tv Worldwide Exchange CNBC December 10, 2013 4:00am-6:01am EST
hello. you're watching "worldwide exchange." i'm ross westgate. you are now going to look at some pictures of the state memorial service for the late former president of south africa nelson mandela. we'll be bringing you coverage of the service. and the headlines today, five years after the financial crisis, u.s. regulators are set today to approve the so-called volcker rule. reigning in financial risk taking by wall street banks.
european finance minister are close to a deal that would allow them to wind down failing banks, pave the way for the creation of an eu banking union. praising greek reforms as the finance minister tells cnbc the country will regain market access as early as next year. >> as we often perform the target for this year, the same will happen next year. i think now we have proven our goal. and the era of on government motors draws to a close. the u.s. government sells its remaining stake in gm four years after the automaker's bailout. >> announcer: you're watching "worldwide exchange," bringing you business new from around the globe. welcome to today's program. we will bring you shots and pictures from nelson mandela's
memorial service throughout the program today. we are just over an hour into the european session. equities are a little firmers, advancers trying to outpace decliners by six to four at the moment. yesterday, the ftse was just up 7 points. we had slim gains for the u.s. market. the s&p still finishing at a record high. the ftse 100 up another 7 points. the xetra dax 0.2% higher. cac 40, industrial figures contracted for the month of the france, suggesting the country is facing a retraction. the ftse mib is fairly national, as well. vopak is warning it's unlikely to exceed its 2012 record next year. the stock down some 47 4.5%.
ashtead group, now saying full year profit will be to the top end of estimates. it also raises dividends by 50%. prudential insurance up 1 is.3% in london trade delivering a fairly upbeat outlook. it's looking at the saudi arabia market and it set out three new objectives, as well, for 2017. as far as bond markets are concerned, hone in or treasury yields. 2.8% is where we stand yesterday. the market did move higher on the back of fed purchases. we've finished on monday around a yield of 2785%. despite the fact a couple of fed speakers said we could reduce purchases this month, the dallas fed president saying we should stop tapering. we appear to be comfortable with that notion as far as treasuries are concerned.
euro/dollar has been up to a fresh two-week high, 1.3749 is where we stand at the moment. dollar/yen, just above the 103 level. sterling/dollar up near two-year highs at the moment at 1.6433. that's where we stand right now in european trade. let's recap that asian session joining us today out of singapore, here is sixuan. >> thank you, ross. asian markets came up pressure on more tapering speculation. china markets traded pretty much flat despite the data showing signs of stabilization. automakers were mostly higher helped by strong november november sales numbers. in japan, the nikkei 225 pulls back a modest .25%. in the yen, one pair hit a five-year low hitting the pressure on south korean
exporters. the cotpy ended down 0.4%. now for individual movers, china's haier was in the green. its a shares resumed trading and hit the daily limit by 10%. h-shares surged another 7% after yesterday's 14% rally to a 14-year high. and this after china's e-commerce company said it would invest in the electronics division. china development financial holdings is in talks with alibaba. china development gained 0.7% today. that's a look at the asian markets. back to you, ross. >> thanks for that, sixuan.
as we mentioned, the memorial service is under way for nelson mandela. the service will last around about four hours and we'll be hearing from the likes of banki moon, president obama, the vice president of china and jacob zuma, as well, the current president of south africa will be speaking, as well. while that is under way, we're getting mixed messages from brussels. the swedish finance minister says all the ingredients are there for an agreement. julia is in brussels. she's defining the tea leaves. jules, we understand that there's a suggestion that a fund to lend to help finance the
closure of banks that have failed and the block is on the table. are the germans going to sign up to it? >> well, as long as there's a compromise in it and a few buts in there, perhaps they will. but there are mixed messages coming into this meeting. listen to what the cnbc's ismussen had to say. >> we will manage to narrow down the differences of the day, but do not expect that we reach a final agreement already today. >> to the key phrase there, narrowing down the differences. and this comes back to the point you made, ross, right now the narrowing of those differences include a three-step process. what we would see first, a cypress stall bailin for these banks. then if more cash is needed, we
go to national rescue funds. and then and only then if more cash is still needed, we go to this common key rescue fund. so a few issues here, we're minimizing the possibility that this fund ever gets used. but the other critical thing is are we going to break this doom loom. we have to see first critters, senior creditors get hit in this process. so that's some of the things that the finance ministers like the swedish finance minister was raising concerns with me earlier. mr. asmusen said he penciled in a meeting next week. someone needs to help him. he also mentioned greece. he said he wants to clear up some confusion. they were saying it it's very unlikely to get a final signoff
by the greeks on their latest bailout deal. asmussen tried to taper that. i spoke with the greek minister yesterday. listen in. >> we continue discussions. we aim to achieve an agreement as soon as possible. as soon as possible. and also the milestones seems to be okay, so we expect d disbursement of installment by the end of the year. >> the president obama of the euro group said today that you need to continue to do more work. but are you pushing the point that politically and socially you're at the limits of what can we achieved here with reform? >> i have explained the association limits, the austerity measures. i think you heard the president
of the euro group referring to this. and, actually, the troika is coming back so that we can work together. to have solution. >> and in terms of regaining access, you believe that that could happen later on next year? >> i think we have two conditions. also to have positive -- a positive growth rate, which is now, as you know, today the third quarter results have appeared. if you have noticed quarter on quarter, the last two quarters, the economic has stabilized. so i'm very optimistic about the next year. we are going to have positive growth so we can have market access, limited access next year, but it will be the first time since 2010. so it is very important. >> so the ping-pong match
between the troika and greece continues. but the crucial issue here is banking union process. on that, ross, i'm going to hand it back to you. >> thanks for that. we'll come back later and keep pictures, as well, for us memorial service for nelson mandela currently going to start in the soccer stadium in south africa. global leaders are still arriving. while we do that, we'll be joined by sir richardson. stewart. >> morning, ross. >> the s&p up 20%. the not that i can up 50%. >> it has has been an extraordinary years essential for a number of emerging markets.
and you compare the corporate rate of earnings and the -- >> we've had a big rerating. >> we've had a big, big rerating. you have to ask the question why. it would appear one of the main drivers of that equity earnings or fundamental sess down to central bank policy. i think those investors who have been fully invested in markets will be thanking central banks. >> even if they do or they do it at a slightly lesser rate, one can't imagine that you're going to have another rerating. doesn't stock prices have to be justified by what companies profits are? >> in the long-term, yes. the bears were cautious going into 2013 thinking something would happen to offset the bull markets.
even if they do, can markets go higher? >> in this sense, one can measure the ecb doing more, but would that get outweighed by the fed doing less? >> we're focused on markets here rather than the economy. i think it's fair to say the fed have not achieved their goal in terms of the overall economy. i think what's interesting, if the fed do end it next year, will the ecb step up to the plate and try and offset that reduction in new liquidity? so a lot can happen from different angles. >> but bearing in mind it's the fed that sets the price for global money, the chances of the
ecb and the bank of japan offsetting that is unlikely, isn't it? >> it is unlikely. and there is even more discussion now. but what are the longer term costs to benefit and should they just get out of the way of the market now, try and re-engineer their policy more towards forward guidance, keeping rates lower for longer and step away from qe. >> i think interesting, too, as we get his comments from bullard and fisher overnight. the stronger employment number. >> first of all, in terms office where the qe is slightly or not, you have to go back to qe2.
the fed was very keen to measure the point the qe is going to be a stimulative move for the economy because something new had to be done. so they can't then turn around and say it's neutral for the economy. in terms of what happens when the fed is doing qe, bond yield tend to go up when they do qe. they're switching from bonds into the equity and as soon as qe ends, bond yields have been low in the past. these are bond markets looking for qe to be reduced. or at least remain within a range. equities have stumbled when qe ends. so i think the message is that qe is tightening and if that happens next year, we expect the bond yields maybe to come down.
>> you're with us for the first hour today. you are, indeed. also coming up in the show, investors are hoping for reform. we'll ask an emerging market expert if the 2014 elections could represent an opportunity. and touchy feeler retailer, ahead of closely watched retail sales out thursday, a guest says shops can still bag big profits because consumers prefer to see and touch a product before making a purchase. plus corn producers are hoping growing domestic demand for the crop could stem the fall of a tide in prices. we'll get the crop report. and the so-called handshake budget deal could be on the cards state site, but would it contain any significant measures? at 11:45, we'll be joined by political analysts who say even a small bull budget could
greatly reduce fiscal uncertainty. and nothing is certain but death and taxes, but what about funerals and bad loans? we'll have a series of loans ready to go on the stock exchange and whether investors will be dying to get a piece of the action. as we go to the break, we'll bring you more shots from soccer city stadium where they're holding the nelson mandela memorial service.
crowd of around 95,000 people are gathering at johannesburg stadium to pay respect to former south african president nelson mandela at the soaker stadium. including the u.s. president pb pb, president barack obama. chris has more details on today's event. chris. >> well, the rain is falling and the crowds are flooding in. 95,000. you have to recall that a lot of
the streets have been closed off around the stadium so that the sig tears can come in and out. that means that a lot of people have to either camp overnight, which a lot of people have done, or walk to the stadium. certainly the ceremony is under way, the marching bands on the pitch walking around, some of the big names are there like arch bishop desmond tutu, he's there. former president beheki. the former president's father, embicki was sentenced to life in prison along with mandela. soon, there will be tributes from family and friends for the next hour or so and then we'll move into the speeches. >> chris, thank you. that is the latest from johannesburg. we will continue to bring you shots, as well, from soccer city
stadium. meanwhile, toiletmaker sanitec continues to buy up shares. it's controlled by private equity firm eqt. the ceo spoke about the listing earlier on the channel. >> we have been out there talking to potential investors. we have seen a great deal of interest in the company, now market leading positions and our strategy, how we pursue our business in different parts of europe. and we have also, indeed, seen a lot of interest in how we view a potential recovery of the european market. because sanitec is all europe in our market positions. >> and it's another big week for hong kong ipos. china everbright bank started building its books today for a $2.8 billion offer. its third attempt at a hong kong
listing, trying to tap recent demand for mainland lenders. steve joins us now. nice to see you. how much interest are these ipos going to get? >> hi, how are you, ross? actually, there's a lot of hype about upcoming ipos. i mean, in terms of there is everbrite, there is china cinda and there is a unique funeral services ipo coming online. there is a lot of interest, people waiting to see how it performance. i think in terms of ever did his bright, people are looking at a very, very tight pricing range. we'll see where it goes, but i think in terms of overall capital raising, we're going to look very large here. $18 billion u.s. will be raised in hong kong this year compared to last year. >> recently, bank ipos haven't done particularly well, have
they? is this priced fairly expensively? >> i think so. we'll see where it trades. and as you said, that recent ipo from the banking sector hasn't performed very nicely. so i think this will stand up the test to investors to see where the banking sector could go and be reminded that there are more banks in china looking to ipo in hong kong. >> yeah. what's the opportunity for cinda? >> i think cinda is a really, really interesting case right now. first of all, this was a company set up in late 1990s to clean up the bad debts of the china construction bank. so from the get-go, it wasn't a policy play. the way to look at this new ipo is not to look at its financials but to look at what the company does. it's interesting because china, on the pboc side, they've been encouraging banks to try to write down more of the mpls. and so there is going to be a
new growth of mpo opportunities within china. and by investing in cinda, that gives you a really good step forward in terms of getting the first take on the mpo market in china. >> yeah. it's a big bet that the slowdown of the economy will create a new wave of bad debt. is that going to happen? >> potentially, i think there is a -- there certainly have been signs that the mpo has been going higher. but more importantly, i think when we talk about financial reform necessary china, it's important to remember that china wants also to develop a tradeable market for the mpo assets and investors have been pouring in to take advantage of the situation, taking advantage of mispricing in sour debt. and so there is definitely a lot of hidden gems within the cinda
ipo. in terms of the greater market for this new ipo, it's up around 50% today, as i've heard. >> what do investors want to buy into most? >> i think in terms of the -- just into the financial services in china, people are looking a lot at the internet space. as we have seen at the big market compared by online retailers in november, sales have groan significantly stronger than people have expected. and that is continuing to last into 2014. so internet space, logistics because more people are buying online, you need deliveries, right? logistics, e-commerce, e-payment, it's all critical topics for investors to look to in 2014.
so that will be a very interesting step forward. >> steve, thank you very much for joining us. good to speak to you this evening and this morning. >> thank you. we'll take a short break. as we do so, the crowds are gathering for the memorial service of nelson mandela. hi honey, did you get the toaster cozy? yep. got all the cozies. [ grandma ] with new fedex one rate, i could fill a box and ship it for one flat rate. so i knit until it was full. you'd be crazy not to. is that nana? [ male announcer ] fedex one rate. simple, flat rate shipping with the reliability of fedex.
you're looking at live pictures from the memorial service of the late nelson mandela. we'll continue to bring you pictures. five years after the financial crisis, u.s. regulators are set to approve the so-called volcker rule reigning in financial risk taking by wall street banks. european finance minister res close to a deal that will allow them when to wind down failing banks, paving the way for the creative of a banking union.
the machines minister told cnbc exclusively the country will regain market access possibly next year. >> as we overperform the target for this year, the same will happen next year. i think now we have proven our -- we seem to be getting out the latest data, up 0.74%. uk global goods trade balance, as well. minus 9.732 billion. a little wider than the minus
9.35 we were expecting, as well. and industrial output, as i say, up 0.4% month on month. that was pretty much as forecast, up 2.7% on the year. october industrial output also up 0.4% month on month. that was forecast up 3 slightly you might have expected. and the manufacturing output up 0.5% on the three-month period. so that data is coming in as we expected. joining us is kevin adams. julia richardson is still with us, as well. good to see you. we've had a string of data, the services pmi last week was slightly weaker. we are annoy pricing such a widespread. you go to investment houses, there are those who believe it's not going to come until 2017. where do you sit on the spectrum? >> we sit on the earlier rather
than the later spectrum. but mark carney was telling us don't expect any rate rises that soon and he's not minded to raise rates. we think the quality is not quite as stopping as it needs to be. so we think rates got quicker. >> say that again. >> it's not as strong or as credible as it could be. >> they're liking the economic data? >> yeah. if you just look at the forward guidance they've given, that started four or five months ago. and even in that period, we've had the economic forecast that the bank was coming out with them being completely turned rain. >> that just means the economic forecasts are wrong. but then they aren't are, aren't they?
it does to some extent calling into question the veracity of the guidance. >> it's not aimed at us. it's not aimed at you guys, is it? >> they're trying to aim at anyone who will listen. and they're hoping to keep a lot up in the air here in terms of making sure everyone is prepared to spend and invest and at the same time make sure the domestics on interest rates are that rates remain po low for a long period of time. carney wants to -- and at the same time we're getting tapering fears coming into the area.
he wanted to say rates aren't going up for a long period of time. we're going to use forward guidance. quite quickly, the data seemed to improve measurably and i think that improvement has been sustained for more cautious than people would expect. and we have this problem with triggers and thresholds. there is a bit of uncertainty about this. it's the wizard of oz syndrome. there is, you know, in the dark as we are, but they want to hammer home and keep rates low forever. >> does not much of it mean anything to you? >> in my opinion, the u.s. fed is the driving force in the liquidity. the ftse is you know 100 has been outperforming cervical
months. >> it could be resource, it could be the stronger currency, etcetera. the movement with gilt is almost the basic reform. >> but nothing in agreement, kevin? >> yeah. the yield is substantially driven. i think that can probably be continued, be expected to continue for the next few months while the uk economy remains as robust as it is. let's talk about the united states. talks could reach a handshake deal today. patti murray and paul ryan are scheduled to meet with the goal of finalizing an agreement. they've been discussion a small plan to raise federal spending levels to around $1 trillion for the next two years and replace
sequester budget cuts. if that deal is reached, specifics could be given to democratic and republican lawmakers. the u.s. has taken a bit of a breather. the federal reserve bank of st. louis, president james bullard says positive trends in job markets make cuts more likely and jeff lacker, the president of the federal reserve bank of richmond says he expects a tapering discussion at next week's fomc meeting. do they go next week, kevin? >> there's a much higher possibility now after the payrolls numbers we saw last week. and i think the comments by bullard are interesting. the fact that he's now coming out and saying a small tape ner december or the smart of a taper -- >> 5 billion? 7 billion? >> yeah, probably. it's showing the hand, showing
that they are determined to start -- >> are there any risks in going next week? >> yeah. markets this time of year are less liquid, therefore, price action becomes more volatile. the markets are much better set up for tapering -- >> bond yields have come down since the jobs report. >> but we're still at 280. better than back in june when we were at 164. >> we are better prepared. it would be nice to start the year without this hanging over us, to start 2014 without a fed tapering hanging over us and we can all deal with it. >> i think if we do get tapering next week, we have to assume that the discussion amongst the committee has brought yellen in saying we want to start now ahead of her taking charge. so you'd have to expect tapering to continue under the yellen fed. so they could end qe maybe sooner than some people think. but they've always got an
excuse. they can look at inflation, which seems to be less than their level. and the two reasons why i think the fed may say, we'll wait until next year. but they have to start sometime. >> could they say we're not going to start in january? but it would be a small amount and the lower the threshold for tightening even more, you know, unemployment rates lower that or -- >> i think, again, there's a couple things there. first of all, if they're going start, they might as well start with a reasonable sum raerchb $5 billion or more. and it looks like they're managing open further criticism or losing a bit of credibility. in terms of this distinction between qe and interest rates, i think they're going to work very hard at it during the tapering process to try and say tapering is one thing. low interest rates -- >> you don't believe it is?
>> i think they'll -- they'll keep rates low for a very long period of time. >> but i think asset prices, tapering is tightening. >> i think tapering is tightening and we'll see it next year. >> i think you will get a negative reaction from asset markets. it's just that we're starting from a better position than we were last summer. >> kevin, thanks for that. more from stewart to come. and the memorial service for former south african president nelson mandela is just due to begin at johannesburg soccer stadium. over 70 world leaders are flying in, the likes of u.s. president barac barack obama. also in japan, businesses and consumer sentiment appear to be heading in opposite directions. fushiko has more for us from
tokyo. >> hi, ross. japanese consumer confidence improved in november, up 11.3 points from the previous month. the index shows more people turned optimistic on the overall economy, income growth and the job market. the government says consumer confidence continues to improve and it's keeping its assessment unchanged. on the other hand, sentiment at large japanese companies took a turn for the worst. the fourth quarter index came down from 12 points in the previous quarter as a weaker yen caused import prices of oil and minerals to rise. the finance ministry said the index will make a comeback to 11.8 in the fourth quarter next year and large firms hope consumer spending will expand before the april tax hike. the outlook falls in the quarter when the hike comes into effect as business conditions are expected to worsen.
ross, back to you. >> thanks for that. meanwhile, japanese businesses have placed their betts on more bank of japan easing. two-thirds surveyed in a reuters poll expect more bank stimulus in 2014. most approve of the abe decision to raise that tax. still to come, all five of the emerging economies hit worst are expected to vote in 2014. are the elections a threat or an opportunity? we'll get into that as we come back. as we do so, we'll leave you with more pictures for the memorial service which will soon be under way for former south african president nelson mandela.
and south africa itself will be facing an election. we've had elections in the weekend dealing a blow to the ruling party. although they were largely welcomed by investors who view modi as a business friendly figure. the sensex hitting an all-time high yesterday and the rupee toughened against the dollar following what has been a torrid year for emerging market currencies, including that mass summer sell-off. so what happened over the course 20614? joining us with his thoughts, at capital economics, joe richardson is still with us. so we've got these five countries with elections, indonesia, south africa, india, municipal those and brazil, as well, as i mentioned. how are these going to play in? >> in the short-term, there are big concerns what the impact will be on currency markets. the big concerns, for example, certainly uncertainty over who is going to win the election. that could certain weigh on
sentiment. then you've got the risk that you've got an election coming up, incumbents behind in the po polls, they decide to splurge. >> is there biggest concern of that in brazil? >> i think it's probably right in brazil. certainly it's not such a big deal. the markets are watching so closely that the governments there declare they won't be having a preelection budgets. >> what about in the -- in the introduction there. what is the prospect for reform there? >> i think india does need reform. i think the slowdown you see is largely structural in nature. a lot of people are grasping hope that certainly the favor, moody was seen as being reform. it translates success at the
stayed level in india to the national level. almost certainly he will need the support of coalition partners who are going to water down and dilute and delay any reform measures that he wanted to introduce. so we're not so confident on prospects in india. >> where is the biggest hope for reform? >> i think prospects are big in indonesia. there the current incumbent has to step down and the current favorite, the current mayor of jakarti is seen as being clean and anti-corrupt. so i think sentiment and hopes there are best. >> just looking at south africa and turkey where maybe the current account deficit is the biggest and obviously flows during the tapering tantrum this summer where basically pushing the country down, do you expect the tapering to affect those countries most or are you looking for some sort of improvement in the finances and the current cap and so on next year? >> i think it's too short-term, really, to expect a dramatic improvement in the current camp,
in the event that fed tapering does happen. so the extent that it's in people's expectations, it could turn out to be damp if the fed decides to taper maybe as early as next week, it would be a complete surprise to financial markets and they can carry on. in the event that sentiment does turn towards emerging markets, do you expect these five will, again, be the hardest hit. >> turning back to south africa, even if rusov gets re-elected, presumably re-elected with less vote or mandate. is that that double bite? >> i think the big problem in brazil is that growth has slowed so much recently and the supporters of government has weakened. for her to get back into power, what they need is structural
reforms to switch their growth model away from consumption and investment. to do that, they need to raise savings rates, introduce pension forms. >> yeah. so despite the -- sort of the world cup coming, the distraction -- >> it's more a distraction. >> so out of the five, indonesia is the one that is likely to fare best? >> i think so. that's the one that we're most confident on. you know, there's certainly no guarantee who's going to win, but if joka does win, and he's the strong favorite at the moment, sentiment could be really good. is that enough to take pressure off the rupiah? >> i think so. part of the reason why indonesia has been so badly hit is uncertainty coming up to the elections. if you get a new minded guy in power, it could reduce
sentiment. >> wee just got news out of nokia and india. nokia owes up to $3.4 billion in taxes. they earlier said they owed $2.4 million. it's quite a big jump. we'll keep our eyes on that. anyway, that's a big bill if it's true. eads, meanwhile, has outlined a restructuring plan which will enhance its business competitive. stephane is in paris with the reaction and the detail. stephane. >> and among the reactions, the french labor minister says it's unacceptable for eads to get overall stat in france. he said the large company and profitable group like eads should have a duty to ensure that there are no forced layer. the comments came just a few hours after eads announced 5,800
job cuts. restructuring will affect roughly 2,000 jobs in germany, 1,260 in france, 567 in spain and 550 in the united kingdom. in france, eads is going to sell its paris headquarter, since the headquarter of the company has been moved. the plan will be implemented over the next three years. some of the terms will be offered in terms of mobility. but eads warned this morning that there could be additional job cuts in the future should the business conditions fail to materialize as planned. the job cuts were part of a broader plan that was afounsed a few weeks ago. eads is going to emerge and rebrand itself as airbus. we might have additional information tomorrow as the company will hold its investors day in london. >> now, at the same time, stephane, we saw industrial
production contract in october. it's another bit of data which suggests the economy has stalled. >> absolutely. down 0.3% in october. down 0.1%, sorry, in october. on a positive note, the decline for september for the french industrial production has been revised a little bit. down 0.13%. that's better than originally 0.5%. on a positive note, the managing output in france increased by 0.4% in october, recovering from a decline of 0.5% in september. but you're right, it's not an indication that the french economy is far from recovering. although, ross, we had yesterday the growth economic forecast from the bank of france which is now expecting the french gdp to increase by 0.5% for the last quarter of this year. over to you. >> stephane, thanks for that. stewart, how certainty are you
about -- france could be in recession right now. it could be a second quarter contraction. yeah. a number of people talk about france being one of the big worries of europe. and we shared some of those concerns. the government is by far the biggest relative to gdp throughout the major economies in europe. the move towards structural reform seems to have pretty much stalled. the popularity of the government is very low, indeed, record lows, and the data is stalling. so when we talk about maybe the ecb needing to do something next year, if france is coming into focus, then it's going to have to be a very big deal. so yeah, we're concerned about france. >> it's hard because, i mean, italy still has no growth and italy and france account for 40% of the eurozone. but germany's economy is doing better. he's going to weigh a few things up. >> this is where at the end of the day, we all know that it's a political will to keep the european project live. to keep that live, we need to
see a strong part towards monetary and fiscal union. this has gone far too far for most people's liking. if something coming up in the next 12, 18 months, it's going to be very, very difficult. and unfortunately france being the second biggest economy is potentially going to be -- next year if things don't start improving. >> we saw quite a bit of institutional flow out of the u.s. and into europe. is that the right move? and is that -- what would you favor, european equities over the u.s. or not? >> in the very short-term, we favor the u.s. because momentum is there. that's where the source is and i think you try and stay close to the source of the qe. european markets last week hit a bit on of a speed bump in the road. and the technical momentum picture of the european markets, france in particular, actually, just up quite so robust. so we're -- in the very short-term, we're slightly overweight the u.s. and europe.
that being said, the overall valuation of the u.s. market looks to be very expensive compared to europe. but, of course, at least there is some economic growth in the u.s. whereas -- >> if you believe the global economy is going to be okay next year, you could find exposure to that, a better value amongst global european corporates than u.s. corporates. >> europe had a decent run from the summer lows this year or the summer lows last year. there will be a time when investors say i have to see some real progress in terms of growth, corporate earnings and so on. we've not seen that this year. yes, the flow of money has been from the u.s. to europe in the last few months. we wonder whether that's going to continue into next year. >> with japan, is it all about what happens to the yen in 2014 s ? >> mostly about the japanese yen. that could come into question.
and, of course, domestic investors, the whole pension fund stream and so on, if it begins to allocation away from cash and bonds towards equities and overseas assets, that's going to help the program look like it's working. so those two drivers, fx and the pension fund, if they don't continue, then maybe 2014 could be a big of a struggle for japan itself. >> are you counting on those two things continuing? >> we are. we think the bank of japan is serious about doing whatever it would take. if they have to do more stimulus, they will. and we made the point earlier that the fed is the one important central bank. we think the bank of japan can continue to print and get away with it for a period of on time. >> thank you so much for joining us. second hour of "worldwide exchange" is still to come. we'll have more from the nelson mandela memorial service. a boxt for one flat rate. so i knit until it was full. you'd be crazy not to. is that nana? [ male announcer ] fedex one rate.
governmental organizations and everyone else here, i welcome you in the name of our president, jacob zuma and the mandela family. i am honored by president jacob zuma to be your president director. we both hope that you will work with us to assure that we have -- >> you're watching pictures of the state memorial service for the late former president of south africa, nelson mandela. president obama, ban ki-moon and president zumba are all scheduled to speak, as well. five years after the financial crisis, u.s.
regulators are set to approve the so-called volcker rule. european finance ministers are close to a deal to allow them to wind down failing banks, paving the way of the situation of an eu banking union. the era of government motors draws to a close. the u.s. government selling its remaining stake in gm four years after the automaker's bailout. nokia owes india up to $3.4 billion in taxes. previously the sum was just $340 million. >> announcer: you're watching "worldwide exchange," bringing you business news from around the globe. and a very warm welcome to you. if you've just joined us stateside, you're looking at
pictures from johannesburg soccer city in soweto. the 95,000 seat stadium hosting the main memorial ceremony for nelson mandela who died last thursday, age 95. mandela was south africa's first black president passed away paus peacefully after a battle with lung infection. u.s. president barack obama and rowhani flying to south africa for this memorial. david cameron is joining was of the biggest meetings of global gatherings in recent history. the service is under way. joining us with more details, cnbc's chris fibber. chris.
>> as you can see, the mining mag negligent and businessman who is tipped possibly to be the next president of south africa is doing the warm-up of the crowd, as it were. we're still waiting, we understand, for barack obama to arri arrive. he's on his way from victoria. bearing in mind that the roads are treacherous today. there's been heavy, heavy rain overnight which is seen in this continent as a blessing when a leader passes. we're going to be starting with speeches. it looks like the whole sort of ceremony is going to be delayed somewhat. the first hour will be family and friends. particularly, the first speaker will be andrew langheni. he was sentenced to life along with nelson mandela, and he will be giving the tribute. so everyone is looking forward to that. >> thank you very much, indeed, for that. that's the latest from south
africa. we'll continue with pictures and shots from the nelson mandela memorial service. meanwhile, if you've just joined us this morning, u.s. futures are indicating we're going to tick higher at the open, down 23 points for the dow at the moment. up 5 points yesterday. the s&p did clowe at a fresh record high, 1808. right now, we're nearly about 4 points above fair value for the s&p 500. the nasdaq is some 7 points above fair value. not too concerned from the comments by james bullard that said we could reduce purchases this month. maybe we are comfortable with the notion we might get a tapering and it's not necessarily tightening. as far as european equities are concerned, two hours into the trading session, the ftse 100 why he yesterday was up 7 points. trading in very tight ranges. xetra dax is up along with the cac 40 and the ftse mib in italy is up about 0.3%. a number of stocks we'll check in on, vopak shares lower today.
warning its unlikely to exceed its 2012 record on everton next year or meet its earnings target of 1 billion because of challenging market services. ashtead is up 1.4%. this is the equipment rental group. it reported a 42% rise in pretax profit for its fiscal second quarter and raises dividend by 50%. prudential insurance up 1.4% at the moment. it's delivered an upbeat outlook. it's on track to double its new business profit from asia. it's looking at the saudi arabian market. and nokia, stock down around 0.6%. it's offered to pay a $270 million euro foft to indian authorities to unfreeze assets in a tax dispute. but india, who originally said the company owes $3.4 million now says it owes $3.4 billion in
taxes. rather a jump up from the original $240 million. treshy yields have gone lower in the session. as far as currency markets are concerned, euro/dollar, getting back near that 1.38 level. the high we saw in may for the year, currently 1.3742. a little firmer. dollar/yen, still above 103. and sterling/dollar, not far away from its two-year high at 1.6 4/40 at the moment, 1.6429 against the dollar. that's where we stand in european trade. let's head back out to sixuan for a recap of the asian session today in singapore. >> thank you, ross. asian markets eased a bit on lingering tapering speculation. china markets traded pretty much flat despite the latest data showing signs of stabilization or improvement. investors eyed the work
conference that kicked off today. officials will review the past year and make plans for the next year. supporters lacked behind despite a weaker yen. and the yen one pair hit a five-year low putting pressure on south korean exporters and the kospi ended lower by 0.4%. now for some individual movers, china's haier was comfortably in the green. its h-shares is surging limit up by 10%. its h-shares listed on the hong kong bores surged 7% after yesterday's 14% rally to a fresh 14-year high. this after china's e-commerce giant alibaba said it would invest into a logistics joint venture between the two. it's reportedly in talks with the securities arm of taiwan's
china development financial holdings. the two are likely to set up a brokerage joint venture and ended higher by 0.7%. thanks for that, sixuan. have a good evening in singapore. reuters poll shows most economist will expect the federal reserve to start scaling back its bond buying program in march. what are the policymakers themselves saying? yesterday, the st. louis president james bullard said the central bank could begin a small amount of tapering this month in response to the u.s. improving jobs picture. his colleague said it was unrealistic to make such a move. while the dallas fed president richard fisher said the fed should be able to cut back at its earliest opportunity without scaring the markets. joining us now, martin. martin, we've all ridden this wave of central bank liquidity.
should we get too held up over whether the fed tapers this month, next week or january or march? >> clearly, fed tapering on the margin, at the margin, has helped equity prices because the confidence factor. we believe if central bank liquidity, there's something like 38 central banks around the world that are engaged in the same thing the fed is doing. so we think the liquidity pumps are going to keep going for at least a couple more years. >> a couple more years? >> there must be a correction at some point. this year has been extraordinary in the sense that it's been -- has been an upward linear move.
>> absolutely. over the past couple of years, the stock market in the united states is up over 50%. corporate earnings are up 12%. another way of putting it is that we've had the biggest pe expansion in percentage terms as high as 1998 and in absolute number terms, the high is for 50 years. so clearly, investors are paying a lot more for a dollar of earnings than they were a year ago. something like 22% more. so for this market to keep going, we need to see continued growth and earnings. we need to see earnings growth. this past quarter has been pretty good if you strip out the financials and the oil companies then we're looking at about a 6% growth, which is great. but the stock market, to us, is a market of stocks.
we believe there can be reasonably valued situations even in an expensive stock market like we have now. >> the thing that really hasn't worked this year has been the time honored principals of looking at valuations, paying for the price of an asset. you can't expect companies to go to 25 times earnings unless we're in a meltup and that would put us in bubble territory. we would rather assume this is like the late 1950s to the late
1960s when stocks were expensive and buying what was cheap and selling what was expensive was something that works. gold stocks, you buy? >> well, we like to be contrarian. we don't like to be contrary, but we like contrarian betts from time to time. and the safest contrarian bet for us would be the biggest i.t. cap companies. they're selling valuations that are very, very low. pretty much the rest of the stock market in the u.s. is trading on valuations level that are akin to pre'07 levels. the
big caps are expected to be in funds. they are traditional retail products, but they are underneath them typically institutional bar portfolios. although we've had a just say no attitude towards the bond market, in december, we're seeing a lot of tax selling. so these high quality closed down funds are trading at discounts to nav. whereas last spring it cost $1.05 to pick up these bar products, you can now pick them up for 80 cents on the dollar. we know part of that discount is just plain out fashioned retail panicking and selling for the end of the tax year. the third idea is the gold socks. it's not something we would --
you know, we're comfortable making a bit on simply because it's been like a falling knife. surely some of these companies will go out of business. given the big blue chips, some are down 50% this year. to us, that represents happy hunting grounds. >> martin, good to see you. thanks so much for joining thus morning, nice and early. >> thanks for having me. meanwhile, in south africa, the memorial service for former president nelson mandela has begun. they're currently going through the interface part of the ceremony. we'll tune in as we go to break.
in life, we preserve our freedom by helping other towards freedom. >> the memorial service for former south african president nelson mandela is under way. as we do so, here is a recap of the headlines, as well. european finance ministers say they're close to a deal that will fast forward the creation of an eu banking union.
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a crowd of nearly 100,000 people have gathered at the johannesburg soccer stadium to pay their are also respects to nelson mandela. tracy. >> actually, we moved a little bit away from there. this is where the focus is going to shift, ross, because for the next three days after this ceremony is over, this is where nelson mandela's body will lie in state. this is where people who can not crowd into that stadium today will get a chance to come and say their personal good-byes, taking a live look at the service inside soccer city, as they like to call it here. we've been watching interface prayers this morning.
it's part of what nelson mandela did. kwe heard from the deputy president of the anc, the african national congress, the party of mandela that helped end apartheid in south africa. we've seen a number of vips arrive, including our own president obama. there are six heads of state scheduled to speak today. president obama is first among them. we're told he'll talk for about 15 minutes about the impact of mandela in the world. let's talk about that crowd you mentioned. 100,000 people. the capacity of this stadium is just under 85,000. so certainly it appears to be packed overcapacity, despite the fact that it's been raining here all day. people were told to be five hours early. some we heard from were seven hours early waiting in the rain at 3:00 in the morning just to
make sure they were able to get in. ross. >> thanks for that, b tracie. if you've just joined us, u.s. futures are indicating we're going to get a tick higher again this morning, following a modest climb higher on monday. the dow is currently implied higher about 21, the s&p up almost 3 points and the nasdaq up 7. european equity ves moved modestly high after the modest moves yesterday. the xetra dax, cac 40 up 0.2% and similar amounts for the italian markets, as well. and on the bond markets, interesting move is in ten-year treasury yields which have gone lower, now yielding 2.82% on the ten-year. yesterday we were supported by fed purchases, buybacks, and unperturbed by comments by the
st. louis fed president james bullard who said they could reduce next month. dollar/yen is holding above that 103 level. also, u.s. retail sales data for november is due out on thursday. analysts are mixed on whether the crucial thanksgiving holiday shopping weekend helped or hindered after it was reported the consumer spent almost 3% less this year. joe joins us now. joe, you own a number of malls throughout the northeast. what was your view of the foot fall, the amount of traffic that came through those malls? >> well, we saw significant traffic over the holiday weekend with the i wiretailers opening bit early. that black friday typical
selling was spread over two days. generally, we were pleased with the results over thanksgiving. >> what is happening now, though? while traffic was okay, people appeared to be spending less. >> well, actually, we conducted a study. we brought harris interactive and did a study of the u.s. nationally and found 85% of consumers intend to spend what they spent last year or more. so we're optimistic that the holiday season is going to bring about some solid results. having said that, one has to recognize the fact that the u.s. consumer is fragile. we've been through kind of the perfect storm, if you will. we had a warm back to school season. we've had slow job growth. we've had -- this is the shortest holiday season that's possible between thanksgiving and christmas.
all things considered, we're optimistic that it's going to be a strong holiday season and that we'll see results in the plus 3% range. >> how much is down to the increased number of discounts, promotions, coupons? are consumers really paying attention to those things? >> oh, clearly. the consumer in our study showed that over 60% of the consumers are going to shop bricks and mortars. you can see the discounts all over the retail shops and they are promoting heavily. >> you mentioned the interesting thick about brick and mortar. clearly you're not exposed to online. have you seen the impact of online or are we developing a click and mortar experience
where you might want to go and touch the stuff and order it online or search online before you go to the shop? >> well, again, in our study, over 80% of consumers say they wanted to touch and see the merchandise before purchasing. having said that, i think i agree with you, a click and shop environment is upon us. total internet sales is less than 10% of total sales. it is here to stay. and rather than try and defend ourselves against it, i think the property owners need to embrace it. and one of the ways we're doing that is creating shopping experiences. one thing you can't do in front of your computer is socialize and dine out. and that's a big part of the new mall experience today, dining, entertainment, wi-fi. in fact, we've seen created a mall app that you can come into
one of our malls, tap on the app and do a products search. in essence, replicate the shopping experience that you would online in the mall environment and looz leave with that product immediately. do you think -- well, one of the interesting developments over here is that ebay is drawing a deal where you can order stuff at ebay and go pick it up at the shop. it's an interesting idea. do you think you might develop more places where you order online and go and pick it up because waiting for the deliveryman to show up is a bit of a pain. >> we actually like that as a venue for shopping. we're where, in fact, the mall becomes a place where people fill their purchases. i think you'll see in the future essentially online shopping on storefront windows where you'll be able to make that purchase on a virtual screen that's on the storefront's window.
and that gives rise to the possibility that we may even be able to buy goods that aren't sold in the mall online at the mall. the possibilities are endless with technology. >> well, they are. they change the game. you have to take advantage of it. joe, thanks so much for joining us. still to come, farmers are hoarding their crops as corn prices hit three-year lows. ly about short-term gains cause them more long-term pay? we'll find out as we head to the cme for your stock commodities 2014. as we do so, more pictures from the nelson mandela memorial service under way in johannesburg. once upon a time, an insurance clerk stumbled upon a cottage.
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you're watching "worldwide exchange." these are live pictures of the nelson mandela memorial service, which is under way in johannesburg in south africa soccer city stadium in the district of soweta, which is really at the forefront of the apartheid movement. that continues. so do our headlines here on the
program. five years after the financial crisis, u.s. regulators are set today to approve the so-called volcker rule, reigning in financial risk taking by wall street banks. european finance ministers are apparently closer to a deal that would allow them to wind down failing banks, paving the way for the creation of an eu banking union. the era of government motors draws to a close. the u.s. government selling its remaining stake in gm four years after the automaker's bailout. and india is claiming that the finish mobile phonemaker nokia owes the country up to $3.4 billion in back tax. it's just 340 million. >> announcer: you're watching "worldwide exchange," bringing you business news from around the globe. if you've just joined us this morning, u.s. equities are indicated slightly higher by
futures. currently the dow is called up some 19 points, the nasdaq is currently around 6.5 points higher and the s&p 500 is around 2.5 points above fair value. the s&p yesterday was just up three points, but it holds a fresh record closing high. european equities have nudged higher this morning. not by much. up another 9 points higher at the moment. xetra dax and the cac 40 is up another 0.1% and the ftse mib is flat. the memorial service for former south african president nelson mandela is under way in south africa. over 95,000 people have entered the stadium for that and over 70 global leaders, including president barack obama are due to attend. president will be speaking, as well. some of the other stories today, the u.s. treasury has sold its remaining stake in general motors. and the taxpayers taking a lot
of around $10 billion in the automaker's 2009 bailout. in a statement, the gm says we will be grateful for what was extended to us and we're doing our best to make the most out of it. a report out monday says the u.s. bailout of gm and chrysler helped the company return to profitability and saved 1.5 million jobs. st citigroup cfo john kazakas is speaking today in new york. investors are expected to cut him for whether or not the cost cutting moves are paying off and citi will be able to keep in line with revenues. cnbc will be on hand at the conference talking with several of the top xrves. among those today, ken jacobs, suntrust ceo williams rogers and carlyle group's co-ceo william conway. texas instruments is
expecting to earn between 44 and 48 cents a share on revenue of 2.9 to $2.$2.9 to $2.04 billion. it's roughly in line with forecasts. ti is among those giving forward guidance hoping for a stronger recovery. the stock is down marginally, around 0.4%. and corn prices have tumbled since their record levels during the 2012 drought. the fall has farmers hoarding corn in the hopes of a rebounding of the crop. it might help if south american price producers see more harvest. let's get more insight, as well. joining us is joseph, founder of admin grain. how brutal hates been for corn
traders? >> well, you know, prices year over year have declined drastically. and the corn market, for example, we saw a nearly 50% drop. corn and prices per bushel traded as high as $8.49 at the peak of the drought last year. we're trading around $4.35 this morning. so essentially what happened here was high prices cured high prices. the high prices we saw last year encouraged producers both in the united states and globally to really go out of their way to put out a very, very big crop this year. and that's exactly what we saw. we're feeling the price implications right now. >> and so farmers are presumably storing fwran that they don't necessarily need to sell. but what will the market be like next year? >> well, it's tricky to say. we have a big usda report this morning, as a matter of fact, and the projections are that we're going to have a lot more
grain left over at the end of the marketing year, which ends at the end of august in 2014. so everything here is kind of negative right now. we're looking at much bigger supplies, we're looking at better yields, better production in the united states. so the corn market and the wheat market here in particular have been trending lower. the soybean market holding up better. but all in all, it's safe to say that the green markets in the u.s. have been in kind of a bear trend here for the last year or so, really. >> how is ethanol going to play into this? are they going to make more or less ethanol from u.s. corn? >> well, ethanol is a big chunk of our demand base for corn here in the united states. and it's interesting, there's been a lot of news out recently. the epa here in the united states, which essentially controls this type of thing, proposed some new regulations. essentially what they want to do is reduce the amount of ethanol that's required to be blended into the fuel supply here in the united states. this is a proposal that was released a few weeks ago and
there was a lot of skepticism and a lot of people that essentially thought that ethanol production might be slowing down or kind of grinding to a slow halt here. and we saw the exact opposite of that. ethanol prices on the last couple of weeks have spiked higher while corn prices remain low. so margins for ethanol producers in the united states are excellent right now. and ethanol production is expected to amp up, if anything. despite the fact that the epa essentially wants to lower the amount of ethanol that needs to be blended into the you'll supply, there is no maximum and will is no cap. as long as it's profitable, the free market is going to take over. i think ethanol production loose pretty good. >> you're encouraged to produce, aren't you? and finally, we've got interesting weather patterns in south america. how is the crop there and soybeans going to impact what happens with the u.s. prices? >> well, you know, south america, brazil and argentina are projected as of right now to produce another record soybean
crop. after the record soybean crop that they put out last year. so i think the market implications are very significant. we've got some pretty high soybean prices on the board of trait trade here in chicago today. as a matter of fact, you know, it's $13 to $14 a bushel range is considered pretty high price historically. it's a big south american crop is confirmed, i think you can look for lower prices down the road. we've got a lot of export commitments to u.s. beans, a lot of those commitments may eventually be shifted to brazil and argentina if their crop ends up to be as good as we think it is. >> joseph, good to see you. joseph vaclavik at the cme in chicago. still to come, wall street is bracing for new rules as u.s. regulators are set to approve the so-called volcker rule today. the measure may end up being stricter than originally thought. ♪
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moves to curb wall street risk taking takes another step as the volcker rule is set to be approved. the eu banking union is making progress. and as we're seeing, 90 world leaders as part of the memorial service for nelson mandela in johannesburg, south africa. u.s. regulators are set to usher in a new era of tough banking regulations with a vote today to adopt the so-called volcker rule. our very own hampton pearson is in washington with the details. hi, hampson. >> hey, ross. well, you know, this is really a bigg biggie. as we say in sports for those of you scoring at home, the top three u.s. banking regulators, the fed, the fdic and the occ as well as the securities and exchange commission and the commodities future trading commission will unveil final details of the volcker rule at
9:30 a.m. eastern time. they're expected to vote and adopt a measure later in this day. now, the rule, which has swelled to more than 800 pages is named after the former fed chairman, paul volcker. it bans banks from proprietary trading or making betts on markets with their own money. it also limits their ability to invest in private equity and hedge funds. approval would end a more than two-year effort to finalize the provision which is part of the 2010 dodd frank law. now, the final version of the rule is expected to be much tougher than what was originally proposed in 2011 following jpmorg jpmorgan's $6 billion london wale trading lost last year. it built a speculative position that quickly spun out of control. under a draft of the volcker rule reviewed by the in work times, regulators will now require banks to identify exactly what risks are being hedged. the rule strikes out wall street's bonus culture, requiring banks to shape pay
packages dheent s that don't r banned prop trading. they've created programs to comply with the rule. however, the rule does allow some proprietary trading. banks will still be able to make betts with treasuries, muni bonds and foreign sovereign debt. .they'll be allowed to built positions to meet, quote, reasonably expected near term demands of their clients. now, the bank is worried about volcker rule will eat into their profits, making it harder to engage in businesses that were exempt such as market making and underwriting securities. the industry is expected to keep up the fight against the measure. wall street lawyers and lobbyists will likely pour over the details to find any weaknesses that would let them sue the government and get courts to strict or water down the rule after it goes into effect. got that, ross? >> yeah. there's a lot to it, hampton. unfortunately, we've got a guest now who can give us a political view. thanks for that, hampton. joining us is greg valio, chief
political strategist for the patoma research group. nice to see you. 800 pages. even volcker says he wishes it was simpler. if we get this enacted, are people going to be challenged or will it depend on the on implementation? >> absolutely. first of all, i don't know how hampton was able to summarize in one minute what's in these 800 pages. he did a great job. i would say there's going to be a lot of lawsuits, a lot of speculation on evading it. let's not forget, it doesn't really take effect for another year and a half. >> yeah, which is the key point. i mean, also, deciding how to implement -- it's all very well having, i suppose, something on the statute book. it's then how it gets implemented by the authorities is the key, isn't it? >> sure. you know, what's the meaning of the word is as bill clinton once said. what are the mention of proprietary hedging, trading. there's a lot of wiggle room, i think, in these regulations.
so it will be a while before the impact is really felt, but i would agree that longer term this will have a negative impact on bank profits. >> and see whether it opens up the market for european banks to compete better. greg, stay there. we'll come back to you fairly shortly. for more on today's volcker rulings, stay tuned to cnbc. we'll have more on why michael is voting no on the proposed rule and its current form. a u.s. budget deal might come today, way ahead of friday's deadline. we'll be back with greg in d.c. he says even a wimpy deal would be important to investors. we'll find out why, right after this. ♪ [ male announcer ] how could switchgrass in argentina, change engineering in dubai, aluminum production in south africa, and the aerospace industry in the u.s.?
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on behalf of the family, thank you. >> nelson mandela's grandchildren are now speaking and gathered at the podium for the memorial services of former south african president currently taking place in johannesburg in south africa. that's under way. also under way, u.s. budget talks which might produce a so-called handshake deal as early as today. congressional aides say the top negotiates patti murray and congressman paul ryan is set to meet with the goal of finalizing the agreement. they've been discussing a small plan to raise spending levels to around $1 trillion and replace some of the budget cuts. if a deal is reached, specifics could be given to democrats and republican lawmakers who hold regular closed door meetings on tuesday. greg is still with us in d.c. greg, does that surprise you?
is it likely we're going to get something hammered out today? >> i think so. i think we'll get a deal and i depart from the consensus that is this is a wimpy, meaningless deal. the deficit is going to come down because outlays are frozen and receipts look pretty good. the bigger story is that all this confusion in the markets and corporate america, among investors over fiscal policy, i think, now gets eliminated for a nice stretch, maybe a year and a half, without everyone having to worry about a shutdown or a debt ceiling crisis. that's a good story. >> yeah, that is a good story. is this deal going to get through the house easily? what's going to happen with the tea party members? >> nothing gets through the house easily. it will be a tough one, ross, as we get through thursday and friday. there will be a lot of tea party members .some democrats who don't like another hit on federal employees who can balk. but i think the majority, which will be boehner and the
republican leadership with pelosi and most democrats, that coalition that we've seen a couple of times already this year, i think, will prevail on friday and we'll get a deal. >> okay. which as you say would take pressure away from us heading into 2014. does that take away one other potential impediment for the federal reserve? does it give them another reason to say, hey, we can taper next week? >> that's a really good appointment, ross. for the fed, it's the reason why they didn't taper in december. we get a retail sales report on thursday. i think while the fed is pleased to see employment growing, they had like to see more spending. so if the retail sales report is up 0.5, 0.6 on thursday, that might be still another factor why we could get the tapering beginning next week. >> should. let's get it started and then start 2014 is, greg, you know,
asking the wheres and the whens and the hows. >> and i think the important point here is that once the fed starts, they will make it very clear to the markets that the next big issue, when they raise the fed funds rate could be two years away. we've got a long stretch of rates stale still remarkably low. >> yeah, okay. so we might get fed tapering under way and u.s. politics next year, then, if we don't have to face the prospect of a shutdown, what will dominate it? >> well, isn't that interesting? all of a sudden, there's going to be some free time. maybe we will see progress on an immigration bill, a freddie/fannie bill, maybe even the jennings of tax reform without this budget overhanging everything. i think some other issues might get quite a bit of attention. >> greg, good to see you this morning. thank you for joining us from patoma research group. that's it for today's edition of "worldwide exchange." coming up next, "squawk box" and the countdown of opening of markets stateside.
good morning. taper talk reaching a fevered pitch. embracing change just in time for christmas. the treasury department drives away from general motors about $10 billion short. and regulators get ready to approve the volcker rule to keep banks from making risky betts. it's tuesday, december 10th, 2013 just 15 days before christmas and "squawk box" begins right now. good morning, everybody.
welcome to "squawk box" here on cnbc. i'm becky quick along with joe kernen and andrew ross sorkin. dignitary celebrities and world leaders are gathering in johannesburg at this hour for a nelson mandela memorial. nearly 100,000 mourners are expected to flood the stadium. president obama is among those speaking at the service. we'll bring you updates throughout the morning. meantime, on wall street, a number of speeches in recent days from policymakers before officials go into their blackout period before next week's two-die fomc meeting. that has been what the market has been digesting. yesterday, jim bullard said positive trends in the labor market make cuts to the fed's $85 billion bond buying program more likely. that is huge news because, remember, when bullard came on with us not too long ago, you talked about the how the fed could be doing this for a long period of time and h