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tv   Worldwide Exchange  CNBC  October 18, 2012 4:00am-6:00am EDT

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europe, hit by a slowdown in emerging markets. yields expected to come down today. saying there's no issues. >> no euro debt crisis anymore. he has dekreeed it as such. p whether you can see is whether socks or credit rallies on this expectation as they've been discussing all week. >> when yields go down, the politicians relax, right? coming up on today's show,
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swiss food giant nestle prints its latest sales figures from shanghai. find out why they're focusing on the far east. >> and how much will apple's new iphone release boost subscriber numbers? we'll get an early preview. >> plus nokia numbers are due in about two hours time. we'll bring you those numbers as they break. in the meantime, though, china's economy in the third quarter grew at its slowest pace since early 2009, but was that in line with market estimates and september data showing signs of recovery in the fourth quarter. >> china's third quarter degree at 7.4%. in l expectations. economists largely reacted positively saying the growth rate was acceptable given recent trends. many agree with the latest 73.5
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growth target, but other key data points for september, retail sales picked up a bit more than expected as beijing has been focusing on boosting production. industrial output also beat forecasts. fixed asset investment rose more than predicted. so no nasty surprises and just as beijing had opened, clear signs of stabilization are emerging. kelly, back to you. >> we'll get into this discussion in a second, but want to mention some data. the bank of spain says the bank's bad ratio rose from july. so a sharp pick up there.
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adding pressure to ask for a full bailout, but also able to pull assets into the bad bank. more details coming up on the program. on seat, economist from btb, and author of asia confidential. hello to you both. neal, your reaction first to the china figures that we've seen. are you in the china is bottoming camp? >> maybe. the markets have taken the view that the the latest data suggests that the economy is stabilizing. i think certainly during the summer months, there were lots of concerns that rather than a soft landing in front of the transition to the new national leadership, actually hard landing worries were intensifying and there are a number of indicators suggesting worries about potential deflation, worries with the manufacturing sector perhaps that activity had stalled. i think the latest numbers, industrial production, retail
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sale, fixed asset investment, all of that do suggest stabilization. i think the promise of fiscal stimulus is certainly positive and helpful. good james, you look at the figures and you couldn't ask for more of a glide path. are we to believe what the chinese government is telling us? >> well, i think that the gdp figures you can probably putut little credence in. but the broader data is a little more positive, but i think it's a bit more premature to suggest that the chinese economy has about theed. sx port data was distorted by one offs. and domestic demand remains very weak. what this shows is that china is loosening policy over the past four to six weeks.
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bank loan growth particular will you off balance sheets. suggests the chinese government is stepping in. it's stepping that up now. and i think that that will continue post the november leadership handover. >> what's the impact for investors bearing in mind the shanghai stock market has been such an underperformer? >> it has been and i suggest it's a time to buy chinese stocks despite concerns about the economic outlook. valuations are cheap. valuations are around 11 times earnings. that's quite cheap. more stimulus is on the horizon post november. and you can also see structural
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reforms coming through. i'd be very surprised if they don't given they need to rebalance. >> what type of restructure are you talking about? >> it needs tax reform and also reduce the influence of state owned enter. both of those are obvious ones. i think you'll see those as well as others over the coming 12 months. the government knows this and china mass lacked reforms over the past few years. that's taken its toll on the economy. it needs to be restructured and put in place and pushed through by the new leadership. >> i think what the new leadership does will be fairly crucial. it may take a couple months before we get visible evidence, but i do agree an interesting development has been the record injections of liquidity by the central bank into the money
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markets and the shanghai composite is distinct from other equity markets. they've been on a downward slide, other markets going up as other central banks have been expanding their balance sheets. now china is getting in on the act. i think we're seeing a bottoming out of the equity markets and the liquidity injections are important and should underpin investor sentiment of gains in the market. >> do you you expect any major policy announcements when that happens? >> i think the markets are looking for something. i think they will be disappointed if there are no tangible moves forward. the initiative is new leadership. so it will be an important date. >> and james, do you think it's
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critical that there are these initiatives or can the shanghai do well without them? >> look, i think that those reforms are needed, but valuations will be one spur to get in on on the act particularly as other markets have run. but those reforms do need to come through and stimulus, i think you can be pretty sure that that will come in in one form or another. it's already occurring, i think you're just going to see more of it. probably fii is an obvious one. rail, infrastructure, there's been some stepping up in that regard. i think you'll see more of that going into 2013. >> are you buying etf, individual stocks, what do you do? >> i think you buy individual stocks. the obvious ones are the
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cyclicals that have been whacked over the past few months, the likes of banks and prop. but i consider those the old china. i think you have to look at the new china and that's the increased consumption aspect of the economy. i would like to things like insurance and internet stocks and the the chinese auto, particularly the ones that have japanese jvs. they have really come back following the japan/china crisis talks at the moment. and also they've suffered because of the china auto figures have been very soft, too. their valuations are cheap and i think you can expect a decent bounce back in those, too p. >> james, thanks for that. have a good evening. >> spain's borrowing costs
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expected to fall. yields seen falling following moody's decision to reaffirm their rating in expectation the country might request a bailout. results of the auction expected 10:40 cet. >> spanish governments has reportedly set a 90 billion euro limit for the bad bank it plans to create. according to reuters, the new entity may include nonreal estate assets and will be in place for 15 years. the new agency writes the government expects the bad bank to turn profitable and the last five years of that period. they want most of the fire power to come in the ec brchlt omt program instead. >> i think as far as the eu summit is concerned in brussels, the markets are expecting anything sub stand sif will be a
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lot of talk about a move toward the banking union. but germany is resisting a move toward joint liabilities. so we're still in this halfway house. and i think the whole eurozone story boils down to where they monetize. if the answer is no, we'll be subject to periodic -- >> the answer seems to be a bit more in the s camp lately. while the german bund is still low, it has moved higher and perhaps reflecting some of this attitude that it's not fairly priced. >> i think that's right. and ever since the omt announcement, investors recognize that has reduced the tail risk. we have seen bond yields come down. spanish government has completed about 90% of it borrowing for this year. but we're still in the standoff
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between requesting a formal bailout and exactly some degree of conditionality. >> if that sort of data continue, would you suggest more recapitalization into the spanish bachks? >> that's right. >> and will we get any thoughts on whether they will be allowed to directly recapitalize? >> one of the key sticking points. the spanish economy is still in a recessionary state. a lot of the forecasts, including the imf is much p more pessimist tig. the real estate market continues to decline. that creates the latest moves. so a lot of the key fundamental problems haven't been sorted out but going forward spain will
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require assistance. but still lots of underlying problems in the eurozone that need to be sorted out. >> that's for sure. spanish students walked out of school to protest on the streets of madrid depends what they called a fascist government after billions of euros were cut from the education budget. primary school students are expected to protest today. and over in greece, the country is expected to come to a standstill for the second day as unions organize widespread strikes. the 24 hour walkout by journalists meant there were no tv or radio broadcasts yesterday and no newspapers are expected to be published today. all right. let's turn our attention to what's going on with these assets today. european stocks just slightly negative at the moment. a little bit more than 6 of the chlt 4 6:4 decliners outpacing advancers.
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cac 40 currently gown a quarter period. ibex down around three quarters of 1%, as well. we'll keep our eye on the bond yields. a little shyer for spanish yields, but still well below 6% at 5.1. we'll keep our eyes on the auction. results in about half an hour or so. threes, fours and tens is where we're looking at. 4.6% for the full year. so yields today should be much lower than those. and the ten year, we had one about september the 22nd, again that was 566 we gottrades at 55 should be lower.
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euro-dollar has been up at one month highs. just below it at the moment. aussie dollar pretty steady, 1.0379. we did get stronger retail sales and industrial production out of china, so that giving a little boost. it is worth pointing out that the chinese yuan has hit its highest against the dollar. not much reaction on commodity today. brent pretty steady. spot gold barely weaker. asian bourses helped by positive cues from the u.s. and
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europe. developers let the rally. september average home prices declined, but earnings from the bigger players are still promising. elsewhere shale gas in the mainland al mainla mainland also surged 37 hang seng followed in the mainland's foot steps to end in the glean helped by industrials and energy plays. elsewhere, the nikkei continued its strong rally ending higher by 2% at a three week high. exporters gained once again on the weaker yen. china plays also picked up the steam. south korea kospi eked out modest gains supported by ship builders and automakers. meanwhile a strong rally in australian miners lent support to the asx 200 rising to a 15 month high. sensex still on the move, higher by 0.6%.
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smartphones are in focus. nokia will report earnings at 12 central european time. this as the number of smart phones oig around the world sold will top 1 billion units for the first time. iphones and androids are the market leaders. we want to know where this leaves nokia and r.i.m. shares have clearly underperformed, although r.i.m. is hanging on. do you still use the blackberry? you can e-mail us here, worldwi worldwide@cnbc.com, @cnbcwex, let us know what you think nokia might say. could they follow in r.i.m.'s foot steps and post a bit of a rebound if their results fend off some of the worsts fears about the company. >> i still like sending e-mails by blackberry. still to come, it may be the place to go to trade metals, but could the lme soon be offering
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investors jet the fuel, rubber and coal? we'll find out what they have in store. bob...
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we're joined by charles lee, ceo of hong kong exchanges and clearing. good to see you. thanks for joining us. the lme has primarily been a marketplace for base metals. so how much scope do you see to broaden that out? >> one of the reasons we're buying it is not only on base metals, but obviously going into potential black metals and even energy. but slightly midterm and longer term down the line. >> so what are you going to do straight away? >> the first thing you to is really make the current current report better. lowering the barriers, bringing the restrictions down all of
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this will develop greater volume. >> warehousing is a key concern in the metal space generally speaking. what will you do to help aleve yaf a l yat a lot of the bottlenecks? >> people sometimes tend to simplify it by saying a costs b, b caused c, therefore something has to be done. the lme management is working hard to make a series of reviews and we'll leave them to come up where a judgment. >> so is it a difficult issue to try to fix? >> it's not difficult if you can clearly identify what's the
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issue. the real issue is the mathematical or physical issue. it's complicated, probably pretty hard to do it on a tv with -- >> you're suggesting it's more a trading issue? >> correct p. it's really the pricing issue. whether the real issue, the narrow issue is whether or not the system is such that a system can effectively hedge your exposure. that's really the bottom line. but sometimes people make it flow into bigger issues as people are not able to get metals and to continue normal production. people are so concerned in an era of quantitative easing, physically getting hold of metals not just production reason, but also because they want that gold, that silver or whatever that product is. so you can understand the concern there. >> this is really an lme issue.
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people can get lme if they really need it. if they can't get it from the warehouse they were supposed to get, they can get it from another warehouse. the real issue is whether the total cost is actually higher than what otherwise should be the case. that's the debate. >> you'll launch new in-house clearing mechanisms. how long will that take? >> the current plan is to try deliver in 18 to 24 months. but there are a lot of uncertainties with the regulation, with capital requirements. but with the actual physical building of the clearing house is not it that difficult. it's making sure the regulators are comfortable with the capitals and everything else. but we have to do it. >> i think this is all welcome and positive development particularly for london as a financial center, but of course it makes sense for hong kong to be involved because we know that china is the world's biggest commodity and will continue to be so and that the trade links
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are quite considerable. so i think this is a positive development. >> quite a punchy price. so how much of the deal will depend on the space that china opens up outside investment? >> they think it's a punchy price because they're looking at the profit they're making as a nonconstrained model owned by member. i think the reason we're buying it is not only we're trying to grow into the commodity business and use the commodity business as a catalyst to help accelerate the opening of the chinese capital account, which will bring tremendous amount of opportunities across the asset
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classes of our business. >> how soon before internationalization? >> initial steps have already taken place. 600 billion already out in hong kong. but we would like to seat next wave -- >> do you think lon do will -- >> of course if there's enough business. more money, more product, more product, more money. so you have to start somewhere. >> well put. charles lee, ceo of lme, thanks for coming by during this week. stek around, because coming up next, we'll be live in brussels where eurozone readers are trying to hammer out a plan for a banking union.
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september retail sales up 2.5% on the year. better than expected. third quarter retail sale, fastest growth since june 2010. >> what's interesting, the rise in clothing sales was the main driver. if this were august, we would
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say maybe ony olympics effect. >> let's say the olympics was a lull -- hang on. let's bring in neal. i'm thinking august was a lull. >> yes, august was a lull and you you had the queen celebration in may which distorted the q2 retail sales numbers. but regardless of that, there are indications that maybe things are beginning to stabilize. we certainly need it. >> are you suggesting pent up demand? >> could be. and i think it will be helpful if this trend continues because consumers do face a difficult situation. employment is clearly a problem up and down the country. we haven't quite solved all of
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that yet. let's hope we can have a better 2013, but certainly these numbers are encouraging. certainly the markets will be hoping that we can see better activity levels. >> car production down 5.8% on the month. year to date still up 10.2%. >> can he with see the reaction of sterling strengthening. >> is there any sense that maybe the call on qe next month is becoming finer? >> it could be becoming finer judgment and certainly reserve a broader question mark on whether it's effective anyway. i think the bank of england is putting more hope on getting the credit mechanism working again. but it's been a very difficult year in the after math of the
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crisis and we go through this e deleveraging process. >> sterling at 161. it was over the summer that we were following back towards the 150 level. but now, you know, these figures -- >> that's the data out of the uk. chinese economic growth slows done as expected for the september straight quarter. september data beat estimates signaling there may be some stability. and spain expected to see solid nand in a bond auction within the hour despite worries about madrid's willingness to ask for a bailout. >> and merkel is heading to brussel for the a two day summit will eu leaders will try to hammer out a plan to create a think banking unit. >> and nestle hit by a slowdown in emerging markets.
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>> a tight call on whether we'll have an up or down day. >> take a look at the bond space because we've seen significant moves over the last several weeks. bunds are on the rise 1.64% there as investors reprice reflation throughout the eurozone. ten year in spain, roughly the level we've heard analysts talk about as perhaps being sustainable. that's ahead of the key auction. italy 4.78%. look at the gilt. remarkable. we were not far from 1.5% -- >> we were trading with treasuries. >> even treasuries is somewhere in the range lately. so anyway --
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>> euro-dollar, 1.3103. we hit a fresh one month high. aussie dollar slightly firmer, just under the 1.04 mark. and just to recap, dollar yuans has hit another record high since the 2005 revaluation. 27 eu leaders are meeting in brussels for yet another summit. on the agenda, furthering plans for a banking supervisor. expected to feature julia chatterley has gone to brussels for us and julia, it sounds like determine any and others are trying to talk down expectations heading into this event, but what do investors actually need to see in your view. >> we're waiting for clarification. expectations are pretty low in terms of any concrete decisions.
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angela merkel suggested the same thing this morning. so what it is is developing the debate. remember, this is about a banking union, a crucial issue. it's about quality and perhaps that he just going to take a bit of time. the first stage is developing a super advisory mechanism. this is crucial for the stability mechanism, the esm, to be able to directly recapitalize some of these banks. fast forward from what we saw back in june and we already have countries like germany and finland suggesting that this facility is not going to be available for countries that are already in a bailout facility. crucial for countries like greece, you but also perhaps, too, for spain. so that certainly will fall apart. but there's other issues. the timing on this, this is expected to come into play by january 2013 yet already hearing discussion that this could take up to a year to organize. there was a report, too, in the
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financial times suggesting that the current proposals might even be illegal based on how the ecb can make decisions. it might also mean that for the countries outside the eurozone that can choose to opt into this oversight plan, they might not be able it legally vote on the decisions that the ecb makes. guys, back to you. >> julia, thanks very much for that. neal, your thoughts on the importance of this summit or whether you agree with hollande that it's over. the debt crisis is solved. >> it's wishful thinking. i think everyone would like to be over because it's been a major down side risk for too lon. the problem is that the summits
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that we've had during the course of the crisis have always been great fanfare, the silver bullet to resolve the debt and banking crisis and of course nothing really happens. but i think we're slowly moving forward. i think the key issue for resolving the eurozone crisis is whether germany decides to monetize the debt. if it does, there will be eventual progress toward fiscal union. >> can they do it in a way that is palatable to the german -- >> no doubt an element of political tactics going on here, but certainly german taxpayers are worried to having to foot the bill. so it's a tricky one to pull off.
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and what's interesting is she has backed draghi on his bond buying plans. and president obama doesn't want any upsets that might affect wall street or the u.s. economy. i think the longer term future of greece is -- they're in the wrong currency and whatever happens, there has to be a restructuring of bad debt again because it's just simply -- >> very briefly, dollar-yen, fresh record high, going to keep -- >> it's been interesting developments as regards the renminbi. whether that's just ahead of the u.s. presidential election remains to be seen.
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i think that if the chinese economy is stabilizing, the last thing they want is a stronger currency that might make export performance even worse than it has been. >> neal, thank you very much for joining us today. in corporate news, nestle shares have slipped after it missed forecast growth numbers. carolyn's been looking at market reaction for us. what are investors saying? >> well, the market reaction is pretty negative. nestle has a heavy weighting of more than 20%. but numbers absolutely disappointing, sales actually better than forecasts, but the organic growth number, that was a bit of a let down. came out only 6.1% for the first nine months versus expectations
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of 6.3%. so we knew there was going to be a slowdown, but we didn't know it was going to be quite that pronounced. surprising aspect is that the emerging market still c contributing the lion's share, but in this quarter for the first time, actually growing below 10% as opposed to 12% previously. u.s. still struggling, but the outlook is fairly cautious because nestle said the difficult trading environment will persist, but at least they did confirm the full year outlook for five to six percent organic growth. sg and you saw the latest export figures out of switzerland this morning. they were weak. showed a decline for the first type since the recovery. what impact is that having?
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>> analysts were expecting a modest increase in the month of september. again, same for nestle. we knew a he slowdown was coming. last year, for example, exports in china were up by almost 50%. same for hong kong. but the slowdown is pretty big. exports down 20% to china, even down 27%. and that is very much reflected on the swiss exchange. the biggest decliner down by 3.7%. swatch group also losing 2.5%. maybe why the stock falling so hard today. >> carolyn, nanks so much for all of that. >> french government looks poised to rescue the financing,
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looking to the french banking sector for support. this as the french labor minister said there should be fewer job cuts and that the government will ask for compensation in return for its help. stefane, are we going to dish out official state aid for the carmaker and what will the repercussions of that be? >> wants its to review the plan. we knew the company was facing some problem with its automotive division, but it looks like this unit is not doing any better. the parent company was downgraded by moody's recently. it's not relying on any customer deposit. it's fully dependent on interest rates and cost savings because
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it's providing financing solutions for people buying new cars. the company needs to be rescued. that's clear. the finance minister dictated that the government was gathering support from banks which could extend 4 billion euro credit line. they could also provide fresh capital. in return the government would provide the guarantee for the whole operation. we might have an announcement very shortly. back to you. >> thank, stefane. >> want to go to japan now where one automaker is using a new technology to cut down its dependency on rare earth. more on this story live from tokyo. >> hi, kelly. the nikkei reporting that honda has plans to give hybrid vehicles new engines that use
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30% fewer elements than current engines. hybrids use a very important rare earth material to improve heat resistance of magnets in the motors. but china's exports have contributed to a huge spike in costs. prices shot up in just a few months. the price has since settled, but policy remains unchanged and the possibility of more price surges remain high. honda hopes to eliminate the risks by adopting the new technology starting with a new model released in september. meanwhile toyota wants to meet the surging demand in emerging markets. it will double diesel engine output. the automaker plans to spend half a billion dollars and hire about 450 new workers. that's all from me. back to you. >> okay. thanks very much for that. let's take a quick look at the a
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judged tak agenda in asia. second quarter earnings and a strong debut from astro. expected to boost to more than $7 billion for the year. >> just getting results from the spanish auction coming through. the first 2015, maximum yield has fallen on that. 3.266%. it was 3.774% last time around. they've sold 1.5 million as well of the ten year. 1.46 of the 2006. divide 1.4 with 1.5 and 1.4 -- we get to about 4 1/2. so i'm looking for the yield -- >> the four year just shy of 4%,
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3.999. with regard to the yield for the 2015, 3.266%. so both of these falling significantly indeed by about half a percentage point more in some cases. and we just got through the yield for the ten year. that we're showing less of a decline, but still a decline from the last auction. >> so yields are lower. i think we've actually raised more. i think we have over 4.6. i think we've raced more as expected. >> so we can add to our problem solved for the day. >> let's take a look at the ten year on spain. yeah, we were 5.5%. so yields on the ten year are coming lower in response. because we were 5.5%.
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>> 5.48. >> all right. hey, look, no assistance required. >> it was either the plan that made no sense or perfect sense. either the plan that would push markets into making spain aspirate or not and we're seeing the or not version of that at least for today. >> all right. p we'll keep our eyes on that. more reaction to come. may boost euro-dollar, as well. meanwhile russian state energy firm looks to capture tnk-bp. they're discussing terms of the sale. the rish shtycoons could end up stakes in.
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and it's better looking earlier in the year because of its partners -- >> just inevitable knowing the side of exxon that this company -- >> biggest publicly listed oil company in the world. >> remarkable. in any case, a couple of foern takeovers by chinese firms appear to be moving ahead. fisher recommending shareholders flick the switch on a sweetened offer from china's payor group. the deal values fisher at $760 million. and china development bank finally ready to back a bid to buy west african iron producer sun dance resources. a letter was sent saying it supports the deal though it has yet to seal it approval. and still to come, have commodities overreacted to the china slow down scare.
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more signs of strength in australia's resource sector. two top energy players each
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reported third quarter revenues. the companies have been registering strongly in natural gas. majority of australia's new investment pool is made up of lng related products. thanks very much, justin, for joining us. the nat gas story isn't going anywhere. it's only going to grow. >> my main focus is base metals, so i don't really cover natural gas per se. but i would imagine it's well supplied for the moment. that's what i hear at least. >> gdp was as expected. >> is it because copper was already starting to tick up? >> i would say it was already at a high level. the gdp figures look a little high from our perspective that
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in actuality, they're maybe 0.3 lower. when you talk to physical consumers, they see their customers with lots of downstream imagery. their order books are looking weak. and most of -- it seems to us that in china at the month, the attention is really dwraun towar drawn towards the change in political power and therefore we think that will continue through the year. but then where do we go from there. the new government comes in and we see fixed asset investment. the main concern is inventories in china, china imports some 8.1 million metric tons of copper this year, but over the last two
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years, they've had a build up of about a half a billion metric tons so excessive -- or not excessive, but ample downstream imagery of copper products, ample private, you know, inventories of copper used for financing in china, some of the consumers think they'll use that instead of importing greater amounts of copper. >> what you're suggesting is perhaps there actually should or may be some different because if you you take the example of copper, perhaps inventory levels will interfere with some support for it. >> that's been the real pessimistic story kind of this week at lme week. but a lot of that inventory is privately held and as i said,
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it's tied up in financing deals. so it might not be accessible when they need it. and global exchange imageries are down at basically five year lows. >> and that would lend support to prices. >> that would lend support to prices. >> where are we at copper in six months? >> i'll give you the 12 month outlook. maybe 7200, high side 8600. >> that's quite a range. >> that's topper for you. >> are you suggesting it's not a reliable gauge of market sentiment anymore? >> yeah, maybe a running gun
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spoke one or something like that. dr. copper is a ph.d., but he's giving professional testimony. >> i like that analysis. >> we've had ono and lennon on the show. >> back to back. >> thank you very much for stopping by. stick around, because we'll be live in brussels speaking to the chief executive of the european banking federation. >> likely to be a hard days night. >> after eu leaders are hammering out plans.
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if you're just tuning in, i'm kelly evans. >> and i'm ross westgate. here are your headlines. chinese economic growth slows down as expected. but september data beats estimates signaling there may be stability ahead. >> spain sees bond auction strong demand. merkel says the country alone must decide on a bailout. >> verizon gets boosts from increased demand. >> plus nestle shares are falling after disappointing
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figures. hit by slowdown in the emerging markets. the dow is within range of 4% from its all-time highs. so shows the kind of rally that we've had in the weeks behind us. nasdaq and s&p roughly flat. take fair value into account and they're just barely in the green. ftse global 300, we have seen a little bit of a rebound here. still looking to he'd a tenth of a percent. european bourses, ftse 100 adding 0.2%. xetra dax up by more than a quarter percent. this of course as german bund in
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particular has seen its yield back up specifically and decide there are steps toward further integration of the european monetary union. cac 40 down, however ibex shedding 0.4%, but this break as stretch of several days of gains. >> yields across the curve falling at auction for the three year. they came in at 3.2%, they were 3.67% in the previous auction. the four year came in at 3.97. decline from 4.#. and the ten year at auction this morning, 5.48, you can see we're trending below that.
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key point as well, they actually raised more than the targeted amount, 4.6 billion versus 5 1/2 was targeted. so yields in spain going a little lower. also dragging italy down with it, as well. and it's not doing anything bad for euro-dollar either. we heard fresh one month high today, just below it at the moment, but we have recovered slightly from where we were post that auction. dollar yuan had another record high today since the revaluation in 2005. aussie dollar slightly firmer. sterling-dollar got a bit of a boost after retail sales came in stronger, as well. we saw volume and prices increase. quick look at commodities. not a big reaction. spot gold just down slightly. brent crude and nymex steady. that's are we stand right now. >> and speaking of commodities,
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china's economy grew at the slowest pace since early 2009, still this line with market estimates and extent figures showed signs of recovery in the fourth quarter. let's get all the details from singapore. >> seventh straight quarterly dwee kle decline, but in line with expectations. nixed asset investment data came in stronger than expectations. clearest lines of stabilization are emerging heading in to the political learn transition. on the back of that china data, gains helped also by positive cues from the u.s. and europe. shanghai composite rallied 1.2%
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september average home prices declined on year, but earnings from the bigger plays are still promising. shares in hong kong followed suit helped by industrials and energy majors. elsewhere the nikkei climbed for the fourth straight session to a three week high. it gained 2% today. exporters gained on a weaker yen. ship builders and automakers lent support to the kospi. meanwhile australian miners helped the asx 200 rise. sensex higher by 0.9% at the moment. back to you. >> okay. thanks very much indeed for that. joining us from the world bank, nice to see you. >> yes, hello. thank you very much. >> so let's pick up on where we're at at the moment. the chinese data we just heard a bit about and we've had a lot of
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policy actions elsewhere in the world. do you think we'll get more now in china, got to get through the leadership reaction and how will that play into our feelings in the world? >> from the official reaction from china, it seems to indicate that they're reasonably happy. they implied that this is a bottoming out, so there isn't any further action necessary. everything is relative in life. i would love 0.4% growth, let alone 7.4%, but if that's the case, that's good news for the world. of course any reduction in chinese rate of growth is bad if the world per se because there's such great demand side of other economies. but if you see a refocusing in the long run, that's a good thing. but otherwise i think it's nothing to worry about from a global point of view. >> spa spain has raised more than the targeted range. three, four and ten year bonds
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at low aer yields than septembe. >> spanish government has reportedly set a 90 billion euro limit for the bad bank it plans to create to take over toxic assets from the country's learneds. according to reuters, the new entity may include nonreal estate assets and will be in place for 15 years. senior officials saying eurozone governments want most of the fire power to come from the ecb's omt program instead. it's interesting, here we go, spanish auction yields coming down, cash yields coming down.
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at this rate, there will be no request for assistance. >> and request would you want within. the only reason the government will apply for a bailout is when no one else will lend it money. people are happy to roll over spanish sovereign date, whether is no reason to ask for a spanish bailout. >> pushing yields down to get the bailout. >> a good question. as long as the market remains confident that steps are being taken to stabilize the whole crisis issue, so the way i'm thinking, it's not something that could happen forever. they would have to see signs of restructuring, the debt being handled. job creation taking lays. all these other good things need to be observed. >> the danger is if they continue borrowing, politicians -- >> do nothing.
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when the market hes are giving you grief, governments realize they need to take measures. >> but if they take restructuring measures, it results in the economy doing worse, that would be the catalyst for people getting more concerned about the health about getting those bonds. so it's actually -- they want to maybe see reforms, but certainly not hurting growth in the short term. >> i don't think anyone is suggesting the restructuring would make the economy worse. the point is to emimprovemeprov situation. most people recognize it needs to be done, but if you keep puttingmprove the situation. most people recognize it needs to be done, but if you keep puttiimprove the situation. most people recognize it needs to be done, but if you keep putting them off, you're just kicking the can down the road. ultimately something has to give. you can't do nothing and except
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yields to keep dropping. >> and the "washington post" says the president will reject the bill unless republicans include tax hike for the wealthy. if he's reelected, obama could dictate terms of bipartisan deficit reduction deal. republican leaders are already complaining about president obama's, quote, thelma and louise strategy. in the movie of course the lead characters chose to drive off a cliff instead of surrender to go police. a fair analogy? >> a little harsh, i think, but the results of the election will drive to an extent the possibility or the protects of this fiscal cliff occurring. because the new president or president elect will have to work with congress and are they going to budget restatement and increase the limit or take steps to reduce it. but it does to an extend who the new president is what the working relationship would be. >> which is the more market
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friendly outcome? >> i actually think a re-election of president obama would be market friendly globally not only because the current policies that his party is espousing, but also on the degree owe political scene worldwide. it's much more stable for the global economy if president obama is reelecting because all these other issues whether the middle east or iran, et cetera, the world will look and see that president obama is the one who is more sort of less likely to result in a conflict. so actually from the economic situation globally, re-election of president obama would be the best thing. >> i think the most likely outcome is postponement. >> weekly jobless claims are
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forecast to rise after last week's surprise drop which was blamed on a technicality as one big u.s. didn't file some claims. naughty them. the fed survey is out at 10:00 a.m., as are leading indicators. after the close, we'll hear from google, microsoft, amd, capital one and chipotle. >> this company has had an amazing run the last couple of years. >> i've never been in a chipotle grill. >> we're taking you there today because there is one that just opened in north london. analysts are betting on another loss quarter for nokia. can they turn around their fortunes in time for christmas? we'll have a preview. bob...
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these are your headlines. chinese economic growth slows for a seventh straight quarter, but data gives investors hope. >> and yelleields falling. and necessaristle shares slip a
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result of slowdown in emerging markets. sprint nextel is in talks to gain control of clearwire's board. sprint seeking to strike deals with the wireless broadband company's big investors which includes comcast. softbank will by a 70% stake in sprint and a condition for that deal, softbank lenders wanted assurances spreint would be abl to control clearwire's board. and nokio seen closing the third period in the red again. may report falling cash reserves.
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and apple lost its appeal against samsung. >> only in london would a london july say clearly you haven't infringed because it's such a poor product. >> apple appeals it, thereby implying -- >> no, apple is saying, no, samsung is cool and that's doctor we want to appeal. >> this all happens as a number of smart phone oig shipments has topped 1 billion units for the first time. where does this leave nokia and r.i.m.? i'm not the only blackberry fan out there. people writing in this morning to say michael saying still on my blackberry and will upgrade to blackberry ten when it comes out. >> is it coming out? i don't know. >> another viewer says proud
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user of high blackberry torch and also eagerly awaiting 10. john says i switched to ios two years ago when my daughter came home with a pink blackberry. no regrets. if you want to join the conversation, e-mail us worldwide@cnbc.com. >> is blackberry or apple the only choice? >> the big screen finger type based smart phone generally speaking. not a lot of options if you want a keyboard and a smaller device. i also like the battery life. in any case, stick around, we'll be live in brussels next. >> all gathering to hammer out plans for a banking union. there's reports it could all be illegal.
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the situation among struggling eurozone countries especially spain is expected to
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feature. joining us is scheef executive of the european banking federation from brussels. good morning and thanks very much for joining us. >> there is a political pressure for recapitalization of troubled spanish banks. there is less urgency for the banking sector as a whole. of course we are in favor of a single supervisor and banking union, but it is something that could have been put in place in a progressive way. but their political reality now is that there is an urgency.
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>> there certainly is although as you say there are ways to handle its banking system. for example the bad bank notion, is it something you broadly support? >> it's one of the possibilities to help a bank recover. now, talking about the spanish banking sector, i would like to put it in perspective because the imf says saving banks need about 50 billion new new capital but the amount largely offsets the capital needs of the troubled banks. so it's to be put in
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perspective. it's important but relatively small if you compare to the european banking sector. and by the way the european banks and that is also supported by you're pea an banking authority based in london assessment, they are doing well. they are strong will and on their way to getting there. >> in the heart of the crisis is some would describe the balkanizati balkanization, we've seen the collapse of the santander deal, maybe not the best example, but broadly speaking there, are certainly plenty of concerns that originate and are spreading through the banking system in europe.
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>> banks in certain crisis were under fresh becaupressure becau sovereign crisis. of course banks as they have to invest heavily by the regulations invest in these sovereign, of course they suffered. but i think this is behind us now. and we have the isolated problem of the spanish saving banks which within public before and now have to restructure. but again, you have to put that into perspective. the thousands of european banks, and it's not i who is saying it, it's the banking authority, they are doing well in recapitalizing themselves. >> how are we to reconcile the
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main view that the proposed banking union should cover every bank in the eu and the german's implied view that it should cover or oversee all the large systemically important banks? >> i think the german government is very much under the pressure of the local saving banks in germany who represent about 40% of the saving market. but we are very much in faefr of a single supervisor if all the banks. we didn't want to have a two tier supervision. i think that would be against the single market in financial services. where he want the same rules for all the banks so we don't have different supervisory practices.
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>> very quickly, there's a report that you can't make the ecb sort of a banking supervisor without a change of treaties and laws. what do you make of that? is this going to be a very long drawn out process? >> well, i'm not a lawyer, but i don't think thoo this legal problem will be a showstopper. if there's a political will to go around it, then they will find ways to go around it and iminform iminfoi am informed the legal office of the council is trying to find ways to go around it. the problem being that in fact there is no legislation that can let say interfere in the government of the ecb. it's up to the ecb to decide on its own governance. and i understand that is the many problem.
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but there are already options. >> we'll see what happens. thanks very much for joining us. we'll take a short break. plenty more still to come. >> verizon reports higher third quarter results, but keeping mum on sales numbers for the new iphone 5 p.
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these are your headlines from around the world. chinese economic growth slows as expected, but september data beats estimates signaling there somebody some stability ahead. p. >> verizon gets a boost from increased demand for it entirelewireless service. >> and nokia results due in just under 30 minutes time.
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verizon reporting third quarter results. net profit rose 16%. adjusted results in line with forecasts as revenues rose nearly 4%. company did not break out specific sales for the new apple iphone 5. verizon is affirming its full year outlook in frankfurt.
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>> the street was looking for 64 cents and that's what we saw. you've seen the street reduce its limits. one of the issues is particularly with supply and demand, we were expecting to see more iphones than we probably saw, but we'll get the exact number when the company gives us their earnings call later today. >> they're subsidizing the cost for phones for customers who sign up for new plans. how much of a hit to earnings is this likely on to be for them.
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are investors thinking longer term they can reap the benefits of the new higher cost users? >> i think one of the most impressive things about the earnings that we've seen so far is that they're posting 50% in wireless ebitda margins. this is now the new record high that they set in the third quarter and that's surprising because you would think with the iphone launching, particularly with the subsidies required for them to sell that device, would you have expected mar begins to go down. we were expecting 46% ebitda margins. p so that was an impressive part of the numbers. right now you're seeing verizon trading at about 16 times towards earnings. that's towards the high end. so certainly investors looking
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past the subsidies and what it will do to margins in the short term. i think that will continue to be a focus for investors. particularly also the dividend. do you expect any movement and what does their cash position look like? >> the company actually just raised its dividend just a month or so ago 51.5 versus 50. and that's in line with the rates we've seen the last three years. in terms of the cash position, they have about $10 billion at least in the second quarter. a lot of that is in their wireless business as opposed to
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corporate. vodaphone owns a stake. while the company does have at least 10 billion at least as of last quarter, a significant portion of that being in the wireless business. remember also last year we did see the wireless did do a dividend. there's an expectation that we could see something like that again in 2013. especially since a lot of that cash that we need to take from verizon wireless, you take that to the parent so that they can actually continue to pay off that dividend. >> colby, thanks very much for getting up for us this morning. >> let's stay in the mobile space. alcatel-lucent is announcing that it's cutting -- the union saying that just under 5500 jobs
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will go globally. which is not a small number. >> that will hurt for sure. take a quek look at u.s. futures as we head to break. we were sitting just fractionally higher. and that still looks to be the case. dow trying to add six points. within 4% of the fresh nominal high.
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welcome back to the program. nokia is out with its earnings in half an hour's time and we'll bring you live coverage. this as the number of smartphone shipments as topped 1 billion units for the first time. iphones oig and androids are the market leaders. so where does it leave nokia and r.i.m.? there are still plenty of blackberry diehards out there. john says i'm a blackberry loyalist. phillip says it's all about the big screen android phones with a stylus. so phillip i suppose is in the android camp. ross and i still struggling i think to make the transition. if you want to join us, you can
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e-mail us worldwide@cnbc.c worldwide@cnbc.com, @cnbcwex or reach us directly. >> probably dictated by whatever apparatus your company insists you use. bp's russian affair hasn't gone too well, but may end up okay. ft suggesting there is a formal offer of $28 billion in cash and shares for bp stake. remember, it was partners in tnk that originally blocked bp from doing a deal with rosneff. but now they've bought out the russian shares and made a similar offer to bp. if it goes through, it would leave bp with a 10% to 20% share stake in rosneff.
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it would be the largest publicly quoted oil producer in the world. they may be able to good the offshore deal that it was blocked from doing last year. i hope that's clear. but anyway, the point is things are looking much better for bp in russia than they were. if you're just tuning in, this is "worldwide exchange" and these are your headlines. chinese economic growth slows for a september straight quarter. and spain seeing solid demand at auction. and nestle growth slows down in emerging markets.
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>> american express third quarter revenues came up shy. slower growth rate than in previous quarters. analysts say it was due partly to decrease in corporate spending on travel, entertainment. that's big a big growth driver. stocks down 1% in after hours and also down 1% in frankfurt trade. >> ebay third quarter profits rose on higher revenue. earnings slightly above analyst forecasts, revenues a little light. john donahoe says he's cautiously optimistic about the holiday shopping season. in frankfurt trade, adding about 0.6%. 16% is the return over the past
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three months. next guest says earning season will confirm a sell the growth program. michael, good morning. so what does that mean sell the growth? >> i think what's happening in the equity markets more structurally, there's a biforcation bifurcation happening. in other words, with the ten year dividend yield staying below 2%, something i expect will continue, it makes a lot of high difference depd compan div companies as quasi bonds. but we have such a distortion in interest rates, in contrast there's growth companies.
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in contrast is the russell 2,000 which where consensus estimates are expecting, you know, 33% earnings growth this year to next year. which is up three times for the s&p 500. so on the heels of -- in the wake of qe three, that's clearly out there, that's in the market. stocks have resettled. and when i'm saying hedging the growth, i expect growth oriented companies to trade significantly beneath the well capitalized companies as this whole sort of global gdp reset continues to reaffirm itself during the earnings season. >> volatility has been very low. do you think now is a good time to buy some insurance?
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>> absolutely. long vol trade has been challenged, stark contrast to the year before or in 2010. up in the less the absolute levels for volatility are very low. so coming in to hedge something that i think could be not a traumatic correction, but certainly something noticeable for a lot of fund managers to the stune of an s&p correction o 1380 is a very realistic scenario. but as we head into elections and of course the fiscal cliff looming a little larger, all that is a very plausible scenario. but we're not talking about a vix rushing up to 35 and staying there for several months.
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>> now that we have stimulus from the fed, as well, before we got it, there was always the view bad news would be okay because the fed would step in. how that we they what we're doing, if we get worse news on the economy, i presume that trade no longer exists. so does worse news equal a worse performing market? >> right. well, yeah, i think there's still some latitude of course with how much qe-3, how much bond buying we'll actually be getting. but you're right, bad news is now bad news whereas prior to september 13th, bad news was often good news for market price action. what will really settle is what kind of gdp growth are we looking at. some of the chinese stimulus off the table.
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so i think range bound conditions are likely to persist and i think investors are well served by taking advantage of that range. right now on the s&p 500, we're just coming up towards the year highs. i have a hard time seeing us breaking out to new highs just because a few companies are beating or meeting expectations on earnings. >> thank you for your time. nokia due to report shortly. we'llbly y bring you the figure live.
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the third quarter. still roughly in line with market estimates and september data did show some signs of recovery in the fourth quarter. our next guest warns investors that the rally in chinese stocks was a head fake and the only way for the shanghai composite is down, so, barry, why are you cautioning to steer clear? >> i look at the market from a technical perspective and if you look at the shanghai composite exchange, that has trended down very, very significantly this year. down about 25%. and in technicals, the direction that we're going in is usually the direction we continue in. we don't see a lot of catalysts for a turnaround. and the other interesting thing about the shanghai market versus other exchanges around the world like the dax and toronto stock
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exchange, it's more heavily composed of individual investors. so that's telling us that the sentiment is really quite negative. i think that will persist for some time. >> a more powerful factor than the monetary easing. i know you're looking from a technic technical perspective. but when you look earlier at this year and the break down, it looks like the macro factors could overwhelm. >> we also look at indices around the world. commodity prices have moderated. so that would be a positive. villes a s industrials are up 37 transports are down. s&p 500 is up, but the nasdaq and russell hitting resistance levels.
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so we're not getting the positive signals it that would tell me it would break back to the up side. >> if i recall you like telecoms but less positive on a company like baidu. >> it can't get out of its own way technically. the stocks has tried to rally three times over the last year, and each time, that has stopped out at lower and lower levels. we're hitting near a 52 week low. it could break that and move lower. telecom had been trending straight down, but we've certainly broken that down trend to the up side. moved up significantly off the low. we think that can move significantly higher. the technicals are looking very
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favorab favorable. >> thanks very much for getting up to join us this morning. we'll check back in in three, six months time and see thousand pans out. >> european stocks pretty mixed. down on the ibex. up by about a third of a percent. cac 40 pretty flat. >> we haven't seen a ton of movement. futures basically sitting around fair value. up about five points for the industrial average. it's expected to be another lost quarter for nokia. seen closing the third quarter in the red again. may report falling cash reserves, as well. this earnings report in about five minutes time.
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peter is joining us. how bare is it for nokia? >> it remains to be seen based on what they report. but this is a key quarter with their new phones on the market. they basically put all their eggs in one basket and failed to get any traction so far in any of their key markets. so really there will be a lot of eyes on what they lost in the next quarter to see if they've managed to improve their sales. >> do you think we'll get pricing on the new 8 some. >> they're expect to go launch next week, so we haven't seen pricing or availability yet. but it's possible they might
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announce that today. and that launch is seen as key to nokia's future. >> they have a location mapping business. are we getting in to the last throw of the dice for them? >> it's looking that way. they've had these windows phones on the market if a year now. launched in october last year. so really they are trying to improve their offering, but really they need to produce the number they're selling or they'll be in serious trouble. >> peter will stick around for coverage of the tokyo number. but about. bp has received an offer from rosneff. >> and more on that in a couple minutes. u.s. viewers, "squawk box" gets
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under way.
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today's top story, china's gdp growing 7.4% there a year earlier. sounds great, right? but it's the slowest quarterly pace since the first quarter of way back in 2009. experts say the economy may have bottomed. earnings central, today's headlines include verizon, who are began stanley, travelers and nokia. plus the euro crisis, european leaders are gathering in brussels. topics are saving the common currency and finding a plan to support struggling companies.
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today is thursday, october 18th, 2012, "squawk box" begins right now. welcome to "squawk box." i'm becky quick along with joe kernen and andrew ross sorkin. and stocks are on a winning streak. the dow's been up all week long. passenger averages are right at about -- up about 2% for the week. u.s. equity futures at this hour, dow industrials up by about ten. s&p futures slightly higher. nasdaq slightly down. but again, this has been a strong week after a lousy week last week.fir worst week in four. brian murdoch is ready to tell us what it will take to get investors to jump back into the deep end. and squawk will once again rise above the partisan fighting, try to keep the u.s. from falling off the fiscal cliff. blackrock's

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