tv Worldwide Exchange CNBC October 5, 2012 4:00am-6:00am EDT
. welcome to today's edition of "worldwide exchange." i'm ross westgate. and these are your headlines. the september u.s. jobs report is up on the mood of investors with data expected to show another month of modest yet unspectacular growth. samsung expects another record quarter of smartphone sales, but analysts say this could be the peak. and the bank of japan holds off on more easing for now, but opening the door to more action later this month. also, spain's finance minister says the country does not need a
bailout facing a skeptical crowd in london, but could rajoy be cornered by the leaders of france and italy at a meeting today? i've been away for a couple of days and thanks for whoever filled in. on today's show, planning more sanctions on iran. we'll look at the worsening impact on the panel of experts. larry fink said the u.s. housing market is inching closer to a rebound. we'll hear more from that interview. and can the united states dodge a financial cliff in we'll speak to a guest who has clear ideas of what needs to be done. first it's about the jobs
report, unemployment report due out at 8:30 eastern. economists think yet another month of modest job growth, but not enough to make a dent in unemployment. dow jones forecasted nonfarm payrolls for an increase of 118,000, it was 96,000 in august. unemployment seen holding at 8.1%, it's judgmented that job gains of 150,000 or more are needed to bring down unemployment. how long will they be doing this for then and what is today's number -- where does today's number come in that scheme of things? >> how long are they going to be doing -- to answer that
pre-supposes that i believe quantitative easing is going to improve the employment picture. and i'm not at all sure about that. and it's interesting that if you ride the fed minutes from that meeting, that there were quite a few fed governors who weren't so sure about that either. >> i'm sure it has no indirect control, but that's not the point. they said they're going to do it until the unemployment picture improves. so whether doing it improving the picture is not the point. how long do they do it for? >> they'll do it until hell freezes over that i'm right that there won't be much of an impact. the point here is we'll have to look at exactly, you know, what the u.s. economy is going to do because of other reasons. and i think the employment picture will improve to a certain extent going forward into next year as the housing situation in the united states
begins to improve. but that is the causal mechanism there that i would be focusing on. i would not be focusing on the quantitative easing aspect on it. >> do you agree with larry fink who is suggesting we're only a year away from a much better housing market? >> much better, i don't know. i think there are enough signals that we can see right now the housing market is picking up. we are seeing a good contribution from construction probably for the first time and this is significant. we're seeing in the employment figures that there is on the construction side some positive moves. so on the whole, yes, i would agree we are maybe within a year perhaps. a bit more conservative, 18 months to two years time before of having a market that's at
least respectable. >> we're also counting down to an election right now. you seem to view the prospect of a romney resurgence rather positive. why? >> i don't believe that another four years of what we've just seen is going to get us out of the woods. for that reason, i think it's time for a change. if i look at what obama is projecting, it will be higher taxes, higher debt, and it will bei be not much else other than more government spending. and that won't make the difference. so i think fiscal uncertainty has to be removed in order for the corporates to spend the huge amount of cash that they're holding. and at this point not investing.
the fiscal -- i don't want to call it the fiscal cliff because that's not so important. the question is getting certainty into the situation for corporates to invest again. >> okay, good to have you on on. plenty more to come from you. but what do you think the jobs number will be? let us know. e-mail or tweet us. so just over an hour into the trading day here in europe. let's show you where we stand. just weighted to the up side. pretty flat day for european stocks. 6:4 advancers currently outpacing decliners. we are a quarter percent higher on the ibex, as well.
let's show you where we stand. yields are still below 6%. 5.8% mar begin alley higher. we'll keep our eyes on u.s. yields. we got down to 1.66 is where we stand at the moment on those u.s. ten years, as well. as far as currency markets are concerned, euro-dollar just holding at 1.30 mark. remember we moved up from 1 .29 on thursday, the level we were trading around tuesday, wednesday. dollar why no-yen dollar-yen, all about japan. sterling-dollar maintaining the break we've seen above 60, 163 we've hit a couple weeks ago. that's where we stand in this european session ahead of the employment report. with the asian recap for the first time today, we go singapore. >> a sea of green for asian
bourses helped by better u.s. data and some relief from europe. mainly markets enjoyed the last day of the golden week. the hang seng gained half a percent today. energy rallied. global clothing supplier is in talks to buy new york based synergy world flight. the nikkei edged up to a week high, but lost 7% on on the week. down beat earnings reports, plunging sales in china due to the territorial backlash. the boj decided to keep its rates as expected. pc makers extending a losing streak, but media tech gained 2% on strong earnings growth outlook. south korea kospi also closed marginally in the green. samsung electronics had a volatile session after reporting record q3 operating profit,
ending higher by 0.2%, but l.g. display tumbled 4.5% after a downgrade on profitability concerns. australian miners and banks leapt support to the sx 200. sensex bucking the upward trend, now lower by 0. 7%. back to you, ross. >> okay, thanks for that. so china shares getting back to action on monday. that's after a holiday week. investors will get a chance to react to the unspiraling pmi data for september. what can we expect -- the chinese market's been a big underperformer this year. can we expect when we get back to action next week? >> well, next week perhaps not all that much. i think there's a little bit of a positive signal there from tourism internally in china, in terms of spending, there's a bit of as positive. in terms of better export orders and the official pmi.
but really we'll have to wait until the end of the communist party congress. so that convenes on november 8. sometime by mid november, these new leaders will have to present gifts to the people and at that point i think we expect a significant cut in the interest rate and monetary easing perhaps more broadly in terms of the reserve requirements for banks. >> can the chinese market begin to clou back some of that lost performance? >> i believe that's possible. the uncertainties on the political side have essentially disappeared.
the new leaders will need to take a firm grasp on the economy and they will. so i think the market will outperform. st. louis at least draw even with, if you will, what we have seen in the rest of asia, in particular hong kong and to a certain extent even better in southeast asia. >> all right. we'll just move on to talk about automakers now. they've been calculating the impact of territorial tensions. toyota expects sales to drop around 40% from september the year before. sales of other brands in china like hyundai and bmw are on the rise. we also are joined by a.j., as well.
a.j., let's just -- we'll talk samsung with a.j., right? samsung electronics. a.j., sorry, i was going to talk autos. but let's talk about samsung, as well. operating profits will double to more than $7 billion. sales of tvs and smartphones. trading fairly volatile in seoul, as well. have we seen the best for samsung now? >> i think samsung still has a way to go. iphone 5 initial response were very good, but not as estimated. and with samsung giving a big push to the galaxy and coming up with a new tablet, i believe samsung still has a way to go. the next two quarters could be even further.
>> how much of an advantage is to be on anandroid? people who like it say the android system offers more. >> the biggest advantage for samsung to be on the android platform is the kind of app, more number of apps for the end users and that creates more. the more use ability, the mormonization for providers. so the biggest difference is the of apps is much larger than apple right now and that creates much more opportunities. >> are apple and samsung going to maintain sort of the control they have really in the smart phone market? >> i believe so in the near quarters they will, but one of the significance challenges i see is from the nokia microsoft.
because the one way the smartphone is moving is the focus on the end consumers and one of the area which is neither apple or samsung have been really focusing on are the enterprise consumers. there are apps both on the ios platform and android which are focused on the enterprise, but you don't have the unified communication platform. so you can see what kind of enterprise applications they come up with and what kind of hch- >> in hong kong, china and beyond, samsung has way outpaced everyone else. and you say leveling off. what's your evidence for leveling off?
>> sorry, could you repeat that? >> yes, i said that you said samsung is leveling off. i said if i look around here in hong kong, if i look around in the rest of asia where i travel a lot, what people are saying about samsung, i don't see the samsung sales leveling off on the contrary. what's your evidence for it? >> i think samsung still has a way to go. the next two quarters could be further pushed because of the holiday season. they could see further push in the next two quarters. so i don't see them leveling off right now. i see a push for samsung positively in the market. the samsung 3 is really getting popular. so i see the next two quarters being critical for samsung and the numbers maybe being even higher he. >> a.j., how bruising is the
patents battle with apple going to be some f? >> from a financial provision prospect, i believe it will not bother samsung that much.some? >> from a financial provision prospect, i believe it will not bother samsung that much.ome? >> from a financial provision prospect, i believe it will not bother samsung that much.me? >> from a financial provision prospect, i believe it will not bother samsung that much.e? >> from a financial provision prospect, i believe it will not bother samsung that much.? >> from a financial provision prospect, i believe it will not bother samsung that much. the one product pushing the numbers has been the galaxy 3. so i don't see it being much of a concern for samsung. it's a bit of as disturbance for the world of business, but i don't see it affecting their bottom line. >> okay, a.j., thanks for that. we got him on a little bit earlier than i was expecting, but important we spoke to him. more to come from uvey. plus we'll head out to madrid as the spanish finance minister insists the country will not need a bailout.
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request is not imminent, this is after the finance minister spoke last night when he insisted as well his country doesn't need a bailout. saying madrid's reform program was sufficient to get the economy back on on track. >> spain doesn't need a bailout. spain, what we have is a proposal from the ecb to trigger intervention with certain conditions. an certain conditions that i understand perfectly, the ecb is still independent, but they have demanded that in order to interve intervene, one certain conditionality. >> meanwhile reports suggest the italian trench leaders will push rajoy to seek a bailout when at the meet on the sidelines of a
summit in malta today. julia's has been in madrid and joins us. what do you you make of those comments? >> they were interesting. i have to depend it slightly, though. he did draw a distinction between a full troica style bailout and this enhanced credit line. i do think this is an extension that isn't being made particularly domestically. but there are two very separate things here. certainly with regards to scale. so i do feel like i need to defend him slightly on that point. he also suggested that they weren't far off the conditional itity required for the ecb bond purchase program. of course he's not only got pressure on the macroeconomic fund, domestically the bank of spain suggested yesterday that the measures that were included in their budget for next year, the 2013 details, the deficits will be difficult to reach. he also suggested that the growth forecast for next year was very optimistic. he suggested minus 1.5%, which is much more in line with what analysts are saying. so he has it on all fronts.
but the social aspect here, it's a week since we had the protests. i'm hering that there will be protests again this we could and actually while he was speaking, the people there let it known how they feel. >> you have the chance to ask your question later, please. [ inaudible ] >> make you your point. the minister will answer that question if you give him the chance, okay? thank you. my second warning to you is you're allowed into this meeting under the condition of not disturbing. >> despite the protests that we've seen here, i've been unite surprised by the tone i've heard
from people here understanding the need for reform and for change, but if you look at recent polls, ten percentage point drop in support for the people's party and i don't think we can under estimate the political risk here that he does hang on until at least after the elections. so could be waiting a while yet. ross, back to you. >> also interesting the head of the bank of spain did disagreeing with the spanish government forecasts saying that they're a little too optimistic. jules, we'll catch you a little later. how long do we play this one out for? >> i hope not for a whole lot longer, but basically i don't think spain is going to ask for aid. i think this is being pushed by the french and by the italians because they would love the ecb to push bond yields down and they are the real beneficiaries
there. i think spain has its banking system under control. it's agreed to reforms. give them time to get it going. the other thing is rajoy is fighting for his political life. he had two important regional elections coming up. he has to survive, though. so there will be no -- the loaded gun will rest on mr. draghi's desk there. >> okay. good to see you today. thanks. have a great weekend and a good evening there. head of research at the orient financial markets. turn our attention to the middle east. european and u.s. authorities are stepping up sanctions against iran. media reports suggest a ban on exports of national gas as well as stricter on the bank. also also the possibility of blocking all transactions on imports and exports via rapiran
banking system. joining us in a moment will be henry smith, and with me in the studio, analyst, thanks so much for coming in. how signature is this ramping up of sanctions? >> we have two crises in iran. one is the currency crisis and another is really an check one. domestic one because of ahmadinejad, the whole system is not working. so the two cries ceases are feen to each other. inflation is above 25%. deposits are put at 22. so there's a problem of people moving assets in to dollars and into gold. but sanctions are working. they are affecting the economy and we're starting to see that impact. >> let's bring in henry, as well. henry, the real has been declining for more than a year. what impact is that having along
with the sanctions now? >> well, it's clearly pushing up import prices as well as feeding into what is already spiraling inflation. it isn't just a result of sanctions. it reflects government general mismanagement of the economy. as we look as the government tries to respond, we see the faction alism and lack of attitude to be able to deal with international or domestic issues. >> if the sanctions begin to have some impact, what does that do on the political front? does it weaken the current establishment or does it in some ways sort of entrench it? >> a mixture of both to be honest. i think what we will see is political establishment, conservative faction try to push
the blame for this on to ahmadinejad's government. and we've seen already that from various stapts. but what it does do is allow those that are heavily involved in the revolutionary guards to continue profiting from iran's isolation. what we're not seeing yet is the significance to change around the nuclear program which is ostensibly the aim of international sanctions. >> so who are the population blaming for higher inflation and access to -- are they blaming the government or are they blaming foreign countries? >> they know it that the government policies internationally and domestically are to blame for this. and they know that the governme government -- if you look at the statements by those recently protested, what we're not seeing are calls for regime change. we're seeing discontent with
social economic conditions and degree of weariness about the prospect of conflict, but not outright hostility to the regime. >> how do you see this now developing? you heard henry saying the nuclear program is still on track. so how does it play out? >> i think we have the domestic issue in which i think we're likely to see some form of debate within the region, pot people defecting, but a real debate between from a kitraditi conservatives and ahmadinejad, who is to blame for the current environment. so that's the part where we'll have much more debate. and the real intention or the real intent of the sanctions is to change iran's position on the nuclear program. that's likely to be less effective. iran needs face saving mechanisms. a deal which guarantees that domestically iran looks weak.
so going into negotiations with the west -- >> is there such a solution where they can come to an agreement that satisfies both his demands for that and the west demands for no nuclear proliferation? >> it's a delicate matter. it's framing the agreement as if it's a win/win situation, but such conditions would directly not allow iran to develop a nuclear weapon. negotiations will be hard. >> good to see you. thanks very much. henry, thanks for joining us, as well. still to come, the controversial fracking technique used in the natural gas sector is rapidly gaining progress. we'll find out why.
sales. analysts say this could be the peak. bank of japan holds off on more easing, but cuts its economic view on japan opening the door it more being a laaction later . and spain's finance minister says the country does not need a bailout, but could his boss, rajoy, be cornered by the leaders of france and at this time italy at a meeting today. after a fatherly flat session yesterday, european stocks are modestly higher today. xetra dax up a third, ftse 100 up just over a tenth. bond yields pretty steady as we head to the unemployment report big data point today in the united states. italian yields just over 5%. currency markets, sterling-dollar 1.67. interesting whether the dollar
starts to advance if we see okay job creation. we'll keep our eyes on that. meanwhile, brent around the $112 mark where we've been. did recover of course during yesterday's session. nymex slightly above 9 # at 91.11. at the same time, frackinging has back the driver of the energy. especially shale gas becoming much more attractive to investors with australia and chinese markets natural gas gaining strength. joining us with a first look at the digital contents analysis, you use your mine lat forplatfo tool the entire digital space looking for referenceses.
>> yes, our analysis is the largest census that's been carried out. we look at millions pieces of kept every day and analyze them for key issues and key insights, very pertinent to the gas sector and energy sector as a whole ranging from online news all the way through to social media. >> shale gas is seen as this big game changer, this big revolution, particularly in the united states, but for anybody who has shale gas deposits, people wonder whether this can revolutionize the energy sector. what is your mining of this come up with, what does it tell us? >> the key thing here is that tracking is absolutely the future. if you look at the increase in demand for natural gas over the next 20 years, it outstrips the increase in demand for oil and coal and nuclear put together. and if you look at that increase in demand, two-thirds of it will be delivered for natural gas for use as the fracking
technologies. >> which is obviously drawing a lot of investment into the sector. so if investors feel positive putting money into it in. >> there are two sides to the investment story. the global which is all about investment in the massive reserves of shale gas and other conventional gas opportunities. but investment is also about the real need to improve the technologies for fracking especially in europe where economic viability of tracking is still challenging. for example in the uk, while there is a real opportunity for energy being extended as a result of fracking, the result is 20% of the offshore shale gas reserves are economically viable to date. >> also what about the concerns of the actual procedure itself? because you're blasting through rock with water, so you're really upsetting the structure i guess of the earth itself.
people are very worried about whether that becomes destabilizing. >> that's very true. there are a lot of environmental and social concerns around fracking. for example, governmental organization called sierra club has declared a war on natural gas with its campaign beyond gas, building a very successful campaign in the past around beyond coal. it was actually polecat early warning trigger technology that i had filed in august global frac down plans for a campaign on the day of the 22nd of september looking at the environmental concerns. and that's the debate. it's not like other debates in the oil and gas industry. you take the example of extraction of oil in the arctic, the debate against is driven typically by one large organization. in the case of the arctic, that
was green peace. with global f rcrack down, it's0 coming together to look at the issue. >> so you pretty good read on what they're all saying and put it in one place. >> yes. that's the thing is how do we identify, how do you get on top of all of that conversation when it's so disbursed and so local, but no less vocal and no less effective compared to those other campaigns. >> james, good to talk to you. it's only going to get bigger, though, right? all indications are this thing will only grow and get a lot bigger. >> and two-thirds of that growth in natural gas will be as a result of fracking. >> good to see you, james. thank you for coming in. other news, credit suisse is being sued by the u.s. based national credit association for selling faulty securities. allegations include misrepresentations in the underwriting and sale of mortgage backed securities which then led to the collapse of a
number of corporate credit unions between 2009 and 12010. credit suisse has not commented on the lawsuit.2010. credit suisse has not commented on the lawsuit. james gore man has given his starkest warning yet over wall street. he. >> shon: compensation was way too high and that managers had to become tougher minded. he added that as capacity at banks declined, so, too, did bonuses. morgan stanley has already announced 4,000 job cuts, around 7% of its workforce. and barclays has announced a reshuffle of its investment banking arm. three of the senior bankers will be leaving at the he end of the year as part of the changes. rich ritchey, head of barclays corporate invest him bank said management changes were designed to provide a greater degree of regional leadership and coordination. appointments include chief operating officer. and there are more worries at king fish airlines. shares tumbling 5% in today's
trade. for the year they've lost close to 40% of its value. let's go to mumbai for more on that story. >> the week of october twefth, a lot of the staff is opposing the management and there are salary which is are not paid for months. controlling body with regard to aviation has decided not allow king fish airlines to function further simply because of the safety issues that the company or the airline would face going
forward. it has to get thumbs up from multiple engineers before it would scheduled to be safe for passengers. so it has definitely lost a large amount of market share. it stands at around 3%. and the bad news doesn't really end for king fish airlines. there were news reports as early as this morning that there was an engineer who works who says his financial position was too difficult because of lack of payment of salaries from king fisher airlines that his wife actually decided to take her life or rather committed suicide. so that's actually the bad news at this point in time. seems like things have come to a draw and there will be a decision sooner or later for the airline going forward. stock down around 5% in today's trade, as well. >> you've heard of aerospace -- thanks for that, by the way. thank you very much. now let's get more on this
latest on the eads/bae. patricia joins us in frankfurt. i've been away for a couple of days, by which time i imagine there have been another 50,000 developments and rumors in the ongoing discussion. >> absolutely, ross. i think rumors hits it on the head there. i think it is more forces talking, leaking information, nothing being confirmed of course in. at the moment we're in the state of pointing the finger who does more and french parliamentary sources are actually saying that the british together with the french are moving closer to saying it's giving support to the merger and the germans are the odd kid on the block. fwer mans say, no, it is the
french saying if we don't get that, perhaps we won't say yes to this kind of agreement. the ceo of eads is not very happy with the german government getting involved in any case saying if you have government involved in this kind of huge entity which it is going to be potentially, that's never good in terms of image or trade if you have that insecurity of government, basically influencing corporate strategy. so we really have to see. my big question he is the deadline going to be postponed for the deal, yes or no. >> yes. or no. patricia, thanks. >> i think yes. >> who knows. we have absolutely no idea. >> we don't know. >> patricia, thanks for that. still to come, the ceo of black rock has given cnbc his take on the u.s. housing market. more when we can back.
8:30 eastern time. dow jones forecast is for 118,000 jobs to be added. what we want to know, what do you think it's going to be? from connecticut, he says 95,000. pessimistic number. and of course that would be good for romney. so let us know whether you agree or not. join the conversation. worldwide at cnbc.com, @cnbcwex, @rosswestgate. ceo of black rock larry fink thinks the u.s. housing market is inching to a rebound. he was also asked about his future plans and if they included a job at the white house. >> fundamentals for the u.s. economy are quite strong. we're about a year away from a full rebound in american housing. we started off in 2007 with 8 million unsold homes. we need about a million to a million and a half new homes every year because of family formation, because of
replacements and for immigration. and over the last five year, we have now brought down that inventory to a more manageable level and in states like texas, you're starting to see rising housing prices. even in counties in california where you had a huge glut of housing and some of the county, you have shortages and housing prices are going up. so housing is becoming a better economic engine. and presently we're only building about 500,000 new homes. in a year from now, i expect us to go back to that million new home level and that's going to create new jobs. second of all, our banks are in great shape. much better shape than the european banks, much better than the asian banks. and i do believe they have the capacity to lend more when there is sufficient edemand. and we have been blessed with incredible amounts of energy. we're the third largest producer of oil in the world today. oil production in the united states is up 8%.
we have all the natural gas. and so this is going to be a huge job creator. >> i want to get your take on really what was behind this strength today. a lot of people saying it was a romney rally. we want to run a sound bite of mitt romney and the president, pot to get you to react to it, but to put perspective in what we saw today in stocks. >> my plan has five basic parts. get us energy independent, that creates about 4 million jobs. number two, open up more trade, particularly in latin america, crack down on china if and when they cheat, number three, make sure our people have the skills they need to succeed, and the best schools in the world. we're faf away from that now. number four, get us to a balanced budget. . number five, champion small business. >> there you go in terms of mitt romney coming out with five points in terms of an economic plan. do you think that this is resonating with folks out there, the issues that are important in terms of deck dating their vote,
the economy? >> no question the economies for so many families in america have been very disappointing. many people are still looking for jobs. much of this is structural unemployment as we've created more efficiencies in our factory which is means fewer jobs. so we're still struggling with an 8% plus unemployment rate. we'll see how the jobs unemployment report goes. that has to be part of the debate as to what direction we go in the future. so it is my view whoever is president in 2014, and i've been public about, you know, i am a democrat and voting for the president -- >> you mean 2013. >> no, whoever is president in 2014 because my views of housing, my views in energy and my views of the banking system, i think we'll have arising economy. so i don't believe -- i think it will be -- we'll have this success in our economy subject to working out a fiscal cliff which we spend a lot of time
talking on, but i do believe the foundation for a stronger america is already here. >> there is word and buzz out there that if the president wins re-election, you want the treasury secretary job. if you leave this post, shareholders want to know, do you want that job? >> i think i'll be surprising the world how long i stay at black rock. this is my credible post here. i love what the company has done. i think we have a lot more opportunity in the future. so -- >> if president obama asked you to serve the country, what are you going to say? >> i'll be speechless at first. >> but then at some point he's going to give an answer, right? anyway, that's maria talking to larry fink. meanwhile bank of japan policymakers have been meeting. they had some unexpected company, as well. japan's new economics minister raised eye brows when he showed
up, the first time the minister has attended the bank of japan decision in almost a decade. he says he respects their independence but wants to bring in a sense of urgency on economic matters. joining us in studio, managing direct information for asia at nomura. stewart, good to see you. can they urgently do anything about the strong yen or not? >> i think it's important to get context here, ross. i mean, if we go back to 1989 when the nikkei hit its high, we're 65% below that level. we've had the best half of 15 years of deflation. so one has to conclude the monetary easing and monetary policy hasn't been the most successful in japan. you contrast that with the u.s. where they only spent one year in a deflationary environment, the s&p just now a mere 7% off its all-time high. and i think these contrasting
fortunes of the monetary policy's success will put a great deal of political pressure on the boj and i do think that pressure for some extreme or unconventional monetary measures next year will definitely be there. >> so what impacts? >> well, i think the most immediate impact that traders would like to see is a higher dollar-yen. i think they would certainly -- the thourts in japan would certainly like to see a higher dollar-yen dollar yen has been on a down trend for the last five years and there are many traders and fund managers that have tried to pick the bottom and go long dollars and really come on stock, particularly in the early part of this year. so i think in the very near term, dollar-yen is still going to trend lower. however, we just need to see, you know, that change in policy and more urgency from the boj which could happen in the months ahead.
>> for dollar-yen to strengthen, do you need treasury yields to back up? >> you need two things. and of course, yeah, you need -- one is certainly a who are favorable outlook for the global growth environment which will co-exist with rising treasury yields. it's difficult to envision that happening when the fed are just taking down enormous volumes of the u.s. fixed income market. the other thing is a fall in jgb yields and unconventional monetary measures from the boj, whether that's buying riskier assets or buying foreign bonds. i think we are going to see something at some point because the pressure will be so great on the boj. >> whethcan the dollar generall have we seen the weakness that
we're going to see for this year if the qe-3, does it get slightly stronger? >> i think we need to be cognizant that the effect of quantity talt testiative easing dollar is starting to change. qe d echl qe-1 absolutely undermined the dollar. the dollar sold off. now it's not so clear. on every dip, that would have been the combination of giving you the best return all year. and i think the market is stating to see that the dollar will retain its safe haven status for a long while kret because the fed are just so aggressive in tackling the problems with growth. >> okay. stuart, good to see you. have a great weekend.
china markets are resuming trade on monday after the golden week long break. on tuesday, we kick off our coverage of the imf world bank meetings, that's in tokyo. and we'll also track u.s. treasury secretary timothy geithner's meetings in asia with the rbi governor in india and japan's new finance minister in tokyo. meanwhile here in europe as we head toward the unemployment report in the united states, just up marginally. still to come, it is all about the jobs. we'll look ahead to the numbers next. and a view of the u.s. housing market, as well.
these are the headlines today from around the world. september u.s. jobs report, it's on the minds of investor and politicians. the data expected to show another month of modest yet unspectacular growth. samsung doubling q3 profit from a year ago, but analysts say this might be the peak. and the spanish finance minister says the country doesn't need a bailout as he faces a skeptical crowd in london. but could his boss be cornered by france and italy in a meeting today.
if you've just joined us state side, a very good morning to you. i'm back after a couple days off. had to take some leave. anyway, this is where we stand. just slightly flat. the dow is just five and a bit points below fair value. nasdaq about 1 1/2 points above fair value and the s&p 500 is pretty much trading on fair value. so very undecided about where we go. cac 40 is up a half and the ibex up around a third. spanish bond yields with fairly contained at the moment. no major moving there. still below 6%, but just above 6% for the italian yields.
currency markets, euro dollar is 1.2999. still very much in the ranges. that's where we stand. no big moves. plenty of caution. let's recap what's happening in asia. >> asian equities lifted by better u.s. data while investors a wait the key u.s. jobs data. energy majors rallied. automakers also sord after bmw reported a surge in september sale this is china. lost 7% on the week, knee con tumbled 5% on down beat
earnings. automakers also retreated on reports of plunging sales in china. the bo jchj stayed the same on policy as expected. pc makers extended a losing streak, but media tech gained 2% on strong september sales. lg display tumbled 4.5% after a downgrade on profitability concerns. meanwhile australian minors and banks support to the asx ending at a 14 month high. sensex down by 0.7%. back to you. >> okay, thanks for that. the jobs report is out at 8:30. expected modest growth but not enough to make a dent in
unemployment. dow jones forecast is for an increase of 118,000 versus 96,000 in august. unemployment seenle ho holding # 8.1%. joining us now is patrick o'keefe, director of economic research. >> i'm on the high side of the forecast panel looking for 140,0 140,000. some continued decline in the public sector. i do expect, though, that the unemployment rate will tip up largely because of growth in the labor force. last month what we saw was fairly significant retreat from the labor force.
. i expect job gains this month will be more broadly spread than was the cares in august. >> put it into context for us. we've had fairly consistent jobs growth for the last two years. but where are we now compared to before the financial crisis begun? >> it's always good to look at longer term trends. compared to where we were the month before the recession officially began, we have about 50% of the gap closed. we're still missing in the united states about 4.8 million nonfarm jobs. we had lost well over 8 million jobs. so slowly but surely we're make
our way back. on average about 150,000 jobs per month. that's about what i'm predicting for this month. so making progress, but as a nail's space. >> what's happening in terms of real wages? we've seen such an increase in gasoline food costs. so how distorted has real wages become? >> real wages are essentially flat. one number that i look at are the way disbursements are going up. and throughout this recovery, wage and salary disbursements which on average make up about 60% of after tax income have only been contributing about 25% of the gains in household
incomes. so they're not only flat in real terms, but they're losing position in terms of the disposable income. >> in terms of break down of where the current jobs are being created in the private sector at the moment, is that concentrated or is it broadly spread, just a couple of entries that are behind it? >> there have been a few overachievers. such as temporary help, a very small industry which before the recession, 2.2% of all jobs were temporary help jobs. it's accounted for over 10% of the net gains. we've seen pretty good performance in manufacturing. i expect we'll see a better number this month than we saw the last two. and then professional and technical business services.
accountants, engineers, attorneys, that's been another source of solid growth. and of course our favorite, health sector has been contributing. that's only one month since about 1990 that the health sector had a decline. so we can expect them to continue to contribute. when you take those sectors out, it's been a very weak jobs recovery. >> finally, one thing that gets a lot of focus here is sort of the long term unemployed and structural levels of unemployment. where do we stand on that? is there any hope of changing that around? >> long term unemployment remains elevated both in absolute numbers and a percent of the total unemployed. i think the bigger problem here and we're seeing it, most of the advanced economies, is the decline in labor force
participation. a lot of people seem to have difficulty finding structural employment and the reason is because so many job seekers have sgich given up. that's a long term issue. >> patrick, stick around. more to come from you. we've been asking you of course what you think the number will be. you've heard from bret says 124,250. send us your thoughts, email@example.com, @cnbcwex, off @rosswestgate. james gore man says wall street workers are still overpaid and banks need to cut both compensation and path. they've failed to reduce pay in hard times and they must address that to improve returns to shareholders. and morgan stanley will consider a new round of cost cutting next year. the stock today in frankfurt is
up 2.5% just about. barclays has announced a reshuffle at it invest him banking arm. rich ritchey says the management changes were designed to provide what he call as greater degree of regional leadership and coordination. and wall street itself has cut around half a million jobs since the financial crisis in 2008. many believe layoff ax will continue to fall. what's your view of what's happening in that sector? >> i think the regulated sector will continue to lose jobs. you can't have an industry where they'll simultaneously facing
increased costs and constraints on income and expect them to add jobs. i think the financial services industry is as you characterize it and correctly so will probably add jobs going forward. there is still the need for financial sophistication to channel savings in to proceed duct it difference uses and we need the best and brightest if we're going to succeed at that. >> patrick, more to come from you. also still to come on cnbc, while the banking sector is shedding jobs, one area has seen consistent growth, restaurants. last month more than a quarter of the new jobs were in food service. jackie deanxious wlis xious dea looking at who is doing all the hiring.
zynga is getting zinged saying they'll cite a third quarter loss. the secretary earnings warning for the company this year. zynga down 19% in after hours to 2.28. down nearly 80%. worlder b samsung electronics may fade out on further projections. the details and filed this report for us from seoul. >> samsung has done it again, it
will make it the very first time the company sales have reached past that 50 trail why not level. so what fueled such gains? solid sales of the galaxy smart phones. more than 20 million so far and expected to make up nearly 70% of revenue. the heavy reliance on one single cash cow is a bit of a concern especially as we have more competition. provisions will be done in the first quarter. so a happy day for samsung, but the future looking a bit murky
for samsung at this point. back over to you. james bullard says investors are signaling they don't trust the fedded to deliver on its 2% inflation target. he has said he wouldn't have said yes to the decision to launch qe-3. foot trick o'keefe is still us. has he got a point? >> in the short run inflation is not a problem, but the short run isn't really where we should be focused. the fed got its dual mandate, this is the first time it has
reduced priority. i'm a skeptic. i wouldn't have opposed the move to qe-3. but i certainly would have ob stained because of a couple reasons. number one, we don't have a lack of liquidity on the economy right now. we have $1.5 trillion of excess reserves because of a consequence of qe 1 and 2. while they don't see structural unemployment, they're probably not looking in the right places. and even if you say, well, let's stop debating structural unemployment, where is the proof thats first two rounds have made any difference? and lastly, the major imbedment in long term growth is the differential of labor costs in the advanced economies relative to the emerging economies. monetary policy can do nothing
ahead of the u.s. open, futures somewhat flat. right now the s&p is just over a point. black rock is pretty optimistic about the prospects about the u.s. economy. larry fink says he expects a rebound on who wins no matter who winls the next election. >> whoever is president in 2014, because my views of housing, my views in energy and the banking system, but i do believe the
foundation for a stronger america is already here. >> patrick, there you go. that's wlarry fink's thoughts on the u.s. housing economy. what do you think? >> i think he takes us to the right place. if we look out the year and a half from now, the housing sector will be at a much more healthy place, more robust pace of growth. but we have a long way to go from here to there. what we can say about the housing sector right now is that the seeds of the new cycle have been planted. but we're still in the process of clearing away the weeds, the legacy of the housing boom the last deck said. so we have to see more clearance of the foreclosure inventory, and then a rise in housing price so is that those who are underwater in their mortgages have a better chance of selling
and going away from the closing cable with a check rather than having to come to the closing bringing a check. >> patrick, good to see you this morning. i hope you have a good day. meanwhile the nba is returning to london in january to play a regular season game. brian shactman sat down with the nba commissioner to talk about his continuediest to grow the game on the international stage. >> nba has been on the international game a long time, why even more so this year by expanding to these places? >> this is just continuing a series of moves we've made.
we're actually only playing one who are game this yemore game tn before. we have offices all over the world, television sponsorship all over the world. >> what market excites you the most? >> well, you have to start with china just in terms of size, but we've just opened an office in mumbai, india and we're -- actually, the u.s. has 300 million people. india has something over a billion. we only need the top 300 million to be interested in basketball. yes, they do. >> expanding the brand is an easy sell, but to what extent do you actually expand profitability?
>> our games are on tv and in none of the countries do we give it around. so that's a profitable opportunity for us. ed a adidas has 2500 shops as well as online presence. games are being televised. so there are commercial arrangements that neighboring more profitable for to us do it than not to do it. >> so you went to visit the english premier league to so he what they do. and did you come back with the idea of the advising on the jerseys? did that come from that trip? >> no, indeed we have advertising on the wmba jerseys, nba development league jerseys. you can't not read the daily clips and see that gm made a deal with manchester united for
jerseys. so it's hard to -- we could dig a hole and stick our head in it, but that's what's out there. >> what's the up side in terms of numbers? >> you can see more of the interview tonight on sports biz on the nbc sports network at 9:00 p.m. eastern. still to come, we'll talk elections with the looming if i cal cliff set to take center stage in the united states while chavez is facing a tough challenger at the polls on sunday.
september jobs report is on the minds of u.s. investors and politicians with data expected to show another month of modest yet unspectacular growth. samsung expects another record quarter on solid smartphone sales. analysts say this might be the peak. and spanish finance minister says the country doesn't need a bailouts as he faces a sceptical crowd in london. but could rajoy be cornered by the leaders of france and italy at a meeting today.
state i'd we've turned things around slightly on futures. they're now pointing to a slightly better start. pretty slim gains. s&p 500 currently trading up 1 point. nasdaq currently trading just under 5 points above fair value. and the dow currently trading around 14 points and a bit more over fair value, as well. so really as we wait for the employment picture as represented as well by the ftse cnbc global 300. just up 11 points. but the best levels for the session right now. european stocks pretty flat, mixed. dow closed yet right now ftse 100 up 0.4 0.4%.
these are the best levels for european stocks for the day. this is a recap of what some of the experts have already told us today. >> dollar-yen is always the cleanest way to play the payr l payrolls. ambiguity of course is sometimes it plays out to good news for the dollar, sometimes it plays out as good news and badded news for the dollar because risk appetite dominates. dollar-yen doesn't have that. >> the economic conditions for gold are very appealing. and i think at the moment it is in a sweet spot for the reasons would he ha we've mentioned and you get momentum investors coming on the back of that. so if you're seeing good demand for good reasons, no reason not to be invested in gold. in terms of the european banks,
i think the argument is wait to go into the equity. underperformance of the bonds represents a buying opportunity. so i would start to rebuild the equity position. >> a few details of how the ecb might run its omt program. buy heavily in the bond markets for one to two months under any omt program and then stop for the assessment period. the bundesbank would then participate in those purchasing despite its opposition to the program. so they envision large buying volumes of sovereign bonds for a period of one to two months. also questioned what the exit bank strategy might be, in other words how it would put a stop to outright monetary transactions. the answer appears to be that they would suspend purchases on
a regular basis for a period that could last up to a month or more. at the same time, we're hearing the german government saying angela merkel will fly to athenss on tuesday to meet the greek prime minister.athens on tuesday to meet the greek prime minister. next week sees the vice president presidential debate before we get two more presidential debates. one of the major issues is it that looming fiscal cliff. president obama challenged mitt romney on his plans for cutting the nation's debt. >> when i got on to the stage, i met this very spirited fellow who claimed to be mitt romney. but it couldn't have been mitt romney because the real hit romney has been running around the country for the last year
promising $5 trillion in tax cuts that favor the wealthy. the fell wloe on stage last night said he didn't know anything about that. >> the president's vision is trickle down government and i don't think that's what america believes in. i see instead a prosperity that comes through freedom. >> president of the committee for responsible federal budget, director of the fiscal policy program, as well, and joins us now. have you heard anything -- have you heard enough of of a commitment from either side of the aisle that you thought might actually work? >> well, what we didn't hear was enough specifics. so i think the good news is that that debate, the discussion was clearly focused on the deficit and debt. which is the issue that we need to be talking about particularly as we go in to the election so that we have enough details about what we're going to do both to avoid the fiscal cliff and to do something about our
mounting debt in this country. but neither candidate really laid out the specifics that would show us the kinds of tough choices they're willing to make to tack emthese issues. and until we know that, it's very hard to make a decision about how either person has president would handle the significance gis cfiscal challe. >> from your point of view, how do you balance this out? you say it would require cutting all spending pie a third which clearly isn't going to happen and fixing the debt with growth alone with require record rates every year. >> the problem is so significant right now that the solution actually kind of comes out on its own. you have to do something of everything. we're going to need in this country to look through every part of the budget. certainly major reform, in social security, medicare, medicaid, all fueled by the
growth of health care costs and aging population. and on the tax side, we'll need more revenue and we should think about how to do take through a fundamental overhaul of the tax system. so the answer is some of everything. so the ways to do it could choke off economic recovery, but there are ways to do it that are smart that would help promote economic growth. the first step is not to go off the fiscal cliff, but also not to punt. instead replace that with the beginning of a sensible plan. we'll need to save $4 trillion to $5 trillion over the next part of of the year and we need to look at every part of the budget to do that. >> to not go off the cliff at the end of the year, what are the chances that after the election you tilly get some kind of agreement sni? i was speaking to john mccain and he said don't expect noticing happen.
you seem to think something can happen. why? >> i wake up pretty much every day and i update my probabilities on how likely that we'll go off the cliff. and i think that we won't. it's unmachblgable that this country as partisan as things are that policymakers wouldn't be able to come to some kind of an agreement to avoid knowingly letting things happen that will put us straight into recession. that is too high a price to pay for the inability to compromise and work this out. so the consequences of going off the cliff is that we would have very significant spending cuts and tax increases. things we need to do, but if not done smartly don't fix the problem. so there is so much reason not to have dumb policies kick in that would hamp harm the economt the policies have to start working together and they have to put together a package that
won't fix the entire problem in that so-called lame duck session, but instead put in place a down payment. some amount of savings that would offset extending the tax cuts in the sequester for some amount of time while they put together the rest of the bigger deal that would really deal with the fundamental problems of health care, retirement, and the tax system. and those would be done through the normal committee process and hopefully by this time next year you have a significant debt deal resolved. the reason i'm more optimistic than i have been in the past is that the fiscal cliff is really kind of an accident forcing moment. if policymakers don't take it moment to start working on the issue, then we really should be worried and i'm sure credit markets would not respond well. >> oof raised -- you have the campaign to fix the debt, what have you raised, $30 million? probably more now. >> that's right. this campaign to fix the debt which is a campaign debt involves republicans and democrats, it's very bipartisan, bringing together business leaders, citizens, to help put
on pressure for congress to come together in a bipartisan way, chief a de achieve a debt deal. and it's raised above $30 million. honestly in this country people know you face challenges. and either you make the choice that it's easy and you can pay the price for many year, or you step up and you make the stuff choices. and people want congress to work together on this one and it will be hard. it will require tough choices, but we know that we have to do it. so there's a lot of support for this campaign. we're eager to start working with bipartisan members to get a debt deal in place that will allow stability in the economy. >> also just very briefly, on the discussions you're already having with current members of congress are you witnessing any movement that you believe you can be optimistic that in the lame duck session we can get some kind of an agreement? >> here's the good news.
members of both parties clearly know how serious this issue is, that we don't have time to wait for this. and the kinds of choices that we're going to have to make to fix the problem. the bad news is that it's hard and politics still stands in the way. republicans and democrats aren't working together very well. that's not surprising right leading up to the election, but we'll have to make a major pivot where the focus will be one on deficit and debt reduction and doing it in a way that both parties come to the table together. it's going to be challenging and it will require cooperation and compromise nap will have to start immediately after the election for us to get it done in time. >> good to talk to you. thanks so much for joining us. we appreciate it. we know it's early there. the u.s. isn't the only country gearing up for elections. in venezuela, voters are heading to the polls on sunday to pick the country's next prime minister.
kerry sanders has sent us this report. >> reporter: campaigning is over here in venezuela. it's now up to the voters. these are chavez supporters. they would like to see him get a third term which would be unprecedented in this country. up against candidate then rekay, the young 40-year-old some say sexy energetic candidate who says that the oil profit fws fr this country are not benefiting the people properly. these folks disagree, they say that they have more money for housing, more money for food, and of course gas at 24 creents gallon makes everyone's lives easy. but there has been less investment in the nationalized oil company which means there are problems with the infrastructure and maintenance. so in the last ten years, there's been 30% less oil coming out of the ground.
the debate will be answered on sunday, we soo should expect that we'll have some sort of answer to who won on monday. and then we'll find out whether the people here accept that the results are fair. kerry sanders, nbc news. next we head out to madrid. finance minister insisting spain won't need a bailout, but his fellow country men seem to disagree. >> translator: the truth is i don't know. everything points us to getting a bailout. they're talking about a soft bailout as opposed to a full scale one. bring the country out of the crisis and start generating jobs, then it's a good idea. >> translator: we have a lot of debt and with this amount of debt, we have to find the money somewhere. but i'm not sure whether we'll get a bailout. >> translator: yes, well no doubt need a bailout.
spain doesn't need a bailout. there are certain conditions that i understand perfectly, the ecb is totally independent, but they have demanded that in order to intervene in the sovereign market, they want certain conditionality. >> i suppose there's a difference between a full bailout and a condition-like assistance which is maybe what they would argue. but where do you think we are some more comments out this morning saying no request is imminent. >> i know. you can't underestimate politically the pressure that he's under right now. the central bank governor yesterday suggested that actually the budget that they
presented for 2013 is off track, the growth estimates for next year are overoptimistic. so analysts and the central bank of spain saying their estimate was off. and the response he got in the meeting was pretty bad and socially he's under pressure, also. we had the protests last week and i'm hearing that there will be protests next week, too. and if you look at the poll readings, a ten percentage point drop in support for the people's party. so, yes, he has external pressure, but you can't underestimate the political pressure that he's under and potentially putting off a decision on asking for external help. he said it wasn't just a decision about spain, it was also a decision about the future of europe. meeting with the leaders of france and italy later tonight and i think he'll get the
message back from them. back to you. >> thanks for that. now, it's one year since steve jobs passed away at the age of 56 after a long battle with cancer. carl quintanilla that been looking back at his life. >> it may go unmatched for generations. >> a truly magical and revolutionary product. >> steve jobs introduced one grainy innovative product after another. consider 244 million iphones sold, 131 million desktops and laptop, 84 billion ipads, 350 million ipods. and while at apple, jobs had his hand in every part of every creation. >> steve jobs was not really an engineer, not really a programmer. he was very hands on from the design, the execution, the menus, the fonts, the colors.
>> i didn't want to tell you i had steve martin on my ipod. >> jobs created a whole new way to appreciate music, using software he designed on devices he designed at a price he set. >> he wanted to sell songs, not albums. selling songs in many respects was -- >> jobs the inventor, the man who changed mobile communication, and digital entertainment, may just have been the greatest retailer of all time. >> apple stores are the single most profitable store on a square foot or cubic foot of any stores in the world. >> and while some question whether his legacy is enough to carry the brand, a year after his death, the stock price has nearly doubled. >> without that sort of visionary pioneer, other business factors might weigh in and interfere with design. >> but for the millions of mac faithful, jobs will ultimately
be remembered as a rebel, an icon and a genius. >> have the courage to follow your heart and intuition. they somehow already know what you truly want to become. everything else is secondary. >> carl quintanilla, cnbc, business news. >> one year on from the death of steve jobs. next nonfarm payrolls set to dominate today's discussion. we'll look ahead to the trading day.
if you want to join the conversation, firstname.lastname@example.org, @cnbcwex, @ rosswestgate. thank you for all of those. and speaking earlier, patrick o'keefe says the market estimate may it actually be a little too conservative. >> i'm looking about 150,000 net gain in the private sector. some in-ed decline. i think the unemployment rate will tip up largely because of growth in the labor force. last month what we saw was fairly significant retreat from the labor force. i expect job gains will be more spread than was the case in
august. >> if there o'keefe is it right, how about traders react? >> i think we'll probably see a continuation of the rally. this week we've been seeing strength across the board in the stocks. we had a real key level of support that was tested earlier in the week, that 1427 level in the s&p which holding up above a very well defined balance. but on the daily time frame again this week we test that had 1427. there are big levels of resistance. we're talking about yearly highs basically ahead of us. so again while you have to give the benefit of the doubt to the bulls, definitely because there's been areas of value that have been established higher. clearly there's certainly again major resistance at these
levels. >> started the week people saying buy down side protection and prepare for a weaker october. >> i think things seem to be firming. and from the last report you just had there, the last person discussing the jobs data, again, he's looking for a little bit of a higher number to come in up above the 113, 114, i think he said around 140. and i have to support that in some ways. if you look at the prior reading we had last month, we had 96,000 and there was a dismal 96,000. and then we had the spike up to the again 113 that we're looking for or that area that we're looking for, but look at june and july. we actually saw 45,000 in june and then a spike back up above the 140 level, 141 i think it was in july. so certainly potential for a big number. >> ben, thank you. have a great number. that's it for "worldwide exchange." that number coming up on "squawk box."
first friday of every month always a crucial day for the markets and the economy. with that employment report. only 32 days left until election tuesday, so the jobs report today is even more important than ever before. will we get under 8%? love that. bank of japan holding interest rates unchanged. policymakers looking to keep their powder dry as the risk of recession looms. and another bank is reportedly being probed over mortgage backed securities. it's october 5th, 2012, squawk bgs begins right now.