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tv   Worldwide Exchange  CNBC  March 11, 2013 5:00am-6:00am EDT

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another great week. five straight up days. all-time highs. do we say it's exciting? no.
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what we say is it's interesting. and we stay focused, we stay skeptical, but we've got to like what we see. i always like to say there's a bull market somewhere, and i promise to try to find it right here for you. i'm jim cramer, and i will see you monday! welcome to today's "worldwide exchange." you can financial stocks also falling as a panel of lawmakers urges a split-up of banks, saying proposed reforms of the sector don't go far enough. and china unveils its biggest overhaul in 15 years getting rid of the rail industry. >> announcer: you're watching "worldwide exchange," bringing you business news from around the globe. welcome to "worldwide exchange." this morning, ross westgate is
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away. we also have a one-hour show for the next three weeks because of a troublesome time change in the u.s. which means that we'll do our best to bring you all the news in this tight space. the fourth quarter figures for italy's gdp is just out. contraction of 0.9% on the quarter. that was roughly what was forecast, leaving the year on year levels slightly weaker at minus 2.8% versus minus 2.7% preliminarily. not a pretty set of figures for italy. contraction almost 11%. nevertheless, it is pretty much as expected. you can see not a major move in the euro/dollar there. hans rhettiker pointing out it should be 1.50 for italy. italy's five-star movement says it is ready to leave a government, but the
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anti-establishment group headed by comedian beppe grillo has once reiterated it is not willing to accept a coalition with another party unless it's willing to accept the 20-point plan. georgia nepolitano is ready to begin forming a coalition and meets with the party leaders next week. yes, the ides of march. ross westgate caught of with victoro glil grillo and asked him if a government would, in fact, be formed soon. >> i think that elections are an integral part of democracies and we are very well within a decision time of schedule. and i think the market up to now has been a conscious -- and i wouldn't call them benign, but clearly they have been watching and if -- and i am confident that italy will be able to
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provide solution within a timetable. i think that will be a positive outcome and it will be just the way the market -- >> fitch cut the country's sovereign rating with a minus to bbb plus citing worries about ongoing uncertainty and the recession. ross asked if the investment would hold up the move in the country. >> of course, the international community, the markets like certainties and not uncertainties. the faster we are able to, as as country, provide certainty and clarification about the political and future of italy, the better it is. >> and the market actually has been rel ofly well played on italian bonds despite the down grade. are you comfortable that they won't question the efficacy of the omt? >> well, our position, my position, some position has been that italy doesn't need an omt
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program. we don't need the funding. we actually, even this year, 2012, a structurally balanced budget. so it's not a question of funding. it's a question of pursuing structural reform program that we had started. and to do that, i think, a large, important country like italy has to find the strength within itself to pursue those reforms. >> germany could, of course, be encores for a set with france after its junior coalition partner warned that fran is what is hollande's government must not be permitted to -- responding to the admission that it will fail to bring its deficit below 3% gdp this year. another round of bond buying was warned against in response to italy's inconclusive election results. now on this monday morning, let's get a sense of how markets
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are trading, especially after a set of figures out of china over the weekend. sixuan, good morning and how is china doing? >> china data offsets u.s. jobs numbers. the shanghai composite eased another 0.4%. inflation surged to a ten-month low. banks were under a lot of pressure on liquidity concerns, but some of the railway related stocks plus the down trend after beijing announced plans to transform the railway's system. developments after data showed china's commercial housing sales jumped nearly 80% on year. the mail-in weighed on the hang seng given back its early gains to finish flat. gains and financials were offset by losses and industrials. but in japan, a weaker
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certaintisy both earned exporter stocks. financial shares continued to rally, boosted that hopes that reflationary policies will support loan demand. sharp shares tumbled over 3% after local media reports that shanghai will fail again to agree in a 9.9% stake before the deadline. south korea's kospi lost a modest 1% as the latest military drill escalates tensions with north korea. australia's asx 200 managed a record high up 0.46%. india is now trading higher by just a touch. back to you, kelly. >> thanks very much for that. markets here are trying to gauge both the china figures and the stronger u.s. payroll data on friday, much stronger than expected, really. but over here, we're seeing red when it comes to the futures when we start to turn our attention to the u.s. that may have something to do
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with what allen at lloyd's this morning is saying it could be technical resistance. how much longer can you continue to rally at these markets. 14,300 we are banging in at that level. not often you see the round number sitting here, but that's exactly the open we're looking at. the nasdaq and the s&p are pointed lower. again, not surprise fg we're in for a bit of a pause after the likes of the rally we've seen. greenhouse points out in the past after we've reached nominal highs for markets, you check in a couple of months later, they haven't gone up much, but at the same time, they haven't lost a lot of value, either. let's take a look at what's been happening in the overnight session. the cnbc global 300, up 0.04%. as we turn our attention to europe, it's not necessarily as positive. most of the indexes including spain and italy over here are losing 0.8%. the xetra dax is weaker. the ftse, though, still trying to stay in the green.
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but it's interesting, because if you look at the bond space, the mood isn't that negative after italy's downgrade. yes, it's selling off, but 4.6 mers here compared to the 4.7% reading on spain. perhaps there will after all be the yields on italian and spanish debt. we have seen italian debt rally considerably since the election despite being conclusive. the real question is whether that continues this week. forex, we have seen a lot of key levels here. the dollar/yen, over 896. the yen has continued to weaken further. not a major move, but taking out yet another level as it inches ever closer to that 1 00 level that a lot of strategists on the program have been looking for. the australian dollar is just about flat. sterling/dollar is giving up about 0.1%. italian gdp did shrink, but not much more than expected and that's enough to keep things relatively steady at this point. a major cabinet reshuffle is on
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the agenda for china. we'll cross line to beijing with eunice to get the latest from the npc. [ male announcer ] i've seen incredible things. otherworldly things. but there are some things i've never seen before. this ge jet engine can understand 5,000 data samples per second. which is good for business. because planes use less fuel, spend less time on the ground and more time in the air. suddenly, faraway places don't seem so...far away. ♪ at a hertz expressrent kiosk, you can rent a car without a reservation...
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welcome back to the program this morning. uk banks could face stricter regulations after a parliamentary commission on banking standards as parts of
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government legislation are, quote, extremely weak. the commission's chair has proposed equity capital markets are too low after fierce log lobbying by the banking industry. florian hahn has been arrested after being on the run for four years. homm is accused of buying funds among penny stocks and trading among themselves in order to generate more for the company. the scheme cost investors more than $200 million in losses. he hasn't been hiding out the whole time. he published a book last year. proving there's no such thing as bad attention. job cuts fears have been raised at richard branson's firm the atlantic. the memo's author, new chief executive craig keyinger warnings performance is
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currently well behind what was forecast. a mediator has suggested iberia lay off more than 3 thus employee webs but it's still about 700 less than initially called for. still ahead on the program, japan marking the anniversary of the devastating earthquake and tsunami that led to the fukushima disaster. we'll head out to tokyo to take a look at the economic landscape two years on. here is a look at the traffic light. see how european markets are trading. we are down almost 0.2% on the stoxx europe 600. can u.s. futures turn things around? we'll be right back.
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some of the world's cleanest gas turbines are now powering some of america's biggest cities. siemens. answers. welcome back to "worldwide exchange." these are your headlines. italy's annual gdp number is down 0.28% percent on the year. fitch downgrades the country's so much ratings. and china scales down its powerful ministry in the biggest overhaul since 1998. officials in beijing announced plans to overhaul the government overnight as they look to boost efficiency and fight corruption. the plans include a reduction in the size of china's ruling cabinet and we'll see
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dissolution of the railways and is family planning ministries. eunice joins us now from beijing. great to see you. it looks smoggy yet again there in bay yieijinbeijing. were these measures expected? >> well, a lot of people have been expecting these measures and, in fact, a lot of people have been talking about how the government is trying to stream line the bureaucracy. they're trying to cut away the fat in order to try and reduce the governmental role in business. that's the overarching theme that we're seeing. take, for example, what is the ministry of railways. they're disbanding the railway ministry by putting it into two, taking the administrative functiones and putting that into a government agency while also with the commercial function putting that into a railway company. the overarching theme is they're trying to split the government function from the business functions. one other thing that people have been talking about are some of the comments from the railway minister. the railway minister said that as part of this process, he is hoping the government is going
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to encourage more foreign investment. so that means to a lot of analystes and myself included that the government is trying to make the process more competitive and that it could also open up some opportunities for foreign companies. >> eunice, also, we got overnight a bunch of figures -- not overnight, but over the weekend a bunch of figures about china's economy, including inflation that was higher than expected. although it sounds like it is roughly at levels that the government was setting out for the year. is that right? >> well, that's right. and what the numbers over the weekend indicated to people here is that the recovery is looking fragile. it's looking uneven. the retail sales figures as well as the industrial production numbers did tick lower. the inflation numbers did tick higher and that is one of the things that people are concerned about. the january to february numbers tend to be a little more volatile. they tend to be distorted on the
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new year holiday and based on the comments that we heard from the premier wen jiabao last week and also the fact that the government is setting a lower target for inflation this year, obviously, this is a concern that we could see rising prices and especially in the poverty sector. >> that's right. i think with food inflation up 6% or something in that range added to the smog and general corruption concerns that you've been discussing, you can see why government is trying to help stem concern. eunice, helen is chief china equity strategist at goldman sac sachs. helen, thank you for your time. it's interesting to look here at how to play china at this point. are you still long china here? >> well, that's a good question. we did publish a notoriety after the chinese new year saying that we're still positive on china
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from a new year perspective. to some extent, that has started to play out. clearly, we've seen slightly disappointing data over the weekend. we've also seen the earlier than expected and harsher than expected property policy tightening. to some extent, i would say that the market has priced in that headwind over the last two weeks, as well. the downside risk is much more limited now. >> do you still see double digit returns here? >> we do. i think if you look at earnings last year was a really tough time. so when you have gdp celebrate, that takes a lot out of margins and brings in a lot of operating negative leverage. but this year, we actually see the opposite phenomenon playing
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out. right now, gdp growth will be about 8.3%, which is an improvement over last year's 7.8%. we see leverage in margin improvement coming through. we're forecasting about 13 is% earnings growth this year and just a little bit of valuation expansion would be enough to get us to our high teens returns for the rest of these years. >> helen, as you said, it was surprising the extent to which china introduced these property measures if they continue to pursue a more aggressive approach to keep the market from overheating. is that probably the biggest risk to that forecast? >> yeah, i would say so. i think the domestic policy is a big question mark in people's minds. clearly, the gdp target of 17% is not really a surprise and it's more like a down side like a minimum level. but nevertheless, it shows the
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tolerance for a lower level of growth versus what forecasts consensus today. so i would say probably tightening and inflationary concerns, that's probably the biggest risk. on the innation side, it really depends, probably we think that what came out just yesterday or over the weekend isn't yet a lot of cause for concern. we did see food prices come off in the second half of february, so march is likely to be a lot lower. once we get into the second quarter, if there are any surprise side shots, that could be one of the key culprit toes tie the policymaker's hands behind their back on policy. >> and a lot of investors are looking at china, generally opening investorses up. we're getting news this morning that the pboc governor is appointing to a governing body. apparently this could clear the way for an extented term. do you make much of this, helen? >> that's something that everyone has been talking about for the last couple of weeks and wondering whether it's going to be true.
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it will be announced for sure at the end of the two meetings, which will be basically this weekend. we think it's increasingly likely that he will stay on for the next -- we don't know how long, but for some period to come. china is standing is one of the the government who is uniquely positioned, who understands all of this and probably has the leverage as well as the influence to push it through and accelerate the pace of financial reform over the coming years. so yes, we think that maybe that's his mandate and is that's why we have this unconventional outcome of stening his tenure. >> it might be one way of getting invept vesters more of a risk on attitude about china. and i wanted to talk about some of the sectors, as well. maybe there's a way to play this beyond do you buy or sell the index. who at this point is probably the safest bet and which sectors
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would you shy away from? >> well, we think that in the near term, because we're not so sure if 100% of the cyclical headwind that's we were talking about earlier are fully priced in. at this point, we're looking to stay with sectors that are more defensive. so in that regard, we're looking at sectors such as utilities, such as health care, such at banks because over the coming three to six months, we were leerning more towards sectors with more reform oriented up sides. then on the utility slides, not only do we have limited movements in terms of cost basis, but we think pricing deregulation which is one of the key themes emphasized at the two meetings, one that plays out for the downstream oil, we think the next sector investors will look
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at and talk with is probably going to be itps. that would be one of the reform beneficiaries, as well. clearly a lot of the negative news as cam out. but over the next month and a half, we think the local governments will roll out their specific targeted properties for individual areas and there's still a lot of uncertainty and volatility as a result of that. >> more on the way for that sector. helen zhu, appreciate your time this morning. japan held a national memorial for victims of the march 111, japanese prime minister shinzo abe has pledged to speed up recovery efforts, promising quicker reaction to help rebuild lost communities. in the two years since the disaster struck, the nikkei has returned to predisaster levels.
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>> the earthquake hit on a friday, so the markets got their fist chance to reaction in 2011. over the next two days, the nikkei 225 tumbled nearly 17% despite emergency funding to the tune of $700 billion. a few days later, japanese stocks were dumped. but they continued to move lower over the next couple of months. then it was global events that brought stocks back down. first, s&p stripping the u.s. of its credit rating in august and then growing over the eurozone debt cries. we saw the nikkei 225 briefly trade above the 10k line in early 2012, but it wasn't until abe took hold at the end of the year kicking off a massive rally in japanese stocks. a day after abe was confirmed as
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p.m., the levels rose above preelection markets. in the same period, the yen has tumbled some 20%. last friday, the nikkei returned to levels not seen since the collapse open lehman brothers and it continues to move up in trade today. back over to you guys. >> overnight, european officials confirmed seven hostages killed in northern nigeria have been killed. both britain and italy said all seven were killed by islamist militant group ensaru. the british government will work with nigeria to help bring those responsible to justice. and venezuela's election race is heating up with opposition leader enrique
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caprise challenging snap elections. officials announced over the weekend the voting would take place on april 14th. the two candidates have already engaged in a war of words, setting the stage for a pretentious campaign and all this as moody's has issued a warning that political uncertainty could hurt venezuela's credit risk. and a diplomatic row between argentina and the uk entered a new stage this weekend. residents of the vulcan islands began to vote on sunday over whether to remain a british territory. but buenos aries will likely reject the outcome as a political stunt. find out what's founder and ceo aaron levey had to say about how cloud computing is changing the face of silicone valley. ey.
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welcome back to "worldwide exchange." i'm kelly evans and these are your headlines from around the world. european stocks are starting the week in the red after italy's credit rating is cut. and china acts as its railways ministry as the country unveils its biggest government
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overhaul in 15 years. >> announcer: you're watching "worldwide exchange," bringing you business news from around the globe. given the kind of week we had for u.s. stocks, it's perhaps understandable that they're taking a bit of a pause, a breather perhaps today. the dow looking to give up about 10 or 11 points at the open but still clinging on to that 14,300 level which is remarkable. the nasdaq and the s&p 500 looking to give up a couple of points this morning. stocks searching for direction around the world between china's somewhat weaker than expected data and the stronger than expected u.s. payroll numbers on friday at least until people started questioning whether or not the fed was exiting. take a look at what's been happening around the world, cnbc's ftse global 300 up fractionally. japan was rallying as the yen has weakened through the 96
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level relative to the dollar. european markets, though, a bit more mixed. the italian gdp figure was mixed. it has turned negative and joined the rest. the cac 40, about 0.3%. the ibex 35 is lower by 0.9%. how do you make money in these kinds of markets? here is what some of the guests have been telling us on the program all morning. >> fundamentals are pretty awful. it seems that the bank of england is scratching their heads at the moment and we're waiting for mark carney to see what he can do and with it a chance that we'll give you more power, really. but for me, if we can trace through the lows that we saw on friday, 1.4880, 75, 80, i think it will be realistic in the near term. >> it's got significant upside, though. ite really all about if those equity bourses over there continues to hit records.
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we've not yet seen any big wave or mortgage driven convictionty hedging in the u.s. when the sell-off in the right in europe gets really violent. that could be somewhere around 215, 220. when that happens on the ten-year yield. >> governments should narrow relative to brent despite the close of production. but that's probably going to be in the next few months rather than just like for tomorrow. we do see that stretch coming in. >> now, italy has been in the news plenty over the weekend. this morning, gdp figures for the fourth quarter are out, confirming the 4.9% quarter on quarter contraction. or is that 2.8% versus 277% prior. the country is still deeply
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entrenched in recession. italian banks stocks taking a hit on that and on the back of the fitch downgrade that we did get wind of friday night. uen accredit, 3.5% lower. intesa and bmps weaker, too. this morning, italy's ten-year yield has been moving higher as spain narrowed. you can see that gap almost touching there. did i get that right? 4.6% is what we're looking at on italy. we are seeing ta gap narrow to within 10 basis points. it was much wider than that in the past week. does that mean they're about to invert? does it matter? joining us now is christian schultz. great do you see this morning. >> good morning. >> when you look at market signals here, do they suggest we're about to put italian political risk and economic risk back front and center? >> absolutely. markets are right to worry about italy. end of this week, we'll have the
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italian parliament congregating, convening for the first time. it's looking unlikely that we'll get a fast solution to the political uncertainty there. that means we're fought going to see any further progress in terms of reforms. italy doesn't need that much more in terms of austerity. progress may not be that worrying. but the problem is, if there is another financial market panic, there is no government to act and that should worry people. >> and this is exactly where the ecb has promised to do whatever it takes and is, in fact, the plans to use this omt relies on the government as we heard mario draghi last week rely on the government asking for it. if there is no government, it's going to be tough to ask for it. >> yes. it was a bit of a warning for mario draghi last week to refer to the old conditions of the omt, which means there needs to be a bailout first, then there can be support from the ecb and a bailout means everybody in the eurozone has a veto on that, including germany's parliament and all the noises that we've
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heard from german politicians suggest that german politicians are not really ready to commit any support to italy at this stage. >> well, all that said, if you look at italy's 10-year is moving higher today, but 4.6%, that still underscores the rally that we've seen frankly since it was up near the 5% level at the last elections. as you point out, you guys are out there staying in your you euro monitor report. you expect the euro crisis to be out there by the end of the year. how worried should we be, really? >> we still think that the italian markets will be sorted out. markets are right in not reacting too violently to the italian news. the country has done the austerity that was necessary. the country is sustainable. other countries are making huge progress. and if you look at the current account of the crisis country altogether, they are probably running a balance current account ready which means they have no further external financing need. fiscal austerity is going to
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fade for the rest of the year. that means by the end of the year, all of these economies and especially the most hurt ones such as spain or greece could be growing and is we think once that happens, once the current account is balanced, once these economy show some quarterly growth rates, then we could say that the crisis is over and -- but in the near term, obviously, that uncertainty over italy does weigh on markets. >> uncertainty over france, too. i almost wonder if what we're seeing away from france is where it was initially centered towards those more important economies like italy and is potentially like france. >> it's all about competitiveness. in the longer term, the fiscal problems can be resolved. but for the longer term, what matters is competitiveness. there we see huge programs, especially in spain, and in ireland we see big progress there and lately even italy. but france is not making any progress at all. the country needs reformes and that's what we find out in our
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europe plus monitor which we've just updated. the country needs reforms, is not doing reforms, so it's falling further behind not just germany, but also behind the crisis countries and ultimately the country is heading for a crisis, maybe not fanl crisis in the short-term, but an unemployment crisis and is even a financial crisis maybe a few years down the line. >> christian, that's a big dey deal to say. if you think the situation is that dire, why aren't markets punishing france more? >> effectively, if you buy a french government bond, then you buy a german guarantee with it. politically, it's inconceivable that germany would let france go bust. of course, there needs to be a certain degree of cooperation, but that cooperation is clearly there. france is doing some reforms, so the country is falling behind further. for a short-term crisis, you would need that pressure from markets which simply isn't
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there. that german guarantee effectively, that seems to help investors to still buy french bonds. >> good point. and the euro/dollar back above 11 is.30. christian schultz, thank you very much for your time this morning. it does seem like another domino to fall on the european crisis. paul ryan says republicans and is democrats can compromise on taxes and spending to reach a budget deal. ryan is expected to outline the gop's proposal this week. he admits democrats are likely to reject his plan which ames to cut spending by $5 trillion and repeat president obama's health care law. but both parties agree on dramatic steps to reduce the deficit. >> i think there are things that we can do that don't offend either party's philosophy, that doesn't require someone to surrender the principals to make a good down payment on getting this debt and deficit under control. ryan's plan is being held by the tax increases on the
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wealthy. senate democrats are prepping a rival budget plan that would reduce tax breaks for the wealthy and keep entitlement spending largely unchanged. president obama continues to round out his second term cabinet and he's expected to nominate thomas perez possibly today. perez is currently head of the civil rights party division, and is likely to get strong backing from both organized labor and the all-important hishispanic. and two years on from the earthquake and tsunami, we'll take a look at how the country is rebuilding. don't go anywhere.
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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. >> announcer: you're watching "worldwide exchange." >> today marks the second anniversary of the earthquake and is tsunami disaster that devastated the northeastern region of japan. hi, nozomu. >> hi. rebuilding the livelyhoods of survivors at the earliest possible time. progress has been slow and the task ahead has been overwhelming. according to the reconstruction agency, around 315,000 vacc e
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evacuees are living across japan. construction has started for less than 10% of the planned housing units for evacuees due to difficulties in securing land sites. 14% of the disaster and 18% of the tsunami dmofts have bb disposed of. the government plans to end disposal of the debris by tend of march next year. as for fukushima, about 50,000 residents of the prefecture have not returned, even though the government declared that the nuclear crisis has been brought under control. deco decome contamination is still being completed around the plant. italy's annual gdp number is revised down now with the economy falling 2.8% on the year. italian banks are leading stocks lower in europe after fitch
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downgrades the country's sovereign rating. and china scales down its powerful ministry in the biggest government overhaul since 1998. berkshire hathaway is adding a new director spapding the country's board to a baker's dozen 13 people. meryl wittmer is the third woman to join the board. the news comes at mutual fund calverts investment is criticizing berkshire for not having a diverse board. cheryl stanberg's new book, "lean in, women, work and the will to lead" hit shelves today in a highly anticipated release that's dividing critics. sandberg said one reason fewer
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female leaders are in the workplace is because women tend to, quote, hold themselves back. sandberg will make the rounds on early morning talk shows today. and one of silicone valley's best is welcoming the call for more women. aaron levey says his company is constantly looking for way toes increase diversity. >> the conversation about yahoo! turned into a work from home versus work from the office type of situation. yahoo! is a business that over the past five years has lost a lot of its core culture and a lot of core morale. what blah ris sa is trying to do is bring everybody back in, build the foundation of a strong business and strong culture. so she's doing something that's very specifically that is well attuned for the kind of situation yahoo! is in. i think in three years from now, you'll see sort of a dispersion again where people will be able
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to work from home. but right now, they need to build that moral foundation and morale and foundation as an industry. >> levie is outlining his interests. >> individuals can bring in their own technology into the workplace. so just as you bring in your iphone or ipad into the office, you can bring in web delivered technology into the office. we have over 15 million users have that brought box into their organization and their enterprises and is then we sell deeper integration into an enterprise investment as you're larger business and you want to have those enterprise features. that's how the model works and it tends to be very traditional from microsoft or oracle or others. i only know about your company, what i read about here and the articles i've been furnished with. really exciting. i don't know if you make money or not and if you don't make
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money, when are you going to make money? >> we're investing for growth and we're doing a lot of global expansion at the moment. while we're not profitable, we have a significant amount of revenue that has been growing over 1100% every single year so far. so we grew over 150% from a revenue standpoint last year. we'll do over 100% in growth this year, as well. >> not bad. levie stressed his company benefits from sector tightens like apple. >> we're big apple fans at box. we benefited tremendously from things like ipades and iphones entering the enterprise. we believe there's a lot of innovation. i think where you see more of the disruption happening are particularly in our industry, the legacy enterprise players. the companies that are still selling storage servers and infrastructure on premise and software that goes inside of your data center. >> interesting stuff there again, from aaron levie of just after break, we'll take a look at the dow jones
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industrial average taking a look at its all time high with the s&p marking on the door. we'll talk about market levels on the cme when we're back.
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avie is seeking an injunction to keep european regulators from releasing information about its drem premeria. abbvie sought information on clinical trials following information for its secrecy. sales reps were up 17% last year to just over $9 billion. and shares of abbvie up about 0.5% in frankfurt trade this morning. twinkies may have a longer shelf life for investors. hostess brands creditor silver
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point capital are interested in buying the company's snack cake brands, including, yes, the tube like pound cake with the dream filling. it could still by by others. and mexico's group may make an offer for twinkies. here is a look at what's on the agenda today in the u.s. no economic data, but reports this week on inflation and industrial production and consumer sentiment. we'll get a pair of retailers turning in results today, dick's sporting goods and urban outfitters. china's yum brands same-store sales will be reported. i believe they said they would keep reporting them until after that turn around about what was in its products. u.s. futures are now pointed lower. now the dow is below the 14,300 mark. nasdaq and s&p 500 also pointed
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lower. what does it mean for trade today? michael gurka joins me now. micah gurka, what is driving trade? is it fundamentals, technicals? is it the fed? >> well, it was fundamentals for a while, but right now, i mean, when markets, especially stock markets start getting extremely toppy towards these levels like we've seen recently in particular the s&p, technicals will run rampant and, of course, i think you stream line most of these markets into the way the dollar has been tradeling. and i think it's start to go rear its ugly head in regards to metals and, of course, how crude oil is trading. >> you mentioned dollars. so, actually, there was some -- there's some chatter last week when we started to see trade differentiate. you had to isolate the dollar that it was driving activity. is that your view here, michael? and are we at a point yet where strong dollar is supportive of risk? >> well, a strong dollar will probably continue to be supportive of risk. the problem was over the last 3
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1/2 years, a strong dollar has been momentary in the markets and then from there we've seen it peter out. and i think that's one of the reasons to reference specifically the british pound. will we entrench in this range here below 1.50 and maybe test down at some of those lows we saw in 2010 as low as 1.411, 1.42? if that's the case, then i think crude oil will take on a completely different dynamic, brent and wti. >> what kind of dynamic would that be? >> well, it would be the whole driver of slowed demand out of asia and for the same reasons this belief at least even here in the states as you approach the summer driving seasons that some of the highs have been priced into the market and a lot of the consumers have been really apprehensive to, you know, start spending. now, again, these economic numbers this week will back that up, but i think at least for now, the crude oil scenario here in the states has showed why you've seen a narrowing in the
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brent versus wti spread. >> .oil is getting hit again this morning. what about gold which we're starting to see a bit of a bid? is this a move, have we put in the bottoms from gold after it has gone from being the most loved to the most hated metal? >> well, i think the gold scenario was overdone, at least how much you started hearing some rumors about hedge funds taking profits on quite a momentous trend for periods of at least, you know, many years and/or months together. but that being said, one of the barometers i was watching was how much platinum was trading over gold to the point of over $100. and now all of a sudden you've had that pullback to around 10. it's very narrow at this point still. >> no, good point. a good barometer there. michael gurka, thanks very much for that and thank you everyone for joining us on the program today. ross is out this week. i'm kelly evans. thanks for watching. time for u.s. "squawk box." and we'll see you right back here, we hope, tomorrow morning.
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