tv Worldwide Exchange CNBC May 25, 2015 4:00am-6:01am EDT
. hello. good morning, and welcome. this is "worldwide exchange." i'm wilfred frost and here are your headlines from around the world. another day, another warning from greece. the country's interior minister warns athens doesn't have the money to pay the imf next mont and anti coalition gaining ground. fiat drops to the bottom of
the italian market on reports that an offer for a merger was turned down. and iraq gains ground from isis. the situation have never reached this point. >> the whole of iraq should be a red line. isis should not be able to take it over. this is the new strategy and the international coalition should follow in the region. greece has warned once again that it could default on its debts. the country's interior minister says athens does not have enough money to pay loans due to the imf in june. unless a deal is made on its international creditors on funding. speaking on local it television the money won't be given because
it's not there to give. let's have a look at the greek yield curve as we look at things this morning and we are looking once again at yields slightly elevated, the ten-year 11.4% and the five 16.5 and two year, 24%. mean while, the country's finance minister has insisted greece has taken huge steps forward in trying to reach a deal with its creditors. >> greece has made enormous strides at reaching a deal. it's now up to institutions to do their bit. we have met them 3/4 of the way. we need -- they need to meet us 1/4 of the way. julia is joining us now. it does look like this payment coming up on june 5th is
unlikely to happen. >> it's another voice that suggested they are going to struggle. it's nothing really new. they were using imf to pay the imf. the interior minister is part of the radical left platform who has a concern passing these reforms. there is a school of thought that these voices aren't dealing with. still ground to be made up. they are not going to let them get away with those crucial pension reforms even if they will give them a bit of latitude on labor reforms. i think you only have to look across at spain and the gains put in for the party they can't give them any more latitude here. it does seem as we get closer to june the 5th we're
getting closer to a little bit of default. does a default mean a grexit? >> we're talking a missed payment. it is not a credited event, if they don't pay the imf. the one thing i would carefully mention is in the master agreement that the huge portion of money that's been lent to greece has the right to miss the payment to the imf which will accelerate the payments on the bonds. fortunately, it's discretionary, so it would be a choice. a missed payment wouldn't send a good message. the risk of course is that it precipitates further concerns as far as the banks are concerned.
we're going to have a quick look at markets. let's bring up european markets, first of all, which are largely closed today because of various bank holidays but as you can see italy, spain, and france and portugal all open and quite significantly in the red as we look at things. italy in particular is down 1.7% and we can see spain down 1.4%. last week was quite a positive week for european equities particularly the front half of the week when we saw the ecb comment that it could be pick up a little bit if necessary, that just reignited some of those european-related trades. the u.s. ended just positive and touched all time highs during the week. we've corrected a little bit european equities what is open today and some of those greece fears we've mentioned taking a
little bit of positivity out of the markets. fiat shares slipping in milan after a report after the fiat-chrysler sent a proposal for a merger of the two makers but it was rebuffed. bond rates have moved over the last couple of months. we were looking at 0.6% on the ten-year german. that had gotten up to 0.7 ten days ago, pairing some of those changes. spain, 1.77. u.k. 1.94. somewhere away from the 2% mark. let's have a look at the 4
x. it rallied to 114 in the middle of this current month. it's down 1.0963. it's off a half percent of the day. we're looking at the yen, 0.06. let's check on the markets in asia. >> good morning. the positive leadership coming from the north asian markets today. another blistering rally on the shanghai composite. we're looking at fresh 7-year highs for that market. it's driven from the infrastructure
infrastructure. on positive, on optimism that we're going to see larger shareholder pay outs from corporate japan, also the weaker yen, the trade numbers saw us that we saw a trade deficit in april for japan. the external picture the exports did grow. australia, which is back in favor, investors scooping up some of the beaten down banking stocks. elsewhere, on the losing end of the spectrum malaysia was an under performer down 1.2%. the power utility was off by 4%. that was a big impact on the broader index.
let's talk a little bit more about markets. joining me is pierre-yvesga gautier. we've seen a correction in the trades. do you think that's finished or will it be reignited again soon? >> our reading is that this quite unique scbinction of cheap energy cheap dollar is bound to knee jerk higher. if you were just speaking about the greek situation, it looks pretty much of a disaster in waiting and we haven't seen much in terms of market reaction so far on this subject, it does show overall very few investors
are committed to equities so far. this is a story we have been strak -- tracking over the last few months. the dynamic is upgraded earning in europe and that will pay in terms of ex-ity -- are acceptable. >> because of qe and the like there's further to go in the european markets, are you suggesting the potential risk of a grexit is not priced into markets? >> quite frankly, i don't know. it looks like because we've had the comments you've just made about greece over the last month or so it looks increasingly impossible for the greeks to reach a solution. a bit like gm you may remember
like when gm collapsed. i would take that view today. i'm quite intrigued by the fact that we do not understand anything about the internal politics of greece and the lack of any initiative to prepare the people for a complete change of regime is a bit strange. i would have expected them to prepare for a referendum. it's a bit disappointing on that count. >> let's talk about sector specifics. banks. you are a little concerned about the banking sector is that right? >> i guess like everybody else. we do know that the flat yield curve is not helpful for the banks. we are like other people intrigued by litigation costs. you can recall a number of prosecution agreements for banks have been dropped. it's a case of maybe more
substantial litigation costs for banks. that is not a proper background. notwithstanding the fact that we have on top of the issue, we have some type of a yuber iization of the banks. it's not a great trade to be in banks. there is only one positive for banks is dividends will be going up. it may not be enough to support the sector. >> is high dividend sectors things you are looking into at the moment? >> it's no news. one intriguing thing is that the bigger pairs are pretty cheap in the relative term. there seems to be in effect value for dividends.
pharmas could be one interesting term terms. and more capacity to pay dividends is really a good background. pierre thank you very much for joining us. the founding partner at alpha value. still to come here on "worldwide exchange," paying the way for investment. we speak to world pay as it enters the fast-growing e-commerce market amid expectations of an ipo. and roger federer is fed up with selfies. stay here on "worldwide exchange."
roger federer was left mifed of after a fan approached him for a selfie. it clearly wasn't a nice situation to be in. the fan also approached the 17-time grand slam champion for an encore session after a practice session on saturday. do you feel federer's frustrations or are you sick of selfies now? join us now. what do you think about self-ises? >> i'm sick of them. i think they link them to mental illness and people crying for help. >> i came late to the selfie craze? >> how many selfies a day, a
week do you take? >> probably a couple of days. just so there's a nice record of how things look. >> just take them for personal use. here i was. is that a cry for help or not that you publicize it? >> we should take one now, julia. do get in touch throughout the show @cbncwex. >> spain's ruling people's party has received a bruising in local elections with left wing and anti as -- austerity gained substantial ground. the socialist party came in second but both parties will need support from smaller groups
in order to govern. as you know julia is on set with a huge story. >> this is a huge shake up in the spanish politics. they traditionally get around 70% of the vote. here they took around 52% what we've seen is the rise of the radical left and then the citizens party which seems to be supportive of business but they have come from nowhere in the last six months or so. they are an existing party, they have been around since 2006 but it just shows you the presence that they have had and of course what we've seen and the struggles they are now having. they may struggle in these regional elections. the crucial questions are how good are we to cross the regional elections to the national elections. we don't really know.
they have used coalitions of the left rather than branding hem receives out outright. do you join coalitions now and show your hand or do you holdback and wait for the general election? the other important point is why again do we care about the regions of spain because it's so decentralizized. as far as the recovery is concerned, if we do see a lack of ability to reach coalitions on these local levels will it impact the economy? the polish president has conceded defeat to the conservative challenger in the country's national election. announcement comes after a poll. official results have yet to be released by the country's authorities.
they are losing ground against the euros by .3%. george osborn is considering a commission to a study as to the british leaving the eu. the specific rules of the vote will be revealed in the queen's speech coming this wednesday. meanwhile, the bank of england is under fire after it accidentally revealed details of a project it is working on in the event of a brexit. it was mistakenly sent to an england newspaper. julia is still with me on that issue. it's not surprising that the bank of england is trying to work out what may or may not be
the fallout if we have a brexit. it's embarrassing they released the thing they didn't mean to release. >> it's risk management. isn't that what risk management is about? you need to take the steps. the big issue for me is the steps that they would take to try and ask the prs the representatives within the bank of england to prevaricate regarding their preparations. we've got an important week coming up. david cameron is going to be visiting various european leaders. do we think that events over the last week both in greece and now in spain with how voting has gone there, does it make the likelihood of the eu renegotiating the terms
significantly with britain any differently at all? >> i think the brexit question for them is one they could do without quite frankly when they are trying to deal with greece. i think some of them would have been happy for david cameron not to have won the election and taken it off the agenda as far as its concerned. if david cameron can go to them and say this is what the uk wants and just because the u.k. doesn't want closer association with the eu it actually controls it. i think it's a warning that perhaps a need for greater cohesion and the risks attached to the greek situation here and what's the preference here to allow a country to leave or set a precedent and risk further fracture. >> is it a different situation for david cameron? >> the u.k. is far bigger in a
greater sense. there's a difference in the negotiating tactics of two. it is not about austerity. here it's about a better understanding and relationship for the e.u. at this stage. i think he has a lot of support. there are other countries like germany who thinks we should have less red tape. we'll hear more on the queens speech later on in the week. new report suggests iraqi troops have recaptured territory near the city of ramadi which was seized by isis last week. the developments on the ground came amid harsh criticism from u.s. defense secretary ash carter who says iraqi forces
lack the will to fight. hadley joins me. >> what you have here is the u.s. secretary of defense is saying these troops are not ready to get the job done and that's very interesting coming from the u.s., considering not only have they train these troops over the last ten years but they have been training them with u.s. special forces and special advisers to fight the islamic state. it isn't like they are unaware of the capabilities here. these guys are getting weapons from the russians and other deals as well from the french. it's interesting that the u.s. is going to take this line with regards to isis because, of course, the response here is one of sort of frustration with the u.s. administration. not just from the iraqis themselves but from the kurds. i had the chance to sit down with the iraqi deputy prime minister and he essentiallily told me this is going to be a big problem going forward. take a listen. >> translator: it is clear that there are targets that the u.s. said that there are a red line
and they remain a red line and isis could not reach there because the u.s. can stop isis but isis managed to reach other areas because the u.s. did not say these are within red lines. the whole of iraq should be a red line. isis should not be able to take it over. this is the new strategy and the international coalition should follow in the region. they should not just make strikes here and there that are ineffective. >> deputy iraqi prime minister saying that these strikes don't need to be -- they need to be more targeted than they are being. essentially that would basically mean they needed troops on the ground. that's what he's saying. what's being done right now is not enough. i've also asked the president of
kurdistan about it. >> translator: was the iraqi army who was not able to take advantage of it. however, for kurdistan we're very grateful. as far as weapons we have not received them to fight isis. we are hopeful that they will respond positively and there will be some changes in this regard. >> what do you think is holding those weapons up? >> translator: maybe there are some misperceptions. >> in the u.s. there is a perception now that the obama doctrine is questionable when it comes to what's happening in the region and many in u.s. congress are now raising questions about whether the president's streg is the right one when it comes to helping to
defeat the islamic state. is the u.s. doing enough to fight this threat? >> translator: as much as we are concerned in kurdistan, the intervention was very swift and quick and we are very grateful for the support they provided but in general there is no a strong reaction to face and defeat isis. there is a need more for commitment and need to defeat isis quickly. >> that is across the board, no. just the u.s. but also the other arab states>> translator: the whole international community in fact. >> the bigger question right now is what is the u.s. going to do about this problem? what you are seeing from the administration they basically saying they didn't know how bad it was and they are running up against the fact that the iraqi troops are not able to take on the islamic state. what do you do next? that's going to be interesting going forward. one of the greatest deals in its history, we hear from the
creditors. spanish equities trade lower after the people's local party receive a bruising in elections. putting brakes on a deal. fiat drops to the bottom on reports that gm's president mary barra turns down an offer of a merger. iraq's deputy pm tells us it never should have reached this point. >> translator: the whole of iraq should be a red line. isis should not be able to take it over. this is the new strategy and the international coalition should follow in the region. let's have a look at what markets are doing here in europe. of course some major markets
are closed today. those that aren't open are down quite significantly. volumes not hugely high. the u.s. is closed today. partly this is because of elevated fears on greece over the weekend and some political results coming out of spain as we just mentioned. there was also a slight correction of what was a strong week for european markets last week. the u.s. last week was fractionally positive by the end of the week but did hit some all-time highs during the week. we're having a little bit of a correct from those levels. let's have a look at forex rates. it's euro is 1.0961. and the euro 1.3.
and draghi encourages countries to unite. in portugal the ecb chief said there is no better moment to push ahead for reform. >> in europe the structural component in low growth is much bigger. as all the data and discussions have shown yesterday. that's why the need to -- by the way, the central banks, the ecb doesn't want to be intrusive. doesn't want to tell people exactly governments what exactly what to do how to sequence who does what, so on. it's very much a policy appeal to action. for example, yesterday, there was the discussion on whether it makes sense to postpone reform that you know it's good to times when the world will be a better place to live in. now, it's clear that from the
other parts of the discussion there's not going to be any better moment for doing the right reform than now. >> and aneta has returned from frankfurt is life for us now. >> thank you very much. that issue whether the ecb and central banks actually have a mandate into advising governments everywhere in the world was one of the big topics during various debates but it was rebuffed by all of these major central bankers, stanley fisher mario draghi and mr. kuroda from the bank of japan and they are all saying they should voice their opinions when it comes to governments. there's only so much you can do as a central bank. essentially what mr. draghi is
saying they do their utmost to enable growth but that is what they can do. if the situation were to worsen they could do even more he said at one panel discussion but so far the monetary policy stance is quite clear. of course, we had someone saying they are planning on front loading qe for some market participants. there was a clear sign that the ecb is planning on flattening the yield curve or managing the yield curve and that was also my biggest question to one of the most senior ecb watch dogs who is also one of the wise men here in germany, advising the german government about economic reforms. >> i think it's part of the
unusual environment we're in with this aggressive quantitative easing the ecb has engaged in strongly influencing longer term interest rates. the whole yield curve as you know in the safe in the countries with low risk it's moved down into negative territory many years out. this is a situation brought about by policy. we're very concerned about it. what does it mean? all these uncertainties for the market and just recently we discussed whether there aren't enough points. we just learned there are because prices have been going down and rates up. for the ecb, this means in this situation, volatility is not surprising high, right? it's to be expected and their decision at least suggests to me that their intention is to smooth this and to actually more or less try to manage the yield
curve fairly far out and i think that's a very difficult under taking. it shows you what extreme policy we're in. >> you say going forward they are planning on managing that yield curve, looking at potentially more volatility to come with the fed, et cetera. >> i mean my guess is yes, they will try that. this is at least a first step in that direction. >> let us also look at what we were just saying recently discussing the potential scarcity of bunds or other government bonds, this is completely off the table according to you, right? >> i think if that had been true we wouldn't have seen the spike up and there would have been no need for the ecb to say oh we're going to buy more to bring it back down where we wanted it. another thing which is difficult about this remember in the forecast of the ecb, we have inflation recovering. we have pretty decent growth in the ecb. you wonder how can interest
rates can be so low for so long. one issue is buying. when you think how inflation will be, i don't see how safe interest rates can be at zero eight years out. there is this conflict which makes it so hard to see what is the appropriate level. >> yeah. some people are also arguing that despite the fact the ecb is not officially targeting the euro exchange rate but that might also be like a second thought at least when intervening into the markets. do you think so as well? >> these are -- this is just another one of the channels through which quantitative easing works. it works through risk and utility and exchange rates so of course they are looking at the mix. since they are paying not foreign currency but government bonds, the first impact is on the prices and yields of those
bonds. >> so essentially the message also from the ecb be prepared that they are going to implement the full qe program as announced in january, even though some market participants were already speculating that the ecb might taper earlier than this. mario draghi says we will fulfill what we have seep and also be prepared that the ecb might intervene during that period of time they are having qe in place to flatten the yield curve and also to possibly lower the exchange rate in order not to hamper economic activity in the euro zone. back to you. thank you very much nor that. we're going to discuss markets in a bit more detail now. joining me is simon gross hodge head of investment advisory in singapore. we've seen quite a significant
move, particularly in european markets over the last few weeks and months. was that because people think qe in europe was going to end or that the trades relating to them had been overdone? >> good morning, wilfred. i certainly don't think it's because they thought that qe was going to end. as draghi said this is a first mile of a marathon. they have got an awful long way to go. i think probably the fact that the initial reaction from the markets was a lot better and more than people were thinking. as mentioned, we had some people pushing up their growth expectations for europe. inflation expectations have come off the floor a little bit and that suggested perhaps that things had made a very good start and if they continued that way, then that would improve open mix that perhaps the policies wouldn't be needed. if we look at the other countries, most of these policies have had to go on much longer than the central bank would have expected or would have wished certainly as far as
japan and even the u.s. with getting as far as qe 3. so to suggest after just a mere one or two months that there was any sign of an exit on the horizon i think is out of the question. we're going to need these policies to be there for quite some time. the markets need the support. certainly we saw from the fed when they tried to end qe 1 and 2 too early the reaction was fairly negative and the ecb should learn from those mistakes from the fed and make sure that they keep this policy running for its entirety to give the market and the economy as much support as they can. >> if we look today at for example the german ten-year is yielding at 0.10% is that set at a reasonable level? are you happy it's corrected far enough already? >> yeah we would think so. if you look at the dynamics particularly may was a month of quite a lot of issuance whereas from june and the second half of year, we get back to a situation
of negative net supply. we think in that situation in the ecb buying such a huge amount of that issuance there should be more natural pressure for supply and demand for those yields to be pushing down. i would agree with the comments that the ecb send a very clear message that they were very unhappy with both a spike in yields and the rally in euro. they are sending a clear message that they are going to be policing this market quite heavily. there seems to be little reason from our perspective to fight that. we think the yields will go back down the euro will go back down and that's a very supportive environment for european equity markets. >> we're going to hit the pause button. federal reserve janet yellen had a hawkish tone. indicating inflation is moving forwards the fed's target.
>> for this reason if the economy continues to improve as i expect i think it will be appropriate at some point this year to take the initial step to raise the federal funds rate target and begin the process of normalizing monetary policy. to support taking this step though i will need to see continued improvement in labor market conditions and i will need to be reasonably confident that inflation will move back to 2% over the medium term. >> simon, it seems like the european central bank had been driving bond prices across the globe over most of this calendar year. is that focus going to shift back toward the fed as they start to raise rates? >> no we don't think so. we think that european influence is going to be very heavy. if you look at the message we're getting from the fed, there are
two things clear. they are really keen to raise interest rates. they want to get off of zero as soon as they can. they will probably do that in september. the more important message coming from all the fed officials is when they raise rates, it's going to be at a very slow and gradual pace and that really shouldn't do a lot of damage to the treasury market and even after the speech from yellen on friday the reaction in treasuries was relatively muted. for sure yields could push a little bit higher especially if we get some stronger economic data but we don't think they are going too far and lower yields in europe are going to act as an anchor. they are going to make those u.s. yields look pretty attractive on a relative basis and that's going to be attracting capital. >> stick with us if you will please because we're going to talk to japan next. boj seconds inflation to sell accelerate in the 2015.
he expects it to reach around 2% around the first half of fiscal 2016. meanwhile, japan trade data showed the country fell back into a trade deficit in april but the gap is not as wide as feared. a jump in exports to the u.s. helped. simon, quite a lot of data out of japan the last week or so. sum it all for us. are we seeing enough green shoots of growth following this humg stimulus they have delivered or is it still a pretty wearing outlook? >> we think the outlook is improving. inflation was moving very quickly in the right direction and until they got hit by the collapse of oil prices. the abe no, ma'am -- --
abemonics story. there is a domestic demand story to the japanese market rather than people trading on a weaker yen. on a global perspective, japan is still one of the best value markets out there certainly compared to the u.s. it's got good room to move quite a bit higher. abenomics very slow but it's still making progress. they are really getting that domestic background moving and that's a very key component in driving this market higher. so we're staying bullish on japan. >> simon we've been around the world in eight minutes. thanks very much for joining us today. now still to come on "worldwide exchange," a top ge executive joins a chorus of critics to say the u.s. was wrong to sit out in talk with
>> incredible conversation we were on the sidelines of the world economic forum in jordan. i asked him how the investment was going in egypt. he explained to me that the leadership is in such a place right now that he felt egypt was a good place to be investing that things would go forward in a positive way for the company. it's interesting as well, this is a company, general electric they are used to working with these governments to make these deals happen. i asked him about the deal with alstom i said what are you guys willing to do to make this deal a success? take a listen. >> it's been a long time since we announced the deal. longer it takes, the more difficult it is on the people involved. we would like to get this done as quickly as possible. we're confident that we can, and we think it will be end up being one of the great deals in ge's history. >> i also asked john not just about the alstom deal where he's saying we're going to do
whatever it takes to make it happen but i also asked him how is the u.s. doing abroad because you are looking at the chinese moving to the middle east the russians are moving into the middle east. is ge as a company and the u.s. in a good place essentially to get to where they need to be in term of market share and essentially he told me he's very worried just about u.s. legislation if it's in the right place to make that happen. interesting conversation on the sidelines of that forum. >> great stuff, hadley. we'll be looking at more of the tape throughout the show. >> russians are rushing to put money into india's ecommerce sector. hedge funds investment firms and asset managers have pumped 3 billion dollars. payment processing company world play is one company hoping to tap into that market. joining us now is ron from world
pay. you are a leader payer in managing car payments in the u.k. and your latest deal expanded. >> we're a fast-growing global payments company. we processed 10 billion payments a across across 128 countries and india is a natural market for us to go into. it helps our customers to expand into that market. it's fast-growing. there's a huge growth in ecommerce. something like 50% growth. it's a natural place for us to get to. >> and indian ecommerce is this all through the phone or is it through traditional pc's and computers as well? >> we operate across multiple channels. typically the device that are used now increasingly in india, smart phones that's where it's starting to grow. we're going to see smart phone usage increase and double over
the next five years. there are 900 million people in india who have access to a mobile phone. it's a massive opportunity for us. >> think about the payment space globally. how will we be making payments in ten years times? >> payments essentially are moving away from a standard proposition to something we've all got a smart phone, we're all readily accessible in terms of using smart phones and using them will be one way to do it. there's going to be a broeth in biometrics and information that's going to be available i think payments will be at the heart of everything that happens in the economy. >> world pay is already established. this fast-changing industry is that a threat or opportunity? >> it is an opportunity. we are fast growing and we are consumer and customer focused in terms of thinking about our
business. our business is about helping our customers. who ten tor retailsers and helping them grow their business. that's essentially what we're doing. >> also on the front, of course the private tech market at the moment is showing up valuations being incredibly high. it would be a convenient time for you to raise money, would it not? >> essentially, at the moment we're doing pretty well. there's no urgency in our business to do anything along those lines. our focus in the business is to look after customers, to grow their business and make sure that we can expand in territories and geographyies that we've been furthering our customers in. >> you don't need any more capital to achieve that at the moment. >> no. >> so plans to ipo at all this year? >> there's a strategic set of options that we've started to consider and think about, and the reality is that the business has grown remarkably well over the last five years since it's been owned by bain capital. the business has grown and it's
the right time to be thinking about our strategic options but it's far too early to think about what it looks like. >> is there other geographic regions you want to get into that you are not present in yet? >> we're pretty global already. we're already in china and japan, essentially it's about making sure that we take our customers into those markets where they have access to the opportunities that present themselves. >> thank you for joining us this morning. amazon has complemented new accounting practices and is not now retail sales in european countries. amazon will not channel all sales through low tax luxembourg. let's look at markets. germany and u.k. closed for the
holiday. france down 0.7. portugal down over 1%. political developments over the week in greece and spain has hurt markets a little bit but just because of low volumes is why we're seeing these red reads across european markets. quick look at forex as well. it's 10974 at the moment. we will be back here in a few minutes time. we'll be talking about grease after this short break.
a very warm welcome. this is "worldwide exchange." i'm wilfred frost and here are your headlines from around the world. another day, another warning from greece. the country's interior minister warns athens doesn't have the cash to repay the imf next month unless a deal is made with creditors. putting the breaks on a deal. fiat drops to the bottom of the italian market on the report gm's boss mary br br barra turns down an offer for a merger. the battle for time warner cable continues.
u.s. media mogul john malone charter communications is reporting francis altice for a nearly $50 billion takeover from twc. and iraq forces gain ground from isis. this is iraq's deputy p.m. tells cnbc never should have reached this point. >> isis should not be able to take it over. this is the new strategy. and the international coalition should follow in the region. welcome to the show. so the u.s. is closed for memorial day. we also have a bank holiday here in the u.k. and also in germany. we're looking at a relatively thin set of markets of european trade. that level of liquidity has also
accentuated the moves we're seeing. italy and spain just shy of 0.2%. some political developments really over the weekend. issues continue in greece. we also had some local elections in spain which didn't go the way of the incumbent party. it was quite strong for u.s. equities just up but also hitting some all-time highs over the previous week. let's look at bonds where the similar story of the last week has been we did have that big correction particularly in european bonds and we moved away from those moves. 0.6 on the ten year. we're looking at 1.94 in the u.k. and similar yields in italy this morning. we're looking at forex.
it raled up to $1.04 and it settled back just below 1.10% today. let's check in on markets in asia as well. >> coming from the north asian market another blistering rally for the shanghai composite. the sectors that were really in demand were infrastructure and transport that's because beijing said they are seeking private funding for over over $300 million worth of public projects. also fresh 15-year high for the nikkei 225. also optimism that we're going to see higher shareholder payouts as well in corporate japan. yes, we had trade data that showed deficits in the month of april. it was a slower pace of growth and we saw some weakness coming
through in terms of demand from china. so that was a negative but the market really brushed that one off. elsewhere, we see a rebound in australia. people picking up the sold out banking shares also rebounded. the benchmark off by 1% there. that's lowest since january 27th. the power utilize was off by 4%. that's how we stand. back to you. now the battle for time warner cable continues amid reports that charter communications is locking horizon with france's altice over a take over bid. charter is said to be leading talks with twc according to the financial files tsh financial times. shares in twc rose over 3% on friday valuing the firm at
48.4$48.4 billion. we're looking at altice's trade today in amsterdam. it's off by 4 and a half%. and gm could pay a fine of $1 billion. this after the department found criminal wrongdoing in gm's recall of ignition switches. it affected 2.6 million vehicles world wide and causing deaths. "the new york times" story says gm rebuffed the approach of a mernler. greece once against says it could default on its debts. athens does not have enough
money to pay loans due to the imf in june unless a deal is made with its creditors on funding. and yanis varoufakis said it would be a ka tascatastrophe. >> it is up to the institutions to do their bit. we have thet them 3/4 of the way. they need to meet us 1/4 of the way. >> on set with me now is julia to give us an update on the situation. mr. varoufakis not changing his tune very much. >> we've got 11 days between then and the current terms and obviously the brussels group are meeting to thrash out some kind of deal. they need to negotiate further
as far as pension reforms are concerned even if they give them a bit of latitude as far as labor reform is concern because those are the two crucial red lines too. there is also a point of view that tsipras doesn't mind these voices. we only have to look at spain to look at the elections they have had. from singapore, phillipe, good morning from here. good afternoon to you. do you think in the market at the moment, the risks associated with greece are they correctly priced in at the moment? >> well we are in a situation where no one wants to imagine that the -- that greece would
exit from the euro zone. at the point we are in a political issue. on one side you have tsipras from greece and on the other side, you have angela merkel and mario draghi on the other. the question is how can they have an agreement on political issues? that's besides the point. we know that the greek situation is not sustainable, but we know at the same time that none of this party from tsipras, no one wants to see greece exit from the euro zone. we need to have an agreement rapidly because it was mentioned, that they have a repayment of 300 million to the imf at the beginning of june so we have to find an agreement
very rapidly. they have as it was mentioned this weekend, there is no more money in greek's pocket so there is a real issue now, at the same time we all make the positives that they won't exit and an agreement will be found between greece and the euro zone. phillip ep how much what we saw in spain over the weekend play into the negotiations do you think? a real show of strength from the radical left over in spain, that's a huge concern for brussels. encouraging voters to vote for a similar radical left party? >> i think there's a very different issue from greece on one side and from other countries in the euro zone specifically in greece. for one single reason is that in greece the situation is
still very weak on the economic situation, on jobs on gdp, and so in that case you -- they have voted for a series at the beginning of this year just to imagine that the situation could stay where it was. in spain, for example, the situation is very different because you have -- now we have strong growth in gdp. we have a strong growth on employment and so the situation on these issues are really different and so we can imagine that the extreme parties in spain will no longer be as strong as it was expected a few months ago because the economic situation, the employment situation is now stronger than what was expected. so it makes a real -- a real
difference and you have to see the -- how time goes by in different countries, and clearly greece is still in a very weak environment. this is no longer the case for spain and it makes a difference on political issues. >> phillipe i want to take the focus away from greece and talk more generally around markets around the world. what do you think is the big driving force around them right now? janet yellen was much more headquarterish -- hawkish than she has been for a while. what is driving it? >> we have a situation -- we have a very complicated situation. on one side you have the ecb that wants to lower interest rates for the next time period. you have china which is not doing well currently and we saw
a lot of reform that has been shown presented by the government on the third part you have the federal reserve in the u.s. where janet yellen last weekend said well we have to do something on rates but at the same time when we look at the economic indicators in the u.s. we are not very -- we do not imagine that they could change monetary policy rapidly. we have these three types of issues and in europe we understand the point at the very beginning of the year we feared deflation. we expect the qe from the ecb, so every investor has tried to take advantage of this situation, so we had very low interest rates add mid april, at
0.06% for germany ten-years, so it was probably too low. we have had a correction. now it's at 0.06%. it's different. but we still have very low interest rates and we will stay this way. in the short run, the main issue is what will be done by the federal reserve. well they change their mind or not? that's the point. because we see that gdp for first quarter was weak. probably it will be weak for second quarter and inside case the fed has to increase its interest rates, i'm not sure they have to soften the dollar before before. >> thank you very much for joining us. now, as we alluded to during the course of our interview, people's parties has received a
bruising during the elections. prime minister's conservative party won 27% of the vote nationwide. it did loose control and failed to gain outright majts in strongholds. the polish president has conceded defeat to his conservative challenger after the country's presidential election. official results have yet to be released by the country's authority. julia, thank you very much for joining during that segment. i failed to thank you more enthusiastically. it was a delight as ever. all of iraq should be a red line for isis. we hear from the country's deputy prime minister on why coalition forces are launching a new strategy to combat militants. stay tuned.
with xfinity from comcast you can manage your account anytime, anywhere on any device. just sign into my account to pay bills manage service appointments and find answers to your questions. you can even check your connection status on your phone. now it's easier than ever to manage your account. get started at xfinity.com/myaccount welcome back. let's give you some headlines. greece back on the brink. athens warns it will not make a june imf payment without a debt deal. charter communications reportedly steps up a fight with altice for control of time wash -- warner cable and gm
could be driving toward a summer settle the over a criminal probe. new reports suggest iraqi troops are recaptured territory near the city of ramadi which was seized by isis last week. this as the united states and its alliesrd carried out 27 air strikes over syria and iraq over the weekend. the developments on the ground come amid harsh criticism. >> that's interesting. this is a different narrative than we've heard over the last week from the obama administration. they are admitting these guys don't have the will to fight. this is something they would have guessed this sometime before this. they have been training this guys and supplying them with weapons. they have a lot of weapons on the ground. the iraqis say they need more weapons. what else are they asking for
from the united states? >> translator: it is clear that there are targets that the u.s. said that they are a red line and they remain a red line and isis could not reach there because the u.s. can stop isis but isis managed to reach other areas because the u.s. did not say these are within red lines. the whole of iraq should be a red line. isis should not be able to take it over. this is the new strategy and the international coalition should follow in the region. they should not just make strikes here and there that are ineffective. >> that's the deputy prime minister of iraq down there talking about red lines. he's saying the u.s. isn't doing enough. the alternative narrative is from the kurds. i spoke with their president and i asked him is kurdistan safe.
how are you feeling about the u.s. involvement there and are you looking for more from the united states and what's happening in iraq? should the u.s. be doing more. take a listen. >> translator: i do feel the u.s. has done a lot for the iraqi army. the iraqi army has not been able to take advantage of it. we have not received the kind of equipment that we demand and is required to fight and defeat isis. and in this trip to washington i have raised this issue with the administration and other government officials and we are hopeful that they will respond positively and there will be some changes in this regard. >> what do you think is holding those weapons up? >> translator: maybe there are some misperceptions. >> in the u.s. there is a perception now that the obama doctrine is questionable when it comes to what's happening in the region and many the u.s. congress are now raising
questions about whether the president's strategy is the right one when it comes to helping to defeat the islamic state. is the u.s. doing enough to fight this threat? >> translator: as much as we are concerned in kurdistan, the intervention was very swift and quick and we are very grateful for the support they provided. but in general there is not a strong reaction to face and defeat isis. i think there is a need more for commitment to defeat isis. >> that's across the board. >> the whole intasht community. >> it's clear whether you are sitting in erbil or baghdad, you are looking for more support from the international community. when mentioned before so many people in congress saying we're not doing enough to support the kurds.
global steel output down in april. it was dragged lower by production in china and north america. we spoke to julia verden to ask about reports the firm could be taken over by u.s. buyout firm apollo. >> i want to talk today about where we are in the distribution chain. it puts me a very difficult position to talk about where stemcor is. last year the company was very successful in servicing of its clients. we maintained the volumes of all the things we targeted.
>> would it be a different company under private equity versus private family. >> when i took over as ceo, the mantra i delivered to the whole team at the company was one about delivering performance, delivering real accountability and what we see taking the company forward, under whatever ownership, we see it based on merit, profit p & l, and based on delivering that service. i've grown up all my career. it's going to be a company under whoever is the ownership which is run absolutely on merit grounds. >> the first big weekend of the summer for motor sport racing ended with a thrilling finish on both sides of the atlantic. nico rossberg won his third straight grand prix.
juan pablo captured his second 500 victory. the tennis front, roger federer got off to a good start at the french open easily winning three sets on sunday. he was left miffed after a fan approached him on the court for aie a selfie. so this has got us thinking. we want to hear from you. do you feel federer's frustrations? are you sick of selfies? get in touch with us. it was a little bit grumpy of federer to come out and say that. this comes with the territory with what he does. i've said it. in this morning on twitter i'm still into selfies and there's a
exchange." i'm wilfred frost and here are your headlines from around the world. another day, another warning from greece. the country's interior minister warns athens doesn't have the cash to repay the imf next month unless a deal is made with creditors. putting the brakes on a deal fiat drops to the bottom of a italian market on a report that gm's boss mary barra turned down an offer for a merger. this is has they settle up with with the department of justice. charter communications is reportedly fighting france's altice for a $50 billion take over of twc. and iraqi forces recapture ground from isis amid criticism from the u.s. defense secretary that they have shown no will to fight. this as iraq's deputy p.m. says
it shouldn't have reached it this out. >> translator: the whole of iraq should not be a red line. the federal reserve chair janet yellen struck a hawkish tone on friday strongly suggesting interest rates could be raised this year. april consumer prices rose at the fastest price since january '13. jelen said any tightening would be conditional on employment data. >> for this reason if the economy continues to improve as i expect i think it will be appropriate at some point this year to take the initial step to raise the federal funds rate target and begin the process of normalizing monetary policy. to support taking this step though i will need to see continued improvement in labor
market conditions and i will need to be reasonably confident that inflags will move back to 2% over the medium term. >> okay. let's have a look at the euro dollar which is off about 0.3%. as you can see 1.0977. let's get out to boris sclosberg. this was quite a surprisingly hawkish tone from janet yellen on friday, wasn't it? >> you know you listen to that statement very carefully and i don't think it's nearly as hawkish has the market interpreted it. it was hedge at the end yes we definitely want to raise rates but we're not at any point where we can raise rates. that's the ultimate message from the fed. central banks anticipate -- think of themselves as anticipateory institutions.
they need to see some growth in wages before they become committed to normalizing rates. i don't think we're quite there yet. >> boris, it's an interesting point because the inflation data did show a pitt more of a pick up than people expected. if we wait a few more months and we start to have the comparison effects from the back end of last year when oil prices had already started to tank we are going to see the number of inflation pick up quite significantly. >> rite. but they are always going to compare them at oil because they always extract energy costs from inflation it's going to be core that we're going to be comparing apples to apples. the core still stays very subdued. the thing about this that is interesting, when you look at qe policies across the world, you use japan as the key analog for everybody else, what happens there is a series of false hopes. where you have hope that the
economy recovers and it kind of just dampens and grows. so far we've seen the same thing in the u.s. you've not seen the growth that gives people confidence. i think we're in the same kind of trap for a couple more months here. >> we looked at the euro dollar range here. what's driving euro dollar more? the european side of things or now the fed is talking about raising the u.s. side of things? >> oh, no i think the euro trade is a pure dollar trade in most cases. and maybe 80% of the euro trade is just a whole dollar trade. the whole point of 2014 was a anti dollar move. i think we're sort of now in kind of a consolidation phase as we see this shift toward
tightening monetary policy is going to be real or not. if the data in the u.s. just doesn't show the kind of growth necessary for the fed to tighten rates. you can see it raise higher. it's really an anti dollar trade that's driving it at this point. >> that correction we've seen particularly in european assets when we talk about the german bond as well do you think it's corrected enough so far? >> the big question is going to be greece. at this point, the market is very complacent very san gien about the fact whatever happens to greece is really a nonevent. we really dent know. it looks like it's coming down to june. there is no money there. they cannot squeeze blood from a stone at this point. it's going to be very interesting and telling. if there is disruption if we get to a point which i think we'll get to where greece decides to spin out of the euro zone you really don't know what
happens to the european markets. you could have a massive spike in volatility there. >> we'll hit the pause button there. still to come here on "worldwide exchange," a top ge executive joins a chorus of critics saying the u.s. was wrong to sit out of the china-led asian investment bank. we have that interview after the short break.
the battle for time warner cable continues amitt reports that charter communications is locking horizon from france's altice over a takeover bid. charter which is bagged by john malone. the french firm has lined up financing from a number of banks to support a possible bid. shares in time warner cable rose over 3% on friday valuing the firm at $48.4 billion. shares are up 0.5%. ge says he's confident the company can wrap up the acquisition of al -- alstom quickly. joining me now is hadley. >> one of the things we heard from john is that despite all of the chaos they are willing to go
into countries like egypt, iraq and even into kurdistan as well. when i asked him how do you manage the business given this sort of uncertain political situation. he basically told me we operate beneath the politics but certainly in egyp we found a leadership that is really willing to work with us. that was quite interesting. i also asked him, what about this alstom deal when is it going to be done and is it going to be done in a timely manner? >> he said we're going to make a real priority to get this deal done and do whatever it takes to make it happen. >> it's been a long time since we announced the deal and frankly, the longer it takes, the more difficult it is on the people involved and really we would like it get this done as quickly as possible. we're confident that we can, and we think it will end up being one of the great deals in ge's history. >> clearly ge willing to make any concessions necessary to get that deal done and i also asked him, in terms of the support you are getting from the u.s. congress, from the obama
administration, do you feel like you have the same opportunities as chinese countries, russian companies, and i asked him what implications the current legislation have for their deals going forward. >> at one level, it doesn't worry me because i think we ought to be able to compete with chinese companies and anybody else that shows up in the markets where we're active but from a u.s. perspective, it worries me in the context of things like authorization, it doesn't make sense to me that the u.s. doesn't have an export credit agency. i don't understand it. i don't get it. i believe the u.s. should have participated in the asian infrastructure investment bank. that would have been a great opportunity to get in on the ground floor and be part of
something which is frankly needed. the world has a big shortfall on infrastructure. like a trillion dollars a year when you look at the mckenzie work and what others have done part of the reason the infrastructure is not being developed is because capital is not available where it needs to be. we got to do? stuff. >> is this the whitehouse or is it congress? >> i think it's congress. i think it's congress. i think that there are a few people in congress who believe in a world that speaks for smaller government. that's something like xm isn't necessary, if you take xm out, it generates a surplus. the debt goes up is it you stop xm. they make money. there's no reason not to have xm. >> the vice chairman of g. expressing some serious frustration with the u.s. congress and this is something we heard across the board whether we are talking about
investment opportunities or whether we are talking about geo politics. over a thousand big businessmen there in jordan. unfortunately for the united states there svent what we've seen in the forums is a big presence from the u.s. the secretary of state john kerry was not there. there was a willingness to hear more from the u.s. what more needs to be done unfortunately the u.s. doesn't appear to be at the table. general motors could reach a settle with the u.s. justice department by the end of summer and pay a fine north of $1 billion according to the detroit free press. this after "the new york times" revealed that the department found criminal wrongdoing in gm's delayed recall of ignition switches which led to over 100 deaths. legal sources told the free
press that gm's fine could outpace toyota's if the department finds executive guilty of a cover up. meanwhile, fiat chrysler ceo emailed gm mary barra on a merger which was rebuffed. let's remind you of the headlines at this hour. greece on the brink. athens warns it will not make a june imf payments without a debt deal. charter communications steps up a fight with altice for control of time warner cable. gm could be driving toward summer settlement with the justice department over a criminal probe. we'll be right back in a couple of minutes. d
it's the never-ending saga the greek situation. another set of flashes coming up in the last few minutes. a government spokesman for greece says that they will reach a deal with lenders within quote, a short period of time. saying also the government has a responsibility to pay all of its domestic and foreign obligations. the government is not looking into paying imf loan charges in june in one go however. it says. and they add there is no chance of imposing capital controls. this comes after reports over the weekend where greece once again warns that it could in fact default on its debts. slashing contrasting those flashes we just brought you. athens said they not do not have enough money to pay the imf. the money won't be given as it isn't there to give.
he claimed the eu and imf were pressurizing greece to make unacceptable concessions in the current bailout talks. now, aneta did speak to nobel prize winner christof pissarides. >> a default can be happen within the currency union, right? >> the problem is if it's properly regarded as default, in other words, if your bonds can no longer be accepted as bonds issued by a solvent authority, then the ecb cannot accept them as collateral and therefore can they cannot issue liquidity to greek banks. greek banks retire almost entirely on the emergency assistance of the european central bank.
if they are denied that liquidity assistance very well to find it other ways. they will go bankrupt. the liquidity from that scenario will have to come from internal sources, from the greek government. where do they find it to keep the banks going? it cannot. if it tries to issue a currency to provide that liquidity, it will be disaster. it will be the biggest hair cut that they have ever experienced and it will be borne by the citizens of the country. it's essential they do what is required from them to get the funding by ecb which is to come up with a credible program of reform. which they dont it yet. they have been in power up to five months now. the question is what have they been doing all this time. >> obviously, that is the obvious question. they are very optimistic coming from the comments coming out.
you could say it could be a good idea, is that right? >> no. what i was saying how will the currency work? would it be possible to get on working. for the reason that if say you issue a currency on power with the euro there's something that carries the guarantee of the greek government instead of the ecb and is worth one euro. as soon as you try and trade it. it's going to deappreciate. maybe 60% something like that. those who get it are suffering a 60% cut. those people who lend the greek government money, twu it will be the civil servants who work with the government. it will be those who have contracts with the greek government and then suddenly they find themselves getting half the money that they were
expecting from the government but we already have the biggest fall in wages in real earnings in the euro zone have been in grease. if you give another hit of 50%, the economy will simply collapse. >> let's get back out to boris. we touched on this previously earlier. on the over all, are the risks of a grexit sufficiently price into the markets at the moment? >> i don't think so. the markets are very complacent in a sense they think something will be resolved. i kind of agree with the market. i don't care that they want to take greece to the brink and effectively force a bankruptcy on greece despite all the tough talk. you know, the problem is it's much more political than it is economic. because the money involved is tiny. they could really write the check tomorrow. the issue is because the greeks have not committed the kind of reforms the europeans want to see, the germans are in the mood
they don't want to write a continuous blank check. even if the actual bankruptcy of greece is not a big event, economically, initially, it opens up a whole pandora's box. and the really big problem is italy which has a huge amounts of debt against its gdp and could be the next target of shorts once you open up the ideas. i don't think they want to take it to that point. the stubbornness and the political factor could create a much bigger crisis than needs to be happening right now. >> are there any protection trades that you look at in order to protect against a grexit? >> well, you know the natural trade obviously is the short euro trade because if you do have a situation where it starts moving toward a grexit --
actually, the short euro trade and the short euro pound trade, you are starting to see the euro pound come down a lot usa the british pound seems to get a lot of the safe haven harbor flows. >> let's talk about that ongoing debate in terms of equities versus bonds. we have seen bonds correct quite significantly over the last couple of months. which is your preference between the two assets classes at the moment? >> i'm sorry. what was the other class? >> and equities. >> oh, equities. in europe equities still remain i think a much more favored asset class because of qe. we have very good evidence that long periods of qe are very favorable toward the equity class and european equities were under valued to start out with. >> boris, thanks very much. stick with us for one final more light hearted comment if you
will. we've also been reporting that the first big week of summer of motor sport racing ends with a thrilling finish. nico rossberg wons the grand prix. later in the day, juan pablo montoya won his second indy 500 victory. on the tennis side roger federer got off to a good start at the french open easily winning his game on sunday. he was left miffed after a fan approached asking for a selfie. a fan also approached for an encore practice session self-ie. >> are you stick of selfies and boris, i wanted to get your take on this? are you a fan of the selfie or are you board of them now?
>> i'm board of them now. as an american we have a much i think, more paranoid higher sense of security. the fact that the fan was allowed to go on the court unend unencumbered unencumbered. his personal security needs to be protected. >> i think federer can do no wrong. he's a bit of a legend. on a personal level, i'm still a fan of the selfie. i have to say. sorry to admit it. thank you so much for joining us today. we're going to have a quick look at european markets before we go which are are the in the red. a thinly veiled today. a lot of red across the screen in terms of the markets that are open. that is all we've got time for today on "worldwide exchange." i'm wilfred frost. thanks so much for watching.
lemonis: hi, there i'm marcus. tonight on "the profit"... we head back to some of the business i've partnered with over the past year. -carolyn? -carolyn: i'm carolyn. -nice to meet you. -lemonis: when i make a deal i come in with a plan and a check. man: thank you, marcus. woman: i was gonna work you a little bit more. lemonis: [ chuckles ] but what happens after the cameras shut down... michael: i've let it slide for three freakin' years! lemonis: ...may surprise you. one struggling novelty sporting good company has been totally transformed. wow. look at this place. but the owner is still making the same sort of short-sighted decisions that nearly brought them to the brink. i'm pissed that you bought the printer. i'm not gonna lie. if you were me, would you stop putting money in this business? at unique spa in long island