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tv   Worldwide Exchange  CNBC  February 29, 2016 5:00am-6:01am EST

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good morning. breaking overnight -- a selloff in asia. chinese shares plunging to 15-month lows. and good as gold. the precious metal is on track for its best month in four years as investors seek a safe haven. and hollywood's big night. "spotlight" wins best picture. and leo finally gets his oscar. it's monday, february 29th. "worldwide exchange" starts right now. good morning, welcome to "worldwide exchange" here on cnbc. i'm sara eisen. >> and i'm wilfred frost.
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our stop story, markets under pressure. they're taking a lead from what's happening around the world and that is declines. the dow caught to open at 100 points low. 94 to be exact. s&p by 10 points. >> lots of red overnight. china devalued its currency for a fifth day in a row. a lot of folks pointing to that, the shanghai composite down 2.8% in shenzhen. and another index over there, even stronger down 5%. hang seng in hong kong down 1.3%. and nikkei down a percent. let's show you what's happened in europe, beginning the trading week on a lower note, with the dax in germany down more than 1%. it's sort of a risk opt day. buying the yen and selling stocks around the world. >> let's dive into the asian market. sri jegarajah joins us from
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singapore. >> good to see you. the chinese markets once again in the cross hairs of the selling pressure. shanghai composite. a couple of factors pressuring stocks. nothing concrete drawing a line under the global economic slowdown from the g of the 20 in shanghai. we continue to see depreciation in currency. a new dynamic is that we're seeing strength in the housing market. that's creating consequences in the stock market because it's siphon something of the credibility away from the main. that's the reason we have the declines. we did bounce off the worst levels of the day we were down by over 4% at one point during the session. china's going to remain in focus, wilf. so this week, because we have the manufacturing activity surveys from the private forecasters and the official number from the national bureau of statistics. that's going to be the next
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test. back to you now. >> sri jegarajah, thank you for that. fred newman the head of co-asia research at hsbc joins us. we'll dive into all things china with him. oil not sliding too significantly. wti is down .6%. brent is in fact up .6%. we are looking at 32.6 for wti. treasury note, not too much movement over the last week or so despite quite a bit of volatility. we've been in and around 1.5%. >> should tell you that wti last week closed up 10.6%. the best week since august. and the british pound which keeps getting hammered continues 138. we're going to wait until 1.45
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before we take it on the road. below 1.10. it's a strong dollar against the euro and pound but not against the yen which has really happened when you've had these global risk opt days buying of the yen and treasuries, selling oil, selling stocks. you're seeing it again today, 113.09. the gdp got together and reaffirmed their commitment. but they didn't take any action. gold, quickly, having its best month in a long time. in years after february. the tickup in gold. a clean winner by far. now higher by 1%. >> interesting the story last week was one of volatility. we did end the week in slight gains and we're on track for slight gains in february. in the day, the moves were massive. 300, 200-point moves for the dow was the order of the week. you mentioned oil up 10% for the
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week but still only at 33. it just shows the percentage moves have been so big now but because we're from such a much lower level. and these kind of swings in china becoming very much the low. >> and the positive month for the s&p and the dow the question is can it continue? it's been a fragile rally. a little better economic data in the u.s. nonrecession-type economic data. it's not that earnings gave us news. at least the guidance pointed to not so robust first quarter. economic data is going to be interesting and a lot this week. >> fragile and volatility hiding underneath. this week chockful of economic data. today, though, look for pending home sales. tuesday we'll get the
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manufacturing index. and wednesday, february adp report and beige book plus they look for labor costs and friday, it's the biggie, the february non-farm payrolls report. lots of domestic data in the u.s. >> i think thursday is going to be a big one with that services sector. with manufacturing this morning, it got worrisome when we started to see the slowdown and momentum of services. in terms of corporate news, valeant ceo mike michael pearson will be returning from medical leave immediately. warren buffett's berkshire hathaway's profits rising by more than 30%. on the programming note, warren buffett joining the "squawk box" team live for three hours starting at 6:00 a.m. today. he'll be answering your
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questions. submit using the #askwarren. make sure you don't miss that. get involved. ask him some questions. i just want to bring you a head line that just happened moments ago, the people's bank of china cutting its reserve by 0.5%. this is easing effort. china's way of lowering interest rates, responding to what has been happening in the chinese market and chinese economy. pay lot of people expected china to start doing this, remember, they're just coming aue ing off meeting which they hosted themselves, they need to look like they're on top of it. >> absolutely. the chinese government saying we're not going to surprise people and there are more levers that we can pull. he's pulling one of them right now. perfect timing to have fred newman on the show in half an
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hour's time. >> and if it's having any soothing effect, generally, when china does the policy, you do see a bounce in commodities, sigh a bounce in equities. it looks like s&p futures are under pressure. >> dow was down about 80 points a few moments ago. off the lows of the day. >> we'll keep an eye on that, we'll talk to fred newman about. and jpmorgan fired two over compliance. they left the bank in january but the reasons for their departure were not initially disclosed. >> the oscars in the books with a mix of expected and unexpected winners as nbc's jennifer bjorklund reports. hollywood's biggest night had enough to win the biggest trophy from the nominations to an upset to the top award. >> spotlight! >> reporter: the title described the moment. the newspaper drama spotlight
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the center of attention. a surprise oscar winner for best picture. >> this film gave a voice to survivors. and this oscar amplifies that voice. >> reporter: the best picture faced the revenant still won big. best director for alejandro inninna ruutu for the second year in a row. >> i do not take tonight for granted. >> reporter: best actress went to "room's" brie larson. >> thank you to the fans. thank you for moviegoers. >> reporter: bridge of spies mark rhode island pulled offan upset. >> if you ever wondered acting with top hanks would it help,
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the answer is yes. >> reporter: and mad mex taking six overall. and protesters profited the lack of diversity. >> otherwise known as the white people's choice awards. >> reporter: jennifer bjorklund, nbc news, hollywood. >> the golden statue at the academy awards reportedly costing less than $1,000. the swag bags are worth upwards of $220,000. but an oscar nod can be much more than when it comes to boosting numbers at the box office. landen dowdy joins us. >> it's called the oscar effect. there's nothing like an academy award nomination to assure moviegoers that a film is worth seeing, despite the best picture, refusen pant that
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grossed $54 million before the nomination and jumped to $116 million post nomination. and here's contributing factors according to oscar effect, how many weeks a film's been in theaters and if a film is strategically planned to maximize oscar buzz. people catch up in theaters. take in "room" brought in $650,000 this weekend. it's already been in theaters for 20 weeks. we talk about the money behind the movies. we have to talk about the dresses. did you guys have a dirt best dress, wilf, i'm sure you have something to contribute. >> tangerine. >> i did like chris rock's white tux, though. >> it was a bold move. black and white. >> there you go. >> what about you, landon.
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>> i got to say charlize theron. she's a classic. and still to come, john chambers joins us on the set next. ♪ mom knows it needs a big solution: an antiviral. don't kid around with the flu, call your doctor within the first 48 hours of symptoms and ask about prescription tamiflu. attack the flu virus at its source with tamiflu, an antiviral that helps stop it from spreading in the body. tamiflu in liquid form is fda approved to treat the flu in people two weeks of age and older whose flu symptoms started within the last two days. before taking tamiflu tell your doctor if you're pregnant, nursing, have serious health conditions, or take other medicines. if you develop an allergic reaction, a severe rash, or signs of unusual behavior, stop taking tamiflu and call your doctor immediately. children and adolescents in particular may be at an increased risk
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about 65 points. >> though, china did just come in and cut reserve ratio requirements to try to ease some of the pressure on its markets. among the headlines out this weekend, g-20 meetings in shanghai. the u.s. backing finance minister george osborne on his move to approve the dangers on the economy. jack lew warning that a brexit would harm the u.s. joining us in the studio, happy to welcome john chambers ahead of sovereign ratings at standard & poor's. what is the risk for the credit rate for a brexit? >> well it would be detrimental. we don't think a brexit will happen but increasing in probably. it could lead to a downgrade, by one notch. the uk is running a large
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current account deficit, and perhaps even more significant, its overall external indebtedness is about eight times gdp. so that is one of the reasons i think that the pound is sold off, as investors begin to focus on that. and it could lead to quite a lot of pressure on the foreign exchange. you know, to finance that current account deficit that has been traditionally partly funded by foreign direct investment, most of that goes into city. if you had brexit, i don't think you'd have much more investment into financial services in uk. >> let's touch on that probability, as you said, the probability is increasing. we saw a response last week on sterling off the back of that, 3.5% decline often the u.s. dollar last week. what has changed? >> boris johnson say big factor on that. and the package that cameron got from this counterparties perhaps
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was disappointing in the minds of the population. >> when we look at that deal, clearly that's deal that for that along that line determines of british membership if they determine to remain in the eu. do you know what it is if they decide to leave? >> in greenland, in 1995, it's never been done, and i'm not quite sure that the uk will have the upper hand in those negotiations. >> what would be the ratings impact on the financial services sector of the uk? >> well, that would be for our colleagues in the financial services to determine. but, again, you would have, i think, important dislocations in the uk economy that would vee reverberate within. there's a couple to keep in mind, one is the eu itself. it is say rated entity. 2 does have a large balance
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sheet. it issues a lot of debt. the uk is one of the largest debt contributors of course it's a highly rated debt contributor so if the uk would withdraw, that eu rating could come under pressure. the other is the european investment bank. they've never had a shareholder withdrawal. if they did, that could affect their rating. >> we saw jack lew mentioning this weekend, it got high status at the g-20, is that surprising for the u.s. deciding it's a relevant factor? or is that grand standing, jack lew doing that for his pals george osborne and david cameron or something that could help the u.s. economy? >> well, the uk is currently the fifth largest in the world with current exchange rates if they have a major dislocation, that is going to hurt the u.s. on the economy and the political settings. we've enjoyed 60 years of a very substantial europe if you compare it to the 60 years that
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came before it. and if the uk were to pull out 0 of the eu that, i think, could destabilize europe. >> talk about stabilization and politics. what about the jus tu.s.? last time you downgraded the u.s. how much of that u.s. credit rating at risk? >> we have a number of candidates from a spectrum of viewpoints and a spectrum of experience. i think it's still fairly early in the election. i think once we get past the primaries, we'll have the clearer choice and opinions and policies will move towards the center. >> which of the candidates that are still in the headlights would be worst for this? >> i'm not sure i want to be drawn on that subject. but certainly experience and orthodox economic policy would be good for the u.s. rating. >> fair enough, john. very diplomatic for you. john chambers joining to us
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talk. still to come here on "worldwide exchange" just a day from super tuesday. donald trump fending off attacks from marco rubio and ted cruz. hillary clinton with a big win. first, as we head to break, here's a forecast from the weather channel's jen carfagno. >> hey, sara and wilfred, after the weekend, still the spring fever. we've got a clipper system on the move from the midwest to the northeast. going to bring a few rain showers. not a huge rainmaker, nonetheless, wet roads out there. southeast stays dry for another day. then we're looking for temperatures warm today but big changing coming later this week. nearly 80 in dallas. 70 in atlanta. out of warm air coming in ahead of the next storm system. it will also bring cooler air and signs of that coming into the dakotas, minnesota, with temperatures only in the 20s. that's the latest forecast coast
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to coast. i'm meteorologist jen carfagno for weather channel. "worldwide exchange" continues after this.
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welcome back to "worldwide exchange." if you're just waking up, let's get you up to speed. this morning, a selloff in u.s. futures. dow futures heading south again, down 73 points. s&p down 9, nasdaq down 28. a sharp selloff specifically in china where the pboc, people's bank of china, let its currency
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devalue for the third week in a row. there's some concern, but also in the lasting moments here, people's bank of china cut the reserve ratio requirement by half a percent. some relief in futures. >> only slightly, just a triple arc as opposed to anything more meaningful. the central bank, then, of course, over the weekend that he had lots of levers left to pull. certainly, that's what he's trying to convince them of. in political news, a busy weekend and one day left of campaigning before super tuesday. nbc's tracie potts joins us from washington with latest. tracie, which state are you watching close jeflt. >> well, all 12 of them, really. texas is going to be a big one because they have so many delegates to award. several. southern states could give us some sense where the race is going but for some of these candidates, democrat or republican, it could be a make or break day as they try to catch up with the front-runners.
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>> reporter: donald trump heads into super tuesday with his first senate endorsement, alabama senator jeff sessions. >> i hate to say it, i'm becoming mainstream. >> reporter: with trump leading every super tuesday state except texas, his opponents are coming hard. >> friends do not let friends vote for con men. >> you don't do that. >> reporter: ted cruz is leading his home state, texas and slamming trump for not condemning support from the former head of the ku klux klan. >> we should all be united in saying that the klan is reprehensive and has no place in politics. >> reporter: hillary clinton is looking good coming off the huge win in south carolina. >> well we got december sim mated, that's what happen. >> i need your help to win the democratic nomination. >> reporter: clinton is leading nearly 2 to 1 in key state, focused on trump. >> i don't think in a campaign
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you make wild promises you insult everybody, then people wonder well, what does that person really stand for? >> but clinton could have some problems of her own. one day before super tuesday, today, the state department is supposed to release the relevant of her e-mails. >> we'll be watching that, tracie, just on the republican slugfest which is the campaign right now, any indication that the rubio, cruz new found stronger attacks on trump are working? when are we going to get the new polls after the weekend and after that debate where they really went after him? >> yeah, after super tuesday, also, we may get some going into this, but after super tuesday, what we're really going to see are the polls that matter. what the voters think about all of that. is the, you know, tougher nastier attacks on donald trump -- are they going to back fib fire on marco rubio and ted cruz or have impact?
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the polls are telling us one thing but what happens when the voters make their decisions is really the most important measure of that. >> absolutely. >> tracie, great many thanks as ever for joining us. it brings us on to our facebook or twitter question. who had the best weekend, hillary clinton, steph curry or leo dicaprio, we branched out from particular politics. >> because they all had amazing weekends. >> i still think not just because i'm a bit of a geek, it's hillary clinton. >> you did not see steph curry. you did not see the end of that game. >> you would have said steph curry either way. >> no, it was especially good. >> well done to leo as well. get in touch with us. still ahead on "worldwide exchange," this morning's top stories we get a preview and pulse check on the economy with anthony chan from chase. you're watching "worldwide exchange" on cnbc. g company arod
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nervousness. it's monday, february 29th, 2016, you're watching "worldwide exchange" on cnbc. ♪ i've been waiting for this moment it's gonna ♪ good morning, welcome to "worldwide exchange," on cnbc. happy leap day. i'm sara eisen. >> and i'm wilfred frost. a very good morning to you. let's take a look at the global markets. we're looking at red right now off the lows of the session. back towards in fact down 87 points lower for the dow. the s&p lower by 10. nasdaq by 33. a lot of this being influenced by what's happening around the rest of the world. europe is looking soft this morning, particularly the dax which is down to the tune of 1.5%. inflation data earlier today was a little disappointing. red across all of the screen as you can see, mostly this was influenced by asian trade china. soft. shenzhen down more than that,
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hong kong down 1.3. so flexing its muscles a little bit, not too significantly in terms of pulling on its levers. the effect on futures initially starting to wear off last trading day of february, one up until now has slight gains in the s&p. 1% gain for the dow. and nasdaq still negative. as for the broader markets, oil is under pressure, following that selloff in china. wti crude down less than 0.4% off china made that low. brent up higher, about 0.5%. treasury note yield, let's see what's happening in the safe haven. you're seeing buys with yields under pressure. the dollar against the euro. stronger against the british pound which is getting no love these days with the brexit talk heating up but the japanese yen
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is flexing its muscles. it's stronger by almost 0.1%. gold strong, strong month for february. strong month for january. gold is actually on track for its best month in about four years. it's up another 1% in the early action. 1234 an ounce. >> not many charts look like that. gold as the strong stock of the year. here's a check on the economics. today look for chicago pm piechlt, tuesday we'll the key the manufacturing index and toe sales. wednesday is the adp report. and thursday look for the ism services index. on friday, it's the biggie, the february non-farm payrolls report. lots of domestic data in the u.s. this week. >> still get a few earnings like kroger. let's get a perspective on the economy. joining from us anthony chan, chief economist at jpmorgan.
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anthony, can stocks build on two weeks of gains, they were fragile gains but gains on the back of stable oil prices. do you expect it to continue? >> i think we can see the equity market making some progress but let's not get the too enthusiastic about this, because we still have challenges ahead of us. global economic growth is soft. probability of recession in the united states is somewhere around 75%. that's another way of saying 75% chance that we don't get into a recession and things will be just fine. but there are some challenges out there. >> when we look at the positives of the economy, is the consumer really starting to deliver now? or is it still struggling? i mean, when you consider where oil price, it's one of the question marks that the consumer hasn't really been perform to get full extent that it could be? >> i think when you look at the personal income and personal spending numbers, they tell you that the consumers are trying to come back. when we see friday's employment report, i think we'll see, it's
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going to be a slugfest webetwee what i think is healthy consumer spending and sluggish productivity. what that leads to this year will be a little softer employment growth. we'll probably get manage in the neighborhood of 2.4 million. friday's employment report won't be too disappointing. . average hourly earnings won't jump as much last month, last month was mostly due to higher wages in several states. you'll still get a number that's encouraging, 2.5% over two years. and unemployment rate holding teddy at around 4.9%. not a bad number. >> we might get clarity from results of super tuesday. it might not be the clarity that the market wants. how do you see the election impacting the markets and the economy? >> elections generally lead to some uncertainty.
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especially when you have candidates at extreme positions. the good news is that all candidates historically have moved closer to the center as you get closer and closer to the general elections. we hope that whoever the candidates are on either side, that we'll eat least some of that relative to some relative positions and that would be a big positive for equity markets. >> anthony, let's touch on the fed. is the idea of further rate hikes let's say on the first half of the year very much off the table in your eyes? >> i think it's becoming more so that we can always say comfortably that rate hikes in the near term are off the table. rate hikes for the entire year are not off the table. the federal research wants to do something, and they probably will do it before the end of the year. as the end of year approaches and elections approach, the federal reserve does say it does not have a strategy, but if they have their choice, they will probably do something that's
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either sharply before or sharply after the election. >> as we go into this area of economic data, can you clarify what you mean by 25% chance of recession. where do you get that number? >> well, i think when you look at the manufacturing sector that's been, i would say very close or at recession levels that increases probability because remember the manufacturing secretary say are cyclical sector. and historically when that sector has been weak, it spills over into the other sectors. so far, the good news, banks to energy prices, consumers are getting a boost. and, of course be the service sector is holding steady. i will be looking closely to see what the isn number will be this week. i think it will actually show a little bit of improvement from last month. the that durable goods number was very encouraging suggesting that the manufacturing sector will be doing a little better. i would say between now and end of the year, i hope that probability of recession comes down.
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>> we'll see what happens on thursday. that's where a lot of folks are watching. anthony chan, thank you. in corporate news, warren buffett and berkshire hathaway posting profits. now the oracle of omaha will sit down with becky quick for three hours live on "squawk box" starting at 6:00 a.m. eastern. you can ask him questions by using #askwarren. starting in 22 minutes time. >> thought it was interesting that he mentioned sort of the election. took an indirect jab at donald trump. did not mention him by name but did say those campaigning negatively about america are dead wrong. this is the best time to be born in america you should never bet against it. over 200 years it's been the call. >> great stuff. google's parent company
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alphabet could reportedly gain $3.5 billion in new tax benefits if intel wins its international tax dispute with irs. this is according to "the wall street journal." at least 20 companies including microsoft and ebay are monitoring the outcome of this important case. now for today's top trending stories. bill gates issuing a warning to silicon valley investors. he told the financial times that over the next two years the valuations of the unicorns will fall. he added the strategy of throwing money at a tech company will no longer guarantee returns. interesting perspective. >> absolutely. >> from a key, key tech man. i suppose it's almost kind of a little late, it seems that's the obvious point to make. >> especially like a lot of companies that got money, box, square, had public debuts and have been less than spectacular.
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starbucks finally set to open its first store in italy next year. ceo howard schultz announcing that the coffee chain will expand to milan and others later in 2016. schultz acknowledged that the company will enter the country with, quote, humility and respect. everyone's wondering when this was actually going to happen if they would at all dare to invade italy's coffee culture. >> i think it's very bold of mr. schultz. wish him luck. i think the risk of the downside is way better than the potential upside. i don't think it's going to be a really big market anyway. it's stagnant growth anyway at best. perhaps they can carve out a market share. but if they don't get it right, it's going to be bad pr for them. >> you know what the secret is for them to succeed there? wi-fi. a lot of those cafes don't have wi-fi or restrooms.
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amazon to strike a deal to frozen to morrison. amazon in the uk, the new service will be available this year. this is getting a lot of news in the uk. morrison up about 6%. and others in the uk down. it's a very competitive area if you deliver in the uk. amazon is going to increase that competition. when we come back, the china's national covering getting under way. the government is expected to lay out new targets for growth. we'll get insight from hsbc's fred neumann next. you're watching "worldwide exchange" on cnbc. first in business worldwide. ethg better. and what an amazing time it's been, decade after decade of innovation,
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welcome back. good morning to you if you're just getting up. a big selloff in china overnight. breaking the last 94, pboc announced its cutting the reserve, ratio for all banks. joining us now is fred neumann, head of research at hsbc. good to see you. >> with that timing now from the pboc -- >> just as we came on. >> you still have plenty of levers to pull if necessary during the g-20 meeting. clearly, he's doing a bit of that today, but how significant is this?
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the monetary policy changes they've done this year, they haven't taken as much effect as they did in the past, has they got that much as he claims he. >> well, it's not going to be that helpful for the economy. what the economy is needing is more demand. it's important to signaling here, remember in january, the pboc said we're not going to cut the triple arc. worried about output. and accelerating, and now confident about capital outflow and change rate and coming out of g-20 saying we're going to do our bit to help the global economy. >> can you just put this in the context of all the liquidity measures? it feels like every day we're waking up and they're doing something orthodox or unorthodox. just how much easing have they been doing? >> quite a bit. they cut interest rates and
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probably doing enough to boost lending. sthaung lending growth in january. some of it is refinancing but some of it is general really increasing funding to spur investment. at the margin it helps but it's the not the quick fix for the chinese economy. much more needs to be done. >> let's talk about the currency, the central bank government to say we're not going to surprise anyone anymore. we're stainless. we're in control of that. do you believe that the intention is to keep it substantial and being that the tools are there for them to do so that they stemmed that flow? >> for the time being, they've stemmed the flow. for the fact that they are conduct the triple r, they're confident with their position of outflows. what's important to recognize here, the currency has been stable. and currency stable itself helps to increase outflows. it's usually that we see cap outflow. as long as you keep it stable,
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actually affects capital outflows. >> just looking at the reactions from this. copper is still lower. oil is still lower. u.s. equity futures are still lower. so, maybe they're not -- is it a signal that they're not doing enough? they're not doing the right thing, or the market doesn't believe them? what does that tell you? >> the market doesn't believe in monetary policy anymore. it's not just a chinese problem. it's a problem across the world, right? investors want to see more, they want to see structural reforms with china with the mpoc coming up we need to see fiscal easing. monetary reaction is easing across the world. this is on the back of the g-20 saying we're going to help that is not the quick fix. >> it seems that president xi is more reliable. is he the man to deliver this
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private change we need. he's already been in power three or four years. >> he's consolidated this power over the last three years he should in theory be able to push ahead reform. we've seen that and hopefully he'll use that in the comes months. one big question is, yes, he has consolidated power but is he going to use the power in the way that western economists and investors would like and that is in terms of enterprise. he may decide to use it for something else. >> what about the hedge fund managers that's against the chinese currency like kyle bass who said that they're going to collapse. >> they're wrong in the short term. the chinese have tremendous controls, i think it's quite risky to take them on. what we saw in the c and h market -- >> that's the offshore. >> that's the offshore c and h market. where a lot of speculation,
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external speculation takes place. they can push up interest rates on investors. careful how you play this. >> fred, great to have you with us this morning. thanks for joining us, fred neumann, co-ahead of economics research at hsbc. coming up on the show, the crude conundrum. some analysts saying that the oil may be bottoming out. and you've still got time to get your questions in for warren buffett. he's be joining "squawk box," the whole team for three hours. submit your questions using the #askwarren. i have a question i will be submitting to him. it's about the election. >> very nice. >> we'll be right back on "worldwide exchange." cathy's gotten used to the smell of lingering garbage...
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joining us now is mike
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rothman. mike, great to have you with us. >> thank you. >> great to have an oil reserve bull on the show. everyone has been treading more softly on their terms. you remain more positive this year? >> that's correct. for the next month or so, i think we'll tread water, once we get into the second quarter, as we expect oil prices to moving high. and we see oil prices higher by the end of the year. last time i visited the show, i talked about $85 by the end of the year. that's still our view. >> one of the reasons on the supply side before we get to that, let's talk about financial demand and fundamental demand in the market. what is the difference between those two and why is it relevant? >> if you look at the physical barrels of oil, 95 billion. and literally 55 times the size.
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there have been historic developments like the selloff in july. largest in the history. that has collapsed in the financial demand for oil. that's the first time it collapsed we had a glut. >> you're saying the underlying is not so soft is and strong? >> actually, it's record highs. oil demand is going steadily. if you trend it out it's a ski slope. >> and companies here in the u.s. saying they're not going to cut production. what makes you think all of a sudden it's going to change. >> so, the cure for a low price historically is a low price. there's a couple of factors in place. one is you're going to see non-opecs contract this year. first time in eight years. and opec itself capacity constrained. when i first went to opec starting in 1996. the meetings were really long.
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i think i spent the first meeting, 2 1/2 weeks they were arguing about 200 barrel a day. today there is really no spare capacity to speak of. the fact that demand's going to grow and supply from opec is going to shrink, somehow opec has to come up with barrels which is a big challenge this year. >> at prospect of russia and other countries making deals together to support the price, do you believe in any of that? >> no, this idea of freezing output is sort of a deal of lowest common denominator. they're capacity strength to begin with. russia probably going to decline. saudi arabia itself added several major oil field information the last 11 years and they're struggling actually to keep their output where it is. >> i wonder somewhere the central bank is, we just got one from china. the fed expected to rise anytime
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soon. the idea that cheap money is here to say, these oil companies can keep postponing the pain and therefore everything gets prolonged because we haven't really seen that huge swath of bankruptcy that people say we need to clear the market and cut production down? >> well, in the u.s., we've had 57 oil companies declare bankruptcy south. the growth production that people hope for or depend on something that's reversed. last year, we saw the u.s. production make a high water mark in april. and it's declining fun look at it, the right way, suggesting that u.s. oil production is lower than what has been reported by the department of energy. >> you say the pain is happening. it's started and it's meaningful. >> it's evident. >> and your price tag at the end of the year? >> $85. >> mike, great for you to share it with us. mike rothman on cornerstone of
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analytics. >> last trading day of february. i'm going to be watching gold. busting a move higher in 2016. february on track to have its best month in nearly four years. what is driving gold, is it the lack of credibility in the central banks? is it the fact that central banks are going to extreme measures to try to stimulate their economies? is it the equity nervousness, february has managed to eke out a small gain. >> i'm looking at the yen. however, one of the key risk-on, risk-off gorges at the end of the year has been at the end of the day which suggests we have declines. >> twitter question today, who had the best weekend. this was a tough one because all of these had terrific. leonardo dicaprio had the best. and steph curry after an amazing shot.
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and hillary clinton after south carolina had a very good primary. >> that it is for today's show, "squawk box" and warren buffett coming up next. we enable you to reach global markets and drive forward with broader possibilities. cme group: how the world advances.
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good morning. stocks under pressure again. couple that with losses with traders waking up to red arrows in asia and europe. moderate losses on wall street. pretty big losses over in europe, as we said. and. and sixth time is the charm for denardo dicaprio take home gold for his role in "the revenant." and berkshire hathaway posting a big gain in its fourth quarter. and warren buffett saying the future of america is great. we'll let you hear it straight
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from the oracle. and it's leap day. kids waiting for a birthday. you do stay young. it's monday, february 29th and "squawk box" begins now ♪ good morning. welcome to "worldwide exchange" right here on cnbc. i'm andrew ross sorkin with joe kernin. becky quick is with warren buffett. >> take a look at u.s. equity futures at this hour. dow jones looks like it will open off 90 points. nasdaq looking to open down as well, down 45. s&p 500 looking down 12 points off. overseas in asia, japan's nikkei fell from 1%. hang seng

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