tv Worldwide Exchange CNBC September 6, 2013 4:00am-6:01am EDT
welcome to "worldwide exchange." i'm carolin roth. investors are calling it the most important number for markets this year. expectations of a strong nonfarm payrolls number raises the prospect of fed tapering fueling tension between emerging and developed countries at the g-20. >> in weaknesses that economies went into this period of potential tapering of qe have been exposed. >> president obama at the st. petersburg summit as ban ki-moon
sounds a warning over sectarian violence. but the white house keeps up the pressure on congress to approve a military strike. we're joined live by former italian prime minister mario monti as fresh talk that silvio berlusconi is ready to bring down the italian government overshadows the forum. and is it game over for kevin rudd? all signs point to the conservatives taking power in australia as campaigns make their final push before tomorrow's vote. let's get back to one of our top stories. president obama is facing gross grohhing pressure from world leaders not to launch military strikes in syria. u.n. chief ban ki-moon warned from the g-20 summit in st. petersburg this morning that any intervention in syria could worsen sectarian violence.
but on the sidelines of the g-20 talks, obama has been making calls from abroad to key lawmakers back home seeking support for a limited scope use of military force. u.s. senate majority leader harry reid said he's guardedly optimistic that the senate will approve the white house views for its resolution by the end of next week, according to a report from reuters. this as leaders gather for a second working meeting in st. petersburg today. you're looking at live pictures of the g-20 summit in st. petersburg where leaders are holding their second working meeting. steven is in st. petersburg. steve, realistically speaking, how much coordination can we expect to come out of the g-20, whether it is on the exit of stimulus or on syria? >> on those two issues i think you got a point. there can't be a lot. on other issues that are apart of the official agenda, they can
look at those. there are a lot there, very important issues including on tax, regulation. i think you'll see some quite concrete moves forward to global regulation on those issues. but let's get back to the main point. point was we have come to this meeting without foreign ministers by and large. that's important. this is an economic rather than a geopolitical meeting and people have come and wanted to talk about syria on the fringes even though it is not part of the official agenda. i think mr. putin did something very smart. you had a working dinner. supposed to last a couple of hours, lasted much longer, ended 1:00 a.m. local time. he got up at the start of dinner and said ten minutes each, we go around the table. all you've get ten minutes to put your starts out, put this issue out in the open so everybody is talking about it. i have to say, you got to give putin credit, whatever you may think of his stance pro the al assad regime and they went around. what i heard from various people is this, it was vociferous. people laid their stance out. you have the british and the french who back military
response to the al assad regime, a limited response as well. and then people were critical. von rompuy, the chinese. i spoke to one man earlier on today who was unequivocal in his support for the united states. now, we haven't got kevin rudd because he's trying to win election. but his foreign minister is here representing australia. that was really, really unequivocal. what bob carr had to say about american support, listen in. >> we can't wait ungeder the gilded chandeliers in the panelled interiors and enjoy a cozy discussion as if syria didn't exist. america delivering a proportionate response, not boots on the ground, not intervention, a proportionate response, a limited response in the words of the president, is absolutely justified. and we have supported it. >> so from that i think you can
go on that it is very clear the u.s. are not completely isolated, albeit most people looking for a u.n. solution which the president doesn't see as viable. we heard samantha powell, the u.n. envoy, saying a viable solution does not look on the table. we heard others saying looking for a political solution, but doesn't speak for the french or the british, even though he's the president of the eu council. so a lot of question marks there about a commonality on stance, just not going to get one on that. is it preventing other work being done? i had a nice chat with the russian finance minister, putin, obama, not agreeing at all on syria. are other stuff getting done? he said, yeah, a whole host of things are getting done across the board, taxes, bets, offshore issues. it is not bligting every single part of the official russian agenda. but you mentioned one other important issue as well, let's bring in ross in, because what seems to be another dividing
line, but this time between developed powers and the bricks emerging nations is tapering. and the effect it is having on the global economy. i got to say from the people i've been speaking to today, the president of the world bank and others, ross, they think the bricks countries need to look at what is going on domestically and stop blaming the americans necessarily for quantitative easing and tapering as indeed is the creator of this volatility. it is about domestic setup and infrastructure they need to worry about. >> yeah. and it is interesting because we already have spoken to the former peruvian president. he was saying, what we're starting to see is slightly worrying for emerging market if your resources are impacted by that. he talked about every basis point drop in chinese growth, over 2 is the slowdown in latin america. what worries him most, steve, is a lack of global leadership. what we're starting to see now is a sense of as emerging
markets get problems, a sense of protectionism growing, a sense of every man is in it for himself and he says one of the big problems we're facing is a crisis of global leadership. now, earlier, ian bremner referred to the g-20 where you are as the g-0. their inability really to get any coordination together. you talked a lot about syria as well. and it just is worth pointing, what he also said was that the red line for the u.s. administration was not particularly syria. real concern is what it means for iran. >> the red line in the middle east for the u.s. is not syria. the red line is iranian breakout nuclear capability. and the iranians, it is very clear, that for the united states to act, they're going to have to have a resolution, which means they'll have to say in advance they're planning on acting and what they're planning on doing. what a horrifying situation for the united states to be in. i really think that going to congress was probably the single
biggest misstep on u.s. foreign policy we have seen now in over -- in five plus years of the obama administration. >> meanwhile, italian prime minister enrico leta is reportedly brushing off questions about the future of his government. that comes as one of silvio berlusconi's aide nicknamed her the pipenness said the billionaire had a video ready announcing he's pulling support for the coalition. now, this video could be played on monday if a senate committee votes to strip berlusconi of his seat in parliament following a conviction for tax fraud. ross, where you are, the setting is so inconsiderably beautiful, and it certainly belies the political drama that is once again unfolding in italy. based on what you're hearing on the ground, are people really concerned about the fall of the government, of the coalition government, or is this once again political posturing that we're so used to from
berlusconi's camp? >> no, i think people are absolutely concerned. it is a real threat. it is a threat that people believe -- i've spoken to this morning, berlusconi would follow through on if -- if he's kicked out of the senate because of his four-year jail sentence for tax fraud. i think people believe that is a real threat. but here's the thing. no one wants to have the coalition fail. and therefore apart from mr. berlusconi, because it would suit him personally, no one wants it to fail and face new elections. there is very little appetite for that amongst the other political parties. people are looking at the two things and going, we actually genuinely do not know what is going to happen. now, i think what i would like is for this committee not to take a decision for quite some time. so you may try and get to spin it out. this is the last stop. this committee, when it makes its decision, is the last stop.
they may have an out because what the berlusconi support is going to argue in this case is they will say that the charges, the case launched against silvio berlusconi were -- was done before the change in the law. it is the change in the law which is effectively needs to be kicked out of the senate. they're going to argue it is unconstitutional for them to rule that mr. berlusconi should leave the senate. so there will be some matter of law and they'll be able to -- maybe they'll find some comfort and be able to hide behind the constitutional part of that. no one really goes. the key point is is the country does not want another election. there are also other big fights here, not the least of course, the change of the electoral law where the government could come under threat as well. the key point is if berlusconi, does withdraw support, kicked out of the senate, and the pdl withdraws its support, the question is what happens to the five-star movement and others, would they come in and try to shore up the leta government.
but it is undoubtedly on the minds of everybody here this weekend. and it is something that we will get into big time with the former prime minister, mario monti who returned here. and this is, as italy just got out of the longest post war recession they have been in, total debt to gdp, 130% at the moment. this is a country with huge economic issues and youth unemployment rate of nearly 40%. so we'll talk about these issues, not only with mario monti and the former executive board member at the ecb. plenty more to come on "worldwide exchange." for now, back to you. >> ross, thank you for that. we're looki ining forward to th interviews. the stoxx europe 600 is pulling back a little bit ahead of the all important nonfarm payroll reports. many say this could be the most important jobs report that we have seen so far this year, of course, because it may decide that tapering is set to start in september. the stoxx europe 600 is off
by .2%, after we hit 2 1/2 week highs in yesterday's trading session. caution is what we're seeing in the markets this morning in the ftse 100, off marginally. the xetra dax losing a third of 1% and similar percentage losses for the cac 40 and the italian markets as well. italian markets interestingly enough are not reflecting fears about a collapse of the coalition government just yet. also, this is reflected and pretty steady yields for the ten-year italian yield. in the bond markets, wow, so much activity, so much excitement because many of the key levels have been taken out in terms of the yields. the ten-year bund yield is above the 2% level for the first time in two years. the ten-year gilt yield did bridge the 3% level in yesterday's trading session. this is after the boe was quiet about monetary policy. no statement from them after the statement -- after the announcement of rates came out.
and the markets are now actually pricing in rates to be raised two years before forward guidance would indicate. really not believing forward guidance much set out by mark carney there. keep in mind that the ten-year treasury yield has also been touching that psychologically important 3% level. we'll see what it does after we get the jobs report later on today. in the forex market, the dollar yen pulling back a little bit. we are seeing some yen strength, which interestingly enough could be tied to this olympics bid for 2020. dollar yen down by roughly half of 1%, back below the 100 level. and sterling dollar pretty much unchanged after a nice spike in yesterday's trading session on the back of the boe and sitting at 1.5592. let's check in on how markets in asia are faring with li sixuan. sixuan? >> asian investors cautiously position themselves this friday
ahead of key u.s. data. the nikkei 225 snapped a four-day winning streak slipping 1.5% as investors took profit after the 5% surge in the first four days of trade. australia also tread water ahead of the pulse for federal election tomorrow. asx ended a tad higher. as for china, a slew of positive data over the past week or so showing more signs of recovery. the latest poll showed china's industrial output to have jumped 9.9% in august, helped by better investment in exports. beijing reopens its futures trade for the first time in 18 years, also boosting market sentiment. the shanghai composite gain the almost 1% today and 2% for the week. take a look at some big movers in the region. japanese real estate and construction stocks led the losses after reports that japan may lose the bid to host the 2020 summer olympics. these stocks had very strong
rally recently and investors booked profits in today's trade. moving on to south korea, the kospi managed to hit a fresh three-month high, thanks to foreign buying. among the top gainers, hyundai motors jumped 2.7% today after reaching a wage deal with a labor union. steelmakers also gained traction on prospects of better earnings. hyundai steel gained more than 4%. back to you. >> sixuan, thank you so much for that. let's move on, details of a g-20 tax plan remain sketchy, but are expected to tighten rules governing multinational firms use of tax minimalization systems. it follows a deal made between the u.s. and switzerland allowing 100 swiss banks to avoid prosecution. that deal, though, doesn't include julius baer which continues to negotiate with authorities. they're holding their first next generation summit in asia. adam baktir has flown out to
bali. he's at the conference for cnbc. you've got a big guest waiting in the wings. >> that's right. tough job, but somebody's got to do t let me tell you about the conference being held in bali. julius baer holds the next generation conference usually in zurich, in switzerland. this is the first time they're holding the inaugural conference here in asia. and one of the key themes they are exploring and addressing at innovation. the message they're trying to drive home here is that innovation is a path to economic prosperity and wealth creation. in a way, it is sort of ideal that having it within this region, because as you know, the bulk of the wealth in southeast asia has largely been accumulated from trading, from resources, infrastructure development and red -- which means property. assembled at this conference of the last two days and just concluded this afternoon here in bali have been a number of keynote speakers including, you
may be familiar with, paul krugman, a professor of economics, to the likes of tony fernandez, who was integral at the birth of asia's largest discount carrier and dan mints, co-founder of doj entertainment. we'll talk to him a little later in the program. first, standing right beside me is a very special guest, the man himself, the host of the conference, boris coliardi. a long way to come from zurich, boris. talk to us about this key theme that you're addressing about innovation, because really this process has been driven by the industrial giants in the u.s. and also in europe. asia is falling way behind. why is that and what do you think the asian governments can do to address that situation? >> thanks, adam. we had two days of long debate, discussion, whether asia would be moving up the value chain,
what is next after manufacturing renaissance that we have seen here for the last 15 years, looking at also increases in inflation and wages in china, what is the way forward? and the only way forward is innovating, putting more, i would say intuition and more inspiration to work than perspiration as it was the case in the last 15 years. >> the thing is, with innovation, that flourished in the developed world in the west where we have totally different social and political systems. can it thrive in this region where things are quite different? >> i think it can. there needs to be a number of factors. the political factor is certainly one incentive structure of society, but i think from all the people we had at the conference covering from malaysia to indonesia to china, i think there is this awareness and willingness to create this real framework for creativity. >> if you're not a bill gates or a steve jobs or a mark zuckerberg, or countless others that innovate behind the veil of
massive corporations around the world, how can asians make a mark for themselves? >> we'll see in the next 20 years, the next generation of the gates jobs may be coming from asia. and if you look at the numbers, likely to come from china. >> all right. talking about the transition and wealth creation in asia, the g-20 under way in st. petersburg and aside from the chilly reception between obama and putin, one of the key issues being addressed at this kofr conference, is, you know, how to foster global growth. isn't that going to be a little bit difficult if we're looking at the tide shifting in u.s. monetary policy, and, you know, with the fiscal adjustment problems in europe and the united states, you know, the hands are pretty much tide behind their backs. >> sure. the other side, frankly, i don't think interest rates will raise that quick. i think there is a lot of testing of the market to see the sensitivity. but i think we are going to look at the low interest rate
environment for another way. europe is taking more time, as we know. emerging markets are a bit jittery. i think overall people understand that we're not back in 2008. there is a higher level of cooperation and coordination than there was. >> okay. well, people are still agonizing over this concept of the fed tapering and it is being addressed at the g-20. and you saw the huge upset in the markets in the month of august. a lot of analysts out there are saying that if the fed is going to taper back or dial down the monetary policy, that they're going to see significant fund flows potentially back to europe and we're also beginning to see, you know, signs of economic recovery. how is that affecting your business and how are you looking to capitalize on the shift in fund flow potentially? >> as much as in 206 until now we have put a lot of our new investments into asia. we're seeing some movements in indonesia ten days ago. we have seen some people taking some chips off the table, pulling back to the u.s., going back to europe, very well
positioned as we know. our home base continues to remain in europe. we'll be able to be very diversified and clients from both regions of the world on where to go next. >> if we continue to see this financial upset in the emerging markets and you're focusing a lot of your energies within this region, how do you think that's going to influence the path of your business and, you know, the client acquisition? >> i think the client acquisition will remain strong, because even on the back of monetary flows, asia is simply, for example, producing more than europe over the last five years probably, combined and put together. i think the stock of new wealth creation will remain in the emerging market as opposed to europe. we all want europe to be on the higher ground, higher base. i think it will be more balanced. >> finally looking at the core of your business, you know, attracting wealthy individual clients from around the globe, one of the biggest issues has been addressed of the g-20 is tax avoidance, cross border tax
avoidance. banks have been pretty much the punching bags of politicians of late. with the agreements that are coming into place, how is that impacting your business from a compliance standpoint and also from a client acquisition standpoint? >> i think the trend started already a few years back as just simply maybe more accentuated in last three years. i think there are two main trends. one is that clients of all geographies understand now and it is more or less acceptable now to -- so the client behavior is changing. the offering of banks in switzerland is falling. we started very early on going to new markets, asking our clients in europe to regularize the situation. i think swiss private banks have a very strong chance to continue to dominate the private banking scene. >> thank you very much for joining us here today and welcome to the region. look forward to seeing you again soon. that was boris coliardi, the ceo
of the julius baer group. >> what a tough gig you have. i may be doing something wrong here. everyone is in these beautiful locations, london isn't too bad either, is it? australians prepare to vote this saturday as the latest polls show the main opposition party is gaining ground. matt taylor is in brisbane to give us the latest. [ 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? ♪
in australia, an election eve flip-flop on internet filtering may have tony abbott but it is unlikely to cost him the job of prime minister. as campaigns make their final push, australians are highly expected to ditch the labor government tomorrow after six years of rule. polls say the coalition is headed for a strong majority while labor's kevin rudd may have been fighting to keep his own seat. matt taylor is in brisbane. why has rudd done so poorly in the polls? is it about personality, his policies or is much of it really down to rupert murdoch backing the opposition?
>> well, it is probably a number of those factors, but i think the most important factor is the switching between leaders that occurred in the labor party over the last six years. remember, of course, kevin rudd defeated john howard back in 2007 and was, for a short period of time, australia's most popular prime minister ever. things, of course, then turned sour and he was replaced by jul jul jul julia gillard in 2010. he was returned to the top job when julia gillard was ousted a couple of months ago. the public had enough of what has been going on internally within the labor party, this changing between leaders and instability, along with the fact we had a hung parliament in australia for the last three years as well. the coalition on the other side,
the conservative side of politics under tony abbott has presented a very united front since the end of 2009, a stable team with very few changes that they're very rarely deviated from the policy lines and agenda, which is why we're seeing that side of politics really look as though it is going to have a comfortable victory tomorrow. you're right, universally pot the po the polls are suggesting it will be a comfortable win for tony abbott and the coalition. about 47 to 53% on the two-party preferred vote the split. and kevin rudd, as well, even having facing the distinct possibility that he may lose his own seat here in brisbane. we're in his electorate now and the opposition candidate there has run a very strong grassroots campaign. so we'll see tomorrow the polling booths get open in about 14 hours and counting. back to you. >> matt, thank you for that.
welcome back to the show this friday morning. investors are calling it the most important number for markets this year. expectations of a strong nonfarm payrolls number raises the prospect of fed tapering, fueling tension between emerging and developed countries at the g-20. >> the weaknesses that economies went into this period of potential tapering of qe have been exposed. >> president obama also on the defensive at st. petersburg summit of syria as u.n. chief ban ki-moon sounds a warning over sectarian violence. but the white house keeps up the pressure on congress to approve a military strike. we're joined live by mario monti as fresh talk that silvio berlusconi is ready to bring down the italian government overshadows the forum. here's a check on european
markets for you on this crucial nonfarm payrolls friday. the ftse 100 is just marginally lower. the xetra dax off by .2%. and we are seeing the cac 40 and the ftse mib in italy showing some modest pullbacks. overall, there is definitely some caution in the markets on investor minds ahead of that crucial payrolls number, which could decide as to when and how much in terms of tapering we're going to be getting from the federal reserve. in the bond space, major technical levels and psychologically important levels have been taken out in yesterday's trading session. the ten-year gilt above or just hovering around that 3% level. the two-year high, fist time it is above the 3% level in two years. the boe was quiet yesterday, the ten-year bund above the 2% level. and ten-year treasuries back below the 3% level we hit yesterday. we'll see how treasuries are going to be doing on the back of the u.s. nonfarm payrolls number. currently, of course, 3% is the
key level that will continue to be watching. in the forex space, dollar yen back below the 100 level, down by roughly half of 1%. overall, the dollar is still pretty resilient going into the jobs report number, holding steady close to a seven-week high. we did see quite a lot of activity in the sterling dollar over the last few minutes. sterling dollar at 15 1.5580. the uk data we got out, uk industrial output was flat in july, but the trade deficit widened sharply. euro dollar at 1.3130, up by a tad on the day. but, remember, yesterday got a big knock on the head after a more dovish than expected ecb and mario draghi. the ceo of a chinese firm which is co-producing upcoming hollywood movie "ironman 3" is one of the guest speakers at the first julius baer next
generation conference to take place in asia. adam bakhtir has more. >> a two-day conference just concluded. we're talking to the ceo of julius baer, the host of the northwe next generation conference. this year is the first time they have been holding it in asia, in southeast asia, an area that julius baer is putting more emphasis on to build growth for the wealth management business. the key theme of the conference is innovation, and the message they're trying to drive home is that the process of innovation can lead to economic prosperity and wealth creation. a number of heavy hitters speaking at the conference. not just boris coliardi but paul krugman, and i'm now joined by someone from a completely different industry, something a little more relaxing, one could say, dan mint, the co-founder and ceo of dmg entertainment.
this is one of the biggest entertainment companies in china. it is a populous nation, isn't it? you're entertaining all these people. welcome to cnbc. >> thanks. >> the key theme at this conference has been about innovation and how it can lead to economic prosperity. in your industry, in media entertainment, i would imagine this must be the core of the very values that uphold. how have you implemented innovation at your company? >> i think we all live and die on our quality creative decisions day in and day out. i think if your company doesn't have and your team doesn't celebrate that, and you understand how to really kind of move that forward, then i think in the future, no matter what you're doing today, in the future, it is going to hurt. i believe very much about embracing that. and it is an interesting process because creativity that leads to innovation at the core of that is very ambiguous and everybody
has to find their own way. but in the film industry and entertainment, obviously, we're very transparent business. everyone can see what you're doing. everything is on the screen, how much you make, how much you lose, what kind of people are in it. the pressure is even greater. >> you are funding "ironman 3". these days the genre of movies is all about cgis and that requires creativity and innovation but that must come at a cost. to continue to innovate, can you still do so by bringing costs down or does it go hand and hand? >> i think obviously innovation is always about trial and error, and always about growing. you're always pushing. it is costly. but the ultimate is that it has to be able to pay off globally. a film like ironman, it is a global film. and working with disney, working with marvel is incredible on that project. but i think that when you look at them, you can't just think only about today and what you're -- how much you're investing. you have to invest on a bigger
scale. and think big. and always swing for the fences, we say, in new york. >> okay. and innovation has always thrived in freer societies. the united states is mentioned and europe. can innovation thrive in asian countrys? you operated business in china. there is a lot of government control. >> it is a paradigm shift. you look at innovation and y you -- and a cultural shift within the country, the focus, the way you incentivize, it is very, very different, but that always comes from the top down. you have to have a vision and be able to execute that vision in a way that makes sense and shows a result. once you show them, once they feel it is happening, people will follow. i think that is an important part of it. >> what do you think it is going to take for china at large to appreciate innovation. you're operating in a industry where it is very difficult, there is a lot of copying going
on. how challenging is it for you. and do you think the country needs title regulation for this? >> we all hope it does. i think across our whole industry and film and entertainment, piracy is the major concern. china in that respect is no different, but it is a big -- it is a big issue there. i think part of it is being vigilant. there are ways in china to make sure it stays -- it is about, again, we prepare a film for years, timing of execution is key. get it out in time, make sure it is top of mind, and i think this is also where you -- we did "ironman" and rolled it out in china before it rolled out in the united states and helped quite a lot. >> you're distribute a lot of content in china. so you're capturing the margin across the entire value chain here. do you foresee that sort of business model evolving now that more and more people at least in the mainland are migrating to the internet and mobile devices?
>> absolutely. you have to go through the screen. you also have to look at habits. what are they doing in tv, what are they doing on pc, how are they buying content, how are they downloading content and how is it different on the newer devices that are coming out. what kind of habits do they have? we look at that. as we decide a certain type of content might start on one device, or one screen, and spread out, so you have to really be very flexible and the market changes so quickly there, nowhere else, you literally within a week, you have to shave. it is always walk and talk. walk and strategize at the same time. >> consumers are terrible. so fickle. >> can't do the same thing every day. >> why can't we just be happy. thank you for joining us today, the co-founder and ceo of dmj entertainment. back to you in london. >> thank you for that. back to one of our top stories this morning, president obama is facing growing pressure from world leaders not to launch
military strikes in syria. u.n. chief ban ki-moon warned from the g-20 summit in st. petersburg this morning that any intervention in syria could worsen sectarian violence. but on the sidelines of g-20 talks, obama has been making calls from abroad to key lawmakers back home seeking support for a limited scope use of military force. u.s. senate majority leader harry reid said he is guardedly optimistic that the senate will approve the white house's use of force resolution by the end of next week according to a report from reuters. steve is in st. petersburg and has been following the talks. steve, want to bring a flash to you from reuters. says obama stressed that the u.s. has high confidence that syria used chemical weapons. he's got a lot of convincing to do back home and, of course, in st. petersburg. may not necessarily be met with open ears. >> yeah. and that's a key point. there is domestic opposition to
the president's plans and, of course, international opposition as well. i want to revisit that meal that happened last night. it was a working dinner, but what president putin did, he got up and got to admire him for this, because everyone has been talking around the ages about syria, but not at the formal tables. he said, we'll go around the table with all the leaders, ten minutes each and we'll talk about syria and air our differences. whatever you think about russia's stance, the us' stance, he tried to get it out in the open. the president got some back. i spoke to the foreign minister of australia, the representative here at the g-20, he said unequivocally they back some form of limited military response from the u.s. administration. yes with know the like of the chinese, the u.n., the russians and others as well were critical of president obama's stance, but i spoke to one man who was at that dinner as well. the world bank president jim yong kim and asked him whether syria was still overshadowing proceedings. let's listen in.
>> it is clear that chemicals were use and there was universal outrage. there was differences in what we need to do. it is really very disturbing what is already happening. >> so i just have spoken also to the russian finance minister who said, look, the americans and russians are speaking on a whole host of issues, so let's not just get clouded with the idea that because of the dispute over syria, nothing else is getting done here. what is getting done for business? i think our next guest is in the unique position to talk about that. harold mcgraw iii, terry to you and i, joined us, the president of mcgraw-hill financial. and the chair of the international chamber of commerce. >> yeah. >> another title. big business card. what is being done for businesses here at the g-20, terry? >> first of all, the g-20 agenda has been one that has been worked on for the better part of the year there is a lot of continuity coming out of korea,
france, mexico, and now here at st. petersburg and getting ready for australia next year. the priorities are very clear. the most important thing for growth is going to be trade and investment. you know, if we can't get our trade and investment agenda right, that is going to be a big negative. from a business standpoint and growth standpoint. secondly, financing for growth and infrastructure is going to be very, very important. third is energy and environment. and fourth is transparency and anti-corruption. what we have been able to do all the way from korea to the g-20 here in st. petersburg is to continue to tighten up on the number of priorities business wants in terms of working with government, in order to be able to see this kind of growth. >> you made an interesting comment before we came to -- that is the short-term goals versus long-term goals. we need to adjust the focus of the leaders to the longer term as well. these guys have to be elected as well. are they ever going to look at
the long-term stuff sufficiently? >> we just came from a session. and, you know, as part of all of that, there is a very real short-term focus. it is all focused on unemployment, youth unemployment, jobs, quality jobs and the like. the longer term aspect is creating a more business and pro business friendly environment. so when you brought up taxation, you brought up regulation and the looks like that, we have to think through this on a broader thing. there is another element here. the world is growing up fast. it is so much different than it was five years, ten years ago. it is not, you know, really what the developed countries are all about. it is now a much even split between developed, developing and emerging markets. and because of that, you're going to need a lot more cooperation and coordination internationally. the g-20 becomes extremely important in terms of being able to do that. business and government have to work together to create the kind of environment. >> you've been working with the like of marcus wellenburg, trying to get the politicians to
listen to what businesses have to say. let's use you're unique example, in the united states, your relationship with the administration and the president and others, do you think the politicians are listening to business or still trying to win votes out of every time they come up with a policy initiat e initiative? >> i think because of the recovery and it being slow and the like, there is much more of a short-term focus. and i think from a political standpoint, there is a lot more focus in terms of getting kinds of votes and all of those kinds of things. what you need to see, again, and not just in the united states, is more broadly, is that government and business need to work together. and if you can create a better environment, a more cohesive environment again, taxation, regulation, the like, you're going to have more of an ability -- >> i'll make you president for the next 30 seconds. what would you get the administration to do as its absolute priority to keep the u.s. recovery on track? >> trade and investment. again, those are the two biggest priorities we have. and i think that we have got to open up markets, you know,
completely. get a lot more investment in infrastructure, in an opening up markets. and so i think those are the two biggest priorities we have. and we got some key opportunities coming up. you've got the wto ministerial meeting in december. and one of the things that came out of the doha development round, the multilateral round, was trade facilitation. this is the customs, logistics, all the processing getting things done. they are looking at a comprehensive trade facilitation bill and they got to pass it. >> that's great advice. changed my mind. i'll make you chairman of the federal reserve. are you going to start tapering next week? >> yes, a little bit. >> you think we're ready for this on the 17th and 18th, september, we taper. >> yes. i think we have to. it is not a question of whether i would like it or not and all those kinds of things. we have to start on that process. it puts more discipline back into the system and allows again an environment that is more growth producing. >> terry johnson, we'll leave it
at that for once, actually. terry, always a pleasure seeing you. the chairman of the international chamber of commerce, which represents 6 million global companies. back to you. thank you very much for that. with hours to go before the ioc chooses the 2020 olympic host city, the tokyo bid committee is pulling out all the stops. now the latest from tokyo. >> it is a tight race but tokyo is seen as the favorite to host the 2020 summer olympic games. tokyo governor now says a chairman of the committee has been reiterating that tokyo is one of the world's safest city and has a substantial hosting fund. prime minister shinzo abe left the g-20 summit in st. petersburg earlier today to attend the ioc meeting in buenos aires. he'll take part in the final
presentation on saturday, a highly unusual move for a japanese leader. even japanese royalty who attended the meeting to thank the world for supporting the 2011 quake and tsunami, but the situation in fukushima has been a thorn in the bid committee's side. representatives continue to assure the ioc the city has been unaffected by the leak of radioactive water and the government plans to use nearly half a billion dollars to fix the problem as soon as possible. back to you. >> thank you so much for that. emerging markets have been route on the expectation that the u.s. fed is set to turn the cheap money taps off. are investors overreacting? we talk to julio velarde right after the break.
leaders are already under pressure from their emerging market counterparts and will argue that u.s. policy is causing the route in their markets and hurting their currencies. bricks nations pledged yesterday to set up a $100 billion currency reserve fund to defend against a balance of payments crisis. ross westgate is still on the shores of lake como where he's also been speaking to emerging market leaders. ross? >> not going anywhere from the shores. the emerging market, what is the impact for a slowing chinese economy and fed policy? no better man than my next guest, the governor of the central bank of peru, julio velarde, thank you for joining us. you just downgraded your growth forecast recently. not by much. 5.5% to 6%. as a governor of an emerging market, how impacted are you by fed policy, by u.s. economic
policy? >> as you may know, with the rate close to zero, we have concerns about the slowdown in china. no such concerns. in spite of better performance, there is concerns about demand for china and commodities. >> yeah, so, are you seeing -- you seeing pressure on the peruvian currency? >> yes. last year 14 million because -- this year 6 billion. and now since april it has been a little more than 6%. but you have seen most of commodities of some countries
with big deficits like turkey, india. >> the key point is whether you have twin deficits, right? that's the point of an emerging market, you're under pressure from a foreign investor? >> we have seen an increase in the purses of the currency by foreign foreigners. >> how important is it, if you're going to get a slippage of construction and supply in the mining sector, how important is it that the government keeps its hands firmly on the public purse? it is increasing spending on infrastructure. >> it is. even so, in spite of the full income tax of mining companies,
income receipts are growing more than 6% per year. >> okay. so you keep the public books on. we got big mining projects coming on in 2014? >> yes. we double the capacity of corporate production after 2016. and that's a good idea because we have a lot of -- that is helping us in this situation. >> talk about the latin block as a whole here. and the concerns, you know, concerns about sort of global politics as well. the g-20, some describe it this morning as the g-0, starting to see a rise of protectionism, every man for himself seems to becoming. how much does this concern you? >> there is a group of countries, mexico, colombia, peru, we share pushing for more integration. and open to economies,
transpacific agreement, working with the states, european countries. most of the country has already with europe and china, so we are pretty open. >> governor, delightful to talk to you. very nice setting. thanks very much for joining us. julio velarde, the central bank governor of peru. plenty more to come on "worldwide exchange." and from here as well at the ambrosetti forum. we'll be joined in the next hour by mario monti, the former prime minister of italy and the former executive board member of the ecb. "worldwide exchange" continues after this.
investors are calling it the most important number for markets this year. nonfarm payrolls numbers raises the pross peblgt of fed tapering fueling tension between emerging and developed countries at the g-20. >> the weaknesses that economies went into this period of potential tapering of qe have been exposed. president obama also on the defensive at the st. petersburg
summ summit over syria, ban ki-moon warning of sectarian violence but the white house keeps up the pressure on congress to approve a military strike. and we're joined live by mario monti as fresh talk that silvio berlusconi is ready to bring down the italian government over shadowing the forum. and alan mulally tells this show he's committed to the automaker. >> i'm focused on ford and we have a great partnership with microsoft as you pointed out, to help us and develop the original sync system. we look forward to continuing that system but i absolutely love working for ford. good morning, everyone. this is the second hour of
"worldwide exchange." we have got a fantastic jam-packed show for you this morning. we're live from lake como, live from st. petersburg, from london, bali and brisbane, very exciting show. let's look at u.s. futures early on this morning, pointing to a mixed open. the dow is seen now a little softer, the nasdaq and the s&p 500 are seen a little bit stronger. this is after stocks in the u.s. eked out some very modest gains in yesterday's trading session. but they were higher for a third straight day. this is all, of course, in the run-up to the all important jobs report that will get out in a few hours time. and that could be decisive in terms of the timing and the size of fed tapering, it could be coming as early as september. the dow and the s&p 500, they are on track for the best week in almost two months. this, of course, also on the back of the ism services sector data we got out yesterday. much stronger than expected. in terms of european markets, we
are seeing a little bit of caution on part of investors' minds. the ftse might be is flat. the cac 40, the xetra dax and the ftse 100 pulling back just a touch, though. so investors really deciding to stay on the sidelines ahead of that crucial data point out of the u.s. later on today. in the asian markets, the nikkei is a bit of an underperformer today, off by 1.5%. having said that, though, over the week, it is one of the best performers up almost 3.5% . today, the weakness is down to the stronger yen and much of that is actually tide to whether tokyo will be winning that 2020 olympics bid, its chances of getting that now seem to be waning. australia ending flat ahead of the general elections this weekend. the bombay sensex bouncing back by 1.2%. and the shanghai composite and the hang seng in hong kong are
seeing a little outperformance this week, almost fell down there, luckily enough i didn't. that would have been quite embarrassing. let's talk about the bond markets where we are seeing a lot of action in terms of key level and psychological levels being taken out, especially for the ten-year gilt yields there. the yield yesterday hitting 3%. back below that level now, this is because the boe didn't come out with a statement on monetary policy yesterday. the ten-year treasury yield also touching that all important 3% level in yesterday's trading session yet again. this is after the services data, the ism number coming in much better than forecast, and the ten-year bund at 2% above that crucial level there. this is the highest in almost two years. in the forex markets, we saw the notable fall, sterling against the dollar, after we got the disappointing manufacturing output and trade data, just
about half an hour ago. sterling dollar falling back below that 156 level, sitting at 155. dollar yen back below the 100 level, we're seeing a little yen strength today as discussed before dollar yen off by roughly .5%. the aussie dollar holding fairly stead yes, with modest gains ahead of the elections and the euro dollar pair at 1.3129. big selling pressure in yesterday's trading session after the ecb was a lot more dovish than expected. italian prime minister enrico leta is brushing off questions at the g-20 about the future of his government. that comes as one of silvio berlusconi's aides nicknamed the pythoness for her devotion to the former prime minister said the billionaire had a video ready announcing he's pulling
support for the coalition. this could be played on monday if a senate committee votes to strip berlusconi of his seat in parliament following a conviction for tax fraud. ross joins us live from the ambrosetti forum with an important guest waiting in the wings who may have a lot more insight on what is actually going on the political front. ross? >> i'm sure he does. thank you very much. joining us now is former prime minister mario monti. thank you for joining us. give us your own view at the moment. a lot of concern about what may happen with the committee and the investigation into berlusconi, his senate seat. there seems to be an implied threat to withdraw pdl support from the prime minister's coalition government. how real is that threat? and how do you think -- what do you think is going to happen? >> well, everybody in parliament
approved at the beginning of this year this new law that my government had introduced to make the credibility of the parliament much greater in the eyes of the public opinion. and now it already applies to other political less prominent figures. now it is the turn of mr. berlusconi. i feel that in recent years and recent months as mr. berlusconi, though obviously in very difficult personal situation, has shown a remarkable sense of responsibility and has profiled himself as a statesman more than on some occasions in the past. and so i'm not convinced at all
that should the process now in the senate lead to mr. berlusconi having to leave the senate, i'm not so sure that that will trigger almost automatically as if it were the abandonment of the majority of the leta government by the pdl. of course, nobody can be sure. >> clearly, the last thing anybody wants is the collapse of government or facing another election. >> i would agree on both points, yes. i think it is important in my view that this government can continue. italy, although, has done a lot in terms of budgetary consolidation, still has a huge lot to do in terms of structure reforms. i am convinced that we need a
grand coalition to do these and we have one in place. we have a credible and competent leader of the government. in a sense we are in ideal conditions and at the beginning of the five-year term of the parliament. so this is exactly the moment when italy has to produce the maximum effort in terps ms of modernizing itself. >> i'll come back to that. one more thing on mr. berlusconi. his supporters will argue in the committee that the law your government brought in, as you say, was brought in after the case had started. they would argue it doesn't apply. your view of that, if you have one? >> i'm not a lawyer. i do have a view. we had considered this issue not in relation to mr. berlusconi, but generally very thoroughly.
and this is not a -- a panel sanction that could not be attractive. this is an administrative sanction concerning the electoral law. and to give you a detail, which is very telling in this respect, when in the counsel of ministers in december 2012 we adopted the -- proposed this law to parliament, this particular point of the law, having to ban do abandon parliament, was presented to the council of ministers not by the minister for justice, which had done most of the package, but by the minister of the interior who is in charge of administrative electoral measures and
procedures. so i believe that in this case the issue of activity or not cannot really be involved. >> let's talk about the challenges facing still the italian economy. debt to ratio, 130% of gdp, the economy is going to shrink 2% this year. youth unemployment is still elevated up near 40%. a big challenge. we know out of the recession. but is it right, do you think, the burden of adjustment should still fall on italy or on spain. and in their case, you think actually europe could still pursue more inflationist policies that will help italy out rather than doing it all on our own? >> well, i wouldn't call them a reflationary policy because the mere use of the word would
trigger negative reactions in germany, because of the second part, inflationary. >> yes. i understand that. >> but slightly more aggressive demand management policies which i believe is what i think you refer to. in my view, could be compatible with a very sound policy management, in particular as it concerns the investment behavior of the public sector. europe still needs a lot of infrastructures, a lot of projects to make the european single market really a single market, for example, and to the extent that there is a bit more leeway at the community level. and a bit more of leeway allowed at the level of the member states by european rules as
concerns public investment. this is not going to produce inflation. this is, of course, demand, which helps the economy. put above all, it is an expansion of the capacity of production of the economies for the future. and i must say that this is not just theoretical point or proposal, because recent decisions by the european council and the european commission have allowed this greater leeway, so i think not much more is needed. what was very much needed has been achieved. and that was the possibility for the european central bank to exercise some stabilizing effects in the market for government bonds, not across the board, but insofar as the member states comply with the requirements of the european
recommendations. and the omt is now in place. i hope it survives the challenge before the german constitutional court and it was decided unanimously bit leaders in the european council including last year. >> thank you very much for your time today. >> my pleasure. >> thank you very much. mario monti, former prime minister of italy. we'll take a short break. when we come back on "worldwide exchange," we'll be joined by lorenzo bini smaghi, former executive board member at the ecb. back to you. >> ross, thank you for that. time for another quick espresso by the beautiful lake como. president obama facing growing pressure from world leaders not to launch military strikes in syria. ban ki-moon warned from the g-20 summit that any intervention in syria could worsen sectarian violence. but on the sidelines of g-20s o
calls back home seeking support for a limited scope use of military force. also, president obama has stressed that the u.s. has high confidence that syria used chemical weapons. steve is in st. petersburg. so much written and said about the tensions between putin and obama. but it is not just about syria. this conflict goes much, much further and it is about permanent national security issues and also a clash of personality, isn't it? >> yes, seems to be the case. this isn't just russia versus the united states as well. on the russian side, you had comments from thes like of the chinese as well. and, of course, the u.n. ban ki-moon and van rompoy. president obama isn't completely isolated. i've seen some firm measures of support, from the french, from the united kingdom as well.
i spoke to the foreign minister of australia, bob carr, who said unequivocally limited military response from the united states is absolutely right against the al assad regime as well. and then there has been measures of support from the likes of the canadians and turkey as well. to say obama is isolated i would say perhaps is part of the story. the question is how much work is being done despite this issue? that's important. because i get why people want to talk about syria. not only is it a geopolitical crisis and important human tragedy, it is a lot more interesting for the headline writers here than writing about tax, than writing about profits and how multinationals need to share those with local taxation authorities. the g-20 can make some real ground. i spoke to the russian finance minister about whether, despite the syria clash of opinions between america and its allies and russia, is real work getting done to boost the global
economy, to boost growth, to boost jobs? let's listen in through an interpreter of what he had to say. >> translator: i think the understanding of economic policy of the united states is very important for all of us. last night president obama said that any tapering of the quantitative easing program will be thoroughly calibrated in order to avoid the steep cliff. we are all afraid of drastic changes which could affect the macro economic situation. and provoke outflow of capitals. >> here's one for all you u.s. viewers. angela merkel viewers who are thinking g-20 doesn't affect me at all. maybe it does for something like bets. have a look in the communique later on, the discord on syria, have a bet, base erosion and profit sharing. this is something which looks like an obscure acronym to all you guys invested in u.s. stock and uk stocks, but it means a
lot of multinationals will see a lot of pressure if this goes through and becomes laws in various countries to share information, to pay tax locally, and that could affect the profits of a lot of big multinationals who have been avoiding paying taxes in various jurisdictions. i know that's not syria. i know talking about tax is nowhere near as exciting as geopolitics but that's one of the tangible things we get out of the communique later today. back to you. >> thank you very much for flagging that up for us. tomorrow's jobs report from the u.s., will it decide the date for fed tapering? ross talks to lorenzo bini smaghi. stay tuned for that. we'll be back in two.
positive data from the us has harden believe the federal reserve will start to reduce its level of asset purchases. across the atlantic, the ecb improved its forecast for the eurozone economy for 2013, but president mario draghi has done his best to strike a note of caution. let's get back out to ross who joins us live from the ambrosetti forum in lake como. >> joining us is a man who has been to many ecb discussions, former executive board member lorenzo bini smaghi. mr. draghi added the note of caution yesterday, a discussion about cutting rates. in your view, would that be warranted? >> well, if rates are starting to go out of hand, market rates, then if you want to avoid that, we need to act. can't just stop. >> are you suggesting markets don't believe the talk that rates will stay low, whether the ecb or indeed in the uk?
>> i'm afraid that's the keys. market is looking at recovery, looking at political enthusiasm around the recovery. they may not be cautious enough. if central bankers are really serious, they have to act, not just talk. >> okay, so if rates keep going up, rates may be going up just because of fed policy, right? >> not necessarily for the u.s. the u.s. is in better shape than europe. so u.s. rates going up is more or less in line with the recovery in the u.s. which is stronger. in europe, they have to remain lower and can't just keep them low if the whole market, world markets are going up. >> yeah. and, look, i know you -- there is not a job that needs to target europe. european exports are a lot less competitive. >> exactly. i don't think this is helping the europe economy at a time in which the area is lagging behind. i think if you want to help the
economy recover, you have to counteract this trend, this appreciation, towards the dollar. also the emerging markets which are collapsing. >> should the fed begin tapering in september? >> well, i think once you enter into the debate, you have to be consistent. so you have to start, i think, doing something. otherwise markets get nervous. don't understand what is going on if you want to go back to add more liquid and add more and more so you may in the end fuel another bubble. i think some gradually and not just going back. >> what would be gradual, reducing -- something that doesn't shock anybody, but that says we're -- >> somehow communicated we'll start, whether september or october, doesn't really matter. but this is the direction. once you tate direction, doesn't mean rates wilg go up in the
short-term. markets have to adjust. i think the fed has to decide. you need to have a path in line of recovery. the recovery is there. maybe not as strong as many want, but it is there. >> do you think investors will be relieved? is it better -- we talked a lot about it, would it be better to -- >> will they not -- the discussion move how gradual. i think it is a safer discussion than yes or no. it is not a question why, it is how quickly and how gradual. the markets, we have understand the direction. >> of course, you already stated that, you know, if that has a bigger impact on market rates in europe, then the ecb should act. if it is not getting what it wants. what about the european economy. it is still very, very early days. spain is still going to contract
this year by 2%. unemployment still up, debt ratio still rising. debt is still rising higher than nommal gdp. that's a big problem. >> it is. i don't think we need -- on top of that banking system in southern europe has a lot of problems. so the low interest rates are not just transmitted to the real economy. still a lot of problems and just talking about the recovery i think is wishful thinking. >> how is it going to play out. i was asking mario monti earlier, i said more responses. you can't use that -- you talk about demand management, but does there -- does there need to be an adjustment program that involves the north as well? could all the adjustment -- can it adjust on the detonations? >> i think the north of europe is close to full employment. so their wages are going up. it is gradual. can they do more?
probably. but i think in italy, it is too easy to say the others have to do something. i think we have to look at what we haven't done so far including the past governments. one thing we haven't done is the structure of reforms. our economy is not competitive. it doesn't matter if, you know, the world economy is growing and we're not competitive. we're not going to be part of the recovery as we're seeing. second quarter, germany and france grew. and italy went down and why did we go down? we went down because we're not competitive. >> thank you very much indeed for joining us, former executive board member at the ecb. we'll look at where futures are headed and the employment report later.
welcome to "worldwide exchange." i'm carolin roth. these are your headlines from around the world. investors are calling it the most important number for markets this year. expectations of a strong nonfarm payrolls number raises the prospect of fed tapering, fueling tensions between emerging and developed countries at the g-20. >> the weaknesses that economies went into this period of potential tapering of qe have been exposed. >> president obama on the defensive at the summit over
syria. the white house keeps up the pressure on congress to approve a military strike. former prime minister mario monti tells cnbc it is important for the italian government to continue fresh talk that silvio berlusconi is ready to bring down the coalition overshadowing the forum. and ford ceo fails to deny reports suggesting he may step down earlier than expected, but tells this show he is committed to the automaker. >> well, i clearly am focused on ford and we have a great partnership with microsoft as you pointed out that helped us with the sync system. so we look forward to continuing that relationship. but i absolutely love serving our record. good morning, everyone. if you're just tuning in, thank
you so much for joining us here on the show. it is a crucial day for the markets as we get the jobs report for the month of august in a few hours time. and that may determine when the federal reserve starts tapering its bond purchases and to what extent, what size. ahead of that, let's take a quick check of u.s. markets and how futures are faring. fair value into account, now, the s&p 500 is actually seen higher by around -- seen pretty much flat. the dow seen off by around 16 points, only the nasdaq would open in positive territory. a lot of caution in the markets. this is visible in terms of the european markets where we're seeing some modest losses. ftse 100 flat now. it is not quite at the session highs, but not doing too badly either. european markets yesterday, remember, they close at 2.5 week high. on the back partly of a much more dovish than expected ecb. ftse 100 flat this morning.
xetra dax is off by around .2%. so how do you make money in these markets with so much -- here is what the experts have been telling us this morning. >> technology is still quite interesting because despite the fact the market is strong this year, the technology sector is not leading it. and it is one area where you can see very strong cash balances and some value. so i think it is worth looking and trawling through there. >> this is something increasingly we want to be using in portfolios because the risk looking at longer term we think starts to rise. and i think that's really the key message for us and lingers. people haven't considered it, it is starting to be an opportunity for investors to think about in portfolios and when the market is right to incorporate into their asset allocations.
>> there is a missed stock. if you look at the first half of the year, it wasn't the only new bank to generate revenue growth. it was the only uk bank to beat market expectations. it came in 5% ahead of consensus. every other uk bank missed consensus in the second quarter. the recognition of that lasted all about three days. >> and traders are watching all things jobs today, for any hints on the federal reserve's next moves. the u.s. releases its widely watched nonfarm payrolls report and this could be a make or break factor for the fed in determining when to start scaling back asset purchases. economists polled by dow jones are looking to add 175,000 new jobs for the month of august. that's up from a gain of 162,000 jobs created in the month prior
to that. the unemployment rate meanwhile is expected to hold steady at around 7.4%. today's report will be the last nonfarm payrolls figure we get before the fomc reconvenes in two weeks at which point the fed is expected to announce a start to tapering. let's get more thoughts and analysis on what the jobs numbers could look like and that it means for the fed and its amount of tapering with patrick o'keefe. he joins us now from cnbc's headquarters. patrick, thank you so much for joining us bright and early this crucial friday morning. on the back of the strong ism services data yesterday, were the employment subcomponent rose to a six-month high, the best numbers for the jobs report has gone up quite dramatically. have you increased your expectations as well? >> i was already at about 200,000 net gain, both private and public sector. so the ism number was more a
confirmation of what we have really seen going on in the services sector. and that is that there is growing incremental growth in confidence, and therefore a need to ramp up hiring a little bit above where it has been. about 200,000 is the expectation for my perspective. >> patrick, there is always all this excitement about the nonfarm payrolls report and this time around, of course, we know that it may have a crucial influence on when the fed will start tapering. on a scale from 1 to 10, how important is this number today? is all this excitement warranted? >> well, the fomc, the federal reserve has certainly shown a light on this particular month's data in the scheme of things. no one month's data is determined above monetary policy. the fed is looking as it made clear. it is looking across a range of
indicators and not looking at the month to month, but over time. however, in this case, the fed in its -- acting like a cacophonous choir with all the speeches they have been giving, the fed made it clear that they think the time has come in the next few months to begin the tapering. my own sense is that the data that we're looking at is -- it does not give the fed the excuse to initiate tapering, saying everything is going the way we hoped. >> quickly, how bad would the jobs data have to be for the fed to put out tapering? >> i think at this point it is probably anything above 175,000 is going to cause the fed to announce that it is going to do something. one of the questions we have to have is when is tapering really tapering? is it that they announce sometime later in the year they're going to do something or
that in october they're going to begin to reduce their purchases. i think that if we -- if we see the numbers i'm looking at, what the fed is going to do is buy time and say that its data dependent and it is going to wait until its next meeting to decide when to pull trigger. >> okay, patrick, thank you very much for that. you're going to stick around. patrick o'keefe, director of economic research at con resnik. alan mulally fails to deny report he's may step down earlier than expected. speaking from berlin's efa conference to mark the debut of the s-max concept car, he told cnbc first he is committed to the automaker, but he did not elaborate on his future at the company. >> i clearly am focused on ford and we have a great part offer inship -- partnership with microsoft as you pointed out.
we look forward to continuing that relationship, but i absolutely love serving our ford? >> we'll be taking a closer look at ford and the world's largest automakers from the frankfurt auto show next week. steve sedgwick live on the ground speaking to the industry's biggest players. that's live from tuesday. and we'll be right back after this short break. don't go away. building animatronics
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edward snowden is out of the -- the latest documents released by the fugitive reveal a spy campaign that could be breaking the codes of online privacy. seema mody joins me with the details. seema? >> internet users may think their personal data is safe from prying eyes, but edward snowden says otherwise. the new york times and other sources report that according to newly disclosed documents leaked by the former nsa contractor, government agencies are compromising online privacy for the sake of national security. the documents state that the nsa and its british counterpart, the government communications headquarters or gchq have been heading a secret deaded a lo de effort. they're using computers to crack web encryption coats through
brute force and inserted secret back doors to access information they would normally be barred from thanks to digital scramb scrambling. it has reportedly cost the agency $225 million, just this year, and is designed to insert certain weak points into security systems that would be known only to the nsa itself. the problem is, as the times points out, these codes guard global commerce and banking systems, p systems, protect sensitive data and secures web searches, internet chats and phone calls of billions of people around the world. who could say what would happen if they fell into the wrong hands. the documents do not name specific companies or technologies, but they're reportedly working to penetrate encrypted traffic on what it calls the big four service providers, google, yahoo! facebook, and microsoft's hot mail. back to you. >> seema, thank you very much for that. here are your headlines this
friday morning. markets await the make or break u.s. nonfarm payroll number as investors try to guess the start of fed tapering. obama tells fellow world leaders at the g-20 the u.s. is confident that syria used chemical weapons. on cnbc, ford ceo alan mulally does little to quell expectations he's off to microsoft. ♪
[ agent smith ] i've found software that intrigues me. it appears it's an agent of good. ♪ [ agent smith ] ge software connects patients to nurses to the right machines while dramatically reducing waiting time. [ telephone ringing ] now a waiting room is just a room. [ static warbles ] president obama is facing growing pressure from world leaders not to launch military strikes in syria. u.n. chief ban ki-moon warned from the g-20 summit in st. petersburg this morning that any intervention in syria could worsen sectarian violence. but on the sidelines of the g-20 talks, obama has been making calls from abroad to key
lawmakers back home. also, president obama has stressed that the u.s. has high confidence that syria used chemical weapons. steve is in st. petersburg. obama obviously very busy trying to convince folks at home and in st. petersburg. is he being met with open ears? >> some, yeah. everyone had their chance to speak. and to mr. putin's credit, he gave everyone a chance to speak about the syria issue, getting almost overdone with almost as a silent issue and get people talking about it publicly. and working dinner last night. of course, president obama does have strong allies including the french, united kingdom, turkey, canada, australia. and i spoke to bob carr, the fro foreign minister of australia who saidquivocally supports the american stance tlc. there are others that are critical, the chinese, the russians, ban ki-moon. there are two views here. what is undoubtedly the case is
everyone wants a longer term solution, just a question of whether short-term limited military strike can be the way forward. now, that aside, i've been asking everyone i've been speaking to whether this is overshadowing the entire meeting, whether it is stopping real economic business being done. let's face it, cnbc is a business economics market channel. our guests were talking about -- talking about those issues. the g-20 is an economic forum, not a foreign affairs forum. it is important to add that although syria is overwhelming in many many ways in terms of the scribes and the media as well, a lot of other business, maybe less glamorous, is getting done. i have spoken to all these people, from the oecd, the world bank, the international labor organization, the russian finance ministry, even spoke to the billionaire owner and ceo and everybody is saying real business is getting done here on the ground. we also had a word with the president of the european
commission, who told us about what he believes of the overriding theme here. >> there was a big political discussion about syria. i believe the conclusions of the meeting on the economy are extremely important. and they reflect the growing consensus about what has to be done. i was particularly happy because that's the first time i'm at g-20 and i've been all at all of them since the beginning that european union was not the focus of attention. when there were remarks about us, all of appreciation including president obama, about the efforts that have been deployed because we believe this now we see the start of r recovery. it is a turn point and this shows that our policies can work. i mean, differentiated fiscal
consolidation, very good -- very big emphasis on strategy reforms and solid agenda on trade. so we are doing what we should do and that was recognized and very much appreciated around the table. at the same time, the emerging economies recognized they also have to do some part of the job, namely in terms of the reforms. i think the consensus for sustainable growth and the framework of cooperation was indeed an achievement of this g-20. that's why we so much supported action plan adopted here. >> meanwhile, improving jobs picture in the u.s. will raise the prospect the federal reserve beginning to scale back its $85 billion bond buying program later this month. at the g-20 in st. petersburg, developed economy leaders are under pressure from their emerging market counterparts who argue that u.s. policy is causing the rout in their markets and hurting their currencies. bricks nation pledged yesterday
to set up a $100 billion currency reserve fund to defend against a balance of payments crisis. steve, how much frustration is there on the ground, on part of the brick economies and emerging market economies at large about just how little they can do about fed tapering and the effect it is having on their markets? >> let me get one fact straight here as well. one of my sores here, one of the delegates i've spoken to, this fund, they're a long way from getting it concrete as well. it is an aspiration rather than a firm statement of intent. let's be careful what colleagues in other places are talking about the $100 billion fund from the bricks. it may not be done in 2013. let's get people back on track on that one as well. the other thing about the g-20 is it is inconceivable it can solve the world's ills. it is inconceivable it has every coordinated policy to sort out the problems in every single
country. and here in lies the point as well. very interesting, i heard from a lot of people, including the secretary-general of the oecd who said the bemoaning from emerging market companies and the bemoaning about the tapering of the quantitative easing is many many ways a veneer and smoke screen for their own problems and the failure to have structural and infrastructure reform in individual countries. we have to take a step back and say the g-20 can act as a good forum for opening up the discussions about tapering and other such issues which the emerging markets are saying so dramatically affecting them. let's not forget very often the bemoanings from countries looking at external figures such as u.s. domestic policies is very often a scapegoat for veneering over what real problems within which they haven't solved over the medium term when they had the opportunity to do so.
it would be unrealistic to think the g-20 can solve all the issues. back to you. >> thank you for that, from st. petersburg. a check of u.s. futures ahead of the crucial jobs report for the month of august out in a few minutes, few hours time, rather. mixed after markets and the u.s. eked out gains, higher for the third day. it seems as though we're sitting on the sidelines ahead of the jobs report. keep in mind, rosh hashanah continues so volumes could continue to be low. out to patrick o'keefe, director of economic research at con resnik. the whisper number for the jobs number has gone up quite significantly. what is the risk of markets selling off if the number turns out to be too strong, which would in turn mean that the fed will have to raise the size of the initial tapering. >> i'm looking at the way s&p
500 options are pricing this nonforeign payroll announcement. and they look like they're yawning into this announcement. the s&p options are predicting about an 11-point move. call it three-quarters of a percent. so i don't think we'll get the clarity out of this number that a lot of people are expecting. i also think that we have priced out syria at this point. apparently firing tomahawk missiles at 14 or 15 targets isn't going to be something driving the markets. i think today is setting up to be a much bigger yawner than a lot of people maybe are expecting. and the number is going to come in, you know, somewhere near that whisper number, somewhere in line. if we get a huge number, i think the markets will probably rally. if we get a miss, you know, that's where i think the confusion is. that's where we get some turmoil because tapering looks like it is somewhat a foregone conclusion. the question is how much and when. and as long as the bond markets
stay stable, listen, the ten-year treasury -- the yield is over 3% in the next few months. it is going to happen. as long as that happens in an orderly fashion, where the market participants are able to use the ten-year to manage their book of bonds, that's okay. probably a good thing. it is just making sure that everything happens in orderly fashion. that's the fine line the fed is toeing right now. >> the trip wire for the markets ultimately may be the 3% level in terms of ten-year treasury yields. do you think that markets will just take that in stride because so much of the volatility in tapering has already been priced into the markets or are we actually going to be stumbling over the trip wire? >> that's a really important question and very key. if we creep into 3%, 3%, 3.01, that's not going to be a big deal. it is just a couple of ticks. if we go from 3% to 3.25% in a
day, that's where you run into huge, huge problems and that's what sends the s&p 500, the equity markets into turmoil. if we get rate shocks, that's where you have problems. >> patrick, just very quickly, want to get back out to you, 20 seconds left, what is the most important data point for the fed today in the jobs report? >> they'll look at the job change number. what i think they really should be looking at is whether the employment rate, the proportion of work age eligible individuals is increasing. that's the real test of whether or not we're really making progress in the recovery. what i'll be looking at first and foremost is the employment rate. >> okay. patrick, thank you so much for that. that's it for today's show. i'm carolin roth. thank you for watching "worldwide exchange." we'll be back on monday. have a good weekend.
welcome to jobs friday. the economy and the global market as we wait for the august employment report, the ten-year treasury is hovering near 3%. it's been a while. were you pregnant? you were pregnant, yeah? >> the last time -- >> kyle was like 2. he's in high school already. it's been a while. it is friday, september 6th, 2013. "squawk box" starts right now. ♪ >> good morning, everybody. welcome to "squawk box" on cnbc.
i'm becky quick with joe kernen and andrew ross sorkin. our guest host this hour is dennis kartman. dennis, welcome. good to see you. we're going to get to all that, but before we do, let's set the stage for the jobs report. the economy probably added 175,000 jobs last month. the unemployment rate is expected to hold steady at a four-year low of 7.4%. meantime, average hourly wages are expected to raise by .2%. we have been watching the futures ahead of this report and not major moves but you can see the dow futures are down by 25 points. s&p 500 off by a point and a half. >> we're watching the ten-year. yields topping the key 3% level yesterday. last time that happened was when becky was pregnant.