tv Worldwide Exchange CNBC March 19, 2013 5:00am-6:00am EDT
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i'm not happy about cyprus. it's negative. what i fear is higher rate, i need to see that storm blow over. there's always a bull market somewhere. i'm jim cramer. see you tomorrow! hello and welcome to "worldwide exchange." it will pass. lawmakers in cyprus get ready to vote on the highly controversial bank issues. new car registrations in europe dropped by more than 10% to their lowest point on record and that's sending auto stocks lower today. plus, india's central bank
cuts key interest rates but markets will, after the rba says it's likely to run out of room to cut further. so this morning, we're continuing to follow the latest out of cypress on this story. it's fast moving. details keep changing. the cypriot government says the country's parliament is unlikely to pass legislation which would impose a tax on bank deposits. lawmakers are set to meet and vote on the levy which has been set on a condition of the eu bailout. meanwhi meanwhile, the german finance minister has rushed to the defense of a highly unpopular tax. the move was necessary to keep cyprus from sharing in the burden of a eu bailout.
and uncertainty over the outcome of the vote in nicosia continues to weigh on markets. cyprus said its stock exchange will trading until thursday. cypriot banks have been placed on negative watch. carolin roth is reporting now for us. the latest we're hearing is that the vote may not happen today. what can you tell us? >> absolutely. there are a lot of moving parts still, kelly. this is a very fluid situation. the vote is scheduled to happen at 6:00 p.m. local time. there has been no official cancellation on part of the government. but, again, a government spokesperson at the same time also saying that it's very unlikely at this point that the vote will actually go through. that is, of course, because no single party has a clear majority in parliament, not even the ruling party under president anasatias. the ruling party says it may not want to vote with the proposal
and it's coming out with an alternative proposal. we spoke to one of the members on "squawk box" just half an hour ago. and one of the other parties which is against that highly controversial deposit tax is the green party. and a remember that we spoke to earlier on today told me that even if cypress were to incorporate the euro group's proposal to not be tax those depositors with less than 100,000 in the bank, that wouldn't change anything. why? that's because confidence has already been shaken and there is a huge sense of betrayal here on the ground. let's listen in to what she said. >> we were expecting the solidarity of the european union to help us out in what would seem to be a problem that would resolve within next three years. while the european union and the international monetary fund have decided that they do not want us to be safe, they want us to be punished. >> so that is the sentiment on the ground, at least as far as the green party is concerned. kelly, we are looking at further political limbo here in cyprus,
potentially over the next coming days or weeks. we know that the banks are going to be closed up until thursday. but we wouldn't be surprised to see that banks are going to be remaining closed up until early next week. remember, monday is another bank holiday, so they may just decide to keep the banks closed up until next tuesday and, of course, a lot of focus on what the talks between the cypriot finance minister and his russian counterpart will be yielding tomorrow. >> carolin, we're hearing the government now indicating they may not on to some sort of plan b after that call last night. but, again, if they were still going to limit people to taking out 400 euros, at least that was the plan, more banks to reopen on tuesday, i can imagine people on the ground with this sense of when are the bank stocks going to reopen, are getting increasingly acknowledge state and had are going to run into logistical problems when it comes to getting their hands on their money. >> absolutely. and that's, as i said, kelly,
that's why there may be plan toes keep the banks closed up until next tuesday when we have more clarity. again, this has not been confirmed. there's is a lot of speculation here. yes, people are becoming more acknowled agitated. i should point out, though, that the limit for the withdraws at every atm, that's 400 euros. that was implemented for cyprus here. but this is, of course, that people have been taking out over the weekend. we've been hearing that the atms were empty by saturday evening. at this point, there is no panic, but it remains to be seen what happens when the banks officially open. but no long cues at the atms as far as we could see right now. back over to you. >> that's a great point. carolin, following all the developments for us on the ground. now for more from market reaction, head of strategy at ing investment, valentin, thank you for your time this morning. markets haven't necessarily
fallen out of bed on this news. what do you think explains whether it's the lack of reaction as carolin was saying on the ground in cypress or frankly across markets the sense of relative calm? >> yeah, it is remarkable if you saw how much attention this whole topic kwas was getting over the weekend, you were anticipating a much bigger fallout. clearly, it hasn't come through. clearly, the panic, which is not yet visible in the streets of cypress is not becoming visible in the streets of other countries and not in markets, either. and i think an element here is the broad understanding that it's not only negative. clearly, there was a mix up in how they solve this program and clearly also levying people with savings under 100,000 euros was a mistake. the eurozone should not have allowed the cypress government to come up with such a plan. but in the end, i think the element of bail in a banking restructuring, remember, the size of the banking system is
eight times the size of its economy without having some kind of bail structure in a solution, it becomes very difficult. and i think that understanding is quite clear among investors. so from a longer term perspective, i think there's a positive element here which is a more substantial bailin in this solution. >> valentin, what kind of exposure do you have in europe at this point and what changes have you made in regard to how the cypriot levy is handled? >> it is creating a bit of uncertainty. clearly, it comes from lingering uncertainty over the political situation in italy. so all in all, it makes the bit more cautious on europe. not so much on our overall willingness to take risks. we're still overweight global real estate, but we have still put down our exposure in europe, so we are now under weight european equities. we are cautious on peripheral bull markets and european fixed
income space. so that is the main changes. still on the regional allocation that we have, but not so much altering our overall willingness to look for risk. i think in general, the broadening of the global cycle there is the key factor and that is still unsolving and keeping us constructive on global risk appetite. >> valentin, yesterday we heard a lot of chatter about italy being a region of concern after this news out of cypress. but if you were to look at the market reaction, while italy was initially hit harder, it was spain that closed on the day earlier. the ftse mib in italy is up almost 0.1% while the ibex is selling off by another 0.25%. what are the market signals telling you? >> well, first of all, obviously, i said before, it's been a very -- impact in terms of fixed income and equity markets in italy and spain. secondly, i think it's important to remember that the problems in
italy are clearly not related to its banking sector so much. and that is obviously where it's different for spain where the majority of its current problems are related to excessive credit, real estate and an overleveraged banking system. so to that extent, if you see a problem surrounding these types of areas in cypress, it's more logical to -- worries over spain than it is -- >> last question, you mentioned you're still long global equities. what regions are your favorite here? >> for us, the most protective story of the year still is the story in japan. the big policy shift or abe-onomics is giving aus view of the japanese economy. we think that the current stance and the shift at the boj with the new governor taking place later this week is clearly the best opportunity japan has had
in the last 15 years to get rid of deflation and i think in that sense we are staying with the market momentum which is very constructive on japan. that is our biggest overweight. >> regional equities. >> we'll leave it there. valentin, appreciate your time today. >> i had mentioned as well the u.s. stocks. here is a look at futures. we saw it in cypriot banks, cypriot stocks reopen not happening. they will be staying closed until at least thursday. largely looking down on the dow by 14 points. the nasdaq and the s&p pointing higher when it did emerge that cypress wouldn't be voting and not approving the terms of the bailout last night. we're still waiting for the final confirmation on the timing of that vote. not so much market nervousness here. the ftse cnbc global 300 is down
by 0.1%. as we look at major european markets, the ftse mib has not flipped negative, but it was positive. giving up 0.3% as spain did just indicate its bad loan ratio continues to rise. the ftse 100 giving up 0.1%. we'll watch today and see whether some of these bourses in the safer haven i.e. britain, i.e. germany can flip back into the green. here is a look at some of the top gainers and losers on the board. spain, they came out 2.9% higher despite the horse meat scandals in britain. they did surprise to the up side with their sales ratio. we see the national bank of greece better than 7%. there is still plenty of concern in markets at least for names that are trading today with regard to how this cypriot deal will be handled. here is what the bond space is doing today. we're seeing differentiation where the yield is selling off. spain, rallying a bit, coming in
back below 5%. and the ten-year german bund sitting at about 1.40. still indicates a flight to safety bid there. for ex rates, today down about 0.1% to 1.2941. traders looking for a sign of weakness in that. the dollar/yen is weakening -- i'm sorry, the yen is weakening against the dollar, 95.40. up about 0.2%. you just heard valentin talk about how they still like japanese equities the. for more on what's happening in the nikkei and other asian stocks overnight, let's get straight out to li sixuan joining us from singapore. >> thank you, kelly. asian markets rebounded from monday's steep decline with the japanese market outperforming its asian fears. a warm welcome to governor kuroda who will be taking over
tomorrow. the nikkei 225 ending higher by a strong 2%. the yen led support to exporter names like sony which led the gains jumping nearly 7% today. and the worst performer sd was the sensex. worries about india came flaring back on news that a key ally of the government withdrew from the ruling coalition, upset about india's stance on war crimes in sri lanka. and the rbs shrugged off the rate cuts.cuts elsewhere in china, the shanghai composite rebounded 0.8%, despite february inflow dipping to a seven-month low. developers got a very strong boost if late trade of bargain hunting. brokerages rallied as they lower the barrier for asset allocation business to open up more firms to raise money. shares in hong kong ended at a 3 1/2 month low dragged lowered by
chinese consumer segments. south korea's kospi is higher by 0.5%. down under, australia's asx 200 ended at a three-week low while the rba left the door open for further rate cuts. back to you. >> sixuan, thank you for that. india did cut interest rates for the seconds time this year. will the move revive sluggish economic growth? we'll be live from mumbai when we come back. [ kitt ] you know what's impressive? a talking car. but i'll tell you what impresses me. a talking train. this ge locomotive can tell you exactly where it is, what it's carrying, while using less fuel. delivering whatever the world needs, when it needs it. ♪ after all, what's the point of talking if you don't have something important to say? ♪
welcome back to "worldwide exchange." twhos depositests less than 100,000 euros could be spared the new bill taxes. and u.s. investors get another check on the housing sector with new construction permits due later today. reuters is now telling us that cyprus has reviewed a draft cypriot bill. it includes a levy spares thog those accounts of less than 20,000 euros from a tax in cypress. it would levy 6.5% on those
between 20,000 and the 120,000 euros. it's waiting to see whether there would be additional levies on the counts of above 250,000 euros. i'm not sure if the math adds up to what cyprus needs to contribute so it would agree with european lenders. what's interesting about this is 6.75%, again, roughly consistent with what we were hearing prior to the fact that the international community wanted smaller deposit holders to be spared. those under 20,000 euros would be. but those between 120,000 paying 6.75% and crucially we know cypress didn't want this double digit tax increase on bigger accounts, this would keep the levy at 9.9% for deposits above 100,000 euros. potentially some pressure from the russians there. we'll bring you the latest news as we continue to get it. india's central bank has lowered its benchmark lending
rate by 7.5%. it's the second move this year as the rbi try toes reboost growth. the central bank has warned it has little room left for monetary easing. rema now joins us from mumbai with more. is there a sense that the central bank is done now or might there be more accommodation to come? >> well, you know, the language that the rbi governor has used by 25 basis points cutting, and by the way, this is in line with what the street was expecting. he's indicated that the hedge room remains quite limited. that's the tone that he had indicated. and he has been cautious in the last one year. the rbi governor has always maintained that the hedge room remains limited. despite that, he has to raise by 1 00 basis points. that's what we've seen in fi 13, as well. in that span of time, we've seen
the inflation come down from over 10%. now to 7%. we have seen a fall in inflation, which is why he can go ahead and cut rates. but now, inflation is expected to remain, you know, fairly -- if you don't have that comfort of, you know, declining, in that context, his thought about the hedge room for easing remains limited should be taken. there's not going to be, you know, aggressive easing by the rbi monetary policy. you can still go ahead and can cut it by 50 basis points over the span of maybe a year or so. but it's not going to go the whole -- apart from that, he's indicated that he will manage the liquidity by open market operations, that on the sidelines. >> rema, thanks very much for that on mumbai out of that interest rate cut out of india. to china now, jack lew met
with abe shinzo. the new mood was reportedly congratulatory. still, both sides admitted to settling key differences would be unlikely. >> the president is firmly committed to building a relationship of going strength where we cooperate on issues of economic and strategic importance, understanding that we will each have and meet our own responsibilities but we'll have to manage our differences. >> some items on the table for discussion include cyber spying, north korea and the chinese currency, the yuan. europe's struggling car market did suffer another blow last month. ford was the worst performer.. its new car sales sunk nearly 21%. u.s. rival gm not far behind with a 20% drop amid ongoing weakness for the industry earlier this year after what was
a dismal 2012 with sales hitting a 17-year low. auto shares are taking it on the chin. shares in british super market chain are trading higher after fourth quarter sales topped analyst forecasts. like-for-like sales up 3.6% on the year. you can see shares up about 2.9%. speaking earlier on cnbc, the ceo saying for his nonfood business was a major driver of growth. >> saying today that our total business is growing at 3.6% in the last quarter, but our nonfood business growing at three times that rate. that is i think an extraordinary strong performance against a tough market back drop. and shares up almost 3%. stick around. straight ahead on the program, we're going live on the ground in italy as the nation prepares for talks to form a government after last month's elections left the country mired in a dead lock. plus, the latest fallout from cypress. we'll be right back.
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julia is in rome following this story for us. no surprise to hear, perhaps, strong words from berlusconi. how likely is it at this point that we're going to see a government formed? >> in a nutshell, kelly, it's no different from where we were three weeks ago, as far as i can see. if you cut through all the noise, the sound and their little bit of furry from berlusconi over the next few days, it looks like bersani is going to try to form a movement with beppi grillo. even if it creates consternation among his voters who says he needs to try and step up a government. as far as i can see, obviously, the negotiations begin tomorrow. we're no farther by the board and even if better sanny does manage to come up with a minority government, the question is will it even win a confidence vote? as far as i'm concerned, it's still a real mess here in italy. >> not an encouraging back drop
for investors who want to make sure should it need help, it should ask for it. we're still watching the fallout from cypress. this draft bill, plan b, would spare depositors and still tax those of accounts of 20,000 or higher. the ftse mib has taken a leg down. it was barely in the green this morning. it's now down 0.4%. what has the reaction been there in italy? >> you know, it's interesting. i made the point yesterday that the press didn't have anything on cypress. yesterday. today they're talking about very much the tone that they're taking is that, you know, this is a cypriot thing. perhaps there is a concern here in italy. but i'm really not sensing that at all. one paper actually -- it's a well known paper, very popular online. it talks about a possible contagion risk. the theme ongoing here is if deposits are below 100,000,
you're protected. there really isn't a sense of concern. one article is talking about a figure of 100,000 euro deposits, more trouble for berlusconi. he's contesting his divorce settlement where he agreed to pay his wife 100,000 euros a day. >> oh, wow. >> three female judges -- that he did that last year. he's continuing to contest that. kelly, not often on my speech on this since -- yeah, speechless. she did put up with him. i mean, she did stay with him for 18 years. >> yeah. i'm not sure that's going to help the argument that there should be people with the small deposit in cypress should be contributing as much as they are. anyway, we'll leave it there, julia. thanks very much for that, always giving us the latest on berlusconi's movements. we'll leave you as we head to break with how futures are trading ahead on wall street. looking for a slightly positive open on the dow and s&p 500.
i'm kelly evans and these are your headlines from around the world. it won't pass, that's the word from the government in cyprus has lawmakers get set to vote on a highly controversial bank tax. the ratings firm warnings losses imposed on depositors would constitute a restricted default for the financials. and boeing might have lost lion air, but it's won ryan air. the irish low cost carrier placing a $16 billion order fo next generation planes. and u.s. investors get a check on housing today with u.s. construction starts expected to point to continued improvement. >> you're watching "worldwide exchange" bringing you business news from around the globe. before we get to the latest on cypress and everything else going on, let's give you the news out of the uk waiting on inflation data ahead of a key budget statement due out this
weekend. the inflation data has generally surprised to the upside. you can see the sterling/dollar, while it's rebounding, roughly flat at 1.5097. cbi up 0.7% on the month, 2.8% on the year. that is the highest level since may 2012. the ppi, the output ppi was up 0.8% on the month. that's twice as much as forecast. the input ppi was up 2.3% on the month versus an expectation of 1 is.9%. pipeline pressures certainly are hopping up as they say here in the uk economy. the cpi, though, improvement and video games. we'll get a closer look. we will be live with special coverage here on cnbc from 1300 cet. here is a look at u.s. futures as we turn or attention towards
the trading session. we have moved lower. it does look like the dow will shed about 4 points at the open. the nasdaq and the s&p pointing slightly lower, too. the index took it on the chin yesterday when it emerged that cypress wouldn't be improving and can wouldn't even be voting on the details of its bank bailin. today, we're still waiting for word as to whether they will vote today, whether banks will, in fact, reopen along the cypriot market on thursday or whether that could potentially stay closed into next week. just how european markets are reacting, by the way, on news that the cypriot government has floated a plan b. this would involve sparing depositors under 20,000. 6.75% on 2200,000. not a huge difference in the ibex is down almost 1% in spain. the cac 40 in france down almost 1%. the ftse down 0.4%. the mib in italy has turned negative. how do you make money in these markets? here is what some of our guests have been telling us this morning. >> what we are seeing right now,
if you look at gold, it is actually -- it has broken above the channel in europe terms. and we think it's impressive to go towards the 1300. gold continues to go up. no more than 1650. 1650 before it comes back down. >> the credit sensitive market is still in the doldrums and i think, we think we have a large position in that area. but those assets are going to continue to reflat. the fed is buying a lot of mortgage-backed security paper. we still have a heavy fed wind behind your sail there. and i think those asset res way better than gold. >> this makes it a bit more cautious on europe. not so much on our overall
willingness to take risk. we are still out of equity. we are still overweight global real estate. but we have filtered down our exposure in europe so we are now in european equities. the most spectacular story of the year still is the story in japan. the big policy shift or abe-enomics is giving us an impressive view on the japanese economy. >> what does it mean for the u.s. economy? joining us now is michael crofton, president and ceo at philadelphia trust company. michael, i know you like the news here. after all the news on cypress, do you still like them i do. i think cypress is somewhat problematic from the view of european sovereignty, but that's a much bigger issue. i don't think this market is going to be badly affected by it. i think we're going to power through it. the fed is driving the boat and the fed has engineered a turn around in the economy. now it needs to catch on, gain momentum and pick up the ball
from the fed and move forward on its own. but i think the u.s. market is still cheap and a great place to be invested. i think we'll see flows from europe and others as people seek more safety. >> this is an argument to put forth in the market yesterday. people say, look, it's not even a safe haven bid. it's u.s. equities that people like here. what is your view in terms of sector performance? do you buy everything or is there differentiation inspect. >> no, i wouldn't buy everything. i think technology represents a tremendous value. i think regional banks are still very good investment at this point in time. and i love domestic energy. natural gas, marcellus shale, anything coming out of the ground in the u.s. is going to have a dominant position in the next economic move. so i think it's a great place to begin to invest. >> and i just wonder as people get into these levels, and is i know there is a debate that's been playing out in markets. but we've had such a run up. even aus mentioned from the regional banks, banks have completely rerated even to where we were a year ago. do you just continue to stick
with the winners, though, or is there a sense for looking for better value? >> i definitely think you look for value but you pick your spots carefully. there are some stocks that haven't participated in the regional banking area, particularly on the lower end of the cap ranges. those can be bought selectively. some of the marcellus shares are doing extremely well, but can be bought at a reasonable price. some of those plays are undervalued in my opinion. there's lots of opportunity. you have to pick your sots, though. and even the broad market, i think, represents some value. we're going to get a little bit of a pullback in here. it was inevitable. but there's so much money on the sideline, much of it professional, that needs to get invested that i think any pullback will be very short lived. >> well, that's -- i don't know. i don't know -- i think people want to see more fear in the markets, michael, before they feel comfortable about getting in. but in any case, that's the view we've heard from many, which is that they're buying into the dips here. we're seeing the reaction generally play out. michael croft ton, philadelphia
trust company, thanks very much for your time. want to bring you the latest out of spain, which, k, is looking to raise more money at auction today. another debt auction going off here. waiting for the yields to come through, but it appears as though they've sold a total of about 4 billion euros of three and nine-month bills. the bid to cover ratios are lower for the three months, higher for the nine-month. the yields coming through here now looks about 0.34% for the three month. what's interesting is this isn't too different from the details that we saw on this last auction. here is a look at the spanish curve with the ten-year government bond yield has been falling back below that 5% level even though its equity markets were hard hit yesterday. they're now down almost 1% today as cypress continues to try and placate smaller depositors and frankly the international community by amending the terms of on its bailin. now, bank of japan governor
shirakawa says siayonara to the central bank today. we have the story like from tokyo. >> hi, kelly. after a five-year term, bank of japan chief sheer cirakawa is lg the bank three weeks before the optional end of his term after fighting with prime minister shinzo abe over policy differences. at his press conference, last press conference, he stressed that the central bank must make policy decisions in the best interest of long-term economic growth or any dangers of trying to move markets with words. he said he believes the japanese economy will turn around, but more entities than just the boj are needed to make it happen. su sle sheer cause wa faced a number of issues. the government debt crisis got pushed up the value of the yen
and the earthquake is and tsunami disaster. he was criticized for failing to end the country's long running of deflation. incoming governor hiruhiko kuroda will take over the post tomorrow who is expected to take radical measures at the boj policy meeting next month. back to you, kelly. >> thanks very much for that. the nikkei is still liked by investors as we've heard on the program. also still liked? hamburgers. find out how one american export is enjoying a global growth spurt. we'll hear from the ceo of smash burger when we come back. [ female announcer ] what if the next big thing, isn't a thing at all? it's lots of things. all waking up. ♪ becoming part of the global phenomenon
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we're looking to bring our business here to western europe and southeast asia. >> isn't the burger market stat rated? >> not at all. people love burgers. it's if number one food market in the united states and big outside. most of us have been dissatisfied with our choices. we're doing burgers in a different way in a new fast casual cooked environment. >> how much of a challenge is it when you come over here when horse meat is big in the news. >> food supply is really important. it's something we all have to face. we're using certified angus meat in the united states and we'll be using that here in europe and it's something we'll do a good job of keeping our eyes on. >> what do you think is smashburger's edge? we've been winning great food awards around the world. we tapped into this fast casual business model where you walk up and order and we bring the food to your table for you with a real nice fork and plate and offer $8 to $10 equivalent in
the u.s. >> it's a higher price point, a different customer and hopefully better margins. what are your profit margins like and where do you want to see them go? >> we focus on getting the business of burgers right. our margins are approaching 20% which is really leading in the restaurant industry. we're doing well north of a million dollars out of our restaurants and we're doing it for less than half a million dollars. >> but i understand you're pushing into markets, not just britain, but pretty diverse in far flung markets. how much of a challenge is it, then, to source the right kinds of product, to keep costs low and looking for, i'm sure, ingredients that are somewhat near to where you're selling the burgers. >> absolutely. so supply chain in the restaurant industry is paramount. we've expanded already into the middle east and canada and central america. so our team is working on all of that all the time to get the product source locally as well as bring those things from the states that we can't final locally to make it straight. >> part of his challenge is to
tailor the burgers to local markets. depositors with less than 20,000 euros in the bank could be spared a tax according to the latest cypriot bill. europe's struggling car market hits another bump in the road with sales sliding near 10% earlier last month. and is u.s. investors get another check of the housing sector when construction permits are released later today. the cypriot government is reportedly set to scrap a highly unpopular levy for bank deposits under the 20,000 euro threshold while increasing the tax on deposits and is leading the highest end 9.9%. this after a spokesman said this morning that parliament is unlikely to pass the legislation. lawmakers are still due to convene at 1700 cet. about 6:00 p.m. local time to debate and vote on the levy
which has been set as a condition of the eu bailout. meanwhile, the german finance minister has rushed to the defense of the highly unpopular levy. the move was said to be necessary to provent eu taxpayers from sharing in the burden of a cypriot bailout. the russian president medvedev said the measures looked like the confiscation of other people's money. speaking on cnbc earlier, well known and punchy economist warned about russia's reaction. >> if you try to -- the russians and you have vladimir putin, why would he not decide to shut down gas supplies to germany until that was righted? if you're going to attack money laundering directly, don't make sip reeus peasants and small businessmen collateral damage in your -- against russian
oligarchs. >> how reliant is cyprus potentially on this aid from russia? do you think that's why they haven't increased the tax that will be levied on accounts greater than 100,000? >> that is certainly possible, but we need to wait and see what the final proposal will actually be and whether that will be ratified in parliament. but yes, russia is a very, very important partner for cypress. it is not just a major depositor. it is also a creditor. part of the reason why this is an issue is to talk about sof n softening the terms of the $3.3 billion loan. fair to say that cyprus is not in a very strong negotiating position at this point. so we need to wait and see what comes out of those talks.
so officially, as things stand right now, the vote would not go through parliament. that is because no party has a political majority. back over to you. >> carolin, thanks very much for that. the newest homeowners are finding much needed relief, even those that didn't have to sell their property. we'll tell you just how many are seeing some data in the housing rebound. u.s. futures are pointed down just barely. can the dow open in the green? we'll sploe explore that.
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now, as the u.s. housing market is showing more signs of recovery, the number of homeowners who owe more than their property is worth is starting to fall. 1.7 million homeowners went from negative to positive equity in their homes during the fourth quarter of last year. it's not all good news for the skter, though. sentiment among u.s. home builders dropped for the third straight month in march. u.s. housing starts are due ahead of the opening bell today. joining us from florida to help us gain gauge trends, sherry olifson. sherry, it's great to see you this morning. there are signs here of recovery. what did you make of that data showing more homeowners now are -- because of the rebound in prices, back above water? >> wuflt news. wonderful news. first of all, it means more money available for spending for these homeowners. it's a matter of confidence.
wee need to see that in housing. we have new home construction numbers coming out this morning. but we're looking in terms of new home construction, for example, we're looking at a high of 2 million homes back at the peak of the bubble and now we're only at, you know, the bottom we were at around 500,000. >> and the important question now is, is this as good as it gets? you're in florida where whether near ft. lauderdale or miami, there have been talked about boom times again. homeowner sentiment is starting to weaken a bit. is this potentially here a time to reassess just how strong the market is? >> well, look, home builders generally are going to look at inventory in pricing. right now, they're in a great environment. because on top of that, those numbers look great. inventory is low. prices are going up. interest rates are low, which translates to home buyer ability to buy more homes.
and we know new homes are more expensive. the big head winds we're facing right now are artificial headwinds. they don't have to deal with the real estate market. those are uncertainty in terms of what the government is going to decide on the rules for qualified residential mortgages under dodd frank which translates to how readily available mortgage loans will be in the next year or so. and, of course, the tax issues with the fiscal cliff and is congress going to be looking at the mortgage interest deduction and other incentives that ever traditionally supported home ownership and doob a deal breaker for a lot of buyers looking to move up. >> what has helped? is it these targeted policies by the government? is it generally that the central bank has been so aggressive? talking about the way foreclosures have been handled, too, which method has yielded the most successful results? >> well, i'll tell you, what has helped most is the fact that people need a house to live in. we're not talking about widgets.
there is always going to be a natural demand. part of the problem and the reason this has drawed out for so long is this is a foreclosure issue. one of the things we're seeing in florida is foreclosures are down 25% for the whole country, but in 32%, foreclosures are up month over month. so we're going to see a resurgence of that and foreclosures flaring up in different regions which will affect housing and construction. so that will have appear impact on the broader economy. >> and all the more reasons why those numbers today will be important. we'll keep an eye on that. appreciate her time this morning. here is a look at what u.s. futures are doing as we continue to digest the latest news out of cyprus. indexes are trying to post small gains from yesterday's declines,
but across europe, it's pretty much red. the ibex taking it on the chin. time now for u.s. "squawk box." we'll be back on the program tomorrow. departure. hertz gold plus rewards also offers ereturn-- our fastest way to return your car. just note your mileage and zap ! you're outta there ! we'll e-mail your receipt in a flash, too. it's just another way you'll be traveling at the speed of hertz.