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tv   Worldwide Exchange  CNBC  October 25, 2012 4:00am-6:00am EDT

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welcome to today's "worldwide exchange." i'm ross westgate. it's all about earnings. banks, santander, credit suisse miss expectations, but welcoming cost cutting plans. ceo confident targets are achievable. >> we continue to as you know increase our cost reduction targets. we think we can get more efficient on the cost cutting side. so we thinks it's achievable. >> and farmers are on the line. sanofi lifts its full year outlit. also autos more gloom for them, shares in daimler trading lower,
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the carmaker warning on profits and analysts cutting their price target on the stock. we'll start off in the financial sector. santander posting a drop in nine month profit in its domestic market. profit for the first nine months, 1.8 billion euros, down 66% compared to the same period last. 90% of government enforced write downs have now been completed. a sxchlt a thinks it will meet full year targets. revenues up 1.3% in the period. strength in property and
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casualty insurance. and credit suisse is targeting an extra 1 billion extra francs in cost savings after posting a slide in third quarter earnings. the ceo has been speaking to carolyn roth and she joins us from zurich. what kind of mood did you find mr. dugan in ? >> he's always pretty upbeat, and he always talks business, but that's his job. the numbers for the third quarter weren't so bad. yes, on the bottom line, we did see a slight miss because net income only came in at 254 million swiss francs versus expectations of 370 million swiss francs. and that was a decline of 63% from a year ago. but after looking through analyst notes, strong investment banking revenues of 3.3 billion swing franks and that is largely driven by the strong feksed income trading which really saw a nice pick up in the third quarter. equity business still somewhat
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weak. the capital himself has improved and that's very crucial for the company because it was criticized heavily especially by the swing national bank over the summer and then credit suisse took the necessary steps to address the capital shortfall. and thirdly, credit suisse came out and said it's upping its cost savings target by another 1 billion swiss francs, actually the second time it's doing that this year. but i think i've done enough talking for now. let's listen to what brady dugan said. >> we focus on the operating earnings. obviously the fair value in debt distorts the earnings again this quarter and particularly for us because we took measures to strengthen our capital. so actually our debt spreads tightened quite dramatically during the quarter. so we look at the billion two of pretax which is a very good result in a pretty difficult environment and particularly we managed to continue to reduce our cost base, reduce the capital we have against the business and we maintained our client momentum. so i think overall we think it was a very good return.
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10% return on equity is among the best in the industry. so we feel like the business is performing consistently and it's been transformed in to a lower cost, lower risk business. >> i hear you, 10% may be one of the best returns in the industry. but then your target is still for 15%. is it feasible? >> we feel very confident that we'll be able to achieve those returns over time. we actually if you look even at the first nine months of the year, about two percentage points reduction was a result of the businesses that were just exiting. so if those were just gone, we would have made 12%. and we continue to increase our cost reduction targets. we think we can continue to get more efficient on the capital side. so he we believe 15% is actually achievable. >> let's stick with the increase in the cost reduction. why did you make the decision, are you attitudely more pessimistic about the long term outlook for the industry? why didn't you increase it back
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in the second quarter? >> well, i think we believe we should be in a mode of consistently driving the business to more efficiency. and that's basically what we've done. as you say, we've actually continued to find ways to run the business more efficiently. we're running now at 2 billion swiss francs less than we were in the first half of last year. we think we can take another billion swiss francs out in 2013. and as you say, we've set further targets in 2014 and 2015. and it's really just a matter of continuing to look at the business to try to find ways to make it more efficient to really drive that efficiency. and we think in this environment where you do have a volatile revenue environment, we think that's the case probably for the industry for some time. having that lower operating cost base is something that's very important to really the resiliency of the business and providing returns for our shareholders. that's how we'll get the 15% return target that we've laid out. >> so, ross, there you go, that was a fairly optimistic brady dugan speaking to me earlier.
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the more negative aspects in the results, because it wasn't all rosy, the main weak spot was the declining wealth management gross margin and that points to even slower declined activity compared to the previous quarters and that could be a potential negative read for the likes of uchtbs, as well, who reports next tuesday. in the next hour, i'll bring you his comments about the potential impact of the fiscal cliff and the u.s. elections. i know you'll be around, but let's make sure the viewers stick around, too. >> absolutely. carolyn, thanks very much for that. nice shot there. it looks nice there in zurich today. joining us for the first part of the program today, founding partner at lieber investment y suisse's report card. >> >> i think dugan is right to
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emphasize what they anticipate that they can deliver. it's words you need to hear still on focus of roe target of 15%. it will be some time before they get there, but for a shareholder, this is an important directional drive for credit suisse. they did get beaten up very heavily in the summer by the national bank. we heard the negative segment in the focuses generally focused perhaps on the world management side being an area of shortfall, but ultimately banks are still going through a major process of restructure and reform. there's no point in pretending that just because the eurozone crisis takes many a back seat, that suddenly banks will return to being where everybody puts their money. but they have been oversold. they've rallied very strongly. hard to see anything from this that will take the banks higher in the short term. >> so you think they're now trading above fair value? >> absolutely. what we've seen is a turn in the valuing environment, but the market took the stocks from being 15% discount to value to
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15% premium to value over the course of the last few months. they're only one of the sectors in the market which actually shows us identifying a positive outcome for risk appetite. a lot of risk p appetite here in the sector and i don't think these numbers and perhaps ubs next week will reinforce it, is an tan dear, these are just telling us actually the turn is in, but let's not get carried away. >> banks have been the ultimate swing on sentiment. any sign of the ecb action announcing omt, qe, spanish yields coming down, bank sector rally, you think it's all in the price? >> what we saw earlier this year is that the whole market in europe was very driven by one or two sectors. banks were the swing factor in qe and q3 and the whole market is getting to an equiequilibrie.
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>> that was just water, right? okay. don't worry about that. talk about banks. finally good news ondeposits. the first rise in six months. greek deposits highest level since may. italian up 2.1% on the month in september. italian bank deposits have hit the highest level on record. french, german bank deposits, irish, cypress, all down 0.1% on the month. so make of that what you will. actually just a quick reaction. spanish bank deposit number, is that sort of reflecting what you've just said? >> i think we have to recognize that these bank deposit numbers can obscure a lot of the detail in terms of who the net holders are. but i think the real message from these numbers that the market will take away right or
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wrongly is that from the sentiment point of few, the fear factor has reduced significantly. we've already seen that in terms of interest rates. bank deposits are stabilizing. that has to be good news for sentiment. >> meanwhile, three of europe's biggest phrma companies have also reported earnses. assist tar take astrazeneca was worse than forecasts. their goal is to restore the company to growth and scientific leadership. also the loss of a u.s. pat tent on top selling blood pressure drug which hurt novartis earnings. but in line with what analysts have expected. they've had a 32% drop in quarterly sales. sanofi posted a 3% rise in sales
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in the third quarter. stefane has reaction on that stock. >> that was actually a good surprise this morning. the drug maker is now you targeting a 12% decline of its business net income on the full year. that's to compare with the previous guidance of 12% to 15% decline. it's growing businesses like the vaccine division. third quarter results were stronger than expected. 2.2 billion euros, but still down 7.4%. this morning the ceo of sanofi told reporters that the company is seeing the light at the end of the tunnel for the last two, tlooe years, stand if i was looking at ways to revive growth because of this strong competition on its key treatment.
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>> chris, you've got a green light on sanofi it says this morning in the lieber investment -- >> green stars. what we do is look through the universe of stocks to identify stocks that are well positioned potentially responding positively to news, but also in terms of their outlook for value and investment opportunities. green star signals we already had a positive view on the sector in general relative to other sectors this week. we feel health scare is positive so far. negative being autos. that's playing out this morning. so when we're looking at individual companies, there's an opportunity for value to be recognized. when companies report respect people can look it at the details. typically stocks move back to where the value trends are. trading a bigger discount the value would be normal. trend outlook is positive. so we're narrowing that gap again. it's a shorter term trading focus for us, but certainly something positive our radar
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screen. >> the new ceo of astrazeneca, the ceo, how do you proceed now that? soro-o-r-o-i-t s-o-r-o-i-t. how do you pronounce that? >> i'm cheating. >> i'll put it on the auto cue. >> i would say soroit. >> okay. it's just since he's become ceo, i haven't been able to pronounce it right. >> you pre-announonounce it the want. >> thanks for that stefane. catch you a little bit later. news coming out of philippines. central bank cutting overnight borrowing rates by 25 basis points to 3.5%. so another central bank trying to ease things up around the globe. this as asia gets into its full earnings season. may show a striking contrast between southeast asia and rest
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of the region. expects to report an average of more than 16% rise in earnings from previous year's figures. partly driven by a strong domestic base. you how are you playing asia? >> well, we actually look at 6,000 companies worldwide. so what we're really looking at is the similarities between the markets and recognize the report there talking about the domestic market. we know asian stocks generally are focused on what's happening in china and leadership changes. so that's dominating the story in north asian markets. we're not really in the the earnings season yet here, but certainly the message across
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board both in europe and states and asia is everybody's focus is on the revenue lines here. we're looking not just at the ability to deliver against earning, with ybut really what' happening with demand balances. expectations are reasonably optimistic. so once that's already being reflected in positive anticipation about the growth outlook, it also puts it in the situation of running just the same kind of disappointment that we're seeing in the european market or in the u.s., which is the very clear focus on top line revenues if you fall short turnover, the market is very unforgiving. >> chris, stick around. look me is the name of a uk startup that says it has mobile advertising figured out. does the company have the answer for the likes of facebook and google? we'll hear from the ceo. plus why does one of the gulf region's leading contractors think africa is the market to penetrate some get a taste of access middle easts as well in 20 minutes.
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also we'll put the pedal to the metal in the global auto sector. we'll find out how hyundai is driving up sales. and chris says autos ranked as the second worst of all sectors. plus it wouldn't be "worldwide exchange" if we weren't getting investment strategy from every corner of the world. a guest recommends keeping a strong overweight position on equities. all of that still to come. meanwhile here in europe, we're just over an hour into the trading day. up at the session highs. advancers outposting decliners by nearly around 8/2 just after slim gains from yesterday. xetra dax up two qu-thirds. keep an eye on the bond yields.
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might be always lower today in spain than we were yesterday. we've had a look at a lot of the stocks of course. ten yield spanish yields 5.5%. some other companies we haven't mentioned reporting today, likes of unilever and wpp. unilever up 3.2%, numbers coming a little bit better than expected. talking about gray swans dwa, four gray swans, not black swans. we'll get into that, europe, china, hard/soft landing. credit suisse we've talked about and daimler with a profit warning last night. stock down 3%. currency markets, euro-dollar hit 1.2929 this time yesterday. it's back to 1.30 as you can see. dollar yen back over 80. aussie dollar got a boost yesterday from china pmi numbers. sterling-dollar up to 1.6084. we'll be getting the latest gdp
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numbers out for the third quarter for the uk and is expected to show uk is out of recession coming up in around 15 minutes time p abo. it could be more. david cameron suggesting more good news to come on the economy. so we'll keep our eyes on that, as well. right now it's time to recap the asian trading session. >> some selling pressure today. the pboc has drained liquidity from the banking system for the second straight week. this signals the central bank isn't inclined to ease further in the near term especially after recent promising data. the china currency is trading around it all time high against the glean bareenback. shanghai composite was dragged lower by infrastructure plays and commodity majors. banks also under pressure ahead of earnings. they're expected to report slower profit growth.
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the hang seng managed to extend a ten day winning streak helped by the services sector, but industrials tumbled. meanwhile concerns over earnings dragged the tyex lower. nikkei hit a four week high. more on that from tokyo a bit later. but sharp sales tumbled more than 4% after a profit warning. the kospi turned higher in late trade. hyundai motor jumped up more than 4% after earnings beat forecasts. we'll get the details from saul. aussie market ended marginally in the green helped by gains in the property sector. sensex higher by still to come on the program, skidding earnings for the auto industry. ford expected to announce another plant closure. plus we're breaking those uk
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third quarter gdp numbers in around ten minutes. 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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one of the top stories trending on our website, apple. investors looking for a 20% swing up or down. find out the whole story on cnbc.com. are results a swing factor for equity markets? if you want to join the conversation, worldwide@cnbc.com, @cnbcwex or @rosswestgate. we'll dig into autos or drive towards them. top firms doing all they can to keep profits up. sherry has more on honda from seoul. how are they doing? >> hi, ross. hyundai's motor q3 profit coming in at $3 billion. 3% on year lower than the second quarter as its labor unions strikes, walk outs in the summer really hurts its production.
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its quarterly net profit up by 13% to $2 billion. really it's overhe sea hseas pee that saved its numbers this time. because of the domestic slowing of consumption. but many analysts are saying this time the numbers were okay, but the problem is next year. and that it's questionable whether it will be able to sustain its rate of growth in 2013. and another concern is the currency factor, the strengthening of yuan which hit its highest level. they're drawing up plans based on that currency factor and its forecast of 3.6% growth for the global auto industry, todown fr 5.1% for this year. >> thanks very much for that. india's auto guy and also set to
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report earnings today. ekta has the preview from mumbai. >> thanks for that. this time around, we're expecting revenue growth of around 30% and operating margins at around 11.2%. and absolutely flat on the sequential basis as well. to put things into perspective even the profitability is expected to grow around 11%. but this quarter in particular, these numbers are not comparable strictly simply because of the year on year basis of any can dpm, which is basically the numbers actually for this quarter are not comparable on a year on year basis or it is possibly comparable on a sequential basis. there are a couple of key things
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to watch out for because volume growth has been up around 7% in this quarter particularly, where takes has been led by the auto sector volume. so overall, it's expected to be pretty much a subdued quarter for m&m in terms of quarterly earnings, but its has been d disappointed. but so m&m is expected to deliver in it terms of growth and sustainable margins. >> ekta, thanks for that. the latest from india. meanwhile shares in daimler falling in early trade. issuing a profit warning citing worsening market conditions. says it will now miss 2013 forecasts by 1 billion euros, will not meet its divisional targets either. daimler posted a 2% drop in
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third quarter operating profit. also the decline of the european car market might expect revenue at renault. we're expecting more news from ford. the group is now in talks with unions over the closure of a plant in britain. that follows the shut down of a factory in belgium that was announced yesterday. you don't like the autos here in europe. >> no, we don't see there being any value opportunity here at all. if anything, trends have been deer deteriorating stocs. korean cars look cheap but there is the currency concern. in europe, we've removed the currency fear, but that's just reennorsed the fact that in the stagnant market, there's no real opportunity for these companies to be growing their market share it's about cost cutting and control and dealing with a soft
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demand environment. that means cars will be expensive. >> any different for bmw or not? when you look at their sales figures -- >> of course. i think what we have to recognize is that it's difficult to find any real quality. bmw is certainly the one company that most people willed hold on to the end if you leak within the sector because you've got the advise at of global demand feeding through there and the more effective way than you have for example in daimler where they recognize the real dominant downward pressure they have coming from the european sector. >> so besides health care which you said you like, sanofi, as well, where else -- where do we go now as we go through the earnings season? >> we're in a difficult position because the market is just in the state of equilibrium where we say there's not enough growth that will surprise us to get geared up and positive about the
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market. we won't be trading at a big premium to a value environment. nor are we looking overly expensive apart from the banks where i think the vulnerability to profit taking is going on. we need the value trend to he emerge either up or done. we're in a narrow volatility range. it's tough for anybody to be putting positions on because you haven't got a momentum going this your favor. so the earnings season is becoming more and more relevant to people's expectations and it's not looking that great for the european stocks that have reported so far. we have the u.s. presidential overhang. i think the fiscal cliff is a bit too big a flag to worry about. >> is it in some ways relief to be able to talk about earnings as opposed to politics? because you're an individual stock guy. is it these that things are being driven by stock fundamentals rather than other
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things? >> to a man with a hammer, everything is a nail. the minute you have a macro fund looking at individual stock data, they're reading straight through what does that mean for global demand output, et cetera. so i think the headlines from seoul gives you an indication of how the stock to macro is still a big driver. >> gdp numbers out, up 1% on the quarter. flat on the year. it was forecast between half and 0.6%. and minus 0 abo.4% on the year. strongest quarterly gain since q32007. this is the quarter in which they registered all the sale tickets for the olympics. that increased q3 gdp by 0.2 percentage points on their own. rest of the growth led by services production. construction still very weak. in fact it fell. it is worth pointing out total output here is still 3.1% below the pre-crisis peak that he we hit in the first quarter of
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2008. nevertheless, the prime minister talked about still good news to come. i'm not sure the markets were expecting quite this kind of news. sister length dollar hitting the session high at 1.6125. chris, second quarter was weak. there was always going to be a bounce back. one quarter doesn't make a trend. what do you take away from it? >> well, qualmly there's a temptation if you're a glass half full or half empty type person to be able to read into the headlines what you want. leal reality is q2 was weak. there was a lot of talk before we've seen the revisions and everything else. but i think the message here is that if you're looking at the whole mix of economic data, this is more in touch with what we're hearing at the unemployment level, this is a broader measure that says the economy isn't roaring ahead, but neither are we in the sense that we've sort of reached a failure point and everything's going wrong again and we have to kick things forward again. i think this will support the financials sentiment
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particularly in money markets and currency markets, you butt bank of england i suspect will be sustained -- >> does that mean -- there's an expectation that we're still tilted towards more qe. does it change that? >> the local qe conversation is now going to be put in the balance. i expect more of a bernanke style we will continue to sustain a accommodating monetary policy going forward is more likely to be the message. i don't think it's about the need to come and buy more securities from the market. or assets in the markets. i think there will be apevolution of qe being discussed in q4, but what this gdp figure does is it takes the pressure off to say we've got to have another big hit from somewhere because otherwise we're in real trouble. that's sort of 1% gdp figure. p plus we need to look tree visions for history. >> i take your point about it chimes with the employment picture more than other things. >> and the construction numbers have continued to be a concern,
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the fact they're weak still suggests that that will be a focus for the markets. certainly when you read the comments that come back from the company level, the situation doesn't look as if it's supporting such a weak outlook for construction. >> chris, good to have on you today. thanks very much for joining us. that strong number, we'll have more on that uk number. also bank of china coming out just a short while ago saying its nine month net profit during september 106.36 billion yuan. the third quarter net profit 34.76 which is better than the consensus forecast of 32.7. their net interest margin 2.12%. nonperforming loan ratio, 0.93% at the end of september. might be some banks in europe who would quite like that nonperforming loan ratio. we'll take a short break. still to come, big players are making big bets on the shale gas promise. we'll ask if there's real mean to be made there.
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these are the headlines. it's all about earnings. santander and credit suisse miss
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expectations, but investors welcome cost cutting plans. ceo says he's confident targets are achievable. >> we continue to as you know increase our cost reduction targets. we think we can also continue to get more efficient on the capital side. p so we believe 15% is actually an achievable for our business overtime. >> astrazeneca's new ceo vows to return the drug make tr to grow. but novartis misses expectations. analysts say the momentum in car sales could run out of gas by next year. and uk growth stuns the market. gdp in the third quarter jumps a stronger than expected 1%. the strongest quarterly gain in five years. all right. let's just remind you where we stand on that. helping the ftse up, half
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percent. sterling much stronger, as well. just a stunning number. if you've just tuned in, uk quarterly gdp up 1% on the quarter, flat against expectations. sterling-dollar it at the session high. it will put into question whether we do get more qe from the bank of england in a week or so. olympic ticket sales putting 0.2% on. elsewhere services and production. and it comes after a weak second quarter. a lot of this is a bounce back from a weak second quarter that was also impacted by the jubilee. nevertheless, better than expected. as far as bond markets are concerned, gilts no surprise to see yields rising there. they are lower in spain and italy, 5.5% in spain and 4.8% in italy. meanwhile china's hunt for shale
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gas is ramping up. land ministry says a total of 83 companies have put this more than 150 bids to search for new shale gas deposits. it was open to both private and state owned firm. at the same time, new energy opportunities across asia attracting global players to the gas asia summit in singapore this week and that's where sergei is, head of contract strategy and price formation. sergei, thanks for joining us. how fruitful are your discussions with your asian customers at the moment? bearing in mind that we're in a slowing global economy at the moment. is there demand waning? >> well, basically what's happening now in asia is that for the last three years, despite the fact that we're in the middle of a global recession, demand for natural gas in asia was growing by 50,
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60 billion cubic meters per annum. the most fast growing global market for natural gas in the world. also forecasts for the future indicate that there will be a doubling over consumption p natural gas that will exceed 1 trillion cubic meters by 2035. and that makes asian market a greater for producers. three years ago, i was at an affiliate in singapore, and we already can report several deals that are already made. and deals that will through its
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affiliate deliver gas from the portfolio of gnt. also we have a type line project and there is already functioning project. >> okay. now, we talked a little bit about shale gas coming into the introduction there. what is the shale revolution going to have, what impact will it have on prices that you can charge? >> well, i think we should neighboring clear frmake it clear from the start that it is positive on shale gas. takes great gift to the industry. but at the same time, we don't see any major threat to
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opposition in europe as well as globally related it to shale gas. although shale gas really made united states self-sufficient in term of gas supply, so we're not considering the united states as a destination for selling our lng to united states. but there is also the direction of flows from the united states to europe our main market and to asia, as well. but at the moment, what's happening, it looks like that shil gas boom will create a lot of problems for the domestic producers in the united states because prices in united states are not sustainable, are not able to support investment cycle in the . >> and just china, the plan is for china to be a long term
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partner for russian oil and gas production. much i guess will depend on on getting the pipeline built and developed. where are we in that process? >> it's not so much the problem of a pipeline. it's a problem that we still are not able to negotiate a price that meets our expectations. the problem comes from the fact that in china, prices for natural gas are regulated. the current price levels are well below our expectations. you mentioned shale gas. i think that shale gas and costs related to shale gas will enable our chinese partners to understand that we in fact are offering them a very good
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bargain. >> okay. ser sergei, thanks for joining us. have a good evening there in singapore. back to the corporate news. shares in unilever are rising. posting better than expected saleses in the third quarter thanks to higher demand it for emerging markets, but they warn conditions will remain challenging primarily due to volatility in commodity prices as well as high levels of competition. and best buy is shaking up its management ranks. the head of it u.s. business will leave in february and achieved a minute straight difference officer at the end of the month. best buy is warning third quarter results will fall well short of forecasts. and dyson says there was a
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mole. no further details have been released. meanwhile japan looking a lot like stimulus everywhere you go. let's get the story from tokyo. >> in an unusual move, the nikkei has learned that the bank of japan is likely to decide on further monetary easing steps for two months in a row at either policy meeting next tuesday. the boj is likely to boost it $1 trillion asset buying program by about $126 billion or more as both the markets and the government press the central bank for drastic easing. while exports and production remain weak, japan's economy is expected to contract if the for the first time in five quarters. when while the government is set to approve a new stimulus package worth nearly $9 billion at it cabinet meeting tomorrow.
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this includes subsidies for small and mid-sized businesses as well as infrastructure development projects that will be partly shouldered by municipal governments. the prime minister noda had called on cabinet members to put together fiscal measures that will use reserves of this year's budget so that the country can pull out from deflation as soon as possible. that's all from the nikkei business report. back to you. >> let's remained you what's on the agenda in asia p toll. agricultural bank of k450i in a, china construction and china life due to report numbers. also south korea tech bellwether samsung and lg display out with their third quarter figures. keep your eyes on all of that. meanwhile operating for over 35 years, the largest building contractor, synonymous with the skyscrap skyscrapers. the latest projects include work on a new it terminal at the
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international airport and construction of what would be europe's tallest office building. in the next episode of access middle east, yousef caught up with the executive chairman and asked him about abu dhabi's sovereign wealth fund, acquisition of a 21.6% stake in the company. >> we're very happy with a move. no question about it, it will open doors for us to do work for as an investment company because they're a huge investor in real estate. they're embarking on a major real estate development in abu dhabi and outside abu dhabi and we're looking forward to cooperating with them and benefitting from this relationship and from this investment. >> so tune in for the next episode of access middle east tonight 23:00 cet. we'll take a short break. still to come, making mobile
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from mobile. a company that promises to revolutionize making money on smartphones and tablets. 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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would not of the top stories trending is what to expect from apple. expecting either a $50 swing up or down. we're asking is apple a swing factor or not. join the conversation here. zynga is soaring on the back of its third quarter reports. julia bourorstin has more. >> on wednesday the stock rebounded surging more than 10% after hours. bookings of $256 million.
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another factor bolstering the stock, the company authorized a $200 million stock buy back. dai the company is making less money from its daily users, 19% less. that's because of consumers shift to spend more time on mobile devices where they spend less money on zynga games than they did on those desktop social games. ceo said another problem is the fact that zynga didn't bring new games to the market fast enough, but they're investing in mobile growth saying it will launch four new games each quarter and organizing its times to combine both web and mobile development. another potential growth area is real money gaming. today zynga announced it's partnering with a british onlean gaming company in order to introduce poker and camsinmsinos
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in the uk. and other bright spots were advertising where it's expanding its team and noted the surprising success of farmville 2 which is on track to be one of the company's biggest games in years. i'm julia were since from cnbc los angeles. meanwhile facebook shares have posted their biggest daily gain since the ipo in may after it managed to allay fears over its ability to perhaps make money from advertising smartphones and tablets through posting a better growth in segment with mobile ads counting for 14% of it total advertising revenue. and one company that promises to boost ad sales is loop mean media. it says its format which enables consumers to have a dedicated advertising inbox will make the ads more transparent and shaerable. coe joins me now onset. just explain this, this inbox, dedicated inbox that you can click on.
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>> we founded it to improve customer experience. the problem we've seen over the last acceseven years is more an more aggressive app format so the whole screen is taken up and even banner display adds are put close to navigational features. so what we've introduced is a small and unintrusive tab or button for those smaller groups of customers that are actually interested in spending five minutes to download some brand experiences. they're brought into an inbox experience and they have a lot more choice. and other big thing that we're doing is we're adding social data to that, as well. so the social data now is the overall community of users to vote bad advertising down or out of the experience and to promote
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or increase good advertising. and i think that social data is going to be the sort of biggest most powerful of the big data stories going forward. >> this is a core product. i responded, you might as well. >> absolutely. that takes an offer from being something that i might never even consider for a moment to something i might be 50/50 on whether or not i actually take it up at that point. almost a new proposition from a brand to a consumer. sglupd the small number of people who might want to find out about ads. so this isn't a big game changer some? it's more niche? >> no, it's a big game changer. businesses like google make all their money who actually click on the paid links. that might not be you or many people in the studio, but that
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hasn't stopped them from building a big business. and for those people who are actually interested in shopping, it's 80% of all the revenue. so don't spend your time upsetting the other guys. look after those people. >> can you insert that into a facebook or google, how would they use it on their sites? >> we're a web app, which means we put very small buttons and tabs into thousands of other apps. it could be skype or communication tool or angry birds or the daily mail and their app. so what we're doing -- what we could do for someone like a google is to help them be more social. we're social discovery or social inspiration. so that -- our experience can live inside many our apps. and that's how we can scale our business very rap lid pi inidly
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market. >> we'll see how it knows. thanks for coming in and talking about it. everyone wants to know how do you tap the mobile consumer. >> the results we've seen so far are we're seeing about ten times greater interaction rates. which means effvems are much more in line with desktops which is a problem many of the big companies are trying to bridge. still to come, the fed holds the line on rates in qe-3 noting while the u.s. economy continues to improve, the job market isn't. our next guest says there is another possible move in qe. [ female announcer ] the next generation of investing technology is now within your grasp with the e-trade 360 investing dashboard. e-trade 360 is the world's first investing homepage that shows you where all your investments are and what they're doing with free streaming quotes, news, analysis and even your trade ticket. everything exactly the way you want it, all on one page.
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sfwlooe r. here are the headlines from around the world. its eye all about earnings. santander and credit suisse missing expectations, but investors well coming cost cutting plans. ceo says he's confident star t targets are achievable. >> we continue to increase our cost reduction targets and get more efficient on the capital side. phrma also on the line. astrazeneca new ceo vows to return to growth. novartis has missed forecasts. it's also a tale of two in the auto sector. daimler shares hit by profit
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warning, but hyundai motors profits accelerates. analysts warning the momentum might run out of gas. and britt tesch growth stuns the market. uk gdp jumps a better than expected 1%. strongest quarterly gain in five years. right now we're 70 points above fair value. nasdaq nearly 20. and the s&p 500 at the moment around about 10 1/2 points above fair value. as far as global stocks are concerned ahead of the u.s. open, best levels of the day. up around a third of 1%. european stocks mild gains
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yesterday. ftse up a tenth of a percent. dax up about a quarter. we had a stunning gdp number out. i'll give you more on that. but up 1% on the quarter. cac 40 up three quarters. ibex up around a third of a percent. number of stocks that haves also been reporting, unilever, consumer goods giant up 2.8% today. posting a 5.9% rise in underlying sales in the third quau quarter. that beat analysts forecasts. wpp down 2.2%, world's biggest advertising group cutting its full year outlook for the second time in two months after a slowdown in trading in north america and continental europe. credit suisse up, daimler down. we'll get into those stocks in a few moments time. but let's show you gilt yields rising this morning. they have been rising after stronger than expected growth number.
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olympic ticket sales helping in the third quarter as well as the fact we had a bounce back from a weak third quarter. second quarter, as well. but nevertheless strongest quarterly gain in five years. yields on spain and italy lower this morning. 4.79 for italy, 5.53% for spain. let's show you sterling-dollar. 1.6120. now bank of england may not extend quantitative easing promise in november. aussie dollar firmer again nearly back up to 1.04. euro-dollar back up to 1.30. so that's where we stand right now in europe. let's get the update on the asian trading session. >> greater china markets underperformed the rest of asia. pboc has drained liquidity for the second straight week.
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this signals the central bank may not ease further in the near term especially after recent promising data. the chinese yuan is trading around it all-time high against the greenback on strong corporate demand. infrastructure plays and commodity measures weighed on the shanghai composite. mainland banks also under pressure ahead of earnings. bank of china just reported after the bell and earnings beat estimates and mpl ratio also dehe kleined slight edee cl dehe klein declined from the previous quarter. the hang seng gained for the tenth straight session. gaming stocks rallied.quarter. the hang seng gained for the tenth straight session. gaming stocks rallied. industrials tumbled. the nikkei hit a four week high helped by a much weaker yen on the boj's easing hopes. but sharp tumbled more than 4% after profit warning. south korea's kospi turned higher in late trade. hyundai motor jumped 4%.
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augu aussie market helped by fwans in the property sector. sensex now hire bygher by 0.4%. thanks very much for that.g in the property sector. sensex now higher by 0.4%. thanks very much for that.g sector. sensex now higher by 0.4%. thanks very much for that.s. sensex now higher by 0.4%. thanks very much for that. sector. sensex now higher by 0.4%. thanks very much for that.t. sensex now higher by 0.4%. thanks very much for that. nexen did meet third quarter production and will meet the annual production guidance. quarterly cash flow from operations decreased to $560 million. and i think they're also talking about they say if they continue to expect senior operation to close fourth quarter of this year. meanwhile credit suisse targeting an extra 1 billion swiss francs in cost savings after a slide in fourth quarter
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earnings. a $5 million write down in properties losses. also the loss of usa patent and top selling blood pressure drug has hurt novartis earnings. net sales down 2% missing forecasts. astrazeneca also reported a 19% slide. worse than expected, but it wasn't all bad news. sanofi raised its full year outlook after posting a 3% rise in sales in the period. and in the auto sector, daimler cited worsening market conditions. the group says it will miss its 2013 draft by 1 billion euros. investors will be keeping their eyes on renault and in talks ov a plant in the uk. also the indian automaker shares extending gains to more than 2%
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today. the quarterly net profit 9 bell i don't know rupees versus 8.4 consensucast. and september quarter sales 95.95, again beating consensus sales. so good numbers there. meanwhile as far as the agenda is concerned, we'll get results from phillips, practical tore and gamble. after the close we'll hear from apple and amazon. greg is joining us. what are the earnings you've heard so far telling you? >> it's interesting one of the common themes i've noticed in a lot of those numbers is just how many of these companies are blaming a lot of the uncertainty on the political front. earlier this week for example we saw united technologies and
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xerox both blame weakness in government orders especially in the united states one of the reasons for their profits not that great. and of course that speaks to the so-called fiscal cliff. the fact that if congress doesn't act, we'll have these enormous cuts to spending plus these tax increases. and this morning companies like wpp and even some of the pharmaceutical companies announcing their miss and they're blaming increased austerity in many of these western governments trying to cut done on health care spending. so i think it's striking the september to which equity market weakness is a reflection of the broader uncertainty going on in many of these countries. looking forward, i think that just tells us looking forward one of the big determinants of economic and market direction will be whether these governments especially the united states find an orderly way to get past some of these austerity issues. >> is the economy going to be worse in december than it is now? >> you know, i have been an optimist, but i have to say some of these numbers that we've seen
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in the last 48 hours are kind of turning me into the pessimistic camp. now, it's interesting the federal reserve yesterday when they put out their statement after something of a ho-hum meeting, they did say household spending had looked better and that is true, the retail sales numbers have been very good and i'll be very interested to see what amazon and apple have to say later on today in the united states. because they may tell us that the consumer is doing relatively well even though the business side not so much. and if you think about it, that kind of makes sense because the consumer here has especially benefited from the lower mortgage rates that the federal reserve has managed to engineer while the business community is somewhat concerned about the outlook out look for capital spending. >> let's talk about the fed in more detail. in december, we'll have had the end of operation twist. if the economy might be turning down a little bit more, will they be facing a decision about whether to make up for the end of operation twist in the election of course will be out of the way by then.
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>> you're absolutely right. yesterday's meeting was really a place holder. nobody expected anything been to happen and the fed thankfully delivered. but that just tees us up for the meeting in december. because as understand, operation twist is rolling off at that i default position defau default position is that they expand to the full 85 billion a month.osition is that they expand to the full 85 billion a month.psition is that they expand to the full 85 billion a month.ition is that they expand to the full 85 billion a month.tion is that they expand to the full 85 billion a month. we've been seeing how well these corporate earnings numbers suggest that things are actually looking weaker, not stronger. and on the fiscal cliff front, certainly no resolution before
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the election on november 6. and honestly, i'm somewhat pessimistic that we'll have clarity even by early december. it could be a lame duck obama, a reelected obama, but either case, it's not clear what will happen. >> we'll get into that. we'll take a short break, but we'll get more in the fiscal cliff in a second. but up next, more than 80 top ceos have written to congress with their own ideas. find out what they're suggesting.
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these are your headlines from around the world. santander and credit suisse miss expectations, but investors welcome the cost cutting plans. daimler trades lower after warning on full year profits. and uk gdp jumps a better than expected, strongest quarterly gain in five years. ceos of more than 80 top companies are urging congress to use tax increases and spending cuts to reduce the nation's deficit. "wall street journal" says the group will release an open
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letter today that -- greg, do you agree with their sentiment? >> i agree and it's not surprising because virtually all the people who have looked at this problem in washington who aren't running for office agree with this problem. i think this is still significant for the following reason. one of the key issues is in romney is elected president, he has a tax plan and deficit plan that does not involve reforming taxes in a way that raise z additional revenue and that very much reflects the priorities of the republican party. so if ceos are telling president elect romney, look, do a deal
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where democrat, gave some ground on taxes, does that make it easier to achieve the kind of bargain that everybody in washington thinks is necessary. i think it's less significant in the context of an obama re-election because if you think about it, most of the plans and frameworks that obama has been promoting do involve both spending cuts and revenue increases. >> some say if obama administration stays, then all the actors are exactly the same, so why would we get any new agreement. does that hold up or not? >> it's a great question and i sort of find myself falling back on the argument that something will happy because something has to happen. and i'm the first to admit that's not an encouraging way to make my case. but a couple key things. first of all, we know from last summer that obama and john boehner were close it a so-called grand bargain that
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would make real progress on sbilgtment entitlements and taxes. and both sides pulled back most of all because of the difficulty of convincing their respective political bases to go along. and part of the calculation was why do a deal with this president when we're pretty sure a republican will be in the white house in 2013. if this re-election reelects obama, that strategy will have to be reexamined. and an obama without having to run for re-election will have a little bit more leverage to stand his ground especially on not extending the bush tax cuts. so that might slight thely change the dynamic. but i think that everyone realizes this is as much wishful thinking as it is a high conviction forecast. >> all right. greg, stick around. a top story is what to expect from apple. investors expecting as much of a
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$50 price swing either up or down. find out the whole story on cnbc.com. dane says earnings should be higher than expected. what do you think? do you think apple's results will be a swing factor or not? join the conversation. worldwide@cnbc.com, @cnbcwex. still to come, we'll find out what to expect from the u.s. department of agriculture food price outlook. we'll speak to an expert who says corn is still the one to watch. bob...
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putting it on vibrate. [ cell phone vibrates ] -[ loud vibrating ] -it'll pass. [ vibrating continues ] our giant store and your little phone. that's progressive mobile. u.s. futures are indicating we might get a bounce. dow implied up 67 and nasdaq up 18. still a long way to go. and zte says third quarter net loss 1.95 billion yuan. so pretty much what we were
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expecting. analysts expect food prices to go up 3% to 4%. the report comes out at 9:00 eastern. joining us is senior agricultural trader. and greg is still with us, as well. anna, let's kick off with you. what's driving us here on the soft space as we wait for this food price report? >> on the baback of the report december, a decrease in yield in corn and low are expected quarterly stocks. so that was underlying support. so we're focused on the next usda report and where yields come into determine production out of the states. >> how much damage has the drought done to sort of future
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yield production? >> the drought has had nearly 30% impact on corn yields. so we didn't know how bad the situation is yet. p we need further information. the krcrop is nearly done, but takes time to count all the bush shells and whatnot. so we need to wait for more information and see how things progress.o we need to wait for information and see how things progress. >> we're still fairly elevated, so what are traders doing with their core positions? >> it's difficult because every trader has a different position naturally. >> what are you guys doing? >> we're keeping it fairly close and tight because we do not know what the end situation will look like. you need all the information.
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>> greg, i want to bring you in here. within of the big impacts has been raw price increases. the cost of living is going up even though core inflation doesn't go up. are you predicting that will still be a big pressure going through the rest of the year? >> actually i think we'll probably see better news rather than worse news on that front. there was a big pick up in headline inflation. there was a move up in gasoline and oil prices especially in california where they had a series of refinery outages that pushed the price up to an all-time high. and that would have been hard on a very big part of the united states. but the price of gasoline is coming down a lot. there is now chit-chat that with all the unconventional oil coming in, we could be looking
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at a glut situation in a few years. but my question actually is whether we could expect the long term story to be one of continued upward fresh on food and commodities. because i still quite remember it was only two or three years ago that we were talking about the huge spikes in demand and there were a lot of countries that were putting in place export limits because they didn't want their food or their raw materials going to anyone expect their own population. is that something we need to worry about in the next 12 months if the drought continues to put up word pressure on grain prices? >> this year was an exception. the production declines that we saw were the worst in the past 25 years. so going forward, analysts are forecasting a record amount of corn and soybeans to be planted in the united states. so we can expect supply will
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increase but we have a lag time. we have to get to the point when supply increases and meets the demand. >> are there any big constraints on terms of supply because you say if prices go high, how much more food can we put in production for next year are there major concerns or not? >> well, that's a very tough question. because that's a question of whether the land is ready or not. and every year you can see a shift of acreage between the more -- >> types of crops. >> exactly. the types of crops. so right now, it's not an issue and we need to look forward and basically see these acres and see the supply come out and by next year, we should have a good apt amount of supply. >> greg, give us your best stab if you can, at what point do you
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think interest rates might go up in the united states? >> the i take the fed at their word that they say short term won't go up until the middle of 2015 at the earlier. if you're talking about interest rate ngs the bond market, we're it down around 1.8% on the ten year treasury yield. it depends entirely on economic outlook. since i've turned somewhat bearish, i can see that coming down partly because i think it would give the fed more impetus to maintain a high pace of quantitative easing. i'm an optimist 12 months out. i wouldn't be surprised to see treasury bond yields begin a
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slow bisteaut steady move upwar. i wouldn't be surprised a year from now we're saying the low in bond yields has finally passed us by. >> we'll see. thanks for joining us this morning. and anna, thank you, also. online retailer asos says it hasn't received any approaches from amazon and they are going to open chinese and russian websites over the next year. still to come, we'll break down the numbers in the consumer goods space ahead of p&g and colgate numbers. and we'll find out why credit suisse's ceo is feeling confident and the latest on hurricane sandy.
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today it's all about earnings. santander and credit suisse miss expectations, but welcome the cost cutting plans. ceo is confident targets are achievable. >> we continue to increase our cost reduction targets. we think we can get more efficient on the capital side. so we believe 15% is actually an achievable roe. >> astrazeneca's new ceo vowing
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to return the business to growth. and novartis misses forecasts. it's also a tale of two in the auto sector. daimler shares hit by a profit warning. hyundai motor profits accelerate, although analysts warning that momentum might run out of gas. and uk growth stuns gdp, jumping a much better than 1%. the strongest quarterly gain in five years. u.s. futures are indicating an upward start. s&p 500 currently trending 11 points above fair value. nasdaq about 20. and we are some 72 points for the dow jones industrials, as well. ftse global 300 pretty much near the best points of the session.
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just on that 5,000 mark. european stocks slim gains yesterday. a little bit more meat on the bone today. ibex up 0.2%. sterling doing well against the dollar after much better than expected gdp number, 1% on the quarter. flat on the year. but the best quarterly gain for over five years. a big buns back from a very weak and jubilee affected holiday. still, that's where we start right now ahead of the u.s. open. here's a recap of some of the thoughts we've already had today. >> what we've seen with euro-dollar, as long as credit risk is weak and even though we've seen spanish bond yields rise a little bit, there's still below 5.7%.
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so that should protect euro-dollar on the down size we think. >> it has caused us to reduce equities extremely fast to 0% now. there's a maim rope for that. it's not that we didn't see any stocks out there that are doing well differencely well. the main reason is that investors don't want to do relatively well, they want to have absolute performance. and the only way to do that is to get away from the equity market as a whole. >> i remain extraordinarily nervous about the ability of companies to actually generate growth in these markets. >> just show you the impact that it's had today on sister electric and gilts, as well. sorry, we haven't got the wall yet. there we go.
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sterling-dollar up 1.6128 is where we stand as you can see the best levels of the day post that. just thoughts now about whether we will get extra qe. now, we teased you with the unilever stock price. let's bring it back. trading higher up nearly 3%. that's thanks to higher demand in emerging market warmed market conditions will remain challenging primarily due to volatility and commodity prices, tdepressed economies and continued high levels of competition. also due to report, procter & gamble. as well as colgate. analysts expecting a rise in colgate. but earnings per share falling about so that what are the challenges in the space? joining us is beauty and personal care analyst.
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are they able to move into higher margin products? >> the interesting thing about unilever is that it is using it existing brands to tap into new areas. in terms of-of-it's also trying to increase its coverage across the pricing tiers. so you see it is introducing its brand in markets such as pakistan an argentina, where it premium surface care brand is the market indicator. >> so they're going the other way.
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>> it is going the other way. but it's still a balance of both. you can't ignore one at the expense of the other. >> becoming majority of sale. how do you get the right products? consumer in india is rather different from the consume per brazil. how challenging is to work out what the right point is at the right prouk price? >> given that the emerging markets are growing, you also now stand to gain a certain level of economics of scale. going to the example of colgate, they have recently launched mouth wash and they're using this pacific grand for asia pacific. so given the scale of emerging markets, it's not that difficult to balance between the different regional tastes. >> what about technological
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development, as well? is that a big seller? >> oh, yes. it depends which level of emerging market you're talking about. in china, takes very big seller. if you're going to another market which is a lot smaller, then it would be less. so it's basically dependent on the per capita as well as affordability of the consumers. >> what sort of policy should itted a dacht it ed adapt in. >> it has announced it will streamline its focus. and it has announced a restructuring program.
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so it's timely and very apt. but the next thing to do is to look at what are these key markets. for example, focus on china skin care. the growth proceed jeks is 64 billion and a quarter will come from skin care and china is expected to contribute 22% of the global skin care growth. procter & gamble used to be number one player until it was topped by lauren in 2008. in 2011, procter & gamble lost 60 basis points in market share. so it is a market that complaint be ignored. >> so watch the chinese skin
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care market. good to see you. thanks very much indeed for coming in. we'll take a short break. still to come, credit suisse ceo feeling confident the bank can hit its targets despite a slide in earnings in the third quarter. we'll be in zurich to find out why.
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these are the headlines. santander and credit suisse miss expectations, but investors welcome their cost cutting plans. daimler trades lower after warning on full year profits and uk gdp jumps 1%, the strongest quarterly gain in five years. credit suisse targeting an extra 1 billion swiss francs. ceo brady dugan has been speaking to carolyn roth in zurich and she joins us now. was he upbeat or defensive? he liked the set of numbers and so did the share prices.
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it was largely driven by the investment banking revenues up 3.3 billion swiss francs. and again, that was driven by the fixed income unit. they were criticized about its weak capital position over the summer and credit suisse has taken the necessary steps to address that. thirdly, as you you mentioned, yes, they have upped the cost savings target yet again. we don't s much improvement because of the low client activity, but overall the ceo was quite optimistic in terms of reaching overall targets. >> we continue tos as know
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increase cost reduction price so is we think 15% is achievable. >> sticking with the outlook, i also asked brady dugan what impact if any the outcome of the u.s. elections would have on the business and here is his rather diplomatic answer. >> obviously regardless of who wins, our rue is that we need to continue to be driving the business of the bank forward, serving our clients and doing the best job we can. so we'll see obviously who win and what the outcome is after that but our focus is on making sure that we can drive the business no matter what happens. >> so of course credit suisse won't be endorsing either candidate, but in this context, it's worse noting that credit suisse employees actually rang among the top five contributors to mitt romney's campaign. >> will the money be well spent or not. we'll have to wait and find out. carolyn, thanks for that. we'll have more of course on the website, as well. meanwhile it's been a roller coaster right for zynga
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shareholders. plan ta plans to cut are soaring. >> after it plummeted on news that it's slashing staff and reorganizing, on wednesday the stock rebounded surging more than 10% after hours on earnings which were in line with expectations. and they authorized a $200 million stock buy back. daily active users increased 10% and monthly active users increased 37% over last year, the company is making less money from its daily users. 19% less. that's because of consumer shift to spend more time on mobile devic devices. c och ceo said zynga didn't bring new games to the market fast enough, but is now investing in mobile growth saying it will launch
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four new mobile games and two new web games each quarter and is organizing it teams to combine both web and mobile development. another potential growth area is real money gaming. today zynga announced it's partnering with b win.party in order toer d real money online poker and casino games in the uk. zynga also highlighted other bright spots in the quarter like advertising where it's expanding its team and noted the surprising success of farmville 2 which is on track to be one of the company's biggest games in years. from cnbc los angeles, i'm julia boorstin. >> and one of the top stories trending is what to expect from apple. investors are expecting as much of a $50 stock price swing up or down. get the whole story on cnbc.com. but we want to know are they a swing factor are not.
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join the conversation. worldwide@cnbc.com, @cnbcwex or @rosswestgate. let us know your thoughts. still to come, we'll be in florida for the latest on hurricane sandy which is just slammed in cuba as a category 2 hurricane.
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hurricane sandy has hit cuba. it slammed into the southeastern part of the island early today with winds of 105 miles an hour. at the same time, national hurricane center has extended a tropical storm warning in florida. joining us from florida, mike seidel from the weather channel. mike, how is this storm going to
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progress? >> so far so good here. it's moving north at 5. still a category 2 hurricane. they had a wind gust to 114 miles an hour. it's now exiting cuba. we have hurricane warnings for most of of the bahamas. it will go due north, so it will avoid a direct hit here in florida, but we'll have winds ramping up as high as 60 miles an hour. also heavy rainfall and again the best bet is not go in the wear. we have dangerous surf. and that will run through saturday. once the storm rolls by, the winds will blow offshore and then the big concern is where does it end up. we have dueling models. the american model, european model. both take it somewhere between the mid atlantic and as far north as nova scotia. we're four to five days out, so we'll be watching that because fending on where gepding on
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broke it goes in, the impacts change. again, that's a monday/tuesday time frame. everybody is aware, there's a lot of buzz out there. we have never seen a tropical system take this path this late in the season. so we're in unchartered territory and if that european model verify, we'll have a lot of power outages and a lot of serious impacts on the beaches. that's early next week if you're heading towards new york, philly and boston in your travel plans. >> mike, great stuff. thanks for that. i know you'll keep givings all the updates on the weather channel. in the united states today, weekly jobless claims are out at 8:30, forecast to drop by 123,000 to a total of 365,000. it's kelly's favorite weekly bit of economic data. also tpending home sales are ou. we'll have result there is al
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treeconocophillips. after the close, apple and amazon. so let's get some strategy thoughts on this. as we work our way through earnings on both sides of the pond, what is it doing for your strategy? >> i must say we are somewhat surprised to the extent earnings are weighing on markets. we have seen sort of hurdles to revenue growth already, but it seems to have caused the realization that headwinds for growth are still very much out there and hitting process spenkspenkt prospects for revenue generation or margin expansion which is clearly disappointing to the down side. on the other side, we would say
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the backdrop from policy and certain defensive positioning amongst investors gives us still a very much conviction that we'll have constructive fourth quarter. so basically we are sticking to our risk on stance. we overweight europe in the region. >> it's interesting because in the u.s., there's evidence that those stocks that are much more u.s. focused, we talked about this yesterday, the lakes of harley-davidson and whirlpool are, coming out with better numbers than knows with big exposure to europe. >> and you're also seeing this in the macro data. europe is clearly lagging still. but at the same time, we think there is here a convergence in sort of valuation gaps that will
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progress during the quarter. what we're seeing now is that even on down days, europe is outperforming the u.s. so we're comfortable with that position. >> what did you make of the commodity sector play right now? because the pmi suggests maybe we've bottomed on the growth numbers. >> absolutely. very interesting area. i think commodities stand out as a clear underperformer year to date. it's one of the few risky sectors. but i absolutely agree that the turning of the cycle and increasing evidence of that especially in china is crucial here and we're looking into this. the problem is that the market itself, if you look at came potty prices, it's still really
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not picking it up. and given the very poor performance year to date of that sector, we probably only will enter if we see somewhat more convincing evidence that prices are moving up about so that we're seeing the fundamentals getting in to play, but sort of the market dynamics not yet. we're waiting for that to really move in there. >> thanks for that. u.s. futures pointing to a positive start. just about the end of the show. "squawk box" up next. tomorrow we have something special for you. [ female announcer ] e-trade was founded on the simple belief
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good morning. deal with the deficit. ceos from more than 80 companies call for action to beat down the deficit with higher revenues and spending cuts. can't go a day without mentioning apple. today the company gets ready to unveil quarterly results along with amazon. and its name is sandy. i guess it's a she. and she means business. but will this storm wreck halloween for the east coast? remember last year? it's thursday, october 25th, 2012. "squawk box" begins right now. good morning, everybody. welcome to "squawk box." i'm becky quick along with

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