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tv   Worldwide Exchange  CNBC  March 6, 2013 4:00am-6:00am EST

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this is today's edition of "worldwide exchange." i'm ross westgate. >> i'm kelly evans. these are your headlines from around the world -- >> the bulls are on the run. the dow hits an all-time high 164,286, surpassing the 2007 record. telecom lead the beltway in europe with vodafone up more than 5% on report it could be eyeing a full merger with or sale to wireless giant verizon. venezuela mourns the death of president hugo chavez as the rest of the world eyes the future of the country's leadership and its vast oil reserves. one hour into the trading day in europe, fresh record
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highs on the dow. european stocks are looking for a softer start as you see. we're weighted to the upside 7-3. advancers outpace decliners on the dow jones 600. trading at multiyear highs and pushing higher this morning. the ftse 6,448. consolidated the move, up .25 as you see. looking ahead to the bank of england tomorrow. xetera dax up nearly 1%. the ibex up .had%. the -- .4%, the mib up.1%. as far as bond markets, interesting moves again on italian bond yield, 4.67%. spanish bund yields down below 5%. we hit 4.98%, the lowest since january. the euro slash dollar firmer,
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2.954. the aussie dollar 1.02. sterling/dollar, 1.51. the currency markets pretty steady. we haven't moved a lot in the last 24 hours. let's check on the asian session. we have more from singapore. >> reporter: thank you, ross. the nikkei 225 added over 2% to a fresh 4.5-year high. retailers were among the top gainers with heavyweight fast retailing jumping over 8%. meanwhile, sharp was the most traded stock, soaring 14%. this boosted by reports that the struggling electronics maker may get a $110 million lifeline from samsung. this was later confirmed by sharp after the market close. taking its cue from the wall street rally, in china the shanghai composite ended higher by almost 1% after yesterday's over 2% jump. the hang seng in hong kong
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gained by about the same margin here. the telecom sector had a strong session on both markets. local media reports that china will likely grant licenses for 4g wireless technology this year. shares of zt as you see and china unicom and china telegold medal got a noaa -- telegold medal -- telecom got a nice boost. beijing is considering raising the deposit low capped on investors. south korea's kospi gained a modest .2%. technology shares continued to lead the gains. and down under, australia climbed to a new 4.5-year high after a solid q4 gdp data. the india sensex trading higher by .5%. back to you. >> all right. thanks for that. so you were excited last
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night, weren't you? i know you were. >> you mean about the dow. it was more about the anticipation of of whether it would happen as opposed to what it necessarily stands for. i was not breaking out the pom-poms but -- >> would you break out pom-poms if we break out the champagne? >> would you break out the champagne first? there's a sense of where we came from on the dow jones average. first it was the closing high, 194,164 level. we marched past that yesterday, 14,198 was the high. we got well above that yesterday in 194,200 range. so -- 14,200 range. do you have to take inflation into account? in the u.s., inflation is up 10.5% since october, 2007. you would have to add that much -- >> that's any investment, on any investment you look at real -- you know, people look at inflation, adjusted returns.
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>> in fairness because bob pisani would say, yes, you have to take inflation into account but you get dividend payouts. >> you have to reinvest the dividends. >> if you take the total amount into account, you would have done quite well. my colleague at the "journal" has a piece where he says, look, if you take the dow and include all the components on an equal weighted basis, we are above the past highs. >> the actual significance of the dow hitting the high isn't whether you're lng nominal returns, inflation adjusted returns, dividends reinvested. the significance of it is psychological more than anything else. i would say -- >> i think it goes beyond psychology at this point, as well. >> if everybody tune information to news last night, stocks up at record highs, there is a beneficial psychological impact, right, on sentiment? >> i don't know. i think people will be pissed off they missed it. wait a minute -- >> it makes people think, hang on, does it not make people -- is not the benefit of all the
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headlines last night in the states -- >> the evening news effect, absolutely. opens multiyear highs. i think to some degree it breeds more resentment today than in the past because there are fewer people exposed to the stock market, more people who say i've lost money in real terms, i'm worried about inflation, i haven't seen -- >> does it make ceos and cfos more confident about making an investment? >> perhaps it will trickle down. the question -- >> doesn't take much, takes one thing to move the dow. >> by the way, it's not just the dow which as paul donovan rightly point out, is a global index. 40% of sales are worldwide. we saw japan and australia at 4, 4.5-year highs. it is a global phenomenon. and speaking of global phenomenons, should we talk of vodafone? >> shares up 5% this morning. some suggestions that they've been talking with verizon.
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verizon thinking about their relationship with vodafone and whether they should buy vodafone's stake out, whether they should consider a full merger. it's probably fair to say, one would imagine that every year these two companies -- >> have this discussion -- >> think about what should our relationship -- they will be normal every year, reviewing what the relationship should be. are they going to decide something. >> it comes in the middle of the cable congress in london. coming off the world congress in barcelona, the way that the mobile industry and fixed line industry are coming together, there's so much pressure on wireless networks. we saw vodafone looking at cable deutscheland, they're trying to get access it more consumers to offset the pressure on their networks. i think we'll see -- there's been a ton of dealmaking already. we're going to talk, in fact, to liberty global ceo in the next -- if only we were in that business. >> yeah. >> okay. let's move on. venezuela's president, hugo chavez, has died at age 58 after
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14 years in power. he'd been seriously will consider for nearly two years and hasn't been seen in public for several months. mr. chavez's body lies in state until his funeral friday. the nation has begun seven days of mourning. the vice president will assume the presidency until an election is called within 30 days. u.s. president barack obama expressed support for the country saying he remains interested in "developing a constructive relationship with the venezuelaial government." it doesn't seem as if too much will change. after announcing the death, interim president maduro said he will expel a u.s. military official for meeting with military officers. >> translittranslator: you all the united states, the imperialist elite who look down on our people, have the objective of destroying the independence, democracy, and peaceful life of our country. they have decided to put in motion plans for the global destabilization of venezuelan
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society. coming up on the show, we'll speak to one guest who believes there was already a risk of continued instability in venezuela even before news broke of chavez's death. we'll see whether the view has changed in around ten minutes. we'll get a take on latin america as a whole, including what investment opportunities exist in brazil amid faltering economic growth. plus, we'll be in hong kong for a few on whether new measures by beijing to curb the rampant property market will have a lasting impact. and as london plays host at cable congress 2013, we'll have exclusively from the ceo of liberty global it how the landscape is changing for content providers. and off to disneyland. we look ahead to -- >> are we? >> apparently. we'll look -- why? in this sense we'll look at the entertainment giant's shareholder meeting in phoenix, arizona, where investors will be asked on splitting the role of chairman and ceo. >> look at those tea cups. >> that's not where the meeting is. they're in arizona. >> that would make for an interesting backdrop, wouldn't it, the flying tea partycups.
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china is committed to fiscal reforms and has stability to stimulate domestic demand heading to the head of the national development and reform commissio commission. property shares recoup something of the losses earlier. stocks fell heavily on monday after the government rolled out fresh measures to tame housing prices. many analysts believe china is unlikely to nishtd more aggressive -- initiate more aggressive moves to curb investments. they will focus on economic stability and is less likely to come down hard on the real estate sector unless there's a big spike in prices. china was the out performed up around 6%. not just due to the wider move but because of its solid results. beijing commercial district's biggest developer said underlying profit doubled last year thanks to the higher deliveries that it booked. nicole wong is regional head of property research at clsa.
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nicole, thanks for joining us. was the initial fears over capital gains tax and impact on the property sector overdone or not? >> i think the fears are very overdone because if you look at chinese property markets, about 90% of the chinese property market has just got 30% or less of the market transaction in the secondary market which is where the capital gains tax will hit. so there isn't that much impact on the overall -- although the impact will be felt in a lot of the first-tier cities. they account for 10% of chinese property market. >> yeah. so we've seen volatility. what happens -- what is going to happe happen? >> the vol tilted -- volatility in the stocks is due to partial details announced and people gauging the impact. there could be further details, and people worry details could be worse. i think the details could be
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better because if we look at the issue that the central government needs to tackle, there are a few pockets of overheating property markets like beijing and the key problem is undersupply and supply can't catch up. the only alternative is to hit on the month. we have that and a lot of inventories and not really too much in terms of price appreciation. so i think this time around the policy tightening would be targeted, and it's not going to hit the overall industry too heavily. >> and nicole, so you like the property stocks here after the sell-off, basically saying this isn't like 2010 where these measures are expected to grind the market there to a halt but instead to just, you know, when we're talking about a 20% sales tax, et cetera, you can see why people are concerned. you're saying this will actually be something the sector shrugs off. >> yes. i think the sell-off has been a reflex reaction to sell whenever
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there are policy concerns, irregardless of the details. when there are more details coming forward, i think the sector will pick up again. that's why we actually are still overweight in the china property sector. >> yeah. you say overweight, china property sector. what's the best way to play tha that? >> if you look at the policy tightening, it's going to be very targeted at the top tier cities which means around 10 or 5 of them. and so -- 10 or 15 of them. and so the best way to avoid risk and benefit from the growth would be to invest in diversified developers, mainly the national ones. so the names that we like would be acoli, cr land bankur, plus a smaller southern chinese developer which is unlikely to get hit because they aren't -- they are in very few top tier cities.
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>> country garden in top-tier cities. nicole wong from clsa. thank you very much for your time. now the pound has recovered back from its recent 2.5-year low versus the dollar. what's the new level to look out for? more when we come back.
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on currencies, euro/dollar 130.50, holding off the multi-week low. sterling a touch firmer, as well, edging back from friday's 2 1/2-year low of 149.85. currently 151.04. improved risk appetite really. stocks in europe and the united states rallying. the dow jones at my highs helping off the multi-month lows. let's get more on this now with head of european fx strategy at morgan stanley. we've come off the lows we hit last week. are we -- what's going to happen now? are we going to -- are those lows going to be difficult to break through in the short term? >> i think the pressure will remain on the downside actually for the euro. i think rebounds are likely to be fairly limited. i think the global currency
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market dynamics are changing quite dramatically. and we're likely to see currency market behavior changing. so while we may well have what appears to be a more global risk environment, increasing risk appetite, maybe with equity markets moving, continuing to move higher, i don't believe that many of the traditional pro-cyclical high currencies will participate within the movement. i think the euro is one which will lag behind and come under further pressure. so i think with regards to the euro, i think euro/dollar can still extend this move lower. i think there's still the risk that we do head down into the 128, 127 area in the near term as we see issues within the europe -- political issues within italy continue. while we still have the uncertainty, that will mean that the euro is unable to participate in a broader risk recovery. >> when you also look at the
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factors that may weaken the yen further, the fact is it may keep the pound under pressure. actually, would you be arguing that for the dollar here? dollar index can go up even if we maintain the stock advance. >> yes, i think the behavior of the dollar is actually changing dramatically. i think there is a rotation taking place with regards to funding currencies away from the dollar and toward the yen. so i believe that as we start to see equity markets continuing to move higher, the dollar could actually remain very well supported in that environment. and in fact, over the course of recent months, the dollar has in fact become increasingly more positively correlated to asset markets and to risk. so the dollar does appear to be coming in the asset currency rather than the liability of funding currency. so there's a big change which is taking place. so i think that's going -- that's a real factor in the market which i think investors haven't full i picked up on as
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yet. i think it will be a feature over the coming weeks. a risk-positive environment i think can be supported for the dollar. >> it's a great point. i wonder, too, where that leaves the traditional currencies like the aussie/dollar, further weakness then? >> these traditional higher beater currencies, particularly commodity currencies, could also struggle in this environment. i think it's quite interesting. when we look at some of the more specific fundamentals of these currencies, as well, they have been at extremely high levels. although as we've seen in the case of the canadian dollar, it has already started to come under some pressure. the australian dollar has held up extremely well so far, but i think there are worrying developments starting to feed through from china and asia again which will put the australian dollar back under pressure. so we believe that, again, these traditional high beater and commodity related currencies could benefit there a more
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risk-positive story in asset markets. >> all right. we'll see what happens. interesting stuff. it could all be changing. head of f.x. at morgan stanley. >> thank you. venezuela is mourning the death of president hugo chavez following a long battle against cancer and leaving behind a deeply divided nation. >> translator: we received the hardest and most tragic news that we could deliver to our people. at 4:25 p.m. this afternoon today, the 5th of march, president hugo chavez died. >> he had been in power for 14 years and recently secured a fourth term as president after winning a landslide victory in last year's presidential elections. the country is expected to call for fresh elections within 30 days.
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with a mix of socialist and pop limp, hugo chavez swayed the economy during his 14-year rule including the oil industry. under the administration, poverty and unemployment declined, but crime and inflation rose. el commandante also became a polarizing force in venezuela's foreign policy for his anti-capitalist views. reacting to the news, president barack obama said the u.s. supports the venezuelan people and looks forward to developing a constructive relationship with the venezuelan government. we are joined with more. james, thanks for joining us. >> thank you. >> when we heard that chavez was ill, we saw a rally in venezuelan bonds. now that his death has happened, what happens for investors? >> well, i think they're going to be extremely cautious. there's going to be no -- i think any hopes of rapid short-term positive change for investors.
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they'll be frustrated, and the business environment as a whole will remain risky. the government is expected to call for elections. but i think that probably the vice president, maduro, will probably be the government candidate for elections and will probably win. poll data is uncertain. but he's received a massive boost through being anointed by chavez. and in that respect, the situation is different from a few months ago. >> yeah. and if he is indeed elected, does that mean a change? >> i think things will stay bradley the same for -- broadly the same for the time being. madd video a pragmatist. on the international scene, he will be looking to avoid -- apart from perhaps in the case of the united states, he will be looking to avoid excessive frictions with neighbors. he'll be looking to work with countries like colombia. at home there's been no indication from him or anybody else in the government that it will take a more moderate policy line including things like
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extracting investments. >> what a lot of people are wondering, what this means to the oil market. >> for the time being, not much. and you know, even if the opposition candidate were to win, hypothetically in elections, in a month or two's time, that would not be immediately good news. he'd be very cautious about unwinding some of the previous nationalizations and unwinding some of the legislation that has happened. in terms of oil prices overall, i think this is only likely to have a major upward impact on the oil prices globally if there is some sort of political crisis. and i think that would only happen at the moment in the fairly unlikely event that there is an opposition victory at polls. i think that if -- the risks around the venezuelan situation generally have been priced in. >> you've seen opposition victory. who is the opposition and what do they represent? i.e., why would that be a negative for oil? >> it wouldn't be a negative. it would be potentially a positive. but not as much of a positive as it could be. this is a table for democratic
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unity. the presidential candidate for the past elections was enrique caprilas. the working hypothesis is that he would probably be the candidate going forward, although some elements of his coalition are unhappy been that. >> is he more market friendly than the chavez-style rule? >> yes. >> what i'm trying to figure out is from the point of view of whether venezuelan under chavez was too closed to international markets for its own good, would a new regime then be more market friendly or open to global markets? if so, that would have to come from an opposition candidate as opposed to maduro? >> i think that would have to come from an opposition candidate. if there was an opposition candidate committed and caprillas would be, he presented himself as centrist on the left. he would be looking to maintain political cohesion -- >> how much support does he have in the country? >> i would say around about 1/3 of the country. it's a very polarized situation. but as i said, poll data currently indicates that maduro would probably win.
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there's a poll agency which recently reported that 50% voting intentions for maduro against 30% for caprillas, more unfavorable than last october. i think there's been a lot of speculation about different factions with win it and how there -- within it and how there might be a faceoff. i think they're overstated for the time being. >> we'll have more in a bit. we mentioned on brazil and ask about argentina, as well. the reaction to chavez's death continues to emerge around the globe. find out why the prospeck of photograph elections may -- prospect of elections may create volatility in the oil markets at if you were planning to see the oval office or east room in person, you'll have to be content viewing them on the internet. the white house is canceling tours until further notice blaming staff reductions due to the $85 billion in budget cuts known as the sequester. the self-guided tours are free,
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but people must submit requests at least three weeks in advance for security reasons. last year, 650,000 people visited the white house. and ross, the white house apparently is making a bit of an effort it draw attention to the effect of the sequester. you have to wonder whether they really needed to cancel the tours because of cuts. >> the effect of the sequester and cutting tours only matters if the five people that did the tours -- otherwise they saved no money. >> exactly. maybe they saved maintenance costs, the costs of issuing people going over paperwork or something. again, that can't be -- yes. are they giving less -- >> unless they've laid off or furloughed the people doing the tours, surely they haven't saved money by stopping the tours. >> what's interesting is if they said, okay, fine, in order to make this, you know, an earnings accretive type thing, could we charge for white house -- >> did they charge? at buckingham palace it brings
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quite a lot of money. >> it's expensive. like 18, 20 pounds. $30, $40. it's 25 pounds to see the shard. anyway -- >> everybody pays, a lot of people pay to see stately homes in the u.k. >> if you have to pay to do a white house tour, shouldn't you as an american citizen regardless of whether you afford it be able to sign up for a tour? there are people who can't if they're going with a family of four at $100 to bring them through. >> anything that helps with the deficit. would you pay to tour the white house? how much would you pay? get in touch with us. you may vividly disagree with the idea you have to pay to go to the white house. e-mail us,, tweet us or @kellyevans or @rosswestgate. >> you can give access to anybody regardless of ability to afford it. >> like going into a room and smelling the leather. emerging markets growing but can't get into gear.
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we'll discuss the index coming up.
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in the headlines, bulls on the run.
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the dow hits 14,286. that surpasses the 2007 record. telecoms are leading the way here in europe with u.k. mobile phone operator vodafone up more than 5% on a report it could be eyeing a full merger with or sale to wireless giant verizon. venezuela mourn the death of president hugo chavez as the rest of the world eyes the future of the country's leadership and its vast oil reserves. the dow finished at a record high. european stocks an hour and a half into the trading day after what was called a softer start, now up. the ftse up .3, the xetera dax up 1%, and .2, the mib up.2%, as well. the cac up .29%. >> the xetera dax index can typically be more mature. ten-year bonds, bund yields moving higher reflecting the risk-taking appetite. spain and italy lower, 5.01 -- can i point to this? we've been watching this.
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>> earlier this morning, we did go below. we've been below 5% this morning for the first time since early '10. >> amazing. italy, 4.66% is the yield there. ten-year guiilt moving higher. >> the dollar/yen firmer but not much. we're not far from the recent multi-week lows that we hit last friday. particularly in the euro/dollar, sterling. it's thought the dollar is going to turn from -- into an asset currency rather than a liability currency. you know, that -- the correlations could be breaking down. brazil's central bank is expected to keep interest rates at a record low of 3.35% for a third meeting, underpinning the country's slow-moving economic recovery. the bank is also likely to signal it would be prepared to raise interest rates if rising inflation moves closer to the 6.5% ceiling set by the central bank. james lockhart is still with us
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from lockhart. which way are they likelying to. >> >> 7.35%, 7.5. i think they're likely to stay where they are today. everybody will be eagerly passing what the statement, the central bank puts out, says whether this is likely to stay like this for the foreseeable future or will hint that this might be an increase the next time they meet. so we're likely to see, you know, over the course of this year, a gradual tightening again of credit conditions -- >> are we? what happened to brazil? it went from being one of the fastest growing, most exciting economies to almost a standstill. >> it was slowing down last year. i think its long-term fundamentals remain good. but really since 2009, 2010, there's been an increase in government protection. there's been a lot of conflict over currency flows, as well. all of this has had an impact on investment. the world is changing. ten years ago, it was enough for brazil to be one of the bricks and be attractive in those
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terms. we're seeing in our growth index a wider range of country of invest to investors -- >> who are the new brics? >> it's not new brics, it's a wider variety plus the brics, at the top of the markets. in latin america you will see countries like mexico, peru, colombia -- >> really? wow. >> yeah. they've had strong growth over the past ten years. >> in brazil, what's happening with the -- you know, the development of the middle class? and then associated industries on the back of that? >> okay, if i was going to see that brazil's achilles heel was its growth environment, probably one of the most positive things for its long-term fundamentals are, as you highlight the emergence of the middle class and especially the lower middle class, people who move out of poverty through conditional cash transfers and so on. that's a process that's very much in motion. you know, the low hanging fruit of consumption-driven economic growth over the past ten years from that has perhaps been picked now. but there's still going to be further expansion in different forms of credit, different
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consumer demand in different areas which are going to drive growth up and drive demand for improving infrastructure, i think. >> okay. you talk about, you know, emerging markets losing some growth. we've also got this report out today from hsbc, the hsbc mi report. the index easing to the lowest level since 2012. the activity expectations did rise for the second month to the highest since may last year. the manufacturing sector improved sentiment as the future output index hit an 11-month high. we have chief economist of central eastern europe at hsbc and joins us. it's something, we were talking there about emerging markets latin america. your index is saying similar things. >> it is true. emerging markets continue to expand. it was a slow pace of growth. as you were showing, it was the slowest pace since august. if you look at the details, it was broad based, manufacturing and services. within the bric conditions, brazil, china, india, they've lost steam actually. if you go further into the
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details, we see new orders losing momentum, in particular, new export orders. and employment conditions, they continue to improve. but at the slower pace. you know, obviously there is still growth. but, you know, it is slower in february. and so we've got slower growth, new business growth slowing. the input price inflation up at a ten-month high, that's not a great combination. >> it's not great, although if you look at the prices charged or output index, you don't see much of a pass-through to actual prices eventually. so there's a bit of increase in output price, as well. it's a modest pace. >> how fast do we think these guys as a sort of -- the model has been based for low-cost production. >> yeah. >> right? how fast is that changing? >> yeah. i mean, again, generally speaking it's growth rather than inflation that is the issue across emerging markets. we can make up two scenario was here. either emerging markets go so long they wobble along because you have strong external
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headwinds coming from issues or political and structural challenges, or you have the wild capital swings further, you know, boosted by japanese monetary policy stimulus, or as we are leaning at hsbc, this is a soft temporary adjustedment in pace of growth. and as we mentioned, the output index, expectations of future in 12 month's's time, they're strong. once adjustment works flew -- works through, cost pressures will feed into price pressures. >> yeah. i mean, i would agree in the case of brazil. we are expecting a weak recovery beginning through this year toward the end of the year. i think better evidence of that will probably be the trigger which will central bank to feel happier about beginning to raise the gain. you know, as i said, the long-term fundamentals of the country remain positive. this is more a blip than some permanent slowdown. >> i'm interested in mexico. you say the expansion of the manufacturing sector continued in february.
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what's happening to the rate of growth? >> there's been a bit of a moderation. again, this was broad based. we've seen it pretty much across many emerging markets and also service and manufacturing. obviously in mexico you had a transition of the administration. bit of an uncertainty with the reform momentum, labor market reform although it's gaining traction. generally speaking, we're concerned. >> how do you rate mexico? >> i think the story in mexico is exciting. it's important to note that when you look at long-term growth forecasts, the imf for 2017, mexico is performing a bit worse than of the other major latin american countries. it doesn't have the emerging markets or diversification of the other strongest countries in the region and negligible proportion of its exports go to china despite having joined the pascal lines. the new the special embarking on an ambitious set of reforms, especially energy reform. you know, he got sanctioned from his party last weekend to move ahead with that. that's still going to be
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complicated. that's going to depend -- it's complex negotiations with the other party despite them already having reached a broad-based pact in december. so it's a -- a complex situation. but the broad outlook is positive. >> i want to go pack to the point about the slowdown we've seen in emerging markets. i think it was at jpms that we are looking at something like 2.3% global growth in the first quarter. by old standards, it would be considered recessionary. there's a sense if you talk to the imf that if we were below 3% given how fast the emerging markets are growing, effectively the world economy had slowed precipitously. is it your view that this is an inventory adjustment, or is there a sense in which the expansion that started back during the financial crisis has basically run its course? >> yeah. i mean, this would be a repeat of 2012. as you know, emerging markets have lost significant momentum in the second half of the year. what we look at, you know, pmi gives an idea about the business cycle for the future. even within emi, we have forward looking components like, for
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instance, new orders for inventories in china. arguably, these countries, particularly starting from asia and middle eastern oil-rich producers, they will regain momentum. >> i know you're an economist, but does that suggest that this is a time when investors might want exposure to emerging markets which frankly have continued to underperform? >> i wouldn't say underperform in a broader term like if you look at the year average. this year, we're looking for whole global growth below 3% which is low. the momentum will still come from emerging markets. looking for 5.5% to 6% growth. you know, in the new world, it is fairly decent. >> we'd take it. >> yeah. >> a lot of places that would take that growth. chief economist for central eastern europe and asia hsbc. thanks. james lockhart smith from maplecroft. thanks. angela merkel said that concerns remain over turkey's membership to the e.u. hadley gamble caught up with the
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turkish minister for e.u. affairs and asked if it was a fair assessment. >> she also said that she has no objections against the prompsz as i said, the -- process. as i said, the process is more important than the end result. i have to give her credit. she was a sarkozy. sarkozy would block chapters and try to hinder the process. chancellor merkel has not hindered the process. she might have some other views about the end result of the process, but by the time they finish the process, she'll probably not be there anyhow. turkey will not be today's turkey. germany will not be today's germany. middle e.u. will not be the e.u. we will look at the situation then and make necessary assessments. >> it e.u. energy commissioner said there's going to come a time when the tables will be turned and the french and germans will be on their knees begging for turkey to join the e.u. do you think that time has come? >> he is probably right. that time will come. it's probably not there yet, but
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soon. however, once they are crawling, i can assure you we will treat them better than they treat us now. in corporate news, samsung throwing a $110 million lifeline to rival sharp. the struggling japanese firm saw shares jump on the news. we have more live from tokyo. >> reporter: struggling electronics maker sharp will accept a $111 million lifeline from south korean rival samsung electronics to raise much-needed cash. this investment would give samsung roughly a 3% stake in sharp, making the south korean firm the fifth largest shareholder. this is the first capital tie-up between major japanese and south korean electronics makers. the investment will increase sharp's tv and smartphone panel supplies to samsung and help improve their financial situation. for samsung, this tie-up will help boost its access to panels without investing in new
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production plans. the two companies will consider broadening their cooperation beyond panel business. sharp's in desperate need for cash. it needs to find money for a large convertible bond redemption coming up in september. it's expected to post a net list for the fiscal year ending this month and has been seeking partners to survive. sharp's financial foundation remains shaky since it looks like a deal with taiwan's industry has failed after almost a year of talks. samsung's investment is definitely a positive factor to show bank lenders that its business prospects remain solid. but it's still too small for sharp's needs to fix its balance sheet. shares rose, up today by 14%. back to you. >> thanks for that. fascinating change. it could have a lot of implications for apple, as well. let's look at the agenda in asia. tomorrow on, policy watch. yes, central banks in japan, malaysia, and indonesia get to announce their decisions.
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we're also waiting for january trade figures from australia. on the earnings front, property developer hong kong land and cheung kong infrastructure will hand in results. still to come, support for striking iberia workers. could the strikes spill over to the snuk a guest thinks we could be in for a summer of strife. oh this is lame, investors could lose tens of thousands of dollars on their 401(k) to hidden fees. is that what you're looking for, like a hidden fee in your giant mom bag? maybe i have them... oh that's right i don't because i rolled my account over to e-trade where... woah. okay... they don't have hidden fees... hey fern. the junk drawer? why would they... is that my gerbil? you said he moved to a tiny farm. that's it, i'm running away. no, no you can't come! [ male announcer ] e-trade. less for us. more for you.
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welcome back to the program. a couple of interesting comments we're getting on the wires from bersoni in italy. he's saying there's unusual impoverrischment underway in parts of the european union. that it would be myopic not to note public ainger with some reforms. this, of course, as the center left leader bersni saying the political system is -- he's not courting grillo but does understand his supporters. comments there which frankly indicate the state that italy is in, talking about the poverty underway there and across parts of the e.u. >> and brussels' post policies aren't working. >> yes, yes. >> i think is the jist of that message. on nbc, with the --
4:51 am, with the auto show underway in eneve awe'll lo-- i geneva, we'll have to look at how much they have to fork out to buy a set of wheels -- not just the wheels, the whole car. does the dow's financial high mean the worst is over or are there new risks on the horizon? and stellar results by the u.s. index. also, you'll like this, the spring arts season begins in new york. 200 new billionaires are swelling the ranks of the "forbes" rich list, demand outstripping supply -- >> the spring arts season. >> who knew there was a spring arts season? apparently there is. >> does that mean -- maybe ied have should go to >> that's a tease. don't know what it means. go to the article and all will become clear. >> back in a few minutes. >> it will be clear. the australian economy continued to post solid growth in the final quarter of 2012. fourth quarter gdp expanded 3.1%
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from a year ago in line with expectations. commodity reports were the key facfactor, but they're trying to steer away from being overly dependent on the mining sector. >> we are looking at a transition from mining to non-mining growth. and we know that that won't be seamless as we go forward. what we do see in today's figures is tentative signs of an improvement in some non-mining sectors. in particular, we see further signs of recovery in housing, supported of course by lower interest rates. and that's certainly quite encouraging. >> british airways' staff are holding a lunchtime demonstration in london today to show solidarity for their striking colleagues at iberia. employees at the spanish airline are striking over proposed job cuts, around 40% of flights for the carrier have been canceled because of them. a similar five-day strike last month caused parent company, g, the parent of
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b.a., around three million euros a day in losses. joining us for more on the latest round of strikes, founder of athena aviation. welcome. >> thank you. >> a nice show of support by b.a. employees i guess for the striking workers at iberia. what's iag to make of it all? >> i think iag in this case, they'll have to contend with the fact that b.a. unions will feel they've got unfinished business with him. he's obviously gone through a painful round of restructuring with them previously. now the pilots are getting involved both on the b.a. side as well as the iberia side. it's going to get messy i suspect. >> at what point does it go from hazard of the job to something more significant? shares up .2%, 11% over the last seven days. >> yes, i suspect it's going to -- the numbers are painful. they've been taken i think in the order of $4 million losses a day with a series of strikes. it will hurt the bottom line for the business. i think willie walsh has to toughen up. he's said he's going to go after
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them on transformation. >> the workers argue they put forward an option that really should have considered or taken at the time that forced strikes that are losing him all this money are. they right, or what's he to do in this situation? >> i think it's difficult to ask iag to do much more in the way of concessions. when they came forward with the november plan -- actually they were requesting higher job cuts, higher -- deeper cuts into the pay of the workers. they've moderated their position somewhat. the reality is iberia is one of the least productive airlines in europe. >> is it really? >> yes. >> why is that? >> it's just -- over the years as with many legacy airlines, they've ended up at the point where their cost base is too high. most airlines run on single-digit margins, and they're in a precarious position. >> we've seen spanish labor costs falling amid the recession. is it because of unions that more of that isn't captured, that iberia isn't becoming more productive? >> i think a lot of it's to do with old union labor laws that
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exist within spain. a lot of the staff in iberia are extremely well paid. and they have been very well treated over the years. they haven't recognized the fact that if you've got 25% unemployment in the economy, you're going to have to share in the pain if you want to establish an effective productive airline. >> right. >> the bank of england giving testimony on the financial policy committee and on banking standards. we're monitoring that session. it's come out saying banks are too big to fail. the single biggest issue for supervisors, and the financial policy committee would like to have greater powers, as well, on controlling leverage. we'll keep our eyes on that. let's get back and talk about away from iag, easy jet entering the ftse 100. pretty strong load numbers yesterday, as well. it was in line with expectations. look, how -- how much further can they if? as they go to the ftse, i mean, how much is a business operation? >> they've been a successful
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maturing business. the reality is the legacy airlines that are going through the pain in europe at the moment create opportunities for easy jet and for ryan air. the guys that will come out extremely well out of all the strife will be those two. easy jet has a fantastic product. they're one of the best business class airlines in europe. >> one of the best business class airlines. i like the way you say that. they're not actually any cheaper. >> no. but they actually get you where you want to go on time. you have the opportunity to choose where you want to sit on board the aircraft. so they've got the advantage cards if you fly -- >> in some ways a genius marketing strategy, using the internet. i was quickly going to ask why orion air needs aer lingus? >> i think that was more about consolidation play within the irish market. take out the competition. probably gives them more freedom and mike o'leary has more freedom to engage in expansionist ambitions across europe. >> is it a reason for investors to steer clear of it, that it might not go through? >> i think it's unlikely that will deal will go through.
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it's been blocked twice. they'll appeal the decision. i don't know why the e.c. would overturn their own decision. the second time passing, six years later they had a second refusal. they've offered as much as they can in the way of remedies, i think. if it hasn't gone through, i think it's unlikely to. i would expect that mike o'leary will have to sell out and leave it to aer lingus and do it in time for that. >> where does it go -- with iag, obviously -- >> about your points. >> there is that. but with iberian problems, obviously an opportunity here. how much an opportunity does the american merger with usairways and expanding that group and -- and have a closer alliance and stimulation. >> i think that's something that's going to come -- it's not going to happen overnight. isn't going to be tenable to bring synergies to bear. american and u.s., as we talked about last time, have got enough on their plate to work through in their own back yard. i think the focus for iag needs to be the european sphere. >> yeah. >> and fixing their business there. arguably the challenge by iberia
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is it's distracting them from looking at the broader opportunities afield that would exist in the high growth markets like asia and the middle east. >> yeah. always good to see you. thank you very much for joining us. founder of athena aviation. we've got more out from mervyn king. >> yes, we do. he's saying the bank of england wants to do more on leverage. they want to review supervisory system in four or five years. don't know whether powers will be adequate. this, of course, about the new committees that will be coming into existence here under andrew bailey. the original proposals on leverage were better, he says, and it's an unknown question if the bank of england has enough powers to solve the too big to fail problem. yeah. as i said, the panel policy committee, he'd like to see it have greater powers on leverage. >> unknown whether our powers will be adequate. he later says we need more power. >> shocking. >> keep your eyes that. that's underway. more to come, as well. earlier we asked, would you also pay to tour the white house. bobby tweeted and said, can we
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pay to tour the cnbc studios? >> i think the -- >> you can. we'll throw in kelly to help out if you pay. >> i think we should auction off a tour of the cnbc studios to the highest bidder. what do we think? market process? >> quite cheap -- it will be adequate. the dow is past the all-time highs. the s&p next. we'll look at the outlook for u.s. markets.
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welcome back to "worldwide exchange." if you're just tuning in, i'm kelly evans. >> i'm ross westgate. here are the headlines -- >> the bulls are on the run. equities around the globe making gains after the dow hits an all-time high of 14,286, surpassing its 2007 road. telecoms leading stocks in europe, vodafone up more than 5% on report it could be eyeing a full merger with or sale to wireless giant verizon. and venezuela mourning the death of president hugo chavez as the world eyes the future of the country's leadership and its vast oil reserves. okay. you're watching cnbc's "worldwide exchange." we're into the second hour, if
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you just joined us, good morning you to. we started with the eurozone gdp and fourth quarter unrevised, minu minus .6% quarter on quarter and minus..9% year on year. exports down 9%. the full-year 2012 gdp revised down slightly from minus .5 to minus .6. the eurozone in contraction across the year. and first quarter 2012 gdp also revised down a little bit. they say gdp's been falling for five consecutive quarters. >> extraordinary. this has been damaging if not more so to europe in 2007. >> a session low of 130.34. chief economist and founding partner at idq economics joins us. better bersan i in italy talking about the labor costs, hume at
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costs at the moment of policies in -- human costs at the moment of policies in europe and policymakers need to start listening to the vote in italy. it's very well having an ecb omt back stop. if the economics in spain and italy don't turn around, where does that leave us? >> well, it leaves europe in a recession with a periphery struggling. and that's where we are. the question is, there's one thing worse in the current situation which is if the euro upon to break up. frankly, italy, spain, and peripheral countries would be in worst position. the financial crisis would be awesome. you know, just terrible for them. >> yeah. >> so we don't believe that can happen. so that means you don't have exchange rate flexibility. and ultimately the countries have to have more pro-growth policies like the segment we had on iberia airlines. how competitive is that airline compared to some of the other airlines in europe. there's no fix other than fixing the companies.
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>> the interesting thing about ibeeria, this was held up as the paragon of what a country was supposed to be doing in temperatures of opening itself to global markets, et cetera. that did nothing for spain to help it avoid this crisis. so these reforms that are being pushed through so vehemently by regulators in other countries, are they really going to amount to anything, or is the point more stimulus, something the ecb needs to do? >> ultimately you need more labor market flexible and pro-growth policies. and unfortunately, those are -- there's a great deal of resistance from the countries that are embattled to embrace that. and from the electorate. so i think mario monti took useful steps, and you had -- but he was a good technocrat but not a great politician. you have essentially a hung parliament trying to put together a coalition government. and it's a coalition of the left and the right. if it comes together. the upstart party from grillo is
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not going to join in these other parties. so the question is certainly back into a -- another election or does it form a government and that last for nine months? remember the average life in the italian government is less than one year in the last 60 years. and half the time they're coalition governments. >> yes. we're used to it in a sense. >> italy's used to it. >> the question is we haven't done that during -- upon when we're supposed to be implementing such big reforms. >> if you look at what happened to the electorates, ultimately like in greece last year, some countries, when they've been faced with the really difficult choice, they have decided to stay with the euro. and so my view is that italy will muddle through. and we're past the systemic phase of the crisis. now we've just got this rather terrible recession. >> yeah. but it's not so deep. >> if you look at the declines
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in output, they are relatively mild compared to the debt of the recession following the failure. >> the unemployment number, the big question is whether the unemployment keeps rising and at some point labor stands up and says we're not taking it anymore, right? okay. good to have you on. stick around. nice to see you. kelly, how are the futures looking after the record close on the dow yesterday? >> we're adding to it which is interesting. usually when you see such a big move, there's giveback the next day. today there seems to be continued momentum. the dow looking to add almost 50 at the open. 14,283 the level. i can hardly believe i'm saying that. the same thing happening at the nasdaq and s&p 500. the nasdaq over the 2,800 level. we know this index still better than 30% below its nominal highs in 2000 which should give you a sense of how strong the tech bubble was. the s&p 500, 1,543. also trying to take out nominal highs. you can look at european markets for a sense of momentum over here. another strong day for the xetera dax, adding more than 1% in germany. elsewhere, the ftse having .3%
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bolstered by vodafone, one of the stop performers on talk about a tie upwith verizon. the cac coran up .3%, verizon on talks of a full-up tie-up. ibex adding .3%. the same green attitude that we're seeing here is reflected in the bond space, as well. >> as far as bond markets are concerned, this is where we stand -- yields in spain and italy, a little bit lower on the day. 5%. we have been below 5% for the first time since, what, early january on the ten-year spanish yield. ten-year italian yield, 4.63%, as you see. a little bit lower on the session, as well. gilt yields slightly higher. on the currency markets, you are/dollar, sterling/dollar have been firmer. now going back negative 130.35. steady, sterling/dollar, 150.73. the interesting issue here is as we just heard earlier is whether the dollar is going to become an
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asset currency, away from a currency that has traditionally been a liebltd currency. people are talking about that move even as stocks go firmer. the dollar index getting firmer, as well. that's where we stand in europe. let's check in for a recap of the asian session from singapore. >> reporter: thank you. investors in asia joined the global buying spree after the dow's record close. thenique 225 added over 2% to a fresh 4.5-year high thanks to gains in domestic and cyclical export stocks. retailers were among the top gainers with fast retailing jumping over 8%. meanwhile, sharp shares soared 14% on news of the $110 million fund injection and tie-up with samsung. taking its cue from the wall street rally, the shanghai composite gained .9% after yesterday's 2% jump. shares of gte jumped on news it's teaming up with intel on the next generation of smartphones. in hong kong, the hang seng
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gained by the same margin. teleco has a strong session there. this after media reported china will likely grant licenses for 4g wireless technology this year. banks also rallied on report sboij considering the possibility -- reports beijing is considering the possibility deposit to lending cap. sentiment boosted south korea's kospi as investors picked up technology and shipbuilding plays. and down under, australia climbed to a fresh 4.5-year high ending higher by .8%. india's sensex closed ending higher by .7%. back to you. >> all right. thanks for that. that's the recap from asia. vodafone focus as well today up around 6.25%. reports suggesting that verizon is thinking about what it should do with vodafone. of course, vodafone has a large nighter stoke in verizon -- minority stake in verizon. whether they should buy verizon
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out or what should go on, investors clearly decided to review this every year. there's more -- >> to it this time. they are leading the stock 600 with the gain of 6.2%. >> yeah. used to be a few years ago every time we had a vodafone, it was whether they were going to increase it. now what is verizon going to do. >> is it coming to fruition. and media mergers the hot trend on the table. the most notable deal is liberty global entering the u.k. market with the $23 billion purchase of virgin media. joining us exclusively is ceo of liberty global. mike, thanks for joining us. look, how tough is a market is the u.k. going to be in terms of competition, competition with sky, you have a competition -- compete in some ways with b.t., and in broadcasting, of course, with the bbc and the other
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independent channels. >> there's no question that this is a competitive market. one of the most competitive in europe, one of the most dynamic. as we've been watching the last five to seven years, it seems to have reached a level of rationality that's convincing for us. in the sense that people are acting rational, there's lots of investment required in networks and infrastructure and content. and folks look like they want to maintain a rational environment. that's always a healthy thing. it's when folk become irrational in competitive environments that we become concerned and we don't see that here. >> what do you mean by irrational, mike? >> rational in terms of pricing. of product. rational in terms of willingness to share content or infrastructure, rational in terms of the approach they're taking to the consumer. you know, competition is competition, but there's different types of competition. we've been in markets that are irrational where disruptive pricing and things of that nature drive everybody down. we don't see that happening
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here. >> it seems as though the competition is heating up. shortly after the news of your deal, we had b. sky b., a big rival buying enough to be a triple or quadruple space to reach out to customers. that deal puts them potentially ahead of virgin media in terms of broadband customers. you indicated you talked with the murdochs about the deal. they have shown their support. as you say, it does look like the grab for assets here is heating up. >> a smart move for sky. you know, build their broadband base, have a larger presence in that important marketplace. makes sense to me. didn't surprise us at all, i don't think it necessarily changes the balance of power that dramatically. sure, we've talked to the major competitors here. i think to the extent they can, they welcome our investment. and i think we're going to have a long-term relationship. remember, we're partners with
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sky. we carry their programming in germany as well. in ireland. so we have a long relationship and history with sky and news corp.-related companies. we don't see any disruption or challenges there at all. >> can you clear up also one issue with regard to tivo. when you're introducing this rival product horizon in parts of europe planning to roll it out, does it not threaten tivo's business model which, of course, is what's now part of the virgin service? >> at this point, we don't have any plans to change out tivo. virgin has been very successful with connectivity in the u.k. 1.3 million of boxes already launched in a relatively short period of time. there's no information to provide on that right now. we think the management team's done a great job, the brand is strong. the networks are strong, products are strong. we don't anticipate meaningful change. this isn't about coming in and fixing something. it's about joining forces and being stronger together. synergies that we can derive, both directions. a natural fit for us. we have exact same dna of the
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two companies. so we don't see coming in and making radical change at all. >> and what about adding, as you mention the -- mentioned, synergies adding in a player like netflix here? >> listen, we spend about $1.8 billion, beijing dollars, in content together. the two companies together. we're -- it's quite a large amount of money that we're putting in the hands of programmers and content providers. we will certainly have greater, we think, influence and leverage over the content landscape. doesn't mean we're going to start buying content or competing with others for content. but it does mean that we'll is a stronger position when it comes to negotiating rights. the key almost in negotiating rights is negotiating online rights and ipad rights and laptop right and thing of that nature. nobody's in a better position than us. we are already doing that in the u.k., as well as in our other markets, providing consumers with the opportunity to watch their television on multiple devices. netflix is behind the game. their expansion has struggled,
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they lost $400 million. doesn't mean they won't be successful at some point. but cable companies are in the ideal position to give consumers what they want, access to television and multiple devices, bringing internet and web and apps on to the television screen. we're doing that today with verizon and tivo. >> how important is owning content? look at b.t., they're buying -- they've got a lot of cash. they throw off a lot of cash, buying spots. they bought espn sports channels. they're buying rights. do you need to do that? >> we don't think so. we don't think so. our goal because we have a large, open network, our goal is to provide all the content that's available to consumers. we're not trying to own content exclusively or compete for content exclusively. that hasn't worked very well over the history of our business. a i've been in this business over two decades. generally speaking, we bet into trouble when we over-- we get into trouble when we overreach for exclusive rights.
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we will be expecting to deliver and distribute all the content in this market to our consumer. not necessarily acquiring it for our platform and not for others. that's going to be our general approach. i think we should be able to maintain that approach. >> good to see you. thank you very much for that. joining us from the cable congress that's underway in london. speaking of cable -- >> yeah. speaking of cable, the sterling/dollar cable. bank of england governor king, not sure he's moving the dollar a lot. he's testifying you in in front of britain's parliamentary commission on banking standards. monitoring that this morning. he's already been arguing saying we might need to review the powers of the -- the financial policy committee in four to five years. and they think we still haven't solved the issue of two big to fail for banks in the u.k. doesn't think e.u. rules either will be effective. won't have the effects that proponents intend. of course the idea of those proposed caps on bonus rules is to make banks safer. mervyn king, governor of bank of
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england, saying it's going to work like that. kelly? >> yeah. we want to talk about market indices. honest, today so much of the news comes off what happened yeth the dow punching not just through the high, jumping to 14,200 for the first time, and exploring what it means. should we care, do we care, should we take floingz and dividends into account. it's interesting where if you look, the dow is a price-weighted index. the s&p 500 is a market-weighted index. both are conferring the same judgment on asset prize. the main point you see going around is whether or not this is all just fueled by the fed or not. john, by the way, do you have a view on that? is if fed fuelled? >> i don't think it is fed fueled. if you take the high level of profit and profit margins in the u.s. and divide it by the corporate bond yield, an index of corporate bond yield, you get a theoretical valuation of those cash flows that's considerably
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higher than the current level of the market. now, that's not to see this stocks aren't are necessarily cheap and we'll have a big rally. we think 1,525 to 1,550 is where the s&p should be at the end of the year. tells you that the stock market hasn't bought in to the bond bubble the fed has created. and there is a valuation cushion that as interest rates correct over the next two or three years and the bond market won't necessarily weigh too heavily on equities. so this undervaluation gap is a kind of gravitational force that's pulling the market higher. >> we'll talk it some of the fundamentals, as well, with john when we come back from this break. jobs report in focus friday. we'll get adp today, give us a sense. >> yes. we're off to disneyland, not literally. looking ahead to disney's shareholder meeting. it's taking place in phoenix, arizona. investors will be asked to vote on splitting the role of chairman and ceo. [ male announcer ] i've seen incredible things.
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welcome back to "worldwide exchange." if you're just joining us, these are the headlines -- european stocks trading higher after the dow rings in a record close. the euro falls after the latest reading from the gdp for the five consecutive quarters. the world wonders what's next for venezuela after the
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death of president hugo chavez. still to come, has president obama played up the impact of sequester cuts on the u.s. economy? more when we come back. aw this is tragic man, investors just like you could lose tens of thousands of dollars on their 401(k) to hidden fees. thankfully e-trade has low cost investments and no hidden fees. but, you know, if you're still bent on blowing this fat stack of cash, there's a couple of ways you could do it. ♪ ♪ or just go to e-trade and save it. boom. ♪
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mervyn king, governor of
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bank of england, 82% owned rbc. he says we've not been decisive enough in recatlizing, restructuring. we need recognize the losses. that means losses should be separated into a bad bank and its nonsense to have -- >> i think it's extraordinary. i can't believe king doesn't sound like the type that would talk about a name check a specific bank, talk about how frustrated with how the restructuring is going and saying this should happen within a year for recapitalization, split is into a bank bank and healthy bank. i'm surprised. >> i wonder if it's the carney effect. ever since carney's been nominated, the bank of england has become more bold in its brow national endowments and ideas. do you -- do you think? >> john? >> canada avoided the entire financial banking crisis. there was a model that worked, and there was no rescue. maybe that is part of it. remember, this is five years in,
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it's five years next week. the five-year anniversary. my firm being forced into the hands of jpmorgan. five years ago. lehman brothers, 4 1/2 years ago now. in a sense, he's right. it is taking a long time to get to grips with these -- >> we've had guests tell us there's no way at this point that rbc and lloyd's will be fully privatized. there's been talk of handing out shares with the public to 100 pence face value and letting them sell over a matter of years. it's clear this has not been handled well. maybe king sex pressing frustration that everyone -- maybe king has expressed frustration that everyone feels. >> at the time you say more bold things when you know you're on the way out the door. >> yeah. i find this very -- bring it on. can we have mervyn king out every day to talk? i'd like to know what else he thinks. >> yeah. look, i mean, talk about legacy as far as you're concerned. how much -- we talked earlier to a guest who said the u.s. might
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become an asset rather than a looblt of swa a liable. principally because the u.s. will perform fundamentally better i suppose. and they have -- have stocks gone up because they're more a safe haven play? >> historically it was a growth trend. following lehman brothers it became a risk off the asset rather than on the asset. we thought the flipover would have taken place last year and the u.s. economy grown somewhat stronger and the dollar have been stronger. but the fed got in the way, muddling things up, with a new round of quantitative easing and expanding that in december. so the fed could add $1 trillion to its balance sheet. it's hard -- you've got all of these different forces at work pulling on the dollar. if the fed could get out of the way and restore monetary sanity
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to the u.s. and the u.s. becomes a relative out performed amongst developed economies, i think you will get that. correlations have changed. we don't have that highly correlated market that we had in the three years post lehman brothers. >> right. >> to a large degree it broke down last year. and that does leave the way open for the dollar to shift if the fed get out of the way. add $1 trillion to the balance sheet. >> more to come from you. also, we'll talk venezuela after hugo chavez's death. what will the country look like a year or five years from now? carfirmation. only hertz gives you a carfirmation. hey, this is challenger. i'll be waiting for you in stall 5. it confirms your reservation and the location your car is in, the moment you land. it's just another way you'll be traveling at the speed of hertz.
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welcome back to "worldwide exchange." i'm kelly evans. >> i'm ross westgate. here are your headlines today from around the world -- >> the bulls are on the run. equities around the globe are making gains after the dow hits an all-time high 164,286 -- 14,286, surpassing the record. the eurozone's contracted .of% in q4. the fifth consecutive quarter that economic growth has fallen. venezuela mourning the death of president chavez as the rest of the world eyes the future of the country's leadership and its vast oil reserves. it's 14,280 we're looking at
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in terms of futures. trying to add 40 to 50 points. the dow jones average saw us take out the closing highs and intraday's highs hitting a new record. looks as though absence in market ship and apd could -- ma and the apd could be the shift. the nasdaq above 500. the s&p only the major index. i should say the nasdaq, too, down 30% from its nominal high in 2000. the s&p 500 is also below its all-time high which i believe is 1,565. in terms of the russell 2,000 and other broad market indices, it is across the board that we are at fresh highs. frankly for your global markets, which we can take a pulse check of, other multi-year highs, as well. .25 on the ftse global 300. japan, australia, at 4, 4.5-year highs. european trade is broadly higher. the xetera dax again the out performed adding 1.1%. the ftse 100 up .2%.
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vodafone is the top performer market in the stock 600, as well, i should add to talk about a further tie-up with verizon. cac coran adding .4%. the ibex 35, strong as spain's ten year fell below 5%. not much concern emanating in the stubborn bond markets. how do you make money in these markets? here's what guests have been telling us all morning. >> what we need is stocks which are going to appreciate during the rally but not come back too hard had -- hard when things get difficult. it's been a more attractive area because income is important and you can't get good income from interest rates at the moment. we're looking at stocks coming through on that basis and perhaps the most safest sector is some of the food sectors. >> i think the sell-off head been a sort of reflex direction to sell whenever there are policy concerns, irregardless of the details. so when there are more details
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coming forward, then i think the sector will pick up again. it's why we asked you about china. >> i think they're going to be extremely cautious. there's been no, any hopes of rapid short-term positive change for investors, they'll be frustrat frustrated. the business environment will remain highly risky over the short to medium term. all right. what about what's on the agenda in the united states? the february adp report out at 8:00 eastern. an increase of 178,000 expected in private equity payrolls versus january. at 10:00, january factory orders, developed to drop 2.1%. then the latest beige book report. fed president richard fisher speaks this evening. you said the fed needs to get out of the way, a short while ago. do you think they'll get out of the way on n your -- in your
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terms? >> no, president fisher is in our camp of wanting to have less k q.e. but at a lunch last week, san francisco fed president john pms spoke. we heard from ben bernanke twice in his testimonies. they're going to keep q.e. going into the second half of the year. the talk of tapering i think is reflecting the concerns of those who really don't have a vote. only esther george has a vote at the present time. she's descended -- >> trying to carry out the legacy. >> absolutely. and you know, the city fed carries an important message, represents the heartland of the u.s. they've seen the impact on quantitative easing on -- >> unfortunately they're not getting much in terms of ben bernanke's ear. how strong will the jobs report friday have to be in terms of making people reprice and earlier fedex it? >> it's about the unemployment rate. with the unemployment rate still
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at 7.9% and the fed saying it has to get to 6.5% before they'll consider raising rates, you need a number of very strong employment report before we start repricing that from 2015. >> where's your view? where do you think the unemployment rate is at this point? >> what's interesting is, it's less about the economy than it is demographics. demographics brought the unemployment rate down far faster than we would have thought, given job creation. so we think the rate is only down to 7.5% or stowe end of the year. but -- or so at the end of the year. >> are they wrong to target unemployment? >> i think they're wrong torg to see target unemployment in the sense that monetary policy can do very little in the kind of economy we have to create jobs. the fed's already taken its balance sheet from $800 billion to $3 trillion. the unemployment rate is 7.9%. add another $1 trillion on if we keep q.e. at this pace this year. growth comes from incentives. and i think this is much more an
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issue for fiscal policy, much more an issue for tax policy. and unfortunately tax policies going in the wrong direction. president obama want higher tax rates on capital. higher tax rates on high earners. and you know, the private sector is muddling through. what i find amazing, the european numbers, how much green there is across the board now. as we sit around talking about -- >> this is the point, isn't? that you can hate ever being what the fed and the central banks are doing. but at the same time, the performance is in front of you. the verdict has delivered. >> right. which says how resilient a private sector we have in the u.s. and maybe emerging in europe. it is able to grow through macro issues and deliver profits. and that's a -- a great frustration to investors. many people sat on the sidelines to some degree because of the macro. and they're stuck figuring out what it is they're supposed to be doing here. >> okay. john, thanks for that. chief economist and partner at rdq economics. >> nice to have him in town, on
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set. >> great to have you on set. venezuelans mourning the death of president chavez, preparing for his body to lie in state today ahead of a funeral on friday. attention now turns to a new election, possibly within 30 days, to replace the socialist leader. our own michelle caruso cabrera looks back at chavez's life and derisive rule. >> reporter: as the president of venezuela sense 1999, hugo chavez led the country with the second largest oil reserves, the biggest exporter of oil in the western hemisphere. chavez used the platform and economic four brought with it to be a flamboyant player on the world stage and a thorn in the side of the united states. his most notorious moment, a 2006 speech at the united nations. when referring to u.s. president george w. bush, he said -- "yesterday the devil came here." >> translator: it smells of s
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sulfur still today. >> reporter: a former paratrooper who tried to take over the country in an attempted in coup in 1992. pardoned after serving two years in prison, chavez founded a new socialist party. upon winning the election and taking office in 1999, chavez began seizing private property and nationalizing hundreds of businesses. often with little or no compensation for the owners. he became a close friend of the socialist dictator of cuba, fafk, giving the island nation -- fidel castro, giving the island nation 100,000 barrels of free oil per day. to pay for social programs such as free health clinics and government run supermarkets with subsidized food, chavez turned the country's world-renowned oil company into his personal piggy bank. in protest of the deep government intervention into the company, workers went on strike in 2002. chavez fired nearly all of them, 18,000 in total. that along with lower investment in the country's oil fields has led to falling production levels for the last ten years. chavez was a darling of hollywood. appearing at the venice film
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festival with director oliver stone. danny glover was by his side at the last election. sean penn flew down in december to voice his support. >> he is one of the most important forces we've had on this planet. >> reporter: early 2011, chavez revealed he was fighting cancer and would seek treatment in cuba. hugo chavez was 58 years old. for more on the future of venezuela, we're joined by michael denison, research contractor. in the short-term with new elections looking likely to get the nod, does that change anything? >> not in the short term, no. i think there will be policy continuity. the chavez legacy is clearly very resonant with large constituents constituents of electorate. there will be no swift policy departure. i think the questions will be asked in a year or two's time. >> we were talking earlier about what this means for venezuela to potentially come more open, more friendly to global markets and to investment. does it at all? is there going to be a real
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change in the status quo? >> possibly in two to five years, i think. the reason being that the fiscal deficit that venezuela's running is unsustainable. there needs to be clear roadmaps to reform of the oil sector which was talked about in the clip just then. and also there's rising discontent among the core constituents that really supported chavez up until he died, yeah. >> it sounds like his successor, though is, potentially going to get at least half of the popular vote. maybe about 1/3 of venezuelan support, the opposition candidate who is seen as more market friendly. so at this point, especial when he we're talking about the oil market, what you say is it needs reforms. is there any prospect that it's going to happen? >> well, we'll have to see. and i think a critical issue will be the extent to which maduro who as you expect, as you indicated, will probably become the president, the new leader. will be able to, if you like, put on side the key constituencies that will enable reform to occur. his rival for the presidency in
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the movement is closer to the army, much closer to the so-called businessmen who do well out of chavez's rule. he will have to square those off to affect reform. >> i was going to say, how much does he -- is this something that you think that venezuelaial leaders know is needed? is it needed and how much are they going to press for it given as you say that it seems to be more popular not to pursue these snshs. >> i think they are a-- measures? >> i think they are aware of it. maduro's strength is that he's a pragmatist. he talked, for example, to the u.s. government on the sidelines last november. and one could expect a potential reproshment over time. domestically they are aware of it. chavez's policy formula if you like was to be ad hoc, tactical. now there's an opportunity to put that aside and to do some more strategic planning. that's the real question of whether he can do. it. >> does this embolden others across latin america who see now a void in terms of the kind of
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guy who's going to get up there and i was going to say bash the u.s. effectively. do you know what i mean? be the news or thought leader for what -- what he represented. >> that's right. he's a big symbolic loss for the latin america left. no you got that. he was a showman, he was flamboyant, he had the right sound bites. they've lost that sort of figurehead if you like. he's also, support ran across ideological lines. he had support in argentina, for example, and you know, in many ways he was a good partner to the central american and learn states through his petro caribe scheme that gave oil to many in the region. they'll miss this figurehead. >> is it going to be good ultimately for latin america? >> i think so. i think the model that seemed to have worked in latin america is the brazilian model. it combines social justice policies with a more pragmatic fiscal and economic policy. more bradley. i think that's been seen as the way of reducing inequality but
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at the same time securing economic growth. i think that's the model that will ultimately take precedence over chavez. >> okay. mike em, thank you very much. good to see you. research director at control risks. another storm, meanwhile, headed toward the already badly hit east coast. after dropping snow across the midwest, winter storm saturn is expected to bring high winds and possible flooding to coastal areas of the northeast. mike bet czyz meteorologist at the weather channel -- bettes is meteorologist at the weather channel and joins us from atlanta. a relentless weather season for the northeast. what can we expect? >> this is a big one for sure. we have huge snow out there, tons of snow in major metropolitan areas. beginning in pittsburgh, winter storm warnings here. toward washington, d.c., and baltimore, heavy snow falling for us now. basically shutting down the city at this point. expecting as much as maybe a foot of snow to come our way. right through the beltway, it's going to be impossible travel today. up around baltimore, it's been a mix of freezing rain, rain and snow.
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a place like philadelphia, all rain. we expect that to go to snow. maybe as much as half a foot coming for philadelphia. here's a look at how much more we have to go. eight to 12 inches in washington, d.c. eventually this does get into new york. five to eight inches there. through new haven and hartford, springfield and boston could end up being the big winner, 18 inches to two feet coming. time to get out for new york rain and snow later tonight. winds gusting to 30 miles per hour with now new snow, three to five inches, overnight tonight. winds now going to 40 miles per hour. then an additional one to two inches tomorrow. so big event for new york city, as well. one to three inches tonight in boston. eventually that becomes big snow, one to three inches additional tomorrow. and then the biggest snow trial come as we go into likely friday. and then even into the weekend with another half a foot of snow coming for us there. winds up to 35 miles per hour, not to mention serious coastal flooding new jersey, new york, connecticut, and up through massachusetts. so watching a variety of things with this storm. but certainly big snow is the
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big concern right now. and heavy loss of power, as well. >> you know, it used to be upstate new york, my home i guess, that was the center of all of this weather. it's really shifted to some of the cities, the heavier population areas. mike bettes, thank you very much sir. if you're just joining us, the headlines -- european stocks trading higher after the dow rings in a record close. the euro falls off, gdp fallen for five quarters. the world wonders what is next for venezuela after the death of president hugo chavez. ♪ [ male announcer ] how could switchgrass in argentina, change engineering in dubai, aluminum production in south africa, and the aerospace industry in the u.s.? at t. rowe price, we understand the connections of a complex, global economy. it's just one reason over 75% of our mutual funds beat their 10-year lipper average. t. rowe price. invest with confidence.
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disney hold its annual shareholders meeting today. but not everyone is excited about what's going on at the happiest place on earth. cnbc's julia borsten with a preview. >> reporter: disney shareholders are gathering in phoenix, arizona. though shares have been on a tear, up more than 30% in the past year, trading at all-time highs, pension funds as well as pracy advisory services are opposing certain proposals. gloss lewis and iss which advise shareholders on how to vote along with the california pension fund calsters and pggm investments from the netherlands are advocating that disney split its ceo and chairman role.
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this would be in order to ensure greater oversight. they're also voting against disney's compensation plan which link ceo bob iger's pay to disney's stock performance. paying iger $40 million in total compensation in disney's fiscal 2012 year. disney won't comment. simply pointing to its record. since iger became ceo in fall of 2005, stock has gained 138% compared to the s&p 500's 25% gain over the same period. in its last fiscal year, disney reported record revenue and profits. we expect all ten members of disney's board to be re-elected. but we'll have to see if the effort to change iger's role or compensation draws enough votes. we'll bring you all the latest on disney's shareholder meeting on cnbc and back to you. >> we'll follow that story as julia says. also still to come, the dow's hit a fresh all-time high. >> is the index set for even greater heights, or is a correction in the cards?
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♪ keeping an eye on shares of microsoft today as e.u. regulators are set to impose a hefty fine against the company for breaking a pledge to offer consumers a choice of rival web browsers on windows software. doesn't this feel like a story out of the past? antitrust chief expected to announce the fine which could run into the hundreds of millions of dollars. at 6:30 a.m. eastern. that's in just about 40 minutes' time. the european commission has already fined microsoft more than $2 billion for not providing data at fair prices and for tying its media player to windows. as i mentioned, microsoft shares in frankfurt, not too far, standing at .5% at a bradley higher session. still about 6% over the past
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through month. and broadly speaking, it's one of the best performers in the european market today. >> yeah. and just remind you of where we are with the european markets. they are firm, a softer start this morning. we've been up over a percent, 1.2%. the xetera dax up .8%. nine points higher for the ftse. seven for the cac coran. the ebig box up, as well. -- the ibex, as well. ridgeworth capital management, alan, thanks for joining you. record close on the dow s. that going to suck more money in, or is this a top? >> well, i'd say over the near term, it wouldn't surprise me if the market were to take a breather in here. the -- the indices are somewhat extended with the s&p 500 well over 8% over its 200-day moving average. some consolidation is probably in order here. but i do think a lot of bond owners are going to be looking at the first quarter results and
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wondering whether or not all their fear and loathing of stocks is -- might be something -- might be time to put that behind them. >> the fear and -- why might it be time? >> well, if our perspective with the allocation strategies, we're looking for good valuations. we think that equities do provide both absolute and relative valuations compared with bonds. so we do like the market. the issue that i'm a little concerned about over the near term is that while the economy is improving and the data we had in the u.s. yesterday supports that, we are starting to see some -- the question of the fiscal restraint that's hitting the economy here in the u.s. and the concerns that we have over in the e.u. with italy and the like, those are going to represent some headwinds. given that the market's extended, that is -- that gives us a little bit of pause in here. but if you look at bonds, bonds
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are -- bond yields are starting to back up. i think that we're going to see some negative returns in the bond sector for the first quarter. i think that's going to be a wake-up call for a lot of more conservative investors. >> alan, that's exactly what i was going ask which is to say even if you're not comfortable buying into stocks at these multiyear or nominal highs, what's an investor to do? do you go to the bond space which is also described as rich if you look at levels across investment or high yield credit? do you, you know, look at commodities? i mean, how -- what do you do with capital if you have a sense that you don't want to be in cash? >> well, it's true. i think that for a lot of the more conservative investors, they are going to have to see pain in their portfolios before they take action. i do think that for those that are more income oriented, we do have an overweight in the credit space. we do think that that is an area. given that the economy is improving, we think that the financial markets are going to continue to heal. that's going to keep credit spreads relatively narrow. obviously the big phone high
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yield has already been made. i do think that the high yield portion of that asset class is going to continue to give you that higher coupon that you would expect. so i think that there are some -- the good opportunities for fixed income investors, but for those who have been investing in treasuries, i think this is going to be a more difficult year. >> okay. alan gale joining us from ridgeworth capital management in richmond. i believe, richmond, virginia. i wonder, alan, if -- we hope you're not going to be affected by the storm that's apparently barreling down the east coast this morning. thanks for joining us. glad we got him today and not tomorrow i suppose. >> yeah. earlier we asked would you pay for a tour of the white house. rebecca says, no reason to pay to tour our house. obama will monetize anything. steve in kansas says, i wonder how the price of the tours would compare with a trip to see tiger woods. viewers not happy with president obama this morning. zap technology.
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