tv On the Move Bloomberg January 30, 2014 3:00am-4:01am EST
manus, let's start things with you. you are watching reaction to the fed. basically -- this is a very self-centered fomc announcement. no bowing of the head to what is going on in markets. i will leave you with a statistic. 55% of global demand is derived from emerging markets. fed the fed -- while the cannot off their cap at the moment, it is proverbial in terms of real demand in about eight months time. it is a fairly moot point. -- $10 billion a month, that is the road. the hurdle to stopping that is pretty high. >> they set policies for their own country, sometimes ignoring the rest of the world. what has been the reaction in emerging markets? >> not as volatile as yesterday
but chinese manufacturing numbers, price contraction more than expected. it is not going to actually help sentiment this morning. when it is good, no one believes. when it is bad, people really believe. we will have to see whether there is a read across into commodities. we also have gdp from spain pretty much as expected. gaining 0.3% in the fourth quarter. staying on corporate news, hans, you're talking tech. a big deal for to lenovo and google. >> normally when we talk about cool, we talk acquisitions. today we are talking sales. they have sold or plan to sell their motorola handset unit to lenovo. we will look at both sides of the deal, who got what and what it means for both companies moving forward. >> thank you so much. we will have plenty more throughout the program. caroline, we have figures from shell and ericsson, roche and
h&m. >> keep an eye on h&m. this is a company that has been hit by foreign currency weakness in emerging markets. profit missed analyst estimates. they did rise slightly but the measure of profitability, the margin was deteriorating. there is worry about exposure to emerging markets. they are sounding pretty optimistic. they are off to a good start, opening more stores. they're opening in the philippines and australia. there has to be a worry about exposure in emerging markets. >> h&m down some 3%. we also have figures from diageo who is suffering because of emerging markets. this is what i am watching, the world's biggest distiller reported profits that missed estimates. down 3.5%. the other one we are watching for, ericsson expected to start to move after the world's largest maker of wireless networks reported quarterly
revenues that missed estimates. ericsson though gaining 1.2%. we have the fed, the emerging markets, bit of mna. it gives us a nice impetus for the day. >> a feast. --. marja his approvals mortgage approvals. i will lead you -- thing about this. the last time your big -- u.k. mortgage approvals were this high, lehman's was in business. mind, that is the backdrop to the u.k. housing data that will come out later on. spoilers health, got a low rate mortgage. equity markets are just dipping as we go into the openings. some emerging markets raising rates by 4.5%, 5%, does it really work? south africans raised their right and it was a two minute
wonder in terms of reaction. let's see if the miners are down. no, it is diageo that really takes the hit their. the chinese story doesn't seem to come through on the mining companies. there are a couple of companies -- you mentioned shell. let's see how they are trading now. that probably needs to update. h&m down 3.2%. roche, they missed on numbers. this is a big drugs company. the big debate is, do you need to do more acquisitions? bloomberg industries ran the numbers. roche has missed on their earnings per share. it is the biggest myth in four years. iss in four years. royal dutch shell up one percent. story, at the currency where this next shoe will drop is anybody's guess. this is basically dollar/yen it
is virtually unchanged. have a look at those emerging-market currencies. we will keep an eye on those through the rest of the trading session. back to you. >> thank you so much. joining us for his views on the fed and china and to discuss his latest monthly is alex friedman from ubs wealth management with nearly $2 trillion of assets under management. always such a pleasure to have you on the show. talk to me about the main themes. , we are on fed watch, emerging markets watch. is there some overarching theme that makes you worry for the next month? >> for the year i would start with a seemingly counterintuitive statement, the world is getting better and investment returns are going to come down. becauseunterintuitive we have had these artificial returns for four to five years. that is because of monetary
policy that is being withdrawn. we are handing off the growth. growth is stabilizing and improving but it is not ideal. >> what are you looking at? do you stock picks? do you look at industries which have been -- in 2013? >> star with equities. they return about 15% annually since 2008 which is not because the economies have been doing so well. it is because of all this monetary policy. we are looking more like six percent to eight percent equity returns this year, next year, probably over the next three years. we like equities because there is not much yield in fixed income but you need to be diversified. into cyclicals, midmarket companies in the u.s. and europe. europe is improving a little bit. >> are you looking for cheap value? stocks that have greatly ratio pe ratios?t o the story -- >> the story on
risk assets is acceleration. we are basically depending on earnings to grow somewhere between seven percent and nine percent for the story to work. stocks are fully valued. there are not an bubble territory but if you want to see growth it is going to be because of earnings. we have seen about nine percent earnings growth so far. >> thank you so much for now. i am going to get more on this next. here is a look at what else is coming up on "on the move." a united front of the fed. policymakers backed ben bernanke's plan to wind down stimulus. the lenovo spending spree continues. the pc maker drops nearly $3 billion for google's motorola handset business. the emerging markets slowdown hits diageo. the chief executive joins us this hour. stay with us. we are "on the move." ♪
interview with the ceo of diageo coming up. down some 4%, this is the world's biggest distiller. it reported profits that missed expectations. that ties into the emerging markets story. they are seeing still a very big slowdown in emerging markets. we will try to quiz the ceo on cost-cutting. fed policymakers have their first meeting of 2014 this week and manus cranny has been pouring through the statement. what stays put? >> it is the first meeting where there has been no dissension since 2011. what we have is a very united fomc in transition mode going under yellen's tenure. that says we are united, we are in taper mode. the hurdle to stepping back, the hurdle to the fomc stepping back from the mode of tapering at $10 billion per month looks pretty
darn high. in terms of what they are considering, we found out more in the minutes. that will make for interesting reading. if you look at citigroup, i love what he says. --s is the fed saying a very and a bank statement. i think when we look at the other no one says in terms of language, don't forget the fed has two objectives. one is about employment and one is about growth. the labor market is concerned, it is mixed. that is the new word. as far as growth is concerned, we have moved from expansion mode to picked up. that is the view. growth has picked up. that is the point. i will probably come through in all the conversations. can profitability return as growth comes? radar going to stay lower for longer.
that is the case. they're going to focus on inflation. those of the nuances but a united front as janet takes over at the alkyl and c. >> the market reactions are more driven by emerging markets. >> yes, look at these three markets. the msci, the sp and u.s. treasury. u.s. treasury being driven more by the desire to be protected rather than anything to do with what is going on with the fed. there is the s&p and the msci, this movement in the markets is fairly protracted. treasury yields are at a two-month low. are you going to get many buyers? i will leave you with this thought from bill gross. turkey and south africa flunked the currency test. don't wait to see who is next to drop. moved to treasuries. i suppose that sums it up. >> it certainly does. thank you so much. still with us, his investment
-- how do you view all of this? the fed is definitely starting to tighten or taper. tapering is not tightening yet. at the same time, they are going counter emerging markets? >> the fed works for the united states. yes, the biggest economy in the world but at the end of the day it has to drive a supertanker touches the u.s. economy. it makes decisions about turning and sees waves. make changesy to on a technical basis so quickly. the u.s. economy is recovering. the fed has succeeded in shifting communication to lose her for longer. that hasn't changed. what we're seeing in emerging markets is a different story. >> it is also central banks all fending for themselves. >> it is three dynamics at play. starting is the u.s. to normalize and the effect on
emerging markets. the second is china and the effect on exporters to china as demand slows. the third is the idiosyncratic headlines we see out of argentina, thailand, turkey, places where there are double deficits. >> is it possible that now we have to differentiate emerging markets? i have guests coming on here saying emerging markets were all in one bag. 2014 is the year where we have to make a difference between india, turkey and brazil. >> this is one of the great inefficiency is of the investing world. isen the 50% of demand generated by emerging markets, about 15% of the mci --m msci, flows have an impact on this. exporters should do fine because the u.s. and europe are buying more stuff. if you take a more domestic demand driven emerging markets, they're going to suffer. argentina is a story of lots of policy errors. korea is doing great.
mexico is doing fine. is are different stories. >> how do you play emerging markets? inyou buy consumer stocks specific emerging markets that will outperform? emerging-market countries that are more exposed to stories that i understand like united states and europe. demand is picking up, people are buying more stuff. they are buying more stuff from countries that sell a lot. exporterd be the nations. i think china is a different story. china has been exporting deflation for a long time. its manufacturing base is getting more expensive. it is shifting towards exporting inflation at the same time as it is trying to shift its domestic demand. there will me that be better growth in 2014 but investment returns will be lower. this has a lot to do with central banks. are we going to see a correction? >> i think the markets will end 2014 higher but it will be bumpy
along the way. my overall view is that we will see some returns in the equity markets but it will be volatile getting there. we see earnings acceleration for corporate and capex being put to work. 10% of u.s. gdp is sitting on the balance sheets of companies. they have to start investing again. that should kickstart the circle the fed is looking for. we need to see it showing up in this earnings season. >> thank u so much for now, alex friedman of ubs. still to come, investors give facebook a thumbs-up. the stock surges after hours. it hits a key milestone on mobile. details, next. ♪
>> welcome back to "on the move ." i am francine lacqua in london. the world's largest pc maker continues its buying spree. lenovo is acquiring googles motorola phone unit for more than $2.9 billion. i spoke to lenovo's president in talkedast week and he about expanding brand awareness. >> we are number one in commercial. everyone knows thinkpad. our customers ask us, expand your enterprise in server portfolio more. the gives the customers
opportunity for a bigger portfolio. >> he could have given the breaking news but he didn't give it to us. hans nichols joins us with the latest. google is cutting their losses vo seizing opportunity. >> you could say google is cutting their losses. on paper, it doesn't look like this was a great acquisition. about 22 months ago, google bought a motorola handset unit for around $12 billion. they are planning to sell it for $3 billion. that is not entirely fair. it came with a fair amount of cash, $3 billion there. they also sold with the tv business so they have about $5.5 billion there. the question is, how much are the 15,000 patents that google will retain, they are not selling those patents, how much are those worth? if you make the argument that main play was's
protecting their operating system from patent wars and keeping that central, it may not have been that bad of an acquisition. they have been running a loss on motorola. it is way down in the rankings in terms of where they are in their handset business. >> if you actually flip it around, for lenovo it is a bit of a shopping spree. you kind of wonder what they are seeing in what they are buying. also, what lenovo will become in 12 months. have a pcis going to spot. they bought ibm's pc business in 2005. last week they wanted to buy ibm's server business. that was announced last week. these are all intentions. it is all subject to u.s. and chinese regulatory authorities. if the motorola deal go through, lenovo will be third in the handset market behind samsung and apple.
this deal happened pretty quickly because lenovo was interested in blackberry. blackberry takes itself off the market and lenovo ends up with motorola. they are a hardware company, they want to be in the hardware business. google is in the search business but they retain the patents and they have decided those patents are still worth a lot of money. >> thank you so much, hans nichols with the wrapup of lenovo. still with us is alex friedman. he oversees nearly $2 trillion of assets. we talked a little bit about the world economy, returns in general. talk to me about tech. are we going to see more c apex spending? >> i don't know anyone who doesn't have a smartphone. you know the old westerns where people walk into the bar and put down there gun, now they put down their smartphone. i think the story on tech is basically, as companies spend
more, as we move into a bit of a , buyingecovery story new computers for their workers, individuals buying new technology, the benefit from this cyclical turn. generally, tech just like financials should do well. broadly, from a mobile phone, something like 2 billion people now are participating in the global economy because of access to technology which is a fantastic equalizer. >> doesn't override your investment decisions if you are looking at retailers, industrials? we just pay a lot more online. does that come into your thinking? >> i guess there are two bank dimensions to it. x is picking up everywhere. technology is one of the real beneficiaries. >> where do you want to position yourself? technology, do you feel that some of them are frothy? do you want to find smaller
players that no one has ever heard of? guess it relates a little bit to this valuation question. that stocks are fully valued and technology -- there are a lot of different ways to approach valuation. the main headline is -- i don't think we are in a bubble but i do think we need earnings acceleration. if i am wrong on this story are we see consumer confidence change significantly to the downside, then they're probably won't be a better story on equities and technology won't do as well. >> we have an overarching view of how you invest your money. what is your favorite place in the next couple of months? >> is going to sound simple and boring but i still like the u.s. market. i think the u.s. is furthest along in the deleveraging cycle. i think the fiscal drag is much better than it has been in years. i like the u.s. i think europe is not as good as it seems.
>> too complacent? >> we still have to get through the bank test. testnk, you don't give a where everybody passes. there will be banks that fail this test. was the process by which they are real capitalized, i don't know yet. scary but theks long-term trends are still attractive. >> anything in currencies? like the british pound we sit here in london. the u.k. is doing well. can are intuitively, i think that is a drag on earnings so u.k. equities aren't attractive. currencies, i think the dollar will strengthen. the economy is doing better and if we do all get scared by emerging markets, it tends to be a safe haven. >> thank you so much for all of that. great to have you on the program. alex friedman there, global chief investment officer at ubs. after the break, diageo's chief
>> welcome back to "on the move ." i am francine lacqua at bloombergs european headquarters in london. these are the bloomberg top headlines. the federal reserve policymakers cut the peso bond buying by $10 billion for a second straight meeting. the fomc maintained its strategy of gradually withdrawing the stimulus program as janet yellen prepares to succeed ben bernanke. it was the first meaning without a dissenting vote since june of 2011. china manufacturing contracted for the first time in six months in january. a purchasing managers index fell to 49.5 from 50 point five in
december adding to concerns about the world's second-biggest economy. the rating just missed the estimate of economists surveyed by bloomberg. bank of england governor mark carney says scotland will probably have to give up some of its sovereignty and mirror integration plans if it votes to leave the u.k. and keep the pound. speaking today or yesterday, he said policymakers need to carefully consider the stability risks associated with monetary union. scotland referendum is set for september 18. the world's biggest distillery, first quarterd profit growth that missed expectations due to a slowdown in emerging markets. joining us now, bloomberg consumer reporter clemente and. i do so much for joining us. it is all about emerging markets. -- in americamuch
it delivered really good sales growth. people are buying more expensive things. western europe was improving. andlook at emerging markets it is just harder out there for consumer goods companies. >> it isthat they are off-center in a cost-cutting program. >> no surprise at all. this is something a lot of people are doing. it is a mess on every single region really. it is a mixture of problems in china with the government cracking down on extravagance, a mixture of fluctuating currencies in latin america and also tough conditions in places like nigeria. >> tough conditions everywhere for a lot of companies. thank you so much, clementine fletcher. for more on this story, we are joined by diageo's chief
executive ivan menezes. great to have you on the program. talk to me about how concerned you were by the slowdown in emerging markets. companytrength of our is diversity in geography and category. before i come to emerging markets, the developed markets are strong. north america, very strong. western europe, getting better. the emerging markets are never a straight line. if you look at our business, we have got some very strong performances in countries like india, brazil, south africa. and we have weaknesses in china, nigeria, etc. when you step back behind the wer, our brand is strong and are growing market share in these environments and we are staying invested. our marketing and innovation programs have never been stronger. as i look at the demographics in these markets, gdp growth, while
it is subdued now, it is four percent to five percent as opposed to seven percent to eight percent in emerging markets, it will outstrip developed market growth. the demographics are still positive. 1.3 billion emerging middle class coming in. we are used to writing this volatility. >> when do you expect a turnaround? it is tough. do you have to adapt your justegy or as you say, weather the storm? >> we are definitely weathering the storm. we are being agile in how we respond. , thexample, within china baidu business is tough, but the whiskey business is very strong. johnnie walker blue is up 60%. bailey's is up 37%. we are investing behind those brands. america,s like latin our scotch whiskey market share is growing even though the currencies are turbulent.
i think the lesson i have learned being 30 years in business is, you need to stay the course. don't get spooked. things will move up and down here and there. that is the strength. we have the diversity and financial strength to whether it. >> keep a cool head. for me it sounds like good advice. talk to me about acquisitions. you have just said that you bought two tequila acquisitions in the u.s. is there anything in the emerging markets that you want to buy to counter the slowdown? >> if you look at the last three years we have made a significant number of emerging-market acquisitions, from india to turkey to brazil. we are very pleased. of course we are looking at more things. if they meet our criteria, we will move. in turbulent times, more opportunities show up. in the u.s., i am excited about two tequila brands.
they are at the top end of the category. we're going to have a lot of fun building these brands and regaining a strong position in the tequila category. >> there is also a report that you may the interested and another bit. is this something you're looked at? company's strength is in north american whiskey. we have a strong position in north american whiskey. we have a market-leading position in the u.s. tequila would be the other category of interest. we're a much more interested at the top end of tequila. one of the trends in our results -- see is our reserve plans brands are growing 19%. the top end of our portfolio is doing very well. the trend of people wanting to drink better. this is much more in building more premium brands. we will constantly be on the lookout for acquisitions. we have a strong balance sheet but they need to hit the sweet spot for us.
you will see us do more over the years. >> so this is going a little bit more upscale? i hope i will speak to you many times before then but let's say 24 months from now, if your portfolio going to be significantly different or just at least more high premium? the mixnk you will see of the portfolio. our faster growing part of our business is the reserve brands. that will continue. johnny walker blue, even in this economic challenging time, is growing 21%. brands like don julio around the high end of our portfolio are doing well. our premium brands expand off smirnoff arelike the engine of this country. and the emerging markets, they are aspirational brands. we have a great depth in our portfolio. in every consumer segment, the trend to drink better is very strong.
in brazil, the trade-off is very much to johnny walker red label and smirnov. about theu worried emerging market movement we have seen over the last five days? does this make you a little bit -- investorsan if associate this with what is happening with central banks. being in a consumer staple business that is tied into --rging middle class growth i am not concerned. the volatility will have short-term impact but the underlying secular trend for our business, we still feel very confident about it. >> ivan menezes in honor of chinese new year, the year of the horse, can you give us a glimpse on chinese drinking? is it different from the rest of the world? is there something that surprised you about the way they
drink? category isy of our quite established in social norms. in china you have a big category called baiju where we have taken an interest in the last few years. that is the biggest piece of the beverage alcohol sector. it is consumed with food. it is consumed in entertainment with family and friends. it is a ritual that has been around for 2000 years, it is not going to change. international spirits is quite small. it is only 5% of the business. it is growing. scotch whiskey and connect and vodka, but it is still very small. beer is a big category. our participation in both baiju and scotch whiskey and brand like bailey's -- bailey's is doing remarkably well in shanghai and beijing. chinese women are really turning to that brand strongly.
pre-k's that is interesting. -- >> that is interesting. go ahead. i cut you off. mix ofunderlying consumption will not change radically. more premium brands are doing very well in scotch whiskey, johnny walker blue is growing 66%. we have opened these johnny walker houses in shanghai and beijing that are doing exceedingly well. really high-end whiskeys. the average bottle sells for about $3000. there is aspiration and spending power in that country. if you can connect your brands to that aspiration, we see enormous opportunity. >> ivan, thank you so much for your time. you will have to give us a tour in beijing or shanghai. ivan menezes, chief executive officer diageo. diageo's growth strategy involves expanding in emerging markets but emerging-market
currencies have made such volatile moves recently in response to fit tapering. what does it mean for these emerging-market economies? jonathan ferro joins us with the latest. >> the corporate angle to this is fascinating. you see these big moves and emerging market currencies. you have a couple of national hedges, the geographic distribution and time, the beauty of time. it could iron things out. for now, for each lire, each rupiah, each round, they are getting less bang for their buck. if you're in a country like turkey, you're getting crushed right now as the lire gets weaker and weaker. what is remarkable over the last couple of days is that you seen that they -- you have seen a turkish central bank hike. use of the south african central bank hike. that is quite concerning. >> the fed isn't helping. the fed has to do policy for the united states. it is not doing policy for the rest of the world. >> the fed's message to emerging
markets, dropdead. every official is out there saying, what does it do for the credibility after they do not paper? it is a big issue. >> thank u so much for that. jonathan ferro with the latest on the fed and emerging markets. banning a racy super bowl ad starring scarlett johansson. that is not all the company's problems. ♪
" onhis is "on the move bloomberg television, streaming live on bloomberg.com, your tablet, phone and any windows phone as well. in super bowl sunday this weekend, that only means one thing. controversial ads. featuring scarlett johansson, an advertisement from soda stream has fallen a felt of broadcaster fox. it is caused outrage. our middle east editor has more. first the ad, soda stream says it is being censored. if you can't say what you want to say and someone is making you not say that, i suppose they are being censored. on youtube, the uncensored scarlett johansson super bowl ad has already garnered more than 2 million views. i have heard some more people talk about it. the offending line comes to
worthy end of the advert when she says sorry, coke and pepsi. the ceo of soda stream whom we spoke with last night says his company is being treated unfairly. >> coke and pepsi can suddenly show competitive products as other advertisers do but we can to do that. can't doall -- we that. we are small and maybe we are too threatening. someone is watching out for the interest of our competitors. that is a big shame. as an american i am upset and ashamed and disappointed because america should be a democratic society. freedom of speech should be very important. we are going to run the spot in russia, in russia to make the point that what runs in russia does not run in the united states. come on. i will take this opportunity to turn to fox and ask fox reconsider. run the ad. >> the offending line is going to run anyway.
they ran their ad last year with exploding bottles of coke and pepsi that was also banned. --m a grammatical active perspective, the ed should be banned because scarlett johansson says less sugar, less bottles instead of "fewer bottles." >> that is just -- [laughter] scarlett johansson is often a brand ambassador for the company. for theas an ambassador charity. they are dead set against any dealings with companies that have business or dealings with settlements in the west bank which is occupied by israel. soda stream has a not -- has a factory just inside the green line. soda stream says, we employ 500 palestinians. they work harmoniously with jews and other arabs. they are building bridges to peace in their words. the palestinians and supporters no,he boycott say that scarlett johansson is in the
wrong and shouldn't be promoting a company that does business in the occupied west bank. >> thank you so much for that. speaking of super bowl ads, h&m is banking on beckham. let's get to hans nichols in berlin. before we get to that, let's start with h&m's earnings. how did they do? >> they missed estimates. they came in just a little bit below on revenues. in part they were hurt because of currency fluctuation. income was $869 million. the important thing is their margins. down tooss margins were about 60%, down almost a full percentage point. before christmas, they got into a bit of a price war. you see that reflected in these earnings. it is not all bad news. they are talking about moving forward, 50% growth for the month of january. after christmas sales. they are making a big push in china and the u.s. themew stores, most of
going to open in china and america. >> tell us a little bit about the super bowl ad. and beckham. >> it is david beckham. what else do you have to say? they want to have some sort of opportunity to have an adenoviral and -- an ad go viral. one or two ads ever year goes viral. h&m had a big hit in 2012. will they strike lightning twice? who knows. they need to get in to the u.s. markets. on the turn percent of their market right now. that is also a currency play as well. you see their overreliance in the european market. they get hammered on currency, they want to go abroad. that is the u.s. and china. >> david beckham definitely uncovered there. i do so much, hans nichols with the latest on the super bowl ads. "the pulse" is coming up in
about 15 minutes. we are joined by guy johnson. we have earnings, emerging markets, the fed, super bowl -- >> let's kick off with the super bowl. let's continue the theme and talk about what we are going to be -- the angle we are taking on this. kate robinson is joining us from the u.k. advertising company. i guess she has got an idea of what is going on stateside. we will get her take on the stories we have been covering. h&m and the soda stream story. we will make sure we cover that. we can't ignore the fed and emerging markets. we are going to cover that as well. we have some great guests coming up. scarlett johansson is not one of them but i am sure she has a view. we will talk to socgen about what is been happening over the past 24 hours. gabriel stein is also joining us as well to talk about what we
can see from the fed moving forward. we live in interesting times as warren buffett once said. johnny ferro reminding me of this this morning. back to you. >> let's get scarlet on the phone. scarlett johansson. >> get her take on the fed, the emerging markets. >> that is your test. guy johnson, "the pulse" coming up in nine minutes. facebook shares surged in accra hours -- in after-hours trading. particularly on mobile. here with more is caroline hyde. they have done pretty well so far. >> they have. shares were up after-hours. at last, facebook has shown, proved it can make the move into mobile. the key figure for analysts yesterday, for investors, now more than half of their advertising revenue comes from adverts that are placed on the mobile.
this is important. this is the biggest social network. more than half of all internet users use facebook. 1.2 5 billion active users. this is what is driving sales up 62%. this is what is driving profit up eightfold. they can really show the quality as well, not just quantity. people were very worried that they were not going to have as many adverts on the newsfeed. they cut down the, of adverts but they upped the price. they upped the price by 92%. companies are willing to pay. >> what about the concern that it was losing support from teenagers? >> this was a big worry. that aalysis shows quarter of all 13 to 17-year-olds have dropped out of using facebook. since 2011, the last three years, the number of teenagers
>> welcome back to "on the move ." on the last few seconds, we have german unemployment features. 48,000 versus the 5000 fall we were expecting in january. the situation getting stronger, more people seeming to find work. the unemployment picture also at 6.8% instead of 6.9%. let's check the boards to see if it has an impact on what the dax is doing. it is still down untouched but down less than it was a couple of minutes ago. i also want to go through, before i am joined by guy johnson, some of the stocks we are watching. overall, it is all about the fed, emerging markets. we have this report showing chinese manufacturing contracted. these are three stocks i want to mention to you. yet here, down 4.8%. they missed expectations because of a slowdown in emerging markets.