rules. we have accepted the set of rules together and all the countries must be treated similarly. meaning they must treat the big countries as more countries because we need to increase confidence towards the currency unit. and also, we have to highlight the need of structural reforms. because one of the biggest reasons why the economy draws and investments are lagging behind is that countries are competitive now. and that's why we have to underline the structural
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reforms. countries are doing reforms. for instance, italy is planning to do significant labor law reform, which would help during the strength to stay competitive. but also, they have to do more in this. >> and you have a reputation for austerity and fiscal discipline. as part of the role as azp for the commission, you're overs overseeing france's moscoviti. do you think it's fair that france is not playing by the rules and containing its budget? >> just now analyzing the figures, we both have the same rules. i don't expect any problems and i'm sure that they must do very proper and sound analysis of the french situation. so we know the keepd of situations very challenging in france, but also in many other countries. so it's only fair that everybody will fill the criteria and
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everybody will follow the same rules. there cannot be exceptions according to the size of the country. >> economic challenges in france and a political calling, as well, if russell pushes back very hard against this budget that looks like it's going to get passed, do you risk pushing the electorate in france further to the right and more into europe? >> well, the rules are -- or the budget -- are in itself. the rules have been created understand to security ordering people's economy, ordering people's social benefits. and that is the reason why the commission is willing to help and encouragement to take the economies. so there is no high quality education if the public economy is going the wrong direction and the public debt is too high. so every cent or every euro servicing the debt is away from
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education and social security. so it's just we're able to make sure that social model of europe will continue. >> investors have shown concern around italy. matteo renzi came in promising change, but we have yesterday to see a change in italy. the fact that italy and france haven't been able to maintain their budgetary rules, does that undermine the influence that the eu commission has? >> italy has very ambitious plan to complement new structural reforms, including labor market reform and others. but at the same time while the countries are reforming, we need more emphasis to european wide investment package. i am personally in charge of creating $300 billion investment package and it will help europe to recover. it will not change everything. it will not change all roads,
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but it will make change to include, for instance, very ambitious single markets part of this investment bank. let's talk about your investment bank. you're in london to talk to osbourn and cameron about that plan. overnight, it's pretty critical of the plan saying it needs more from the ecb. how exactly are you going to create jobs? how exactly are you going to get the eurozone economy going again? >> the eu's investment plan is like a triangle. there are three corners. the first is leave it at the corner. we want to provide more money. also the equity tool is more medium size in the budget. the second part is concrete to build up new projects which private investors could finance later on. and the third party single market, we need proper single
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market in energy sector, in digital sector, but also in capital markets. so basically, the investment package is not a one off stimulus measure. it's the bulk in a process which will create new markets, new opportunities, which will encourage the investment infrastructure and which will provide more liquidity. >> this $300 billion euro investment plan is expected to lift gdp by roughly 0.7% for the 28 nations that are in the eu. but the question is, where is this money going to come from? germany is arguably the only country that has the public finances to support this plan. >> it will come mostly from the european departure. in a sense that more currencies. so we also want to encourage member states and private sector party states. so the $300 billion will be 300 billion taxpayers money on the table, but it's the final
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outcome of public resources and private investors. >> one more very quick question. is there a lesson to be learned from japan at the moment? they've had to delay a tax hike. is there a mistake by rushing argue tearty too soon here? >> actually, today, or this year and next year, the european fiscal policy is quite neutral. so there is no austerity any more. but, of course, depending on the country and the situation in the country, those countries must do more than the others. but the fiscal policies are pretty neutral. >> thank you very much for joining us. >> thank you. >> yerkey katainen from the european commission. let's take a look at u.s. futures right now and how they're faring ahead of the wall street open. right now, we're looking at a lower open, down just about 2 markets in premarket trade for
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the s&p 500, the tech heavy nasdaq right now trading lower by around 3 points. we tail earnings take center stage today with the likes of offee and european earnings. the stoxx 600 is fractionally in the green. it was down 0.3% earlier, so we found a bit of strength over the last hour or so. we haven't found strength is in the uk, however, the ftse 100 is down 0.2%. germany is up 0.4%. france down 0.25% and italy in the green, 0.75%. still to come on this show, the keystone xl pipeline bill falls, just one shy vote of approval. you get reaction, live from washington.
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an action packed hour coming up on "worldwide exchange." i'm seema mody. >> and i'm wilfred frost. >> a u.s. vote in the senate falls show for the keystone pipeline approval. >> it's been on my agenda and it's staying on my agenda and i'm going to do everything i can to help america become energy independent. >> the bank of japan stands by its huge stimulus package
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despite a delay in the sales tax hike. this as feds eyes minutes on the inflation outlook. shares head to a five-year low in. wintry weather sweeps across the u.s., even hawaii resulting in the coldest november day in nearly 40 years. buffalo, new york, bears the brunt of the chill with six feet of snow. >> announcer: you're wchg "worldwide exchange," bringing you business news from around the globe. let's take a look at u.s. futures right now pointing to a lower open. we are expecting results, retail earnings, that is, from the likes of target. lowe's as well as green mountain coffees. s&p 500 currently down about 2 points in premarket trade. the dow jones industrial down just about 4. the s&p 500 did close at a
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record high for the 43rd time this year. the dow settling at a record for the 26th time. so will today be another day for record highs? of course, that will be the question as we wait for wall street to open. the ftse cnbc global 300 index, a good gauge of stocks across the world. just about trading flat right now. we'll keep an eye on the comments coming from the central bank governor, diving into the european market which have been rebounding over the past couple of days thanks to a better than expected investor sentiment report from germany. we did see the dax gain triple digits yesterday. right now, continuing with its gains up 0.4%. in france, looking at gains around 10 points and in italy, a triple digit gain. the ftse 100 trading down just about 11 points. interestingly enough, after we got those bank of england minutes, we are seeing the sterling gain against the euro. >> indeed.
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and let's move on and look at bond markets. the s&p closed for the 43rd time at a record high yet. those record highs suggest that we're in a risk on environment. always worth reminding yourself that the risk aversions 2.3% at the moment. still record lows. so with those equity markets hitting records, do temper your enthusiasm with what the bond markets are telling us. the ten-year in germany has just picked up, 0.8%. a little less yield compression than we saw earlier in the week. and the uk, 2.12%. let's look at forex. the euro is basically flat today. now, yesterday the euro did gain 0.7% on the back of more positives than expected economic sentiment out of germany. today, flat, as you can see. 1.2528. the yen has weakened 0.6% against the u.s. dollar. that's a fresh seven-year low for the yen.
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117.5. the other big mover today, the aussie/dollar, 0.863. cable, rel ofly flat after those bank minutes, 1.56346. seema, back to you. october housing starts are out at 8:30 a.m. eastern. forecasted to rise 0.8% to an annual rate of 1.03 million. building permits are expected to rise 0.6%. and at 2:00 p.m., we get the minutes from last month's fed meeting. earnings still taking center stage at lowe's, schmuckers, and target report earnings before the opening bell. a after the close, we hear from keurig green mountain, l brands, and williams sonoma. wesley, great to have you. looking at the s&p 500 closing at a record high for the 43rd time this time. if you have been on the sidelines for the past couple of
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months waiting to get back in, is it too late or can you get in and reach some of the gains? >> i think investors need to temple their expect azs. historically we've been in a rate regime of 5% to 6%. equity premiums are around 4%. which means we can expect by investing in the market maybe 9% to 10% nominally. now, unfortunately with a 2%, 2.3% tenure, if we add 400 basis points to that, you're looking at a 2.6% return on your riskiest assets. they can ohm expect nominal returns between 4% to 6%. so it's not really a question of, you know, what do i want from the market, it's what will the market give me? and i think it's important that investors realize they're probably not going to get too much. >> and wesley, you're a big
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proponent of value investing. i suppose both in the short-term and the sort of recent longer term, five years or so, markets have been driven. does that mean your style of strategy has been underperforming? >> we've done overall, actually, fairley well. our philosophy is to buy the cheap eft, highest quality level. at the risk management level, we apply trend and technical analysis. if security is wanted by the cheap stuff, we're going to ride the trend. if we see that the market -- or the trend is breaking, then we're going to go to cash. but obviously we haven't gone to cash because all the markets do is go up. >> u.s. investors are trying to assess what the broader implications are of japan being in recession, given the fact that a lot of u.s. multi nationals do business in japan. what are your thoughts on that?
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>> so my thought is basically what the research says. there's a great paper everyone should check out by jay ritter. what he highlights is focusing on macroeconomics and the growth of the country has zero correlation with future equity returns. and the reason for that is invest sg all about the priet you pay. so i think when we focus too much on macroeconomics and the news coming out of the country, we steams lose site of what we're paying for in those assets. so regardless of what happens in japan or around the world, i think you're going to expect is to have returns that aren't as high as they have been in the past. >> yeah. and it's important to know that the dow jones industrial is up about 8% over the past month despite slowing growth data from around the world.
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>> another big story today, a bail to approve the keystone pipeline failed by one vote in the u.s. senate. democratic senator mary landreaux has staked winning e the -- leader. despite the loss, senator rand rue it's up beat. >> where i come from, we don't talk about whining. when i played ball, whether you won or lost that day, you shook the opponent's hand, you got up and you went to fight another day. so there will be no blame from this senator. the senate vote is being taken hard in canada did he spietd president obama's actions, alberta says it will
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continue to push for the keystone pipeline. >> he has a certain perspective on the thp i don't agree with everything he said, but he is the president the of the united states and this will continue to work through the american legislative process. we will try to be constructively engaged, we will continue to advocate our position. we'll continue to emphasize that we see this project as being in the best interest of both countries. the ceo says they won't give up on the pipeline. this first vote failed, but a republican congress could change that. >> absolutely. and the republicans have said they will bring this bill back to the senate for a vote early on next year. we can expect and keep in mind, republicans vv a majority across party lines. we can see 67 votes in the
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senate in favor of this bill, which is enough to override the president's veto. that of course is the big wild card, whether or not president obama will veet toe this bill if and when it passes. he's trying to make climate change a lasting legacy in his lasted few years. but even if he votos it, this could still pass the bill. >> i have to think that those individuals who say this isn't good for the land or for individuals will continue to push back. >> absolutely, the environmentalist res keeping up the fight. there is the state department. rob has said they don't see a significant impact to climate change from this pipeline. a lot of it has to do with the tact that it gets transferred by means and other means that are potentially harmful to the environment. so, really, the verdict remains.
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we will see forces on both sides of the aisle to continue to push that. hunger games has sold more tickets than any film this year and it hasn't bit that iters yet. cute little guy, huh? this guy could take down your entire company. stay with me. on thursday a hamster video goes online. on friday it goes viral - a network choking phenomenon. why do you care? he's on the same cloud as your business. the more hits he gets, the slower your business may get. do you want to share your cloud with a hamster? today there's a new way to work. and it's made with ibm.
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welcome back. the bank of japan governor warns inflation could fall below 1% pledging to keep going as long as necessary. and investors remain cautious ahead of the release of fed minutes later today. >> sirnd does not officially start for another month, but already the u.s. is bundling up. hawaii was 30 to 32 degrees fahrenheit at the dormant volcano. this is video of buffalo, new york, which has been hit by six feet of snow, yikes. tuesday was the coldest november morning across the country. relating this back a little
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bit, as a result of retail earnings came in lower than expected. i wonder since this is coming around the holiday shopping season how this could impact retail earnings. >> i wouldn't go out and shopping in that type of weather. i wonder whether it will bring more traffic online from the retail -- the traditional source. but i suppose the other thing is how long this lasts. earlier this year, it was dramatic in terms of the prolonged nature of this hard weather. this current weather isn't expected to last long, right? >> i believe so. walmart has announced it will start black friday discount prices in its store, some tomorrow. it is the second year in a row the retail giant has tried to get ahead of the competitors on the move. new research from nerd wallet suggests most retailers will
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repeat black friday prices at other times. and we want to hear from you. does it defeat the purpose of black friday? and will it stop you from getting up early and heading for the stores after thanksgiving? if you want to join the conversation here on "worldwide exchange," get in touch with us via e-mail or via twitter @cnbcwex. our personal handle are coming on the screen for you now. does it defeat the whole point of having a special day? >> no. i think it's wonderful. i think the whole concept of getting up early the day after thanksgiving, of having that wonderful thanksgiving meal and getting up at 4:00 a.m. to buy a blender or a tv is not the best thing to do. i think you should stay at the convenience of your home and shop online. >> so a blender and tv. i'm adding it to my list of seema's presidents. thank you. there's more to come, by the way. >> you keep throwing it at me and cross your fingers. coming up, brian cornell
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after the kepsest retail hold. that is today at 12: 15 p.m. europe time. fans have yet to set eyes on the film hunger games which hits series friday. but it's being hailed as the season's top money spinner. what do you think about hunger games? >> i love the books, but i don't really love the movies. >> i saw the last one. what nowed me about the producers dragging out the franchises is they stop in the middle of a story. you go and see a movie -- i get that if you're watching a tv show, but if you watch a movie, you want there to be an end to it. >> but at the same time, you like the suspension. well, maybe. >> we have a tape of the series,
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"the hunger game" the movies. >> the latest installment of the story hitting theaters tuesday. there is no question the film has a huge fan base. mocking jay has more than doubled the social media -- of any other film this holiday season. lionsgate is tapping into that index with a youtube series. it's the top advanced ticket seller of the year. it could make the last linger games, $158 million opening weekend, which would make it the year's biggest u.s. open weekend by far. the challenge? imax is not showing the film. the studio box office won't benefit from those higher priced imax ticket. lionsgate needs its biggest
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franchise to fly. it's the crown jewel they have in the line. there's a tourism, plans for next fall, a theep park in the works along with a play debuting in 2016. though the box office could swing lionsgate stock, mockingjay is already baked into it. and who says a scandinavian super hero can't be sexy? people magazine have named actor christmas hemsworth as this year's sexiest actor alive. the 31-year-old, who is australian, joins a long list of hunks with the honor, including brad pitt, glornlg clooney and chatham data?
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>> i think you should go for it. i'll sit out that day and you and him can -- i'm sure you have questions for him. still to come on the show, we will be talking about uav company goods public. you ask, anything in the interest term? that and more after a short break. for access to one of the top wealth management firms in the country... for a team of financial professionals who provide customized solutions... for all of your wealth management and retirement goals, discover how pnc wealth management can help you achieve. visit to find out more.
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now, we have a uav, or drone, in studio as you can see. however, for health and safety reasons, we will unfortunately not be flying it. perhaps an expensive tv studio is not the best airport. however, this is an example of what drones are capable of when in expert hands. you are watching video from the footage championship so the from a camera on one of the aerial drones. you can see a beautiful view of the fireworks from up above, something that could only really be captured with a drone. >> totally epic view, i would say. >> absolutely. with us now is managing director at aero filming. what are some of the most exciting places you've been able to take these drones? >> i would say the most exciting
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place and nerve-racking place is probably flying one out of the back door at buckingham palace, which was a nerve-racking experience, but really, really good fun. >> yet you're not allowed to fly it indoors today? >> we're not allowed to, but we could and it would probably give the place a good dusting. >> tell us about the company, mainly using drones to film special footage like we just saw. >> that's right. we've been going for about 2 1/2 years now. we use drones mainly for tv production work. we do do some videos for large estates that are being sold because we can get across the size of the property and its position and its environment. but mostly, it's a television program because we can get such amazing shots that nothing else can get. >> russell, i'll bring you in now. a completely different use for drones, mainly in military and defense contracts. is that right? >> that's right. a training and military with fixed wing and also with the motor rotors like ben has.
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so we've -- we'll focus on that area in our business. >> and you recently took your company public.. what's the response been like for investors? >> it's been great. we had a great opening day on monday and we were thrilled with it. and it continues to go well. so i think it's a -- it's a unique area. it's a leading edge and people are excited about it. >> and there's still some hesitation out there in the market and investing in jones because we still have yet to see what some regulatory forces will say regarding the use of drones. >> with tell, the nice part is, the europe area, there's a lot of flexibility. in the u.s., as a commercial operator, you just can't fly. but we found a way around that with military contracts and law enforcement agencies. >> and one of the things that amazed me about that video clip we saw earlier was the finite inch perfect controls you have with the drone as filming, even
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with windy conditions conditions as you were just telling me in the break. does that mean there's a lot more uses for the drone going forward? >> i should think there are a number of them. but, yeah, i think the imagination limits what you can do. >> we get a lot of stories about potentially amazon using it for delivery. it sounds farfetched to me because there could be chaos and packaging left. >> it's something that i fought a lot about. practically, it's certainly possible to program a drone to pick up a package, take it to -- and leave it there. but i think to do it safely, there's -- and i'm sure russell will be thinking on how to do it safely with air space control and public safety in mind. but i think -- i'm sure it's possible, yes. >> do you think this is a market you would want to enter delivery? >> my company probably won't do
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that. i'm really glad the big boys are doing it and spending the money on it. there's a lot of challenges, but they will overcome them and eventually that's going to be where we go. when you look at the number of packages they have to deliver, that will help. >> why do you list in the uk? >> it's a good location for us. we're international. we have businesses in the u.s. as well as europe as far as singapore. so it's a good location for us. >> russell, ben, thank you very much. we enjoyed having you both in, including the drones. now, still to come on the show, never mind the sales tax delay. find out why the bank of japan is standing by its quantitative easing program. we cross live to japan after the break. and after a record closing day on wall street, take a look at how futures are fairing, pointing to a lower open. the dow jones industrial down about eight points and premarket
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trade will leave you a look at how futures will be trading throughout the rest of the show. m
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welcome to "worldwide exchange." i'm seema mody. >> and i'm wilfred frost. these are your headlines from around the world. >> a vote to approve the
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controversial keystone pipeline falls short in the u.s. senate. >> it's been on my agenda and it's staying on my agenda. and i'm going to do everything i can to help america become energy independent. the bank of japan stands by a huge stimulus package despite delays in the federal tax hike. this as they stand by for clues on employment and inflation. >> tak at a a shares fall to a 5 1/2 year low after u.s. regulators urged the country to widen a recall of potentially defective air bags or face action. wintry weather across the u.s., even in hawaii, resulting in the coldest november day in nearly 40 years. buffalo, new york, bears the brunt of the chill with nearly six feet of snow. >> announcer: you're watching "worldwide exchange," bringing you business news from around the globe.
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and if you're just tuning in, thanks for joining us here on "worldwide exchange." here is a look at how futures look. better-than-expected earnings as well as economic data has helped markets move to the upside, but right now premarket trade positioning to a lower open. we're looking at the dow jones industrial down just about 7 points in premarket trade. the s&p 500 down just about a point. route rite now the nasdaq is indicate ago lower open. wilfred, over to you. >> thank you, very much, seema, for that. we're just going to bring you some flashes coming out of the ukraine. the ukrainian prime minister rules out direct negotiations with pro russian separatists who
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settle the conflict. as we know over the last few days, the conflict has been escalating, it has been rumbling on, and it does seem there is no immediate end in site as things stand at the moment. and the big story that has been rocketing market is japan. the bank of japan sees a continued economic recovery despite data earlier this week that showed the country slipping into recession. the central bank kept its policy and economic views unchanged. one member of the board dissented. the bank of japan governor says quantitative easing would continue until the 2% inflagz target is reached. he also rejected suggestions that the central bank should avoid further easing. kaori is in tokyo with the latest. >> this decision by the prime minister of japan, shinzo abe, to postpone the consumption tax
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hike puts the bank of japan and the governor in a difficult and delicate position. because, on the one hand, this deal that was struck between the government and the central bank last january was that, yes, the bank of japan would do everything it can to unleash extra stimulus, monetary stimulus to try and get the economy growing. but on the other hand, the government would inability global reform so it doesn't seem like the bank of japan is monetizing the debt. but here we are today where the bank of japan has called off a tax hike and he has made it clear, the government, that they're going to enact more economic stimulus. and that probably means more debt issuance. and i think that raises the sector of criticism against -- or towards the bank of japan that they may be monetizing the debt even though there's there he is no risk we could seek a spike in yields. i think private sector economists seem at that to think
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this situation puts the possibility of a downgrade into sovereign debt as a distinct possibility. and that could pose a huge problem for the japanese government that needs to finance this wagz. so i think although kur oi da is saying he will stay on course with his plan to try and boost inflation to 2%, he's in dafkt position, especially because there are people within his own board, you mentioned the one person that dissented, who had been very vocal about engaging in further monetary stm ewe husband as they did last month. so i think this decision by the prime minister to forego the situation. >> and all eyes on the snap election and the results we will get from that. thank you for your time. more flashes coming out on the ukraine/russia issue, the ukrainian prime minister has ruled out direct negotiations with pro russian separatists. he said that russia should abide by the agreement reached a few
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months ago and not indulge in game playing on this issue. as you can see, the ruble is flat so far today. let's continue our market discussion with chat morganlander, the portfolio manager at steeple chat. let's continue the discussion on russia. instability on the geopolitical front, of course, has weighed on market sentiment over the past couple of months, yet we continue to see this resilience with the s&p 500 closing at a 43rd time for a record closing high for the s&p. do you think markets can continue to move higher despite this rise in geopolitical tensions? >> i think it can move higher for a bit. but geomill concerns as well as deceleration could cause some
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trouble going into 2015. let's look towards the wider market rally. the market rally has been somewhat robust growing at a 3 handle, 3% gdp growth as well as earnings have been very good in the past quarter here. revenue growth was roughly 4%. the s&p 500 up over 6%. and that really, really is what pushed the market higher. also, monetary authorities across the global have been quite accommodative. when you look towards the bank of japan, the boj, the ecb, they've been providing a tremendous amount of let's just stay stability to the financial system. but when you look across all risk assets, across the risk spectrum, things are not cheap here spop investors have to be somewhat more cautious. we up the priority spectrum and pretty much try to prepare their portfolio for some type of sell-off coming in the coming months. >> chad, you mentioned the bank of japan. let's talk about the developments in japan over the
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last couple of days. i wonder whether there's someone in particular having a big smile on his face, mr. bernanke. does japan's actions in the last couple of days underlie the predominant global view today is the best way to get growth when it's struggling is to print money? >> well, look, the bank of japan is trying to reverse that 20-year strength within the yen. and by doing that, they can provide, you know, the print money as much as they want. and that will help the exporters, that will help their economy. unfortunately, though, the structural issues within japan, they have a declining population. when you have a declining population and you have credit dynamics in japan that haven't been, let's just say growing, then you have a deflationary cycle that is occurring. so they're going to really have a battle here. i'm not so certain that they will win that inflationary battle over the course of the next 24 months. but nonetheless, the financial assets in the markets in japan
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has been somewhat up, but i would be, again, somewhat more cautious within the japan trade. at the same time, european markets have been rebounding thanks to reassuring comments from mario draghi. jpmorgan citing valuation. hsbc citing a 17% to 18% upside through equities through the end of this year. the european story changing. would you at this point get bullish on europe? >> well, we're somewhat underweight the european markets at this deflection point. we do believe they have a growth problem within their economy, as well as a disinflation or deflationary issue. a couple of things there. mario draghi needs to be much more aggressive even than what he is right now. so that hopefully will happen over the course of the next three to six months. also, the fiscal austerity, which is self-inflicted on the eurozone, needs to be somewhat more curtailed. that's really creating this kind of deflationary issue within the
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european markets. and until we start to see, perhaps, them pair back their austerity measures, we're going to be somewhat underweight. like japan, mario graggy needs to decrease the value of the euro over the next 24 months in order to battle that deflationary or inflationary trend. >> at that point, we continue to see that fall further. how much farther can it go? we'll discuss that after the break. now, the weather outside is frightful as the entire united states suffers through an early blast of winter. parts of upstate, new york, are literally being hit with a wall of snow. the amazing pictures, coming up next. independently rated for sustainability. traceable from dock to store.
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u.s. safety regulators are calling on ta ka ta to step up their recalls. landon is joining us with more from headquarter. >> five automakers and takata are being called on to expand a recall of driver's license air bags nationwide. currently it's limited to the
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u.s. territories with high humidity conditions. the air bags can deploy sending shap natural in the car. the national highway traffic safety administration says this latest action was prompted by a new incident in north carolina which is not covered by the existing recall. the agency is scolding takata for what it called an unwillingness to move forward, saying the company needs to be open with the public about the risk of the air bags. the initial recall involved 4.1 million cars in hot and humid areas. including florida, alabama, georgia, louisiana and parts of texas. most of the effected cars are made by honda, takata's biggest customer. about 17 million cars have been recalled worldwide over the past six years with more than 10 million in the u.s. nine other automakers use the air bags, including bmw, chrysler, ford, gm, nissan and
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toyota. takata -- the senate commerce committee is holding a hearing on thursday to find out why the issues weren't resolved more quickly. takata closed at a 5 1/2 year allow, down 7% today. back to you. >> landon, thank you. in other news, winter does not officially start for another month, but already the u.s. is bundling up. temperatures in all 50 states were below freezing auto wednesday, including hawaii writ was 30 to 302 degrees farn fight. this is jido of buffalo, new york, where it is cold. it has been hit by six feet of snow. tuesday was the coldest november morning across the country since 1976. let's take a look at some of today's other top stories. cnbc has confirmed gold man sax
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dismissed the currency trader while working at hsbc. frank cahill was asked to leave goldman's london office on tuesday. he joined the bank in 2012. cahill was among a number of hsbc traders whose conversations were cited as part of last week's $43 billion settlement. goldman had a was not prart of that settlement. a proxy adviser firm is recommending shareholders vote against her pay package. iss demands what it calls a representation -- and what nardella received depends on microsoft's performance, but conditions would let her sell a quarter of the shares even if
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microsoft performed. microsoft down 0.1% in frankfurt, but up 40% over the past 12 months. before we go to break, let's remind you of the headlines so far. keystone fail toes pass the senate, but proponents of the bill vow to bring it back. the bank of japan governor warns inflation could fall below 1%, hedging to keep qe going as long as necessary. and investors remain cautious ahead of the fed release data today. xkç
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a big to approve the keystone pipeline fails by just one vote in the u.s. senate. miles an hour landrieu of
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louisiana has staked winning a fourth term on the bill. senator mitch mcconnell says a new bill will probably come up early next year. despite the loss, senator landrieu says she's upbeat. >> where i come from, we just never talk about quitting. and we don't talk about whining. after the game is over -- and this is not a game. it was very serious. but when i played ball, whether you won or lost that day, you just shook the opponent's hand, you got up and you went to fight another day. so there will be no blame from this senator. >> john harwood now jones us live from washington. there's a good chance that this keystone pipeline will get passed in january. but what's the likelihood of a presidential veto if the congress does pass the keystone pipeline? or do you think president obama will use it to his leverage to get some of these agenda items
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passed? >> i think leverage is exactly what the president is looking for. it is likely that they will get 60 votes in the republican-led senate in january. of course, it will pass the house again. there aren't enough votes within either chamber to override a presidential veto. but i would expect the president would not make it his goal stopping the pipeline so much as getting something in return for it. he has indicatedette not adamantly opposed to the pipeline. but since republicans do, he is going to look at this as a chance to make a deal with the new republican majority in both houses of congress. and so we'll see whether that deal can get done. it's going to be hard. we know how relations are between the two parties, not impossible. >> john harwood, we're going to leave it there. thank you so much for your time. 16 retailers report you now through the end of the week and target earnings are due soon. it's out its outlook twice this
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year because of the data breach that resulted in slower foot traffic. some analysts are expecting earnings to come in better than expected. keurig ingredient mountain reporting after the bell. thursday, analysts will focus on best buy and its ability to compete in the online space. now, retailer dollar tree will report on thursday followed by foot locker on friday, which by the way, is citigroup's top pick this season. target due to report later. coming up later today on cnbc, an exclusive interview with target ceo brian cornell just after the company's earnings conference call. we were asking about the retailer's holiday strategy and its ongoing efforts after last year's massive data breach. that's today at 12:00 p.m. eastern time. let's give you a rundown of what else to watch. housing starts, forecast to rise
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0.48%. building permits expected to rise to 0.6%. at 2:00 p.m., we get the minutes from last month's fed meetings. lowe's, schmucker staples and target before the opening bell. after the bell, we hear from keurig green mountain, l brands, and williams sonoma. still with us is chad morgan lander. what are the headlines you're looking for in the fed minutes when they come out? >> well, the general tone for the federal reserve will be much more dovish. but nonetheless, the federal reserve is battling this inflation target, which they woefully disappoint month after month. it looks as if inflation is going to be running around 1.5% to 1.75%. i don't follow in a way that i think that is going to lead what
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the federal reserve is going to do. there's way too much noise in the minutes. so look towards messages from the several fed governors, look at dudley, fisher, whatever they say as well as janet yellen. all three of them have been giving a very, very dovish tone. we believe then the federal reserve won't raise rates until the second half of the year. when they do, they will go by a quarter of a percent here, a quarter of a percent there. so a couple of things. we spoke about inflation. the labor market. the labor market, although the unemployment rate is below 6%, the underemployment rate is still above its 30-year average by about a point and a half percent. so you're not really seeing wage inflation where it's start to go run at a hot level, which you have to be seriously concerned about it. but when it comes to the federal reserve, we still believe that the message will be somewhat balanced to dovish. >> and inflation catch ago three-yee low in the u.s. that's the data we got yesterday. analysts say three factors are contributing to this
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disinflationary trend. stronger dollar, lower commodity prices and the lack of wage growth. the question is when can we see a healthy rise in inflation? >> i don't know if you're going to see it within 2015 or 2016. inflation is not only driven by those three factors that you mentioned, but also by credit dynamics within the united states. so i'll give you an example. you just mentioned housing starts. housing starts are 11 million per month. on average over the last 30 years, post housing bubble, i was running at about 1.3 misdemeanor. household income is between 4,000 and 5,000 below 2007 and 2008 levels. so there is a lot of things going on within the u.s. economy that is quite unhealthy. yes, the markets overall in the financial system are high, okay? s&p is hitting a high.
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but there is still this below trend or let's just say this below trend growth that is going to plague the united states and i think that's going to continue for 2015 into 2016. but look at gdp growth at 2.5% to 3%. >> all right, chad morganlander, portfolio manager at steeple. thank you for your time. >> thank you. >> retail earning eggs will be in focus today. let's give you an update on european markets before we finish the show. the stoxx 600 itself is just in the green. the ftse 100, the laggard of the major markets, down 1.6%. germany up about 0.35%. france, fractionally in the green and italy up. the best part of 1%. >> we should know the german markets are up about 7% already this month, but quite the rebounds for the german markets. u.s. futures poiping to a lowe more and close for the 41st sometime this year.
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thanks for watching. i'm seema mody. >> and i'm wilfred frost. "squawk box" is coming next. 9m
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good morning. rejected. the senate failed to capacity the keystone pipeline bill. we'll have a lot to say about this. and the reason. she thought she had 60, she didn't. netflix down under, the video streaming service is launching in australia and new zealand. happening now, large parts of the country are digging out and bracing for record low temperatures and more snow. upstate new york, six feet. six feet of the white stuff.
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it's wednesday, november 19th, 2014. and "squawk box" begins right now. good morning, everybody. welcome to "squawk box" here on cnbc. i'm becky quick along with joe kernen and andrew ross sorkin. new this morning, "people" magazine naming its annual sexiest man alive. this year's title goes to chris hemsworth. you know him as thor. here are the big stories you need to be watching today. breaking overnight, the bank of japan announcing it will keep monetary policy steady. we'll have a live report from tokyo in just a moment. auto wall street, earnings and economic data. we get housing starts and building minutes. we have the minutes from last month's fed meeting. before the bell, we'll get quarterly result


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