tv Worldwide Exchange CNBC November 5, 2015 4:00am-5:01am EST
good thursday morning. welcome to worldwide exchange. i'm susan li. here are your headlines. the u.k. and the u.s. say there's significant evidence that a bomb possibly planted by isis brought down the russian plane in egypt. britain suspends flights sending shares lower today. >> adeco in the red sending it's shares down. they still remain positive. >> it doesn't affect the
financial position of our company it is a noncash event. >> janet yellen says there's a live possibility of a december rate hike as the french bank has offset volatility around central bank policy. >> based on the monetary policies regarding the fed, ecb i remain overall positive for 2016 in particular for the europe and equity asset class and especially if, as we think, we see a further improvement of the economy. >> british oil and gas services firm amec loses a fifth of its value after slashing it's dividend and increasing it's cost cutting. >> good to have you with us
today. let's kick off the program on break news on monetary policy since we have been listening in closely to janet yellen and her testimony on capitol hill yesterday. norway which surprised holding steady. so the norwegian central banks and key policy rate is unchanged or holding at three quarters of 1%. last time around they surprised the market by cutting interest rates. what are we looking at? strengthening back on the back of this and the central bank continues to say that their inflation expectations are in line with what they projected. all right. let's move on and taking a look at our top story today with the u.k. and u.s. authorities saying there is significant evidence that a bomb possibly planted by isis brought down the russian plane that crashed in egypt's sinai peninsula. british authorities suspended all flights. the aircraft's outbound destination on saturday. u.s. officials sources telling
nbc news that a bomb could have been planted aboard the plane by ground crew or baggage handlers. egypt and russia are leading the investigation into the crash which killed all 224 passengers on board the flight across the sinai peninsula. now nbc's bill nealy reports. >> for five days investigators searched the wreckage for clues. the cause a mystery. now evidence indicates it was likely a bomb. the suspicious it was placed on board by ground crews or baggage handlers and isis is responsible. it's a strong suspicion. not a conclusion and no evidence of a bomb has been found yet in the debris but it's a suspicion shared by britain. >> there's a significant possibility that that crash was called by an explosive device on board the aircraft.
>> britain is suspending all the flights to the airport where the plane took off. they won't say if it comes from the crash site or the flight data recorders and no one is ruling out the possibility of a technical fault on the plane. one hard piece of evidence, a u.s. satellite strongly suggesting an explosion. the heat flash detected at the time of the disaster can only have come from a catastrophic fault coming the fuel tank to explode or a bomb. russian doctors report the injuries of those in the back of the plane match an explosion. but the mere suspicious this was a bomb raises this disaster to a new level. >> we obviously have a strong desire to get to the bottom of what happened there. >> getting an explosive device on to the aircraft in this region is a real game changer for security. >> u.s. aircraft have long been warned away from this area.
faa advising airlines should avoid flying into or over the sinai peninsula. if it was a bomb, there will be evidence, explosive residue, fragments of a timer. no one has found it yet but there is growing concern. >> that was bill reporting for nbc news. back to the markets with shares in thomas cook which operates a number of flights between the u.s. and egypt trading down now. we're being sold down by 5%. in other news the odds of a december rate hike are as high as ever. this is after the testimony by the fed chair janet yellen yesterday saying that a move next month is still a possibility. >> the economy will continue to grow at a pace that is sufficient to generate further improvements in the labor market and to return inflation to our 2% target over the medium term
and if the incoming information supports that expectation, then our statement indicates that december would be a live possibility but importantly that we've made no decision about it. >> there's fed chair janet yellen. meantime, one u.s. lawmaker, probably have a different take on this and he is afraid that lift off next month could upset the man upstairs. >> god's plan is not for things to rise in the autumn. as a matter of fact that's why we call it fall. nor is it god's plan for things to rise in the winter through the snow. god's plan is that things rise in the spring. so if you want to be good with the almighty you might want to delay until may. >> congressman sherman as you heard there is a man of strong faith and more seriously went on to say that he's worried about
the risk fk the fed does hike too early and then has to return to zero, possibly cut interest rate ifs the economy slows down. but let's talk about the markets and joining me around the london desk, chief economist and co-chairman. so i assume you don't believe that the man upstairs thinks that we should be holding off on raising interest rates in 2015? >> i don't have a direct line to heaven but in any case, what i believe doesn't matter and what the gentleman in congress believes doesn't matter. what matters is janet yellen and her colleagues and i think the market is right to price in the highest probability of the rate hike in december since the end of the financial crisis. as yellen said, the economy looks like it's growing at a fairly descent pace. not sensational but descent. the soft batch observed in
september is probably over but the decisive event will be tomorrow morning when the u.s. payrolls come out. because if we get another weak one the rate cut will be deferred but the chances are in my view we'll get a strong u.s. payroll tomorrow. >> what's strong? 200,000? >> around 2000 or possibly 200 plus and also importantly some revisions to the previous two months which were very weak and looked to me and i think to a lot of people as if they may have been some kind of statistical aberration and the timing of labor day late this year or something like that. if we get an upward revision that will calm down the fears that china, for instance, was lowering the world economy. >> the fed has taken that out of their statements. no longer watching international markets or economies and i was watching that testimony live yesterday with janet yellen and when she said that, to me, it didn't sound different to what she has been saying all yearlong. >> well, i think if you look
very carefully or listen very carefully to janet yellen and most of her colleagues, what they have been saying has not been different. it's been consistent. what they have said is we're dependent on the data. if the data improved sufficiently we will start not to tighten but with draw accommodation. that's a very important difference. the fed is going to be running a very loose monetary policy two years from now and if the data gets weak they won't. it's the markets that have been in this kind of volatile and feverish state throughout the year. >> but then you have the big yield in the market. spiking to the highest since 2011 and then the currency moves as well. the highest against the euro in three months time. you sit tight and just a reminder for you. we have more coverage on monetary policy this time across the pond with the bank of england.
you want to join us at 12:30 cet time for decision time. nancy and i will be live ahead of the bank of england. bringing you the latest minutes as well as the inflation report. we have good guests ahead. you want to watch bob for one of goldman sachs. he'll be joining us on the program today. let's turn our attention to european markets and how the session is fairing. we did have a snapping of a winning streak yesterday in germany. finishing off thanks to volkswagen and porsche. we're still seeing declines and this is the carry over for what happened at wall street after the testimony from janet yellen. ftse 100 falling and the cac 40 in france continuing their winning ways. this could be five straight days of gains and seeing declines by a third. but let's talk about asia and what about china all of a sudden in bull market territory.
>> it's been a fantastic rebound. take a look at asia with the prospect of december being a live possibility. we saw more capital outflow in some of the markets, particularly here in southeast asia that did end in positive territory. notwithstanding that we did see significant weakness again in the currency markets and that's continuing to play out in the asian trading session here. pressurizing equity prices in these emerging markets. india down. we have it tetherred to the emerging market story because of the commodity plays listed here but the picture was slightly brighter. further north asia you go. we had a continuation in the rally in the shanghai composite up 0.19% and what a substantial recovery there and the nikkei 225 punching above 19,000. getting obviously continued
support by the on going robust trading of japan post heldings. we saw the previous trading session and the weakness of the japanese yen helping to boost those stocks. >> adam, thank you so much. let's bring it back here to the u.k. and check in on earnings with shares in amec foster, wheeler, plummeting as the oil and gas services company is slashing it's dividend in half. they confirmed margins would be lower than in the first and expects an extended period of weakness. joining us on the line we have the cfo ian mchoul on the program today. thank you for taking time-out on your busy day. i'm just wondering, people were talking about the share, the fall in oil prices and how companies like yours will be suffering. do you anticipate that we're going to see the sustained, i guess, pressure on oil pricing
going forward? >> that is our assumption. we spend a lot of time talking to our customers bias to oil and gas. we see their behaviors that it's appropriate to plan for lower for longer or lower for even longer. i'd love to be able to sit here today and talk to you about an anticipated bounce in hydro carbon pricing. that's not what we're anticipating and not what we're planning for and that's why we have taken the actions we've taken today. >> slicing your final dividend in half and reporting prurs on the top and the bottom lines. are you surprised by the big hit that your shares are taking today? >> well, particularly in the
u.k. market any cut to dividend is always very poorly received but i think it's for the long-term security of the business. we have also announced today restructuring internally. over and above the cost of plans we're already anticipating. we announced a view across the business to focus on stronger performing assets and exits. those performing more weakly so i think this is about setting the business up for stability to be well positioned for growth in the longer term when that hydrocarbon pricing restoration comes even though i expect that
to be some time away. >> i'm surprised that you still sound so optimistic. you'd have to be. because along side the dividend cut even with cost savings forecast to be $188 million you're saying margins will come under pressure and there isn't much visibility. can you give us a sense as to how bad it is when it comes to your industry? especially in the energy deals? >> well there's a couple of points. in the oil and gas market pricing was $100 plus and now it's half of that. so that clearly leads to reduction and it leads to them pushing down on their supply chain and hence there is pricing pressure. we also have the diverse business. we're active in solar in wind in nuclear, in mining. swoe have a diverse business and
widespread so there's pockets of strength so we're looking at revenue stability and growth going forward but what we're seeing is a push down on our pricing. that has lead us today to some margin erosion which we are upsetting to some degree as i say by cost reduction and to your point, i don't think i'm feeling optimistic today but we have a job to do and our job is to put this in a position and thrive and prosper in the long-term. that's what we intend to do. >> i want to thank you for taking time-out on a busy day for you. ian mchoul. we'll go to break here. but still to come, a bright spot amid a cloudy sector. find out how they're bucking the trend with better than expected earnings. that comes your way, next.
results for us. >> good morning to you susan. shares getting hit pretty hard today on a couple of reasons. first of all, very cautious guidance. second of all, the cut in the outlook they can no longer achieve that 5.5% margin target and most importantly the fact that we saw the surprise impairment to the tune of 740 million euros. why did we see all of that? we have new management coming in. i did get a chance to speak to the ceo this morning. take a listen. >> the figures that you're seeing today is 714 million euro. it doesn't affect the financial position. it doesn't affect also all t dividend policy as it is a non-cash event. >> in terms of the goodwill impairments or do you see more down the track? >> we're cautiously optimistic about the development of the
different economies and that's what we have also said in our outlook. we will deliver 5.2% in 2015. a very strong profitability and we're kauscaution. >> they're still seeing fairly sluggish growth for only around 1% or so. 13% growth in spain. actually quite surprising. but overall big disappointment for investors today and shares off sharply on the swiss exchange. back to you. >> thank you so much. let's talk about earnings from the banking side. trading sharply higher today after reporting a 2.4% increase in it's net income in the third
quarter. speaking to cnbc, the ceo saying that he remains bullish on his european business. >> yes, first of all, we think that the economies are moving forward progressively, moderately but definitely and we expect this to be the case for 2016. it is true for france in particular. but may i say, beyond this general environment, i think we collect the benefits of all the hard work to put the right business models. when i look at our number of new clients it is at a historically high level. we conquer clients with business models such as the new private banking one which is very effective. we also have joint ventures. so i think that we also have a particularly strong dynamic in terms of commercial activity. that translates in good deposits
in increase of debt reduction and margin interest as the fees. as i said we have a good monitoring of risk and strong increase in profits. i think it reflects the dynamic of our business. >> on the flip side in france, they're trading sharply lower today after seeing that it's plan announced over a year ago to simplify the group structure is unachievable, at least in the short-term. plus the french lender also posted a decline in third quarter revenue. let's talk about the world banking and joining us is many the manager partner. chief economist and co-chairman. you know, this world banking is still tough as we know. we have known that for awhile but these french lenders outperform expectations in the quarter. >> it's doing okay. but the reality is the european
banks even if they are able to improve on their revenue at the group level they are essentially laiden with their capital market operation which is is not performing as well as it used to. the main reason is a loss or decrease in revenue and profit. >> right. so credit i recall when you look at their numbers the strength is coming from the retail banking side. >> always been. >> always has been, right. but a lot of banks are switching more to focus on retail, for instance, you know, for instance here in the u.k., barclays and the like. is that the future? banking should be boring as we heard in 2008? >> it's not just about switching to retail. essentially the banks are shifting from setting assets, managing risks for their clients or on their own behalf to becoming service providers. in a sense, yes, it's becoming more boring. actually it's becoming more normal.
if you want to make descent returns or profit you need to provide a good service. >> deutsche bank is switching to a retail focus. >> they're decreasing their global ambitions. >> okay. >> yeah. >> so now you're saying that european banks are reporting pretty much in line with what the u.s. banks are doing. would you agree with that? some have said that the u.s. banks took their pain earlier on. they paid their fines and deleverage and cut the riskier business and now it's the turn for the european side. >> that's the case. they have a massive amount of loss on this quarter. regulatory fines are yet to be paid up. a lot of them have been paid recently. >> and recent cash. that's what credit suisse is doing and what stand chart is doing with their rights issue. out of the bunch is there one
that stands out more than others if you had to pick pockets of strength? >> what is true though is in terms of global presence and the ability to provide the product and services across the world, the american banks have got it today. what you see is effectively the former global european banks retrenching on the domestic markets and activities. >> that is so strange to me that the u.s. banks might be in a pocket of strength. >> well, relative to the european banks on the global scale a agree the european banks are deglobalizing and that's leaving only a handfull of global fairs really.
>> but as you said earlier it's time for the european banks to turn. the european banks have cleaned up and what that indicates is a broader lesson that over the next year or so european economies are going to be the ones that surprise on the upside in the way that the american economy did three or four years ago and i think what we heard about the credit growth and the development of the retail side of the bank i don't know what it will do but the fact that they're providing more credit for small business and the consumer sector is a very important forward indicator of the european recovery really gathering pace. >> thank you. we're going to thank also frederick for your time. good seeing you today. he's going to stay with us for some closing thoughts. let's get back to earnings and we have to talk about the world's largest car maker. fast lane profits for toyota.
britain suspends flights. new friends on wall street after stronger ad shares send shares in the social media giant up to an all time high. adecco is in the red today after a surprise loss. the ceo telling cnbc he still remains positive. >> the figures you're seeing today is 714 million euro. it doesn't effect the financial position or all dividend policy as it is a non-cash event. >> meantime, janet yellen says there's a live possibility of a december rate hike as the ceo tells cnbc that the french bank has already offset volatility around central bank policy. >> based on the monetary policy regarding the fed, ecb, i remain overall positive for 2016. in particular for the europe and equity asset class and
especially, as we think, we see a further improvement of the economy. >> let's get the latest on the downing of the metro jet plane over the egyptian peninsula and we're hearing from the kremlin in reaction to the u.k.'s decision to suspend all flights to and from there. the kremlin saying this is london's sovereign decision and any theories about causes of the russian plane crash in egypt are still speculation at this stage in their view. they go on to say they hope any information about the cause in this crash to be handed over to investigators and russian planes are continuing to fly to and from there in egypt. the kremlin says there's no grounds yet to name any definitive cause of this plane crash and they have to wait for investigators to continue their probe. let's get the very latest with the u.k. and the u.s. saying
there is now in their view significant evidence that a bomb, possibly planted by isis brought down the russian plane that crashed in egypt's sinai peninsula. nbc's tracie potts joins us from washington d.c. with the latest. >> good morning, yeah, both the u.s. and great britain are saying this is a significant possibility. it is something that the investigators are look at very closely. officials say intercepted communications at that airport. there is a theory, a belief, and i emphasize theory at this point because it is not confirmed that a baggage handler at the egypt airport where the plane took off may have placed a bomb on board. also u.s. satellites detected a heat flash in the area where that plane was last known to be but that could also still indicate that it was something mechanical. so it's not confirmed but it's raising new concerns about isis terrorism. particularly not isis that's based in syria but isis, a separate wing of isis in the
sinai peninsula. they claimed responsibility saying they will provide more details about what happened. new video now coming out of just afterwa afterward. britain suspended the flights. russia thinks that's premature. egypt thinks that's premature. they have the black boxes. one of the flight data recorders they have gotten information off of that. the cockpit voice recorder was damaged so they'll still be looking at that. still a very active investigation and later this afternoon they're expecting to wrap up the search on the ground for any remains. >> let's bring it back here to london to talk through this situation. the senior associate joins us. this is unprecedented for the u.k. intervention by another government. basically, in an air crash investigation that is on going with the lead investigator and countries being egypt right now and russia.
they both haven't concluded there's been a bomb as part of this. >> that word bomb is the last word that the russian government wants people to be saying now. they don't want this human tragedy to turn into a geo political strategies for the middle east. so far the intervention in syria has been cost free for russia. we hadnly like one reported soldier death, possibly a suicide. the russian public opinion is behind the war so the government has gone on an offensive. offense being the best defense for putin for quite sometime now to paint the opposition or the speculation that this might be a terrorism to paint it as a plot to discredit it's operations in syria. >> okay. i believe isis, one faction of isis has raised their hand saying that they are behind the downing of the metro yet
airliner which is the worst disaster in russian history right now. but we have been hearing there are no grounds yet for them to say that the plane crash was caused by an act of terrorism. do you believe them? >> it needs to be said there has not been an official conclusion about what caused this plane. it's too early to speculate. we know the russian government tried it's best to draw attention away from speculation that it might be a bomb. the first thing it did was after the plane crashed they launched this very serious investigation into the airline. there was a lot of reports that there was technical difficulties and all sorts of things and petitions launched to investigate the airline. this didn't gain much traction so now we're hearing from putin's spokesman that said, this is two different dimensions. terrorism and this crash and let's not link them together.
he said point blank there's a geo political plot to put psychological pressure on russia by linking the crash of the plane to its operations in syria. >> let's talk about the russian approach in syria. i'm wondering if this changes it if isis is putting their hand up saying this is something that we perpetrated. wouldn't you say that the russian involvement in syria hasn't been targeting isis this far? >> this has been a retorte that the last people that russia is bombing are the ones they have reported to be going into bomb but isis is one of the groups fighting assad and russia's interest in syria. so i don't think we can say that russia is protecting isis in
syria. i think they have an equal opportunity approach to critics and enemies of the regime. >> but i'm wondering if this forces russia to retrench or does this motivate russia to add more forces and more, you know, resources to the fight in syria? >> well, this is the big question and so far russia has a tremendous amount of pain over the last two years since the beginning of the crisis. we can think of the syria issue as tied to the u. crane crisis. how does it fit with america and how does it fit with the western powers? and so far russian people have bore this pain surprisingly well. the sanctions, the fall of the ruble. there's been a resilience in public opinion but when it comes to human lives and actual
deaths, yes there is a question, how much more can the russian people tolerate before the government sees blow back. >> okay. thank you so much for coming in today. getting back to the markets and the world's largest car maker toyota posting a 26% jump in second quarter operating profits thanks to cost cutting and a weaker currency. the japanese yen. the world's leading car maker cut it's revenue over concerns of a slow down taking place in emerging markets. astra zeneca raising profits. they meantime posted third quarter earnings in line with the market expectations as it contends with increasing competition so it's key heart burn drug nexium and also the strong u.s. dollar. adidas raising it's top and
bottom line forecast. sales rising 18% in q-3 outpacing strong demand for its adidas and rebok brands. they're cutting 14% of staff and it's golf division to maintain sustainability going forward. you want to stay tuned because we'll be joined by the ceo at 12:35 cet and that's in our special decision time program today coming your way. >> morrisons is in the red after posting a drop in underlying sales in the third quarter amidst intense price competition among the major supermarkets. they're under pressure from food price deflation and the low cost german discounters coming into the market. so it's been pretty shaky all around among the big four. it's super thursday over at the bank of england.
the boe with investors. it could boost call for a rate rise before the middle of next year. they're voting for an immediate hike in interest rates. they may be joined by the other hawkish members later on today. let's get a preview and joining us is the senior u.k. economist. still with us is the chief economist and co-chairman. your call today. >> it's unlikely we'll see anything in terms of a rate change today. i think we're really looking for information which tells us when the bank of england might be ready to raise rates. so i think we'll probably see there's been some speculation that it could happen from a policy perspective, that's maybe a step too far. the markets have certainly moved in favor of bringing the rate hike expectation forward.
we have seen strength in sterling. yields have been picking up the last few days so the bank of england are in no rush. let's put it that way. >> as opposed to, what, the fed and janet yellen that might be doing it next month? >> we won't see a bank of england rate before the end of 2015. actually i'm quite early in terms of the range. i think february is likely for the rate hike but i don't think the bank of england need four months to prepare markets and markets are preparing themselves at the moment and that will do more for expectations than anything that happens. >> what do you think? >> actually i was going to make the same point. i think the most important question for rates is what the fed does in december. i think the u.s. payrolls are much more important for british interest rates than anything that happens in britain because there is no way that the bank of england was ever going to move
before this despite the fact that the two issues were lengthened. if the fed does move in december which i think they will, then i agree with him that the bank of england will want to start massaging market expectations. but you should note that market expectations are still incredibly -- well, very, very dovish in the u.k. about november, december, 2016. i think they will want to bring them forward. i wouldn't be quite as aggressive in expecting february because i think of the strength of the pound and the weakening of the manufacturing sector. but the middle of next year. >> middle of next year seems realistic to you? we are expecting that inflation report and i would agree that the markets have been a little dovish because there isn't the data to motivate the bank to do something but inflation numbers
today might change that scenario. >> look, the market has been too dovish on the bank of england for a long time. the market doesn't really understand where the u.k. economy is in a cyclical perspective. so the bank of england can only obtain anything. on the up tick. when you achieve that, i mean unemployment at 5%, wage growth at 3%. trend rates of gdp growth and inflation growing toward the 2% target. then the bank of england says it's time to raise rates. the markets played chicken and said we beat you'll keep rates low for a long time and now we have good data through and we say okay maybe that was a wrong bet to take. >> i got ten seconds but the sterling has it priced in in a february -- >> not just yet. >> where should we be trading if that is going to happen? >> hard to say. let's see what happens today and see what happens with the fed in december. >> let's just say higher. >> okay. >> we'll make that very broad. good seeing you today.
thank you for sharing your time today. decision time is coming your way. 12:30 cet we'll be all across the rate decision. we'll get you the inflation report and so much more. nancy will be joining me and we'll get through it. we're going to go to break but coming up on the program, sir elton john launching a new partnership with the u.s. to help lgbt people in africa. and he revealed he might turn to an unusual person for help in changing antigay laws. >> these laws come from the common wealth. these laws can be changed very easily by the queen saying change the law. i haven't approach that yet. >> will you be? >> yeah, well, if the worse comes to worse, one has to, yeah. these are old laws from the british common wealth and they need to be changed. so the queen could do that with
sharp jump in it's costs. revenue rising 41% to $4.5 billion. facebook has 1.55 billion monthly active users. apps like instagram are accounting for more than one in every five minutes that people spend on their mobile devices in the u.s. >> we're feeling pleased with our add business and strength of advertiser demand. going into the holiday season we know how important this season is for clients and what we work on with them is focussing on business results. we want to be the best dollar and the best minute they spend on adds that we can drive the highest roi and we want to measure it not just with the traditional add me tricks but moving products off shelves. cars off lots. >> facebook stock rising 4% in after hours hitting an all time high. that means it's market cap,
facebook's market cap briefly topping $300 billion and we're looking at gains in german trade today for facebook shares up some 4.5%. she has more from the web summit taking place in tublin ireland. >> facebook shared a lot of big earnings in it's release. it has a billion people a day using facebook accounts. it added 60 million extra users in the quarter. compare that to the likes of twitter. i spoke to some industry peers to see how they view facebook. >> facebook is actually not as well used as twitter at the moment. i see it more as sort of older people using facebook. there's a lot of noise on facebook. >> facebook is the easiest way to keep in touch with anyone around. it's probably the easiest way to
advertise and reach out to people interested in what you're doing. that's through your friends as well as people you might not know. >> i love facebook. i'm on it every day. nothing but positive reviews. i have no complaints. >> how many hours a day would you spend on facebook? >> probably 2. >> what do i think of facebook? i think it was a very smart idea. honestly not much else to say other than that. >> more eye balls is giving facebook an age with advertisers so it can charge more for the ads and serve up more video ads to users. interestingly enough the information voluntarily giving facebook could be the future for the company. it's investing money in artificial intelligence to mine our photos. this could be a problem for rivals such as google if facebook can own the social search. i spoke to google's director about the challenge their
facing. >> it's true. everyone benefits and the users benefit most of all. assistance is almost like where the web was in '90, '93. so there will be a lot of innovation in the space but from our perspective one of the things we're starting to think about in terms of how do you tap into it so i'm a mom of a 7-year-old son and i'm researching summer camps, it's an ordeal and it to benefit from all of those folks that have done the research and searched on google. so for example, google now should proactively tell me, hey, here's when you should start looking at summer camps. here's the best karate camps and art and craft camps, based on the wisdom of crowds. >> cost and expenses grew 68% in the quarter outpacing revenue as facebook spent up on what's app
social messaging and artificial intelligence and virtual reality. i had a demonstration of oculus. it is an experience. these platforms can be slow to develop but it may be like the launch of the smartphones in 2003 where just a few hundred thousand of the devices are sold first up but it does raise questions, what type of launch will facebook have? will it be a soft launch? a big budget? where will the devices sell and how much fall? keep in mind this is the first major hardware launch for facebook. >> zurich insurance is trading higher after saying it doesn't expect to meet it's financial targets. it does expect to meet it's targets despite a sharp drop in the 3rd quarter profit. carolyn roth joins us and has been all across a lot of earnings today. you have been very busy haven't you? >> absolutely. let's get back to zurich
insurance. we were expecting a substantial drop to the tune of 80% for the third quarter. why? this company preannounced a couple of weeks ago. that's when they said they're expecting a $200 million operating loss for its struggling general insurance business. primarily because the blast in china a couple of months ago and that's why, susan, they also walked away from the 8.8 billion dollar rsa bid. so the question going forward is how much visibility does the company have for that general insurance business. >> we're in a tough cycle for the entire industry currently. but as you can see, that portfolio is significantly underperforming. it's not a question of chasing rate to try to chase volume. we need to resize the portfolio. we'll trade market share for profitability next year. >> that was the cfo speaking to me earlier. he also told me there will be no change in the company's dividend policy currently with a high
payout ratio of 66% and they're going to guide for a confirmation of their financial targets. 12% return on equity is what they're currently looking at. back to you. >> carolyn, thank you so much. carolyn in zurich. let's talk about sir elton john. his aids foundation launched a $10 million partnership with the u.s. to help people in africa. speaking along side his partner he had a message for the world's business leaders and one political leader in particular. >> embrace the lgbt employees. we have a happier work place. if you don't embrace the lbgt community then you're going to have an unhappy work force. any business that treats it's employees well and has a feeling of inclusiveness and good will
you'll get better products because everyone is work in a happier environment. >> and there's now actually evidence that's been done that companies that embrace lgbt employees perform better. you attract better talent and those companies that work in the countries where it's illegal can be gay can have a safe haven where people are not going to be persecuted and work productively and the companies benefit themselves. >> did you have a productive conversation with president putin when you finally did talk to him. >> i have talked to him on the telephone. we're trying to arrange a date where i can go to moscow and talk to him. i feel very honored that he wants to see me and he put the olive branch out and it's essential that i do go over there and put my foot in the water and see what we can do to change the situation for lgbt people in russia. which even though the russians say it's great, it's not great at all. but, you know, as i say, i want
to try and knock the wall down a little bit. so i will be trying to go and see him. he was very pleasant on the phone. he apologized for the fake interview i did. i was very, very impressed. >> elton john. let's leave you with a look at u.s. futures since we're looking forward to the wall street open and the big three indices you see across your screen there. still on pace for the 6th positive week in a row. the implied open telling us we'll be higher. we're heading into the second hour of worldwide exchange. stay with us.