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tv   Worldwide Exchange  CNBC  October 15, 2012 4:00am-6:00am EDT

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this is today's "worldwide exchange." >> these are your headlines from around the world. >> softbank gets set to announce its deal expected to be worth $20 billion. >> chinese replace leaves the door open to more easing but stronger that be expected trade day that over the weekend could offset some pressure. >> and uk bank comes under pressure to secure a buyer for 216 branches even as rumors say
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branch and flowers might be giving. we've started a new week here. >> and this is the final sprint for the sprint/softbank finish. >> let's's ho hope the sprint d finish. >> the call was supposed to start right now, but there's a little pit about of a delay it sounds like people in the room waiting on the presentation. >> softbank, here we go, coming out with stuff. the reports say it's aim to go take up to 70% stake in sprint in a deal that's worth up to $20.1 billion. so that is now confirmed. softbank will buy the majority stake in sprint nextel for that amount. and then we'll wait to see what else we get out. but the deal is confirmed.
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it is going to happen. and softbank is acquiring control of sprint nextel. >> there will be of course a webcast for the deal. softbank shares under pressure down 5% this morning. sprint nextel is roughly unchanged. >> the price, $12.1 billion. and then pump in $8 billion in new capital. going to try to clear out a lot of their debt. >> and s&p had earlier placed softbank reallyings on watch negative. so of course we'll have analysts weigh in. but investors are worried about what this pore tends for softbank. >> these details are exactly as have been reported. they expect the transaction to be completed by mid 2013. so we'll keep flashing those details up on the screen there as they continue to come through.
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we'll get more details, as well. meanwhile chinese inflation eased in september giving more elbow room to boost sluggish economy. the data dropped further marking its september straight month of falls. a month that's also reacted immediately. analysts warn the numbers may have been skewed by seasonal factors. the former pboc adviser told cnbc that china is going to face a pretty tough balancing act. >> inning coming two to three years, i expect the chinese economy will go through a difficult adjustment process and minimum degree of growth which means 6% is necessary. if it slow down too much, you'll
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fall down. >> thanks very much for joining us. good to see you. when you look at the inflation data, trade data suggests things are actually a little bit better than we might have thought. are they just one month figures? >> are you asking whether it may be a one off? >> yes. >> okay. i see. prior to the data release, we were looking for actually a stabilization of export growth in china. and given the recent improvement in the global ism and also export orders, so instead a little better than expected. and wihether or not it will extend into early next year remains to be seen. what we can try for watch for as
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a gauge is the trade fair that starts today. we can check out whether the export orders during this trade fair will help to extend the growth. >> so what more policy action are we going to get? >> we see today the inflation figure came in line with expect station and for the full year, the inflation probably will come in at 2.7%. also mentioned by the pboc governor during imf and the world bank meeting over the weekend. and i think the governor was emphasizing on the medium term inflation risk and the controlling inflation renewed the top priority for the pboc which from what i see suggests that the pboc or the chinese government will continue its cautious easing policy stance in the coming months. as we know that the lack of
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policy, big policy moves in august and september, probably suggests that the interest rate cut is constrained by a rebound in the property price and also the pboc is preferring to inject liquidity instead of the rrr cuts. so therefore, i think probably we're not expecting those kind of big bang monetary measures, but in the meantime we can see that the credit growth and corporate bond issuance have actually exceeded expectations which show support growth in the coming months. >> and stefan has joined us. looking at the figures, if this is further evidence that we've failed to see this kind of emerging strength of the chinese consumer which is really the rebalancing that everyone is kind of hoping happens here. >> yes, i agree. i think that's really the thing you want to see, the consumer
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picking up, but that's a very long term change. that's not the kind of they think that will help us on the cyclical basis. and if you really look at the next three months or six months or short term horizon, the consumer will not be there very quickly. >> and do you agree with that? >> well, i certainly agree that the rebalancing of the chinese economy and consumption growth would be a long term trend which would not happen overnight. and also during the cyclical town t.u.r.n. i think at best we would expect is the consumption growth for a stabilizing factor and for china investment to be a key contributing factor in the near term. so significant rebound in the chinese economy, which is not our baseline, would require investment growth and pot consumption. >> okay. thanks very much for your time this morning. stefan will stay with us. and we want to bring you the
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latest update on the sprint/soft dalt bank official. they will buy a majority stake for about 20 billion. sprint ceo will remain. softbank will pay 1.1 billion to sprint shareholder, $8 billion to strengthen sprint's financial standing. aims to complete the acquisition by 2013. softbank will buy 3.1 convertible bonds at a price of $5.25 a share and softbank will finance the deal. >> and another analyst is joining us. good to speak to you. what do you make given the
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details through of the price and will they launch into more acquisitions once they've consolidated this one? >> that's right, i think a lot of people have speculated and talked about the deal in the uk a couple years ago. and going back to the rationale, the rationale is there for softbank to get this deal done to expand its investment into lde systems, and the company will have to explain and the synergies that they're proposing with this softbank/sprint combination. and from there on, i guess we'll see whether or not they'll go after clearwire, further expand
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their network in the u.s. >> what is the attraction here for softbank? >> this comes after the transaction of another acquisition in japan. so it's in line with what they've explained to investors over the past two years. where they want to take the company, expand into the telecom sector. and this will allow them to get a foot hold into the u.s. market which they currently don't have a presence in and the inner -- with their massive capital expenditure going forward. >> do you think they're going to
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start lowering prices or do you think they'll keep prices where they are because they like the cash generation from it? >> as far as bill porter is concerned from softbank's perspective, this will make them the third largest wireless carrier over in the u.s. behind verizon and at&t. and so i think eventually once we deal with the forward capital expenditure that they'll have to invest in going forward, i think we can all talk about, well, is this going to also impact prices
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in the u.s. but first they'll expand their network before talking about is it going to lower prices. >> and i wonder if this is the stance of a new japanese wave of m&a in america. the strong yen will help on pricing. a lot of cash sitting on japanese balance sheets. the bank is clearly in a position to help leverage deals, as well. so is this the start now of a new wave of japanese m&a? >> sure. we were already on track to by pass last year which is the record over the past 20 years. after this acquisition that was announced today, this will catapult m&a over $80 billion in the u.s. so it's a trend that's been continuing.
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i think what has changed is the focus of the acquisitions rather than simply bolt-on acquisitions in order to get a presence in a market in which a japanese company doesn't have a presence in, we're looking at japanese companies that are looking to expand overseas to further bring in what they already focused on. >> okay. thanks very much for joining us. >> as you can see, this is video of the conference under way. we're waiting for better sound or perhaps english sound in order to get a sense of what's being said. and the bottom line is as this continues, any headlines we'll bring to you right away.
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>> i notice they're saying it's a risk and a difficult challenge. you don't often hear that. >> if your shares are down 5%, i think you have to at some september nod your head -- >> should always go down if you're the acquiring company -- >> they're buying top line growth and you wonder what does it mean. >> we'll take a short break. plenty more to come from stefan. and plus lbmh to post it latest figures today. >> and citigroup set to be the latest bank to report numbers in the u.s. we'll get an early preview from wall street. >> also we'll get the vow from outer space, an austrian daredevil skydiver has broken the sound barrier and a number of records after free falling from 24 miles above earth. he's going quite fast there. >> 650 miles an hour, i think it
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is. ben bernanke is defending the central bank decision to launch qe-3 against foreign criticism. speaking in tokyo, he said it's far from clear if fed stimulus hurts emerging economies. others say the monetary policy weakens the dollar which hurts exports in developing countries. bernanke says qe-3 not only helps the u.s. recovery, but boosting spending and growth and also has the effect of supporting the global economy. stefane, is he right? >> well, i'm not sure that qe-3 will have a big impact on the economy. what we did is look at the impact ons assets and actually the impact on the stock market is not that clear for us. >> what about for emerging economies in particular? >> yes, that's one of the point where you do see qe. you to see flowing into emerging markets. >> does that help or hurt?
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because the argument from a lot of these emerging markets is that that then strengthens their currency, makes them less competitive. are they right to try and fight that or are they right that it's the u.s. being selfish in that regard? >> the currency hurt the exports. they will not write down appreciation of the real. so basically they're importing whether they like it or not, so they will run an easing monetary policy. >> bernanke came out saying they're not responsible for the huge waste of capital flowing in. is he wrong? >> what's interesting is we did some research on that. qe 1, qe-2 a huge money of going into equities. what we have seen so far is a big way at the very beginning of
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september, reaction of the market, pre-announcement and just the week after, but since then actually there's been almost nothing. so quite interesting. because it looks like qe-3 has much less of an impact for the time being. so we'll see. >> meanwhile, the country's prime minister sounded as positive note. the pm said an agreement with the troica will come before this thursday's european summit. but not everyone is as positive. swedish finance minister says they may quit the currency within the next six months. christine lagarde said athens should be given more i'm. >> they need more time. more needs to be done, but at a sensible pace, a pace that they can deliver on. >> vice president of the european commission says the eu hopes to reach a deal with
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greece on fiscal sttargets this week. said they're considering giving greece more time. and he also suggests spain saying madrid is open to considering a bailout request. >> it was another weekend of protests on the streets of madrid with thousands demanding an end to austerity. and on the sidelines of the imf meet i can't 20ek i can't, spain's finance minister signaled the government would hold back on requesting a bailout. still ecb member told the "wall street journal" spain shouldn't wait for the market to pressure it into asking for aid. and austerity protests also took place in lisbon. more demonstrations are expected today as the portuguese government presents its 2013 budget and measures are expected to include enormous tax hikes on the middle class and financial transaction tax. >> we're still monitoring of course this softbank conference,
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as well. they say they will continue to focus on early net reduction. no equity financing has been used and no change in the company's dividend policy. >> and they say the combined company will have 96 million users. and this i find interesting because it gets to the broader question which is that softbank saying it needs to break out of an aging japan. is the company in a comfortable position basically looking for growth. >> what do you make of this deal some some? >> we don't have the specific detail, but i think there are two things which i find intriguing. it's a company indeed buying growth in the u.s. probably the u.s. would be the
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better place for buying growth. and we're seeing a lot of companies with a lot of cash and this is an example where you put cash at work, reducing the at the time, and trying to put more equity. so that's something that could continue in the future. >> we're still talking about corporate strength. is that as much of a dichotomy takes sometimes seems? >> it has been the story for a long period of time that companies are very cash rich in japan simply because that's one of the side effects of the credit crunch in japan. they have been used to not rely on the banking sector. >> you could almost be describing conditions across the western world, japan a preview of all of this. >> hope not, but just to some
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extent, that deleveraging, not investing the cash, so if indeed we're going the january theez way, it would be very worrying. meanwhile we're weighted on to the up side after a week of being down. advancers outpacing decliners by around about 7:3. ftse last week down 1.3%. right now up about a third of a percent. dax and cac 40 down. currently up 0.8%. ibex up around .75%. bond markets, 5.67%, so sort of holding on to some of the gains made last week. on the currency markets, remember euro-dollar has baeen -
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we've come back down a little. so not a huge follow through. sterling-dollar still just about the 1.60 level where we were this time last week. that's where we stand. european trade, that about the asian session? let's go to singapore. >> most asian markets lost following and failed to inspire markets as they wait for gdp figures. the shanghai com positive i will pulled back after last week's rally. we saw profit taking on miners and media stock, but alcohol producers rallied after top makers forecasted some 50% to 60% jump in profits for the first three quarters. the hang seng managed to recoup losses and he said a tad higher,
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but vte shares tumbled on both bourses. telecom maker issued a profit warning for q3 noting u.s. security concerns were having a negative impact. elsewhere the nikkei outperformed the rest of asia despite japan revising down its august industrial output. more room to stimulate the slowing economy. over in korea, the kospi was weight the down by autos, techs and steel makers. gains in defensive plays and banks capped losses. lastly, india sensex now higher by 0.1%. thanks for that. still to come, a september shopping spree has given a boost to h and m. more on that later in the show. bob...
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oh, hey alex. just picking up some, brochures, posters copies of my acceptance speech. great! it's always good to have a backup plan, in case i get hit by a meteor. wow, your hair looks great. didn't realize they did photoshop here. hey, good call on those mugs. can't let 'em see what you're drinking. you know, i'm glad we're both running a nice, clean race. no need to get nasty. here's your "honk if you had an affair with taylor" yard sign. looks good.
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[ male announcer ] fedex office. nanners.
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asset allocation, you guys
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really like commodities. and goldman has just taken down its target a little bit. so why do you think you'll do so well here? >> we are overweight commodity and especially precious metal. it's very much a qe play for our point of view, a tactical play. from long term point of view, we don't like commodity especially the metals because china is slowing because of intensity slowing. so medium term view, we're bearish. >> so what then is the time frame where you think the trade will work? >> if you look at what has happened, we were long already pressure issues metals over the summer and it has worked very well. >> gold is up like 12% over the last quarter. >> but now we're starting to go down. and if you look midterm it's going down. >> comes back to the conversation about qe versus growth. which one wins out.
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>> and it doesn't bode well for growth if what you're saying is qe wins but not base metals. >> i think for the time being again we have the short term reaction like we were saying about the emerging markets. what we haven't seen a long lasting effect of qe. so we're getting nervous on this trade, but we still believe that there is room -- >> very briefly. going to spain this week. is the tail risk off the table at the moment? because if yields go out, they'll get bailout. if they don't go up, we're sort of in this position where whatever happens, deals get contained. >> i really like the draghi plan, but that's one of the in-consist espn is is. you announce the spain, you remove the pressure. either he
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et cetera, et cetera. if you look at the numbers, spain probably has enough cash until the end of the year. if you look at the target position or the imbalance position, you're far, far away from the level where ireland was when they were forced to request help. so to answer your question, i think spain will not ask for help in the immediate future so we will still be in limbo until the end of the year probably. >> thanks very much to stopping by this morning. want it on bring you back to the conference ongoing between softbank and sprint. dan husbasey will remain ceo. it's kind of like new coke. new sprint. >> you can't call it sprint light, though, because it's got heavier. because they'll go out and buy more -- >> is that a mobile growth thing? >> full fat sprint.
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>> we'll keep watching the conference. >> yeah, i don't know what i'm saying. it's monday. i haven't recovered from the weekend yet. meanwhile, an austrian daredevil has become the first man to break the sound barrier without the aid of a vehicle. in his pressurized suit, felix baumgartner hit more than 830 miles an hour after leaping from a capsule sitting more than 24 miles above the earth. nine minutes later, the man known as fearless felix landed safely on his feet which is some fa feat in the mexico desert. >> it was a listening flight. that's what would have freaked me out the most. take a look at these pictures and we'll be right back.
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softbank buying sprint next it tell. >> and ceo says the company needs to break out of an aging japan, but admits the deal is a risk and will be a challenge. chinese inflation has left the door open for more easing
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but trade data might offset some pressure for more stimulus. >> and the uk bank comes under pressure to secure a buyer for 316 of its branches. rumors swirling christopher flowers and richard branson could be bidding. >> european stocks are higher this morning. ftse up up about a third. ibex up three quarters. >> take a look at the bochbd space. ita italy, 4.96% bunds and gilts
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haven't moved much.bochbd space. italy, 4.96% bunds and gilts haven't moved much.ondbochbd space. italy, 4.96% bunds and gilts haven't moved much. space. italy, 4.96% bunds and gilts haven't moved much. >> euro-dollar inching a little higher this morning. what isn't on there is the aussie dollar which did spike up after the chinese trade data, but it has fallen back. so not a lot of follow through. >> in the meantime h&m beat forecasts. sales open a year or more rose 6% last month compared with expectations for a 3% to 4% increase. after the market closed today, lvmh will release third quarter figures. a dow jones analyst sees surveys up 15% year on year, but top line growth is expected to firm. the firm's perfume and cosmetic televisions are supposed to help. stacey is here to help us walk through this. so h&m, let's start there.
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last most sales figures a big disappoint but showing reversal. what's the message? >> it was actually a big surprise that the comps were up 6%. they blamed the weather in august, but sales came back and in general what we're hearing is things are getting a little better. but you also have to look at the competition. you have to look at what the two companies have been doing. h&h has delayed rollout in the u.s. >> does it suggest it was a one month aberration or does the company have to be more innovative on the online front or whatever it is to make up for it with investors? >> yes, this does take the pressure off until next month. but i think again the pressure from investors is get your
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e-commerce together. >> is it just a market share story? >> yes. fast fashion is where it's at. they're taking share from the fwap, from fremp connection, you name it. list of companies that can't have the newness in the stores as quickly, so fast fashion, top shop, all taking shares. >> that's a chain management? >> supply chain. >> that's what i meant to say. is it more that's what enables that rather than having the -- you have to have good designs, but -- >> it's both. supply chain, getting the newness in the stores and it's being distinct in the market. >> and when you talk about the importance of online strategy if it isn't almost easier to have the online presence and reach customers that way. when we start talking about
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luxury, you were at the luxury conference are one of the main points was how do you deal with phrase book, it is it brand delusion or management. >> exactly. the topic there was the luxury brands i don't facebook, how do you use social media, does it dilute the brand or is it effective. someone from chanel stood up and said we're not convinced yet, we can't want to be integrated with pizza hut on someone's screen. but that's what you have to do, you have to look atop shop success. . they have 2 million viewers. the guy who jumped out of the sky tif yesterday had 8 million viewers. so that's important to get those eyeballs. >> what if fill lyphillip green out. >> you can imagine the challenge? i'm just proud that i get that reference now. this time in london is paying off. but i wonder for lvmh what the
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expectation for. >> it's all about china, how badly is china slowing. and the question that we've talked about before is does that traps la translate into the tourism. >> people don't fully appreciate that it's asian tourists. >> it's almost half asian toir wrists tourists in the luxury market. and burberry did warn there. >> absolutely. thanks for coming by. india's government raised subsidized fuel prices. what does it mean for rate cut hopes? reema, what does it suggest? >> the street is actually very confused and very divided
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whether the rbi reserve bank of india will move of any rate action p when they meet for the policy next. what stacks up in favor of the rate cut, just last friday we got the august industrial production data, 2.7% higher that be street expectation. that was a positive indicating growth is looking better. and second more importantly has been all the action in terms of reform for the government side. but what stacks against rbi cutting rates is the fact that inflation still continues to remain very sticky. so as you correctly pointed out, the inflation figure at a ten month high, higher than street expectations. even the july figure has been increased -- the july figure has been revised upward significantly. now stands at 7.52% and there is a fear in the market that even the september figure there is a
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fear that that may be revised higher. for this month's inflation, the reason we saw the month on month increase is primarily to do with fuel price increase. there was a two week impact. but even if you strip off that, the rest of it is manufacturing inflation has jumped out on a month on month basis and core inflation continues to remain at higher levels, 5.6% unchanged in a month on month basis. and even the pond markets are actually pretty unchanged after we got the inflation numbers. more or less this time the street is divided whether we'll get a rate cut or not. pa back to you. >> reema, thanks so much for that. let's remind you what else is on the agenda in asia tomorrow. fdi data. and first major stock sale in months. and the rba set to announce
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minutes of its last policy meeting. >> and switzerland is taking some special precautions to deal with the eurozone fallout. the nation has launched a military exercise to respond to instability in europe and to test the speed at which its army can be dispatched. switzerland is not a member of the eu, though it is part of the free travel zone. for more on why the military is such a hot topic, head over to of course this comes as the european union was awarded the nobel peace prize which some euro skeptics have called an april fool's joke. let us know what you think about that or anything else you've heard on the program,, @cnbcwex or reach us individually. >> it is october. halloween approaches. still to come, nothing scarier on "worldwide exchange." trade links this week, we'll hear from the ceo of ecover
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about the challenges of going green. bob... oh, hey alex. just picking up some, brochures, posters copies of my acceptance speech. great! it's always good to have a backup plan, in case i get hit by a meteor. wow, your hair looks great. didn't realize they did photoshop here. hey, good call on those mugs. can't let 'em see what you're drinking. you know, i'm glad we're both running a nice, clean race. no need to get nasty. here's your "honk if you had an affair with taylor" yard sign. looks good. [ male announcer ] fedex office. ave 50% on banners.
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ceo of e cover says there is a lot of interest but also significant challenges. i started asking just what those challenges are. >> biggest hurdle is still the green washing what's happening. a lot of countries do not have sufficient regulation in place. so we're in markets with more difficult environmental credentials in our products compared to local produced products who actually say they're doing the same thing. so green washing is a big hurdle specifically in those territories where there's limited or no regular regulation. >> e cover is a couple decades old. and that's really what has helped build the business. s as you look in emerging
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markets, you're having a more difficult time getting that message across. >> we're the first green cleaning brand in europe and we've built our presence over time over the last 30 years. and we're actually going to with the learnings we have in europe into new markets, for us it's building a platform and then from that start to build the whole brand awareness and doing a the lot of education which we've been doing here, as well. we'll do it as well in the new markets. it will be a challenge, but exciting, as well. there's a lot of know how already and interest in environmental methods in the new markets. i always say the population issen come fronted with
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environmental issueses on a daily basis. so there's a very i'd say high level of interest in making sure that there's an improvement in environmental performance. >> and you're a european baseded manufacturer. you have these elocate logical fa ecological factors. how are you able to keep your costs down at a time when it must be so much less expensive to be producing in asia or cheaper parts of the world? >> that's one of the reasons why ecover is still in the market with a premium. and we're facing indeed quite a tough challenge always to keep up with the conventional products because not necessarily because of the cost price of the product itself because that's just a minor point, but keeping up with the promotional al pressure that the conventional brands are putting in to the market, that's probably the biggest challenge. but the whole acquisition that
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we've done will help us getting the necessary skill to further make synergies and efficiencies into our company and our products. >> the acquisition method makes you a $200 million company biannual revenues. when are we going to see ecover going public, and if you were to do that or pursue a public offering of some sort, what would determine your choice of where and how to pursue that listing? >> that's not yet on the agenda. we've just completed the acquisition which is very exciting. we've done that because it gives us the necessary platform for growth and we want to grow the which is over the next three to four years. so we believe as prift company, we can be in a stronger position without having the pressure on profitability on the short term. >> should we expect further
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acquisitions? >> yes and no. there's not transformational acquisitions as we've done take because there are no other brands in the market that will omp p kochl p complement us. >> just a reminder that trade link series does run here every monday at 10:50 chlt doctor chlt techlt. we look at how the financial crisis is affecting global trade and the impact on business around the world. it's official. japan's tell company giant softbank is acquiring 70% of sprint nextel. and for just over $20 billion. softbank ceo says the deal will make the u.s. mobile market more competitive when it closes in mid 2013 and dan hesse will keep his job. softbank shares have extendeds
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losses today. those investors are worried about synergies of the deal, down 5.3% as you can see there. still analysts say it should be a win/win situation or it could be for both situations. that could open the floodgates for a japan m&a rush. >> sprint was looking at purchasing the rest of the stake in clearwire. the comment out this morning from softbank is that this does not require any actions involving clearwire, which i think probably means that they can do whatever they want, they can continue with with it or not continue with it. >> not necessarily a knock on effect. but it's very likely that they'll pursue that. >> the other thing that's of interest, we'll come on to this, the ceo saying this is a difficult and challenging deal. >> the ceo of soft babank that .
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>> branson and flowers could fight out for 316 rbs branches. this after a deal collapsed on friday. the ft reports injury begin money which lost out in a bid for the branches two years ago has made informal contact with bidding again. flowers also thought to be considering an offer. rbs underperforming rivals over the last year. up just shy of 11% compared about 14.34%. and of course it is the one owned by the uk taxpayer here, ross. >> yep. get it done, guys. meanwhile other bids get under way this week. bp's partner aar is tipped to make an offer. and shares of vivendi.
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according to the weekly paper cites a person familiar with the negotiations, vivendi would take a 49% stake in the new entity and up to 5 billion euros in cash. the paper writes the new company would eventually be listed eventually vivendi to exit the business entirely. but the question with all of these deals is are they going about it the right way. a new study by global law firm says businesses are having a hard time realizing the full potential of cross border connections. robin johnson is joining us. timely report bearing in mind the news flow. no surprise that it's difficult to get deals to work. we've known that for a long time. i suppose the question is why having known this for such a long time, why is it still difficult for firms to connect the dots. >> what's interesting is we knew
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there was an issue as you identified, so we asked people around what sort of issues are coming up. and when we hear people talk, they don't actually know what other people do in terms of taken grace, so they're sort of doing their own thing. what they wanted to shaer what other people are doing. the common theme that came out of this report was there was a lack of connective tissue between the deal teams and the intake a grace team. they weren't utilizing the deals properly when integrating into the business. >> do the integration teams need to be brought into the process an awful will the earlier? >> much earlier. so not just the integration teams. the whole of the team. so when you have an original team looking at deals, they don't bring people in early enough and therefore they do the execution phase and integration phase, but if they're brought in right at the beginning, things go -- >> do they not do that because if a lot of discussions take place that never go anywhere. so do they not do that because they're worried they might be wasting everybody he's time?
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>> we're finding where they're brought in earlier, the results are better. who are chanc more chances of issues getting identified which saves time in the longer. >> we're at a point when so many deals have fallen apart because of what you might call macro concerns. whether it's the relationship between europeans, whether some of the big relationships between national security and what they want to allow from asia. so is it that that's a better way of identifying perhaps these issues from the start to avoid deals falling apart because of those reasons or are those factors simply outside someone's control? >> what's interesting is that the business people say it's macro issues causing the issues whereas it's actually the people
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doing the deals saying it's the micro issues. so people are too quick announcing the deal without analyzing -- >> bae and eads? >> there was a lot of political interference in that case. >> if you'd gone straight there, you would never have proposed it. it would have been clean it wasn't going to happen. what do you think of the softbank sprint deal? the softbank coe saying it's going to be challenging, but the sprint ceo will stay a run it. will that help? >> personally i think that's a very good move. because what will happen is as they integrate, they will have that continuing of management 24r who can focus on the issues. one of the issues that came out of the report was that people don't use the due diligence they use as the bidder properly with the target management of the target. >> they crujust chuck it and put
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in the file and don't use it going forward. a new integration team comes in not having benefit of the work done during the deal. having management continuing in the process, if they understand the cultural issues associated with those, could be a significant benefit to solve the bang. >> clearly you need the right what you firm that's worked on at least 10 m&a deals. >> that's the magic number. >> sad if you've only worked on nine. i'm joking. nice to see you. thanks for joining us. still to come, citigroup will report third quarter numbers. find out what analysts say could be their biggest challenge.
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welcome to "worldwide exchange." softbank reveals it's buying up to 70% of sprint nextel. it will create one of the world's largest telecom companies with almost 100 million users. >> softbank says the company needs to break out of an aging japan, but admits the deal is a risk and challenge. and chinese inflation leaving the door open to more easing, stronger than expected trade data could offset some pressure. and cue up another round of earnings.
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citigroup leads the pack out of the gate today reporting third quarter results before the opening bell. as mentioned, there was some stronger chinese data. exports grew, imports were softer. net result is that futures in the u.s. are pointed a little bit higher. dow jones trying to add about 25. nasdaq and s&p also trying to open in the green. take a look at the cnbc ftse global 300. definitely a pick up in risk sentiment. not a huge move all together. european markets giving a sense of what's happening across the region. xetra dax is strong performer this morning. cac 40 up nearly 1%. ibex 35 adding three quarters of a percent.
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so the mood much more positive than initially we started. >> better than last week. as far as bond yields are concerned, not good moves to date. 5.68% spanish yields. dollar-yen steady at 78.54. we had interesting trade data, chinese exports growing at roughly twice the rate expected in september. we've come back down to 1.0230. let's get more reaction to the chinese data we've had out.
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let's go out to singapore. >> asian bourses kicked off the week in lackluster trading. we saw subdued response as investors wait for gdp figures. alcohol producers rallied. and the hang seng managed to end higher, but vte shares tumbled. te u.s. securities concerns were having a negative impact. elsewhere the nikkei outperformed the region despite revising down august industrial output. more easing hopes from beijing,
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but softbank shafted tumbled. some investors fear the deal will be mower costly. more coming up on that deal shortly with our guests. the kospi was weighed down by techs and steel makers. gains in defensive plays and banks capped losses. sensex still higher by 0.1% ross, back to you. >> thanks for that. have a good evening. >> and our top story is japan's tell company giant. soft bank ceo says the deal will make the market more competitive. peter larsen is joining us on the line. thanks for phoning in.
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what's your initial take on this deal? >> well, i think they admit it's a risky deal and we agree. exceptionally th essentially this is a throw back to the 1990s when mobile phone operators expanded around the globe with a vague promise of lots of uses under a single umbrella. recently it's all about softbank declining in japan where the population is shrinking and it's taking advantage of the strong yen and the fact that it can borrow a lot of money cheaply. but sprint is notten aun troubled acquisition target and the benefits are far from clear. >> softbank ceo said, and this
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is a guy that's trying to pay down debt and now loading up on it again, so are in-he investors worried about the loss of that discipline? >> yes, i think they will. ironically softbank in japan built itself up by buying vodaphone japanese business for which it took on a lot of debt. and now it's trying to do the same with sprint. they need to explain why this is better than some other deals they might have done. obviously investors may say we'd rather have the cash for the time people. so quite a lot of explaining to do for softbank.
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>> shares down 5% today. as you say, it has a lot of explaining to do, but what can softbank do to convince ib trnvr this is was the right strategy? >> it needs to make a clearer case on the synergies between the two businesses. argument seems to be the two will be able to buy mobile phones more cheaply from operators. these benefits are vague and as i said before, when companies like vodaphone and others which are trying to make similar arguments in the late 19 ninth cross border expansion, proves tos tall promises. so a lot of skepticism about this and they will have to come up with some hard numbers.
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>> peter, you mentioned two factors, the strong yen and an age japanese population. these affect a lot of japanese companies. do you think if they execute on this a lot of other firms will be looking at more m&a in the united states? >> yes, i think they already are. this is obviously one of the beggar deals to come along. and i think share hold cholder n is quite important because companies have to believe shareholders are willing to tolerate these kind of acquisitions. so if they don't deliver on the results they promised, that will make it harder for other companies to follow. >> peter, thanks for that. our apologies obviously for the
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not perfect sound. >> here's more proof of the revived appetite corporate japan appears to have for american assets. japanese parent company of 7-eleven stores says it's picked up the gasoline stands and 67 convenience stores in pennsylvania and ohio from easy energy usa. they also bought 58 handy mart stores. no price tag given for either deal. turning to banks, citigroup reports results at 8:00 a.m. eastern. forecast to earn 96 cents a share on revenues just shy of $19 billion. citi will also take a $5 billion charge related to it sale in morgan stanley smith barney. analysts say the challenge is to maintain growth in emerging markets. it generates most of its core profits outside the u.s. p
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shares down about 0.1%. >> on the agendagenda, septembe retail sales around 8:30.shares down about 0.1%. >> on the agenda, september retail sales around 8:30. 10:00 august business inventories. in addition to citigroup's earnings, also look for results from charles schwab. >> and wd 140? >> is there a household anywhere in the western world that doesn't have a can of wd 40 sitting around? >> a great question. so wt d 40 reports today. and also expecting tepid growth the next year. latest poll finds 44% of economists expect 1.9% gdp
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growth and graduate you'll increase of 3% by the fourth quarter of next year and unemployment back up above 8%. there's a silver lining that housing is recovering faster than expected. a majority don't believe the u.s. economy will fall off the fiscal cliff. although if we've learned anything from economic proce projectio projections, it's usually to do what they don't expect. still to come, as one door closes, another door opens. another bidder has emerged. we'll tell you who and what. #
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. banks firmly in focus. citigroup poised to report third quarter results. >> and chinese inflation remains tame leaving the door open to more easing. ben bettrnanke is defending
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their decision to launch qe ece and it's far from clear to say it hurts other economies. bernanke says qe-3 not only helped the u.s. recovery by boost being spending and growth and also the effect of supporting the global economy. >> the imf and world bank meetings wrapped up in tokyo with the closing statement that was cautiously optimistic on the outlook for the global economy. maria bartiromo sat down with christine lagarde and began by asking her if greece will be given more time to meet its bailout targets. >> we have consistently said that given the major adjustment, about 14% of gdp in the last three years, they need more time. more needs to be done, but needs to be done at a sensible pace.
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the key thing you see is that the country be back on top, if we put on them obligations that they simply cannot deliver on because it's just too hard and too much, the program is not going to be credible. so our position is that we would rather have a program that is difficult but credible rather than a program that is going to be so difficult that it is not credible. >> you have complimented the ecb's efforts and central banks around the world providing stimulus. but when is it too much? can you keep doing it or do you need fiscal policy to replace some of the changes? >> one cannot replace the other. and it works both ways. the monetary policy by the central banks will not replace fiscal policies decided by
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governments and vice versa. they have to go together. clearly both in the u.s. and in the eurozone bankers are saying we've done our bit, where are you, governments, with your fiscal measures. and that's what's needed. >> what would you like to see in terms of fiscal measures? a lot of people have feel spain has worsened while italy has stabilized a bit. what can you tell us about the nations in europe right now, the most struggling away from greece? >> i would say most of them are taking effective fiscal measures in order to consolidate their fiscal position. and in the medium and long term, reverse their debt trajectory which is currently climbing. so the key point is to stabilize the debt and then go into
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prediction of the overall debt. so hers doing their job in the main, not all of them, and don't ask me to be specific, but essentially doing quite a bit. it has to be credible. that's our key concern. it shouldn't just be the numbers for the numbers. they should focus on the measures rather than the nom not target. what is more needed is for governments to deliver on the commitment for say more europe. maybe political union as the chancellor has indicated. that's what i think the central bank is expecting. >> so let me follow up on greece. when will we know whether or not greece gets the next tranche of money? >> there's a process that is ongoing at the month wiment wit teams from the imf and european commission and central bank working to see what has been
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done, what needs to be done in terms of structural reforms, in terms of financing and in terms of debt. and once we have reached conclusio conclusions and agreed on those conclusions, it will be concl e conclud concluded. it will take a few week. >> a cautiously optimistic tone there. but switzerland is taking special precautions. the nation has launched a military exercise to respond to instability in europe. it tests the speed at which its army can be dispatched. for more on the story, visit
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still to come on the show, stick around because we'll hear from howard marks on why real estate in the world top financial centers may not be a good investment.
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welcome back. want to check in with u.s. futures. a pretty positive session in europe and that looks to be extending into the u.s. market where we see dow trying to add about 28 points at the open, 12 for the nasdaq and 4 for the s&p 500. >> and after weaknesses last week, we are up this morning. the cac 40 up about a percent. about half a percent gains for the ftse and xetra dax. the virgin boss richard plbrans and richard flowers could be fighting it out for branches of rbs. the ft suggests virgin money which lost out to santander has made at formal bid. rbs is being forced to sell these branches because of the
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state aid it's received. so sort of an eu command. >> a group of homeowners in the u.s. want to take 12 of the world's biggest banks to court. the plf plaintiffs believe manipulation resulted in mortgages costing more than they should have. more than 100,000 property owners could be represented and i find this to be such an unusual lawsuit because that may be true that on the first day of the month they're on a time to time basis, but for the most part, if you look at what happened during the financial crisis, it was that banks together were colluding to keep the rate much lower. >> they have to prove they had a financial loss.
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>> it's going to be complex. the american civil liberties union will reportedly sue morgan stanley over predatory mortgage loans made to african-american bore roers. t were row the aclu claims morgan stanley is culpable because it linked new century billions of dollar, packaged to sell to investors and pressured the companies to make loans to people who couldn't afford them. >> just want to note here as we look at the sprint/softbank deal, clearwire price target has been raised raising rating to neutral. but the sprint/softbank deal notwithstanding, there hasn't been a ton of deal action in
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global markets this year. at the london summit, i asked babbs and capital what concerns are weighing foremost on the minds of investors. >> a lot of people are sitting on on the sood lines for a number of reasons. one is the uncertainty around the eurozone crisis, around the u.s. election, the fiscal cliff, waiting to see how the transition occurs in china. we're in a unique phase in 2012 and first part of 2013 where you have key elections, government transitions and really just seeing how those things play out. also for america, we had a lot of legislation come in. f but while you have renlg lagsz, y legislation, but no rules yet. >> and we're seeing such changes or potential changes with regard
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to the tax code. >> is there an impact on the economy, if they deal with it, if we get positive news out of it, that might give people more conviction to consume which will give business more conviction to produce. but right now the uncertainty is the governor on growth. >> i also asked if it was a good idea to look into real assets such as real estate in major cities. >> real assets in this environment, your phrase, is an example of the kind of simplistic formula that people result to. and one of the things i always
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try to emphasize in everything i say is that there is no idea of a good idea or bad idea until you talk about price. the trouble is people say real assets are tangible, you can touch them, you can live in them. so they're obviously a refuge. does not mean owning a house in london is a good source of safety regardless of the price you pay? it can't. if something is a good idea at $10 million, it's hard to believe that it's an equally good idea at 30. >> so you don't think we'll be in a world where fiat money becomes completely irrelevant? >> the trouble is, and from time
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to time people think that, so in 2006 or 7, people said houses are safe. you can live in it and they always go up. land is safe. the beach is safe. it's finite in amount. in 9 '99, people said internet stocks are safe because they'll change the world. sweeping generalizations are horrible especially if made without regard to price. >> interestingly, howard marks did just make a huge purchase of new york real estate, which is partly why i asked him about it, but he doesn't sound quite as positive on london. still to come, jpmorgan posted record third quarter profits. can citigroup follow suit?
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these are the headlines today from around the world. >> softbank reveals it's buying up to 70% of sprint next tell worth more than $20 billion. the tie up will create one of the world's biggest telecom companies with almost 100 million users. >> and the firm needs to break out of an aging japan but admits the deal is a risk and
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challenge. chinese inflation leaves the dwoor op door open to more easing. and cue up another round of earnings. citigroup leads the pack today. third quarter reports before the opening bell. if thes are trying to open higher this morning. dow jones looking to add about 40 points. up from about 25 the last time we checked in. and this does cue off the mood. if you look at the major bourses, up in the range of the ftse 100 of now more than half a percent. not typically a big mover during the session, but xetra dax trying to add almost a percent.
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ibex up more than 0.8%. >> we've already had plenty of thoughts. here's a reminder of some of those thourts. >> we're really looking bonds. we've done now through the year and we think yields will continue to go lower. we think the sector might turn around first quarter of next year. >> looked at buying the april 16. it will work well when the market sellses off so when we get good news in europe and further evidence of something
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solid with regard to spain.s oft good news in europe and further evidence of something solid with regard to spain. off so when we good news in europe and further evidence of something solid with regard to spain. >> we've gone through all the international meetings and markets are mindful of what the markets will do as far as the yen is concerned. >> watch the to want to bring you the news here. didn't take long for moodies to come out and say it's placed softbank on review for a possible downgrade. looking at the did additional debt burden it will face. possible to see the downgrade move more than one notch.did ad debt burden it will face. possible to see the downgrade move more than one addt burden it will face. possible to see the downgrade move more than one notch. addit
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burden it will face. possible to see the downgrade move more than one notch. softbank shares down more than 5%. citigroup reports third quarter results. bank expected to earn 96 cents a share on revenues of just unit der $19 billion. the company will take nearly a $5 billion charge related to the sale of its 14% stake.the compa $5 billion charge related to the sale of its 14% stake.der $19 b. the company will take nearly a $5 billion charge related to the sale of its 14% stake.the compa $5 billion charge related to the sale of its 14% stake.$19 billi. the company will take nearly a $5 billion charge related to the sale of its 14% stake. joining us on the phone is eric oja. i see your estimates are shy of the consensus help do you, though, expect city to confirm some of the strength that jpmorgan indicated on friday? >> yes. we expect strong trading results today. just like what we saw at jpmorgan friday. we expect pretty good carg results, as well. >> and have we moved to a period in which that's still supportive
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for the bank or are there concerns that that could be more of a drag? >> it's more of a drag with the consumer globally, but commercial growth worldwide should be fairly strong and should help power long growth. we expect loans will grow 4% globally from last year. >> so how many of these trends continue into 2013? >> mortgage banking will likely start to tail off in the middle of 2013. for citigroup, we think loan growth should continue. a lot of it depends on the health of the global economy. but we think loan growth should be in the mid single digits in the next year. >> and if you get the earnings you expect, what will that do for your view of the stock?
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>> we have a buy recommendation on citigroup with a $40 target price. we see the shares being attractively valued on earnings and tangible book value. >> the question still comes back to top line growth. how are any of the banks here really going to expand? >> that's a good question because right now the banks are growing their top line with mortgage banking and fee income. loan growth and net interest income growth is really not there. so we're looking for a transition towards loan growth and net interest income growth. in the low interest rate environment, that will be tough. so it will be a transition here in 2013. >> and what's interesting about that is that there's been a lot
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of speculation over the end of free checking or how banks basically are able to raise fee income. what levers does city frup have to pull on the fee side? >> citigroup has many sources of fee income and clearly the regulatory burdens will be increasing. however, let me point out that debit cards which was supposed to be a major hit to revenues, it looks like the major banks have rebuilt fairly nicely and starting to grow again. so it all comes down to the banks are fairly resilient fee income growth. and they should be able to rebound.
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>> and you can put citigroup in context for us across the sector, both with competitors like b of a and then the goldmans and morgans. how do you rang them, who do you like best in this environment? >> we like j pchp more fan anga citigroup the best. we have sell on bank of america because we're worried about the cost of mortgage repurchases. they are doing much worse than any other u.s. bank in that aspect. and we think that investors have been over lookilooking that and have a hold recommendation on wel wells fargo. >> eric, thanks very much for your time. and citigroup earnings will be out in just a little over an
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hour's time. >> not long. >> still around, because still to come, a september shopping spree gives a boost to h&m. we'll explain next.
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overmany discounts to thine customers! [old english accent] safe driver, multi-car, paid in full -- a most fulsome bounty indeed, lord jamie. thou cometh and we thy saveth! what are you doing? we doth offer so many discounts, we have some to spare. oh, you have any of those homeowners discounts? here we go. thank you. he took my shield, my lady. these are troubling times in the kingdom. more discounts than we knoweth what to do with. now that's progressive. the vice president of the
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european commission says the eu hopes to reach a deal with greece on on fiscal targets and structural reforms. the commission is considering giving greece more time. and madrid is open to considering a bailout request. another weekend of protests on the streets of madrid. and spain finance minister signaled the government would hold back on requesting a bailout while its were rowing costs remain sustainable. the measures included are some of the harshest seen so far.
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tax h tax hike for the middle class. and switzerland has launched a military exercise to test the speed at which its army can be dispatched. switzerland is not a member of the eu. for more on the story, visit wilmer has tweeted to say they can buy europe. no reason to mill tar itamilita. send us your views. h&m beat forecasts. sales rose 6% compared to
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expectations of 4%. stock up 2%. meanwhile after the market closes take, we'll hear from lvmh. growth seen slowing a little bit. what they say about the china market and of course the export market will be of key interest, as well. if you're just joining us, these are your headlines. softbank will buy a 70% stake in sprint next it tell for more than $20 billion. banks are in focus again with citigroup poised to report third quarter results. and chinese inflation remains tame in september leaving the door open to more easing.
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a new survey shows likely voters favor obama by a slim margin. just one in eight say they're undecided or could change their vote before election date. second debate is tomorrow night at hofstra university. and job cuts may be looming at amd. the chip maker set to cut between 20% to 30% of its workforce or up to 3500 people. an announcement could be made as early as this week. the cuts will reportedly come from sales and engineering units. they slashed third quarter revenue forecast because of weak demand. the stock down. >> i think this is interesting because we've all been so laser focused on corporate earnings season.
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there is real on on the ground impact from the companies having to take down their forecast. and these are significant cuts. we get in a period of profit cycle slowing and the question is whether the economic cycle more broadly is losing momentum, too. but staying with tech, microsoft is hoping everyone has forgotten about the zune. the company is launching a new music service on tuesday. xbox music will stream songs for free with an occasional ad. the service will initially only be available on the xbox, but will expand when microsoft launches windows 8.
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still to come, hoodmoodys sg there's a possible downgrade for softbank. bob...
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it's been quite a merger monday. softbank is officially acquiring 70% of america's third biggest wireless operator for just over $20 billion. softbank ceo says the deal will make the market more competitive when it closes next year. dan hesse will keep his job. softbank shares down more than 5% as investors are worried about synergies related to the
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deal. rating firm has warned it kcoul be cut more than one notch. and we're seeing a move in the yen, weakening in the last hour or so. >> we're seeing brokers upgrading price target for clearwire and the rating on the firm to neutral. citigroup will report third quarter results at 8:00 a.m. the bank is expected to earn 96 cents a share. city will take a $9 billion charge related to the stake it sold in its morgan stanley smith
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barney joint venture. and in the u.s. today, september retail sales are out at 8:30 a.m., expected to gain 0.7%. at 10:00, it's august business even p story a to have been fn of fed speak. and we'll have earnings from wd 40. i think that's a great read on the health of the consumer household. >> futures indicating a slightly better start first thing this morning. s&p up just under five points. around 40 for the nasdaq and the dow currently up some 34, 33
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points. >> joining us ben liechtenstein. good to see you. i wonder given the positive mood that we're starting with today, what you think is driving that attitude and why it will last. >> i think right now what we're seeing in terms of positive attitude if you will is really just a rejection of the lower levels. last week we tested key level of support in the s&ps. 1425 is a major level. there was a very well defined balance formed on the daily i'm frame and then a nice run up. very little follow through, low participation, and just very low energy associated with the trade. so we pulled back right now and are testing these key levels. in the overnight session, we traded below last week's low down to 1416. but have now rejected that level. and basically trading sideways around the 1430 level magneted to this level, if you will,
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basically this is where we chopped around last week. but i think just a rejection of those lower levels is one of the main reasons why we've come off and are actually seen the trade in positive territory. >> do you think we'll be range bound? >> i think there's a lot of pressure. broader based market, russell, nasdaq, the tech sector under a lot of pressure. breaching major levels of support again as i mentioned, last week we tested that level on the s&p z really yet to see a rejection of those levels. the fact that we're just trading in this 1430 level, i think there's still a lot of pressure and all between lows get tested. >> a lot of focus on citigroup earnings. wd 40 perhaps a tell of what's happening with u.s. strength. what are the risks around these reports? >> i think concerning results in
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terms of earnings, in terms of sales, i think the bigger picture right now i think that a lot of traders are looking towards that retail sales number and then again the tech sector around the rest of of the week. >> ben, thanks very much this morning. and wd 40 was developed in 1953 by norm larsen. and it is an abbreviated from the phrase water displacement 40th formula. which if pick spewikipedia says must be true. >> citigroup earnings coming out at 8:00 eastern. so we'll see how that plays in. futures at the moment are just indicated a little bit of a higher start. this is after markets also pulling back some of their losses. the folks that will have those numbers are coming up next. becky, joe, andrew and the team on "squawk box." >> thanks for tuning in.
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today's top stories, japan softbank is buying up to a 70% stake in sprint nextel for $20.1 billion. earnings central with a flood of quarterly results. first up this morning, citigroup. and the bulls are looking for catalysts to propel stocks after a rough week last week. it is monday, october 15th, 2012. "squawk box" begins right now.


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