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tv   Worldwide Exchange  CNBC  November 17, 2014 4:00am-6:01am EST

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a very warm welcome to "worldwide exchange." i'm wilfred frost. >> i'm seema mody. here are your headlines from aund the world. >> japan sends into recession sending the nikkei lower and weighing on sentiment around europe. and merck strikes a big deal with pfizer forces it to cut its profit guidance. and going live in shanghai with the stock market.
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but we hear they are still confident on china. >> i don't see people pulling out of china but i continue to see people putting money into china. g20 leaders warn russian president vladimir putin more sanctions could be on the way as they meet in brussels to discuss possible measures. now to our top story, a quite astonishing story in japan. the gdp number shows a 1 president 6 contraction against the expectation of 2.2% growth. one of the analysts said there's a big drop as businesses cut back on investing. key consumption is another weak quarterly factor. japan is now back in a technical recession following the drop in q2 after the sales tax came
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through. the latest fall is cementing last week's rumors of the second tax hike to be delayed and a snap election will be called. now what does that mean for the markets? the nikkei, sorry, the yen hit a seven-year low of 117.06 but they are currently up .92%. does this mean we get more easing or have a snap election? or a sales tax hike is delayed? hence the volatility we have seen in the currency today. but the move in the nikkei has been unequivocal down 2.96% today. but we are showing a two-year chart to highlight the incredible run the nikkei has had despite poor fundamental data. as you look at the chart, it's hard to think it can go up further despite the ongoing stimulus we will surely see. as i just said, the data raised further speculation that a tax hike could be delayed. speaking to cnbc, decisions on a
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tax hike are going to be a delayed. >> to the depreciation of the yen to the structural reforms, we can't say they should delay the sales tax hike at this time. we really need to see more data. and it's also the case that japan's debt to gdp ratio is very high. so they have to be considering both the short-term effects of a sales tax hike as well as the long-term implications for debt to gdp. they have two long-term things to be considering when making these decisions. >> joining us is chris sicaluna to discuss the latest data out of japan. thank you for joining us this morning. there have been many investors along the japan market given the trust they have put in shinzo abe, but clearly having worked
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for the japanese economy, what else is left in abe's tool kit, do you think? >> well, i think that's a long way to go, actually. i wouldn't jump to too many conclusions on the back of the latest gdp numbers. in fact, we would expect to see a return to positive growth in the next quarter after that. you know, another way of looking at this number is that it does cement the decision to postpone the consumption tax hike. i think that's a good thing, too. let's give growth a chance in japan and give economics a chance to work to regenerate inflation before one has to start worrying about tightening fiscal policy. the decision in april to increase the consumption tax was perhaps a policy error. thankfully, they have time to sort that out and adjust to that. and let's not panic, but i think it does make sense to put the second consumption tax hike on ice now and focus on regenerating growth and
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inflation. >> chris, you say investors should give abenomics time to work, but how much time as investors have been waiting a while? >> i think there's been quite a lot of positive steps forward on the back of abenomics already. we saw inflation push from negative territory firmly into positive territory. of course, because of the positive developments, that gave the confidence to go ahead with the first consumption tax hike. but now we can see that it has taken a lot of wind out of the sails for recovery. so let's put the second one on ice and wait for that massive monetary easing from the bank of japan's work. we can probably expect further modest fiscal stimulus from the government in terms of extra public spending. the corporation tax cuts as well and sufficiently to generate lasting events of the recovering growth and shift inflation, which is starting to drift back
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beneath 1%. get it back above 1% and let's get japan, help it to become a more normal economy. one of steadily rising growth and consistently positive inflation. >> at the moment it's far from being normal as you highlighted growth negative, the currency is in a freefall, and the government coffers won't be replenished any time soon with tax hikes being pushed back, so how far are we from total panic from foreign investors n particular, selling government assets? >> we are a long, long way from that. for a start, investors hold a small share of the gdp market, less than 10%. it's a sophisticate d and almos total gross issued into the gdp
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market. if you look at ten-year yields below 50 basis points, one really doesn't have to worry about that. the bank of japan will keep the yields exceptionally low, not just this year and the next year, but the year after that. we are a long way from having to worry about fiscal us is tapability. the government debt in japan is pushing on quadrillion yen now, worrying about 5 trillion yen here or there and the delay in the consumption tax is seeming rather pointless. you know, frankly the key challenge for japan right now is trying to drive out those deflationary pressures that have dominated the last 15 years. that's going to take a long time to drive those out, so let's have a consistent macroeconomic policy to achieve that. one really only has to worry about the risks of qe and postponing the consumption tax
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for as long as inflation or if inflation starts to rocket ahead well above the 2% target. i think that's highly unlikely given the pressures in the japanese economy, for example, those associated with adverse demographics. so i think at the moment the costs really are pretty small of delaying the tax hike because of expanding qe in a way that bank of japan did. in a couple weeks, the pep fits are probably quite large. >> in the meantime, we are seeing the nikkei move lower and the yen continues to depreciate or appreciate against the u.s. dollar. thank you. and we have the head of the european central bank here who says that we need to wait to see the effect of abs as it backs securities and covers bond buys.
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the unconventional measures could theoretically include buying state bonds. and on the back of that, we'll see the euro move slightly lower against the u.s. dollar currently trading at 125.05. now we had four weeks of gapes in the u.s. but that hasn't been the case in europe where in november we have been range-bound and struggling for direction. that's what we've got again today. 9.5% of declines in the stoxx 600 partly because of the weak sentiment coming through from asia and partly because we have not gotten any fundamental data to urge us forward nor convention from the ecb either. the stoxx 50 is down .53%. we'll see where the weakness is coming with the ftse 100
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down .31%. france is down .26% and we'll go to the top stocks. h&m reports 14% higher sales in october over last year. that compares to reuters forecast of 10% growth. you can see it is up 1.40%. meanwhile, the vivendi is up .30%. almost double on last year. the french media firm was boosted by two major assets. stephan is in london with more details this morning. >> reporter: good morning to you. because the net profit was boosted to have the operating profit more relevant in this case, and it is much higher that expected. at 151 million euros was the ample forecast and it was at 310 million. this is partly due to some significant cost reduction at the universal music. in terms of businesses, the
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revenue from paid television can increase by 3.4% on the quarter, mainly thanks to its international expansion. the revenue from universal music is almost 6% contraction and still because of the decline of music sales from physical support, vivendi will soon receive a huge amount of cash as the company divested a couple of companies receiving 35 billion euros from the sale of the french group and will receive almost 5 billion euros from the sale of the unit dprgdp. this would bring down a significant amount of cash to the shareholders, around 7 billion euros, but they didn't say how and when precisely.
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they need to give more details about the plan and when the debt will be reduced. the market reaction this morning is up 0.2% outperforming the french market on this monday morning. back to you. we'll have a look at bonds. we have seen on friday and again today a little bit of yield compression in the u.s. as you can see, 2.29%. we are just below the 2.3% handle. when you think that most of november we have been range-bound between 2.3 and 2.4, we have dropped below 2.3% today as a slight risk aversion sign even though the u.s. equity markets are hitting highs the last four weeks. the gapes have been small and it is not and all-out risk on trade. similar trade for the ten-year guild, we are still at.775%.
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the yield compression follows relatively significant falling below 2%. that's quite a psychological barrier to cross over. and the most interesting today is the yen that initially fell to a seven-year low, 117.06. it is now up today so the currency is struggling to know which way to move off the weak currency. we are at 124.92 on the u.s. dollar. shares are trading higher for merck after they struck a deal with pfizer to develop cancer immunity drugs giving it upfront $850 million. merck can receive up to 2
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billion through regulatory and commercial milestone payments. the two companies will jointly fund costs associated with the project, but pfizer lowered its guidance for 2014 as a result. the immune therapy uses your own body to fight cancer. citigroup estimates this to be a $35 billion market. pfizer and merck not the only players. roche and bristol myers are l k looking into this therapy. >> we'll talk about this more but still a lot of deals to be done in the health sector. >> i think it is a partnership. the leading cause of death right now in the u.s., heart disease is number one, cancer is number two. so clearly a growing need for
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medicines and treatments to combat cancer. >> indeed. and news of another deal in the health care sector. activists reportedly are nearby after earning up to 62.5 billion that could end up in pursuit from activists. they could pay between $215 to $220 a share. a deal could be announced later today despite the current 4 billion dollars. and allergan and valent pharma are both up this morning. and find out who is piling into the al alibaba shares.
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and speaking of trust, would you be happy to use facebook at work? stay tuned to weigh in on the viewer exchange.
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the g20 leaders in australia has wrapped up with commitment to boost global growth and tackle climate change and tax avoid dance. matt taylor filed this report from brisbane. >> reporter: australia's role in the g20 ended much like it began. g20 countries examining ways to foster job creation. >> because of the efforts the g20 has made, this year culminating in the last 48 hours, people right around the world are going to be better off. that's what it is all about. >> reporter: leading discussions, the challenge of growing the global economy with the latest confirming if they implement actions devised over the past 12 months by their finance ministers, they will be able to achieve an extra 2.1% growth on top of current projections. >> i believe that the g20 this weekend has shifted again from
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responding to events to setting an agenda for growth. our message to the world is that governments can deliver. >> reporter: on a scorching pris brisbane weekend, the hot weather was the topic seem dpli off limits by the australian host but ended up dominating talks. japan also confirming a 1.5 billion dollar climate fund commitment. >> we're showing that there's no excuse for other nations to come together, both developed and developing to achieve a strong global climate agreement next year. >> reporter: meanwhile, australia, japan and the united states all say they oppose russia's actions to annex crimea. the u.k.'s david cameron also flagging the possibility of further sanctions against russia. >> we have just been discussing
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in a separate meeting that we will continue to maintain the sanctions against russia. we'll continue to keep up the pressure. and that if russia continues to destabilize ukraine, further measures would follow. >> reporter: but president putin who faced the threat of a shirt-front from tony abbott was all smiles in front of the cameras. behind closed doors, the reception was much frostier. in brisbane from the g20, matthew taylor, cnbc. the ocd and imf say the new fed policies could increase by 20% if implements. we spoke to the managing director david lipton and asked him about differences over whether the government should save or spend. >> i think people have come around to believe that countries have to operate on every margin from putin that they have. and so where there's room to demand more, they'll demand
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more. and where there's not but there are structural reforms to be done, people will focus on structural reforms. i think if there's disagreement, i think there's an understanding you have to do some demand and some supply measures. if there's disagreement, it's about who can do how much. but i think what we'll see and i would add that in the eurozone, in particular, where the economies have been a little more sluggish than people had expected, that means also that the level of concern's a little higher. so we're seeing countries now coming around to thinking about what more they can do. >> we're joined now by jerry fally, and we continue to debate what the best path of action is to get growth going again, particularly in europe. you think that we will have outright sovereign qe by next month. what gives you confidence that we'll see that? ? well, our economists are definitely looking for the first announcement of qe in december and potentially more next year
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in the second round of qe, because whoever starts qe never finishes with just one program. it's really what draghi has been talking about with expectations and the forecasts coming down. december is a reforecast meeting so they may take the opportunity to expand the program because the forecasts are very much likely to be lower in the coming years. >> gerry, we got a sense from mr. draghi while he's ready to act as necessary, he wants to give the recent measures a chance to come but we have not had the second numbers due in december, so surely he'll wait to see the numbers and give them a chance first. >> they would perhaps like to see those work, but they also want to get a balance sheet back to 2012 levels. and we think they are probably about 600 billion euros short of that based on the programs already announced, including the abs and a couple bond purchase programs. they really need to do something more. the market they could go into would be either the corporate bond market or particularly the
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sovereign bond market because you need quite a lot of debt and liquidity to get that size done. and keep in mind, the ecb did not cause a stellar recoverfully 2012. so that may not yet be enough, but the key we are looking for is the open door to sovereign purchase, which you'll be happy with because later on in the program they will expand it further if need be. >> i saw quantitative easing priced already into the market trading at multi-year lows. >> you would think that actually, but on the announcement of the qe programs, yields usually go up. particularly if it's a credible program to increase expectations and contributes to some sort of confidence. the growth may eventually follow in indirect mechanisms. the fact that yields are low is more of a deflationary concern more than the qe is on its way. what we would like to see in terms of the qe being priced into the market is the reversal
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of the downward trend because that's dropped about 100 to 150 basis points the last year, which is really showing very low terminal normal growth consumption to europe. and that's part of the reason why the euro declined, which should be beneficial for a lot of european companies. because it's not enough to keep the share prices up in europe. >> i want to talk about what this means for the u.s., in particular, not just in europe but following japan's data this morning. we are likely to see further easing from japan as well. easing outside the u.s. borders, does that help the u.s. because it's just more liquidity globally or hurt them because it means the dollar is likely to be stronger? >> well, it's a little bit of both. the dollar strength is less of a headwind to the u.s. than currency weakness is a title wind for many economies. so the u.s. can handle a stronger dollar. actually, more policy divergence outside the u.s. versus the u.s., which looks to be tight anything up next year, is
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potentially a very powerful flow driver pumped into the u.s. to keep funds very cheap without qe. the last time we had a really strong dollar environment started in 1995. and at that point you had u.s. growth outlook performing, the u.s. asset prices outperforming and the currency outperforming globally. think about that in the cop text of today with european and japanese investors n particular, with weak economic growth, weak asset price performance and currency depreciation. all those investors are looking for where they can put their money for better opportunities, better growth and better currency performance, which would be the u.s. as that money flows into the u.s. and the u.s. investors also keep their money at home, the liquidity will be plentiful and cheap in the u.s., even without positive easing. so we are expecting a relative ly calm yield much like in '95, '96 and '97. the big problem for that scenario is that a strong market
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where the liquidity is attracted to u.s. markets is it's not very good for emerging markets, but that also means cheap capital has less control of the mop tear policy. >> gerry fowley, thank you. david cameron warned russia of further sanctions if the situation in russia continues to deteriorate. he arrived in brussels to discuss public measures and fredericka said she wanted to find a way to engage moscow in talks. >> we will be sure to install sanctions, but not just sanctions because if we work only on that and not on the other two tracks, the sanctions would not work. we have to work more on the reforms of ukraine and then we'll start right now with the ad minster. we'll sign agreements to allow the european union to start
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emission to assist on restructuring the civilian security of the country. vladimir putin, meanwhile, said there's a good chance a revolution to the european crisis. the russian leader left the g20 summit earlier after facing pressure from the can nad yap leaders. the russian president was reportedly told to, get out of ukraine. but he played down the significance of the timing of his departure. >> translator: it takes nine hours to fly from here to moscow. so i still have to get home and on monday i have to be in the office. at least i can get four to five hours of sleep. >> and we'll discuss more on russia and vladimir putin coming up on the show. and another big story, the shanghai/hong kong stock exchange is live. we'll discuss this after the break.
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you're watching "worldwide exchange." bringing you business news from around the globe. a blow to economics. japan's gdp is lower. and merck is jumping to buy
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pfizer but will it cut its quarter profits? and the shanghai stock link goes live. the g20 leaders warn russian vladimir putin more sanctions could be on the way as world leaders meet in brussels to discuss possible measures. and our cues are coming from asia given the disappointing gdp numbers trading in negative territory. the dollar is trading down .30% against the yen. also looking at european markets trading right now in negative territory. we'll get a good gauge on investor sentiment in germany tomorrow with this report that will give us a good gauge of how investors are responding to the
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recent weak economic data coming out of germany, although gdp data out of germany on friday came in slightly better that expected. right now the xetra dax is down .80%. the cac 40 is down .76 kt. and the ftse market is trading lower. a look at the stoxx across the eurozone, we are looking at the index trading down just .90% or 26 points on the day. interestingly enough, over the last month it's gaped momentum up 2.5%. so despite weak economic data priced into the market over the past one to two months, we are seeing a little bit of a rebound here. >> it's all about capturing the end of the rally in september and october. let's look at bonds now, 2.29% on the ten-year in the u.s. with a little build of yield concession across the major bond indices.
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germany dipped last thursday where it remains at 0.08. in general, the dollar is giving up a limit bit of ground against the yen. it had gained earlier in trade. now we have had a volatile session for the end continuing as we get some flashes at the moment out of prime minister abe who says he would like to andize the situation and calmly decide whether to press ahead with more easing and more tax increases. this also follows the significant decline in q3gdp we had earlier today. the three hours of government economic policies are steadily yielding results and japan cannot miss the chance to exit deflation. he did admit the july to september gdp was not encouraging. now, the surprise supplied in japan's gdp may mean no sales tax hike next year as we mentioned earlier.
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and we are live from nikkei with the story live from tokyo. >> reporter: thank you, wilfred. the number we have all been waiting for, the preliminary gdp figure for the july/september quarter was announced today. and the inflation contracted by 1 preside 1.6%. and a rough 2% expansion to tumble the nikkei closing 3% lower. the main reason and lists were caught by surprise is that the negative contribution from the up event terror was significantly larger than expected and consumer spending expanded. but the growth was far smaller than released by the cabinet office. regarding the gdp results, the economy minister said in a press conference that the impact of the april consumption tax hike had been greater that expected and that the government has learned that raises taxes while the country is still struggling to break the grip of deflation may not be the wisest policy. so the disappointing economic
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figure likely ended any chances that prime minister shinzo abe would raise the tax next october. he may announce a decision to delay the tax hike as soon as tomorrow and dissolve the lower house of parolment. back to you. >> amy, thank you very much for that. now moving on to the highly-anticipateded shanghai/hong kong scheme could be posting ipos in a matter of months. according to the stock exchange ceo charles lee. eunice yu is joining us live with more from shanghai. >> reporter: hi, wilfred. global investors were showering the stang high stock exchange with a lot of attention today hitting their daily limit because they were so interested in buying so many shanghai stocks. some of the trends we were seeing was that people were buying consumer plays, a big liquor and as well as a partner for general motors here, saic.
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a lot of interest in the big companies. overall like you said, a lot of people were excited here about the greater meaning of all this. because of the shanghai stock exchange, officials say they really see this as a step towards paving the way for the shanghai to see this as a way for china to open its financial system. one of the disconnects that people have had about the chinese economy is the fact that it's financial sector has been so closed off. it's capital markets and overall financial system. and now you're starting to see a bit of an opening. and investors here were also excited that we ended up talking to a up cole different people in shanghai who were more high network individuals. they were very interested in buying into the hong kong stock market because they felt like this was another way for them to really diversify their own portfolio and have a broader impact on global markets.
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over to you. >> eunice, thank you. we just got a few flashes out on the bird flu outbreaks in europe over the last couple of days. the german, dutch and british outbreaks could possibly be linked although over the weekend all of those cases are said to be low risk to humans and they were being contained. we'll get more on this story and bring it to you. now back to the china/shanghai stock connect. the fund manager at henderson global investors is joining us this morning. charlie, thank you for joining us. is this a game change her? >> good morning. i think it is very significantly based. as an investor overseas in china, it is very important to now access the companies you previously did want to buy because either they were cheap or the best operators can come to do that now from hong kong. it's almost like a new investment opportunity. >> what are the big risks investing in the chinese market. investors seem to be cautious
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when it comes to the chinese banks. i was just reading that the chinese banks ratio is 1.6% at the end of september up 0.9% in june. that's a big concern for investors trying to figure out where to put their none the chinese market now. >> surely that's a big question from investors. if you look at the flows of what people are buying today, they are seeing things relatively cheap, the saic, they are the largest auto company in china. and they are still trading cheaper. so china is a volatile and more riscy asset, but i think investors knew it to better wipe before they whine about it.
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>> are you seeing the tax from the government again since april time and therefore growth numbers haven't been too disappointing? >> there's a number of things going on. the basic stimulus in the economy from april is taking a real bit of the market up. i think probably in the short-term some of them are getting growth and trying to buy company ps that foreigners are buying. and then lastly in the near-term, i think people's expectations probably accelerating. and therefore i do think people expect the rate cuts to come in. >> speaking of china, some of the largest hedge funds snapped up shares in alibaba following the latest 13 filings from the sec. the whale watching reports show 7.2 billion shares in second.
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and alibaba's smaller rival is due to report earnings before the bell today coming just days after the group reported record sales on singles day with over 14 million orders placed. that's up about to% compared to last year's event, 320%. we'll see more money flowing into china given the transparency and how we have seen a lot of the ecommerce players have strong ipos and continue to move higher. >> the one thing about the economists is the cash flow growth for the companies is dramatic. if you look at the financial status and see alibaba, that's the difference that you make on the chinese businesses, so i think that's something attractive far lot of people. those types of companies, they are invested from the u.s. or hong congress or shanghai? i think there's an investment
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case for countries in each of those, but clearly the biggest ones have been, as you say n the u.s. market. >> and charlie, from your notes, i get the feeling that you are slightly general in the outlook for china but do see lots of pockets of opportunity. is that a fair sum mate and what is the top opportunity here at the moment? >> i think that's a fair conclusion. we are very cheap because people are shut upping it. and they are looking to go buy attractive companies. so what we say is very interesting because of the investing opportunity that is you will see people exploit through the disconnect today. but companies like you mentioned in alibaba, it is really quite soft ground for a stock picker. in terms of growth and value,
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notwithstanding what mac co situations are. >> charlie, thank you for providing that to henderson global investors. another story on the way. this will have you jamming to your favorite rid tunes while going around town. the and droid and apple apps soon come with a feature to let y you. the companies teased the service earlier this year when they released a video ad in france showing a pass up jer walking out to his playlist. this sounds very intriguing given that i use this a lot in london, it is quite cheaper in relation to tax season here in london. why not take over and jam out to somebody like beyonce or taylor swift. your two favorite singers. >> two of my favorite indeed. i don't know if the smurfs make any difference.
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the trend is. you can't be knowledgeable about that, which is why there's such a battle. facebook wants to help you keep your work and personal life separate. the fastball times reported the company is secretly a new face called complete facebook at work. you can let them connect with contact and collaborate. we are trading in frankfurt today. unless we see it, it is 9.83%. >> i want to hear from you on this. would you trust using facebook for networking, or would you be too concerned about your privacy? join in on the conversation here on "worldwide exchange" or by
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e-mailing us at @seemacnbc. >> i'm very concerned about privacy aspects of facebook. and i know they said they have changed their culture in the last six months or, so but i need to see more before my work contacts are involved with facebook. >> i think it's a great opportunity when you look at linkedn, the leader in the social networking business space, but i think it will take a while for facebook to really strengthen its position given that there are a lot of employees or employers that bunned me because they don't want to limit or not wasting time. >> i agree. get in touch with us on that debate. and still to come on the show, the power of fear.
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find out where a group of london ceos chose to start their work with the tribal dance rather than a strong coffee. that's coming up on "worldwide exchange." location. location. (shouting) location. here's the location that matters the most. here. or here. or here. it's wherever this is. to get customers to come here and stay here, you're going to need an app that connects to all your systems. so they can bank, shop, do what they need to do, and you gotta do it fast. before the competition does. it's tough out here; you better be on the right cloud. today there's a new way to work. and it's made with ibm.
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activists are reporting a near deal to buy allergan. activists could pay between $215 and $220 a share. news could be announced today. this comes ahead of the special shareholders meet iing at allern that is up 8% in trade. valeant is flat. and merger talks between the oil services firms have stalled. on friday the initial offer from halliburton was rejected after making a counter offer. reports say the companies have failed to agree on price and other issues on how to address anti-trust concerns. we'll look at shares here to be one of the reasons we saw the
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energy numbers come up slightly. halliburton is up 1.2%. "shrek" may not be joining the forces with "transformers" after all. the talks between dreamworks and hasbro have fall up apart. dreamworks wants $35 a share. dreamworks is off consistently at 15%. hasbr sorks off 1.%. >> we are seeing the reverse on the gapes last week on the speculation of a deal. another stock in focus, the chairman of the troubled italian bank says there have been no approaches from any other lender over a possible merger. however, alessandro said the options are still on the table. for more on this, claudia is in milan with more on this story. >> reporter: yes, good morningment we are seeing the stock trading higher on these comments that came out from the chairman, allesandro.
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remember, this stock is down 38% since the beginning of the year. the stress test resulted in the need for the troubled lender to go forward with the capital hike that in the end is going to give 2.5 billion euros. further 220 in order to help with the lack in capital are going to be coming from asset sales. the company has just reported for the tenth consecutive quarter losses of 1.5 billion for the first 2014. more nonperformers weighing on this, so the idea that a buyer is out there but still not identified. he said over the weekend that the idea seems to be boosting the stock. the focus is on the fact that this troubled lender will, in
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fact, turn back to help. you are seeing banks in negative territory, so we'll closely monitor to see if anything comes out for a potential buyer. back to you for now. >> claudia, thank you very much for that. moving on, reforms desperately are needed to deal with trust in the banking sector according to the british lawmaker and drive tilley. terry, you said it is extremely concerning that the currency market has been exposed to similar manipulation to that of the rival market. five of the six banks hit by fines from the international regulators last week understood to call that millions of dollars in bonuses to traders and the european rules. the banks have the authority to hold up paid bills. and one of the five rural banks is looking into the
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chairman of the new city initiative. one of the core beliefs is to trust the sector. great to have you with us. the sector does suggest that this is going on in the sector, therefore is it fair to view the sector as a whole point negatively? >> well, i think it's fair they view the activity of the individuals. that's very important that we do have that. but our concern is that smaller firms like mine are being treated like small banks. and i think it's structured completely differently. this is a struggle we're having. we're lumped in with all the bad boys and they are throwing all the good babies under the bus. >> the regulatory pendulum
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swings rather far after a crisis, whatever it might be, so surely that's just the reaction we would expect when there's been that type of wrongdoing. what kind of things can you do? what points can you highlight to prevent the regulators from tarring you with the same brush? >> well, we can show our structures are better. we behave for our customers, but we are more alined. and what is interesting when you look at the forex scandal, the individuals are driven by the targets in bad management. it was cultural. you can't stop one individual in crime but you can change a country of organizations by enforcing the responsibility initiative and carrying out long-term thinking of how you treat your clients. for my business, it's about having long-term client relationships and being rewarded for maintaining that sustainable client activity. >> but don't you think that the bank fines and fees will result in institutions playing by the rules many the future, or is
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there a cultural change that is needed? >> it's all about the culture when you have people truly linked. and the whole management structure has to feel the pain of individuals. you have to either bring back the concept of liability, you have to have partnerships like we have where we care about what the people do. and the big issue in the organization is that no one really cares about the guy next door and what he's doing. whereas in my organization, we are tied together and eat from the same table. so you're forced to really worry about controlling risk. >> just quickly, what is the biggest threat regulatorywise that you're facing? domestically or in europe? >> it's in europe. we immediate to make sure we see london has a hubbub of rising financial firms. this is how we get out of the recession and grow. it will be how the small firms really can have powerful intellectual superiority for the rest of the sector. >> we'll leave it there, domenick johnson, ceo of somerset capital management. that's a fascinating discussion
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to watch closely. coming up, how do you kick start your morning? a double espresso or a does up sit-ups when you get out of bed? maybe you should consider a war dance. earlier 30 gathered to launch global entrepreneurship dances. >> the traditional dance of the new zealand rugby team. there. it looks like it was not a dumb idea to wait 20 years to make a sequel. "dumb and dumber too" topped the box office with 38.1 million pushing disney's "big hero 6" out of the number one spot. and harry and lloyd go on a road trip to find harry's long-lost daughter. the best debut since "bruce almighty" in 2003 and the best in jeff daniels' career. we'll look at the u.s. futures
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before going to the break. the u.s. futures are also pointing to a negative open. the s&p is expected to open eight points down with the dow expected to open 52 points down and the nasdaq will open 14 points down. and a quick look at the european markets in the red, the stoxx is down 0.60%. and italy is down 9.8%. and japan is falling into the recession, the question is how will the global markets react to date? we'll discuss with a round of experts.
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welcome to "world wild exchange." i'm seema mody. >> i'm wilfred frost. these are your headlines from around the world. >> the nikkei is sent sharply lower and weighs on sentiment in europe. and activists near a $65 buyout deal for botox maker allergan putting valeant out of reach. and pfizer cuts its earnings guidance after cutting a deal with drugmaker merck to develop cancer treatments. and shanghai's stock market goes live ahead of the landmark
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scheme. wilbur ross tells us he doesn't see nip pulling out of china. >> i see people continue to put money into china. >> you're watching "worldwide exchange," bringing you business news from around the globe. four weeks of consecutive gains for the u.s. market. the s&p 500 trading in record high territory, but the big question is, will that japan gdp number disappoint the street and weigh on investor sentiment not just for today but for the week. >> it's hit the nikkei by 3%. it will be interesting that it could be one of the reasons the european markets are down today. we'll see what it does for the u.s.ment more interesting on the u.s., four weeks of gains, that on the headline seems to be positive, but look at the size of the gains quite small and the bond market with a bit of yield compression dipping below 2.3% suggesting the all-out risk.
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>> the s&p 500 finished up by 1% more or less to close out the week, so a narrow trading range as you pointed out. prix-market trade in the u.s., we'll see how investors factor in the gdp report from japan worse than expected. the dow jones industrial down 50 points. the nasdaq is down 14 and the s&p 500 is also showing some losses in premarket trade down just about nine points. in the u.s., retail earnings will take the spotlight, but t.j. maxx and others we'll get to. but look at how the european markets respond to the gdp number with weakness in the yen and in the nikkei as well translating to losses here in europe as well. the ftse 100 trading down 25 points. germany, france, italy, all trading in negative territory. but we'll keep an eye on the xetra dax markets volatile given the mixed economic data investors have been factoring in. the gdp numbers on friday
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slightly better that expected. germany was able to avoid a recession. of course, that came in as a surprise. and one of the reasons we saw the markets move higher, but right now in response to japan's gdp, we are looking at the xetra dax down 50 points. not a great start to this week. >> absolutely not. down in europe as well. we'll look at the bond market to touch on the points i just mentioned. in the u.s. we are below 2.3%. in the last few trading sessions, yields have come off bond buying suggesting that the investors are a little worried about the outlook. we have seen that across the other major bond indices as well. ten year in germany, we are below 9.8% since thursday. and quite a lot of yield compression in the u.k. since mark carney's relatively dubbish statement last week. we are now above .28. we'll look at the euro just
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slipping a quarter percent at 1.24 against the dollar. the most interesting today has been the yen which initially fell to a fresh seven-year low of 117.6 but it bounced up to 116.8. we'll look at commodities with oil continuing its slide. the nymex is at $74 down 1.3%. brent is still below 80, 1.4% today. and the saudi arabia stock index is down 3% on the back of weaker oil prices. now, back to our top story with japan's price slip into recession. we have been following the asian market reaction from singapore and this report was filed. >> reporter: japanese ek wes getting dumped today with the market down by 3%. the biggest loss in three months as q3 data showed the economy slipped back into recession. so what the numbers are going to
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do is cement the case for the sales tax hike to be put on ice. it is clear to say that the japanese commerce cannot handle the higher tax burden. we saw money flowing into the safety of the jgb market and the japanese yen as well on a risk aversion play. elsewhere in the markets, we are watching the hang seng very closely after the hong kong/shanghai stock connect went live. it was clear to see that the inflows into the northbound trading sector with money benefitting the shanghai composite did end flat because we have seen a lot of positioning in this market and some profit taking just today as the stock connect went live despite the flurry of buying by international investors. hong kong, the benchmark, hang seng down by more than 1%. that's how we start today in
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asia. back to you now. now japan entering recession coming as a surprise to investors and that's one of the reasons you're seeing asian and european markets trade lower. we'll bring in tina fordham at city group. as shinzo abe run out of time and need to look at other policies and programs to put in place to revive the japanese economy because clearly what he's done so far hasn't worked. >> well, i think that abe does have a couple of options available to him. i'm not sure that he's run out of road because it's not just what the market thinks but what the people think. with that in mind, i think the expectation that he dissolves the japanese parliament and we have early elections this year seems a likely one. >> last week we were considering that we might get earlier elections. and the reason for that or the reason touted was to give him a stronger map date on the expectation. he would certainly get elected rather that carry things out at 2.5. now we are learning that the election could be a certainty on
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the back of very poor data. over the weekend half his prospects could be elected off the back of this weak data. >> well, remember that the public is not quite the same as investors. they to end be a lag time so a data release over the weekend may not jeopardize his chances of next year. i think that he could comfortably win and then of course his challenge will be parliamentary elections that come next year. >> the focus is not just on abe but the bank of japan does meet this week to discuss next steps in monetary policy. any major milestones or announcements expected given the data we got out today. >> one small ask at a time. we'll talk about the g20 meeting over the weekend in a couple minutes. and on the radar right now, merck shares are trading higher after striking a deal with
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pfizer to develop cancer immune therapy drugs to give it an upfront payment of $850 million. in addition, mark is eligible to receive $200 million through regulatory easing. as we point out, cancer in 16 years, cancer will become the leading cause of death in the u.s., wilfred. that according to the american society of clinical oncology. so clearly it's considered to be not only a big concern for citizens around the world but of course a big market opportunity for the pharmaceutical players. >> a significant deal for allergan that could end a rival pursuit from valeant. reports say activities may pay
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between $2515 and $220 a share. news of the activist deal comes ahead of the shareholder. he's seeking to replace aller n allergan. and halliburton is looking at merger talks stalling with activus. reports say the companies have failed to agree on price and other issues such as how to address anti-trust concerns. halliburton shares up 2.5%. in frankfurt, up 1.2%. baker hughes up 2.5%. "shrek" may not be joining forces with "transformers" after all. talks between dreamworks and
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hasbro fell apart. hay were asking for 2k34r5r a share and dreamswork has fallen off the news of this last week. and find out more from warren buffett straight after the break.
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we'll give you some headlines. activists report a $65 billion buyout deal for botox maker allergan is now out of reach. and japan has a surprise recession from shinzo abe. and more on shares and profit taking. a rundown of what to watch this trading day in the u.s. the forecast is showing that at 10:00 a.m., as well as fyson foods will report their earnings. and wall street closed on friday after another
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record-breaking week. the s&p 500 came close to last year's 45 record closes. in contrast the dow has only had 25 of those in 2014. now, last week's rally on the nasdaq was fueled by apple up by 4.7% for the week and up for four consecutive weeks for the first time since the week ending june 6th. we'll bring an investment strategist at lpl financial. john, at what point do the large caps get too expensive? >> that's our favorite sector right now, the tech sector. also industrials. in terms of evaluations, we are not too overvalued right now. we are in line with historical averages. if you look around the globe, the u.s. is in the best spot right now with the u.s. economy doing very well. probably accelerated into next
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year. so right now we would favor owning large cap u.s. stocks. >> okay. we'll also take a look at the energy sector broader indices to see a big boost to the upside last week, although still trading in record territory. the energy sector continues to move to the downside. nine names were down 5% or more last week. at what point do investors say this on the evaluation basis and energy looks attractive? >> well, we have been dabbling a little bit in the energy sector. we don't own oil outright in the energy services area, and that -- those kind of plays are based on oil staying about where it is now somewhere north of $70 a barrel on wti. once you get into the 50s and the mid-60s, that makes some of the shale projects here a little less economically viable so it will hurt those stocks, but if you stay at 70 to 75-plus, those
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are in pret dty good shape. the drop in oil has been a positive for the u.s. economy overall, but another $10 to $15 lower than some of that shale boom has really helped a lot of parts of the country here and could begin to hurt. >> john, let's talk about earning season and getting toward the end of it. you put in your notes you're ready to declare earnings season a success giving it status like big elections. was it as important as big elections this earnings season? do we have to see a strong earnings season given where evaluations are? >> we did. if you recall when earnings season started, it was right during that big turmoil in the middle of october. stocks fell close to 9%. peak to trough, there was a lot of concern about global growth. a lot of concern about ebola and isis and some sort of all those things that led to the drop. what we hadn't heard from yet is corporate america, s&p 500 company earnings. over the last six weeks or so,
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what we have heard from them is that things are pretty good. we beat again on earnings heading into the earnings season. the market was looking for somewhere in the 6% to 7% range. and depending on how you measure it, we got 10. guidance was solid. revenue was solid as well, so i think the earnings season was a big success. the problem now is we have to wait until the end of january to get the fourth quarter earning season. between now and then, we are sort of at the mercy of all the mac macroissues that tended to drive stocks lower back in mid-october. >> do you think earnings is enough to drive the market higher or do you think the geopolitical tensions could weigh on the market approaching the end of november and december? >> back to tend of 2009, all the gapes in the s&p 500 have come during that earnings reporting season. so the couple weeks before alcoa reports and then a couple weeks after, if you go back to look
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since the end of 2009, all the earnings in stocks happened then. in between those times is typically when we get the big mac co issues driving, so things like the holiday shopping season. things like the drop in oil prices. things like weakness in japan. all those are going to dominate the news here over the next couple months until we get to the fourth quarter earnings reporting season. now, there are some positives here in the fourth quarter. fourth quarters generally pretty good. fourth quarter during midterm election, which we just had here in the u.s. last week, those are positive 88% of the time. and so i think there are still a lot of positives between now and the end of the year. the first couple weeks in january could be tough, which is if you go back to the beginning of 2014 where we have a difficult start to 2014. >> thank you very much for joining us. investment strategist at lpl
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financial. now is whale watching time in big name investors to unveil the big stocks e they have been buying. and directv, viacom, visa and mastercard were the most popular in the nird quarter. john pollson reports a drop in gold prices. checking shares of the stocks we mentioned, let's have a look at those now. significant moves on some of them with the board showing ups and downs. president obama steps up to moscow, but the big question is how will vladimir putin respond? we'll discuss that with analysts coming up next on "worldwide exchange."
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president obama says russia will remain isolated if president putin continues to violate international law in ukraine. speaking in brisbane, he said more sanctions against moscow are a possibility. meanwhile, eu foreign ministers arrived in bus zells to disdoes possibility of further measures.
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we have the chief political management that is still with us. tina, let's talk a little bit about what is driving mr. putin's decision making. a bravado to send the flotilla of ships ahead of the g20 meeting, but he acted surprised when treated so tough. what is driving this? >> what i get asked by investors is what is putin's end game. here's what we have to do, look at the actual scenarios of how things could deescalate or reescalate. ahead of the g20, we had confirmation of nato from russian arms and troops going across the border leading to fears that we could really be headed for a new phase in these tensions. >> and that build-up of troops that we have heard about and that we have seen, we have sufficient forces on the ground on the border to make significant strategic gains if fighting kicks off again? >> based on military kinds of
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estimates, it seems more likely what they want to do is hold the territory they've got. one of the things we have to watch for, too, is more soldiers over the border over into southeastern ukraine and we have the conflict there that has already cost a few thousand lives. the eu is looking at this as you mentioned the foreign ministers summit. we would like to see another round of sanctions coming out of that, but these will be targeted to individuals in the self-declared independent republics. >> experts are calling for a retraction in the russian economy in 2015. is that enough to stop putin from strengthening his foothold in ukraine? >> in new vie from watching russia for more than 20 years now, we must not think about this but we talked about abe that is very motivated and putin
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is calculating this. furthermore, russia can carry on for some time and putin doesn't have to worry about re-election until 2018. it's a very different set of circumstances. of course, this narrative also plays well to russia domestically. and i think that the g20 shows that putin feels like this is something he can do without fear of really adverse consequences. and can you blame him? sanctions so far have been incremental and have hurt the russian economy, but he understands that the rest of the g20 leaders are focused on the economic outlook. >> i want to move on to another political area we were just talking about during the break, and that's what has developed in the u.s. we thought the midterm elections could give the markets at least certainty whether that was certainty of gridlock or not, that the markets would take that well. so far markets have continued up since the results of the midterm elections. but looking forward, do you expect that to be significant gridlock on all avenues that
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might give reason for the markets to pull back? >> well, there's still a lot to be seen. of course, in the aftermath of the midterms, we have had postures from both sides. yes, we'll work together. but a new narrative emerged from congress in the last few days and one that i thought about, gridlock is the most likely outcome. and there were a few possible bright spots. i'm now more concerned that we could see a shutdown in congress over immigration. and a lot of real tensions playing out where president obama's threatening to use executive authority and congress even though the new congress doesn't take its seat until january 3rd, really vowing that it's going to push back on him with huge implications, not just for domestic legislation like keystone but also from the iran deal. >> we had another tragic killing over the weekend in the isis issue. isis also came out to say they made threats to kill more americans but this time on their own straights next. is there an imminent threat at home?
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>> well, the cia and the intelligence agencies tell us there is. we have it here in the u.k., too, on high alert around celebrations. so what we're hearing from the intelligence agencies is there's a significant threat. but there's no way for us to know whether it's imminent. what we see is that a group like isis, which brings together fighters from different countries, which is sort of an unstable organization, is able to make the united states make big moves. president obama did not want air strikes on iran and has. >> we just got a flash that says the french interior minister says there's a strong presumption there's a british jihadist there on the video. we'll bring you more on that. and still to come, valent closes in on allergan.
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and futures trade lower as investors digest the recent gdp data as we look at premarket trading. opportunities aren't always obvious. sometimes they just drop in. cme group can help you navigate risks and capture opportunities. we enable you to reach global markets and drive forward with broader possibilities. cme group: how the world advances. to build something smarter. ♪ some come here to build something stronger. others come to build something faster... something safer... something greener. something the whole world can share. people come to boeing to do many different things.
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welcome back to "worldwide exchange." i'm seema mody. >> and i'm wilfred frost. >> japan sends into a recession
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sending the nikkei lower. and a buyout deal for allergan is putting valeant out of reach. and pfizer cutting its guidance after securing a deal with merck to develop cancer treatments. and the hong kong shanghai market goes live. and wilbur ross says he's still confident on china. >> i don't see anybody pulling out of china. i see people continuing to put money into china. now our top story so far today. the year-on-year number shows a 1.6% contraction against an expectation of 2.2% growth.
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one of the big swing factors was a big drop in businesses cutting back on investing. weak consumption is another key factor. the latest quarterly contraction means japan is now in technical concession following the 3 president 7% drop in q2 after the sales tax fall came through. this cements last week's rumor that is the second tax hike will be delayed and a snap election will be called. seema, what has that meant for markets thus far? ? well, arrows are red so far today. we're looking at the yep hitting a fresh seven-year low against the dollar. before then recovering and coming back right now down 0.06%. does this mean sales tax hike is delayed hence the volatility that we have been seeing in the dollar/yen trade today. but the move in the nikkei has been to the downside trading down just 3%. we are showing you right now a
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two-year chart to highlight the incredible run the nikkei has had despite very poor fundamental data. but to give us more on the japanese markets and what to expect going forward, we'll bring in phyllis papa david. thank you for joining us. the big question is does this change the japanese trade going forward or do investors have to wait for another round of gdp data to get a good assessment on whether abenomics is working? >> well, the gdp number was undeniably weak to set the stage for further yen weakness. so the data really speaks for itself. it puts japan back into technical recession. it doesn't look good. it means that the boj will continue with its easy and unconventional monetary policy. and essentially it means wait and see, as you mentioned, in terms of the additional data, but it is certainly negative for the yen.
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>> excuse me, seema. is it certain that we'll have no sales tax increase in a snap election? >> we think it's likely that the prime minister abe will likely call an election as soon as in the next few weeks given the data. we flagged that the numbers were particularly important for him. so were they to come in weak, which they did, it would significantly increase the chances of him calling an election. and a likely postponement of the hike in october of next year. >> this further easing shinzo abe has not worked so far, so what else is in his toolkit to revive the japanese economy? >> well, certainly the weakness in the yen is conducive to growth in japan. a weaker yen is a necessity for the economy to recover. we are seeing anecdotely some
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companies are keeping their investments onshore because it's more cost effective. so a weaker yen is necessarily part of japan's continued recovery. and that comes alongside the three arrows that the prime minister of japan has put forward. so they need to push ahead with the reforms, with the monetary policy easing and with the easy fiscal policy as well to support the outlook. >> phyllis, if we look and take a step back, growth is negative and the currencies are in an apparent freefall and tax increases to refill the government coffers are being delayed. how far away are we from total panic for japanese social securities? >> well, i don't think the currency is in a freefall as such. the weakness in the yep is consistent with fundamentals. we are looking for another leg
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higher in the yen, possibly to the 118 level. and we have 124 in dollar/yen penled in for 2015. so we would probably take issue with the currencies taking very much in freefall in line with the economic fundamentals. that's what i was about to say. >> we'll leave it there. phyllis david, thank you for your time. we'll look at the u.s. markets responding to the japanese pre-market data trade suggesting a lower open. the dow jones is down 20 points in free market trade, the s&p is down 40 points. a ten tech-heavy nasdaq is showing a little bit of negative right now down just six points. one of the big movers in the tech last week gain iing 14
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points. the xetra dax is down 30 points. tomorrow we get a good indication of investor sentiment in germany that could be a big mover for the german markets. taking a look at france, currently down 9%. the italian market is down just around $61. we'll continue to keep an eye on the banks which have underperform ld. in fact, bank of materials are showing this from the last few weeks. and the shanghai keep sto /* stok stocks exchange is being
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watched by eunice. >> there is a lot of intention here from global investors now that they can directly invest in the limit have hit the limit for chinese stocks and picking up a lot of liquid plays, such as a shanghai automotive company to deal with general motors of the united states. and now a hard company here. a lot of this again because of the fact that these domestic store and the cop summer growth story. now, overall, the largest picture here is that there is quite a bit of excitement for how this is and important for the financial system. the capital markets have been largely closed off to the rest of the world, and a lot of people have seen this as a step to really change that. this in fact, i was told this is
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a historic moment for shanghai's development into an international financial center. also, there were a lot investors in china that will be able to trade directly there with hong kong stocks. some of them are telling us they were happy about the ability that they now have to try to diversify the portfolio for their investments and to have a larger say and larger influence over the global financial markets. wilfred? >> eunice, thank you very much. earlier on cnbc our colleague spoke to wilbur ross to ask whether china's slowdown would boost investors. >> i don't see anybody pulling out of china but i continue to see people put money into china.
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>> including yourself? >> including myself. >> are you scaling up the amount of money right now? >> we have a clean energy act in china and expanding there. i think the chinese government is send iing more. and coming up, more on this story after the break.
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and a story on our radar, merck shares topping the top of the german market after the drugmaker struck a deal with pfizer to develop cancer amenotherapy drugs giving merck a large amount of money. this partnership may come as a surprise for investors. we know immunotherapy drugs are a billion dollar market. >> hey, seema. maybe a bigger surprise considering that's one of the key reasons that folks said fizer is looking at astro zeneca in the $118 deal that was spoiled earlier this year. now that seems to be part of the
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answer. as you mentioned, they are paying $850 million upfront and then there's an additional $2 billion that could come in potential milestone payments in the drug is successful. so the companies will be collaborating to develop merck's anti-pedia 1. that's one of the therapy drugs that is in the early testing levels now. they will work on these in clinical trials and work them on a lot of different cancers, like lung and ovarian cancers. and they will operate on an early stage product as well as a lung cancer drug that is already in the united states. so this is really forging pretty strong collaboration between the two companies. and it's a big upfront payment of $850 million we're seeing here for this asset. as you said, this is such a huge potential area, up to $35 billion in revenue for all the drugs combined. >> meg tirrell, thank you for
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the latest on this story. the pursuit of botox maker allergan may be coming to and end. landon daly has more. >> good morning, wilfred. allergan may have found its white knight as the latest deal could be worth up to $65 billion in stock. a actavis could make an announcement today to put allergan out of a lrleant's rea valeant's reach. allergan has several lines of defense including sue ackman for insider trading and looking to make its own acquisitions.
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this news comes ahead of the special shareholders meeting on december 18th prompted by ackman. he's seeking to replace the company's board forcing it into merger talks. a actavis moving its headquarters to ireland last year. as for ackman, he could have plan b in the works to disclose an 8% stock in zoetis spun off from pfizer in 2013. it's been a frantic year for the drugmakers and the chances of pfizer making a new offer for astrazeneca is looking grim as this is the biggest deal of the year. merger talking between the oil services firms have stalled. on friday baker hughes rejected
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halliburton's offer after it made a counter offer. the companies have failed to agree on a price and otherish shoo issues. baker hughes is up 2.5%. halliburton also seeing a bit of green up 1.2%. now it's a great shame but "shrek" may not be joining forces with the "transformers" after all. dreamworks and hasbro talks have fallen apart because of price. dreamworks was calling for $35 per share. it is down 15%. hasbro is off 1.3%. uber and spotify may announce a deal today having you jam to your favorite tune driving around town. the apps will soon come with a feature to let you stream your spotify playlist through the
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uber car speakers. they teased the service earlier this year when releasing a video ad in france showing a passenger rocking out to his favorite playlist. wilfred, if you had to choose an album to listen to, which would it be? >> you are putting me on the list. i don't know, seema, i would probably steal your ipod and put it on the top. >> i'm sure it is miley cyrus or something. >> i would be happy with that. you know me. facebook wants you to keep your work and private life separately. they are developing a new site called facebook at work for linkedn and microsoft. you can chat with coworkers and collaborate on documents. facebook in frankfurt trading is up 9% over the last year. and this is something interesting to watch. ten years ago facebook was launched and just used by college kids and now it's
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targeting new communities. and that's including the business professionals space. we'll have to see if they can strengthen their position in this space. now, in other news, it looks like it wasn't a dumb idea to wait 20 years to make a she credit. "dumb and dumber too" topped the box office with $38.1 million pushing "big hero 6" out of the number one spot. the film follows dim-witted friends harry and lloyd on a road trip to find harry's long lost daughter. >> any of your friends in the states seen that yet? i cannot wait for that to get to the u.k. if they have seen it and don't like it, i don't want to know. >> i will tell you, two girlfriends of mine went in new york this past weekend and loved it. >> excellent news. i can't wait for it to reach london. now, before we go to break, we'll remind you of the main headlines. japan slips into recession putting pressure on the prime minister, shinzo abe. and actavis reports a near
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$35 million deal to buy out allergan. we'll be back in a couple minutes.
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who provide customized solutions... for all of your wealth management and retirement goals, discover how pnc wealth management can help you achieve. visit to find out more. welcome back. the nikkei has been dragging markets lower across the board today. it's down 3% after the gdp number came in minus 1.6% against expectations of plus 2.2%. it is now in technical recession after the q2 decline. also, as i say, that negative sentiment in the nikkei weighing on markets across europe in red across the board. italy is down half a percent. france is down 9.3%. germany and the ftse 100 down
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9.25%. no fundamental negative numbers today, but sentiment from asia coming through european markets. will it weigh in on u.s. markets as well? >> well, already premarket trade is suggesting a lower open because of the disappointing gdp data out of japan. looking at the nasdaq down 9 points in premarket trade. the s&p down 4. we are looking at the dow hitting new highs over the past week down just about 30 points in premarket trade. so how do you make money in these markets? here's what some experts have been telling us. well, we believe that the nikkei will continue to perform, especially next year when we witness this taking place. you have some value investment opportunities that i think you're seeing people exploit through this connect today, but you're also seeing growth companies, companies like
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aliba alibaba, it's really quite fertile ground for a stock picker. that's our favorite sector right now, the tech sector, also industrials. and in terms of evaluations, we're not too overvalued right here. we're pretty much in line with historical averages. and if you take a look around the globe, the u.s. large cap space seems to be in the best spot right now. the u.s. economy is doing very well. and let's give you a rundown of what to watch this trading day in the u.s. october industrial production is out at 9:15 eastern time. the forecast to rise 9.2% at 10:00 a.m. when the chicago fed president charles evans is speaking. and reports resulting before the open as does tyson foods. after the close we hear from agient and urban outfitterses. and the ceo of tgm is
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joining us now, scott, thank you for joining us. we'll talk about the lackluster data out of japan, how does that weigh on investor sentiment or when they focus on the strength anything data out of the u.s. that continues to come out better that expected? >> well, i think there will be some sort of mild tsunami to come our way. virtually, i think shinzo abe's folks have said the qe isn't working through, so we have qe doubters in japan. and surprising numbers that came through this morning won't be good. you know what? europe is not doing that well. so i think the 64,000 or 64 million question here in the states is, although we've had slow to no growth here and some of the numbers are coming through positive, are they strong enough to weather the storm of a weakening europe and say a weakening japan? and it looks like china is not going to grow at 6% like others have thought. so there isn't really a lot of
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good news here this morning. we'll definitely start off in the red. >> at the same time, earnings continue to be a red point as we hear from tyson foods today. how much higher will pork and beef prices impact this quarter? >> they are going to definitely impact earnings. i think that also we've got some cheaper grain products, too. so slowly but surely we'll start to see the high prices come down. but i think really the key here is this, tuesday, november 4th, we had and election here in the states, and i think that what that told us was clearly that the economic expansion or the u.s. is doing well story really hasn't made it down to the middle classes. we've got an economy here that is struggling. the upper 5% said okay, but take a look at what the american people said about the economy here two weeks ago. >> scott, senior vice president to the tgj investments. that's all the time we have
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here on "worldwide exchange." i'm wilfred frost. >> i'm seema mody. "squawk box" is next.
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good morning. stocks plummeting in japan that the economy has officially slipped in to a recession. and will workers like this idea, excuse the pun? facebook is working on a new product designed to let you use the social network at the office separate from your personal profile. and a smart play on the big screen. "dumb and dumber" is bag atop the box office. it's doing it 20 years later, november 17, 2014. "squawk box" begins right now.
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good morning, everybody. welcome to "squawk box" on cnbc. i'm becky quick along with andrew ross sorkin. joe is off today. and a little bit of a rough week for bono. he'll undergo surgery today after injuring his arm after a cycling accident. they were in new york after scheduled to do a stint on "the tonight show" starring jimmy fallon. this will be postponed just days after bono got a scare when the luggage compartment on his private plane fell off 15,000 feet above germany. nobody was injured but they lost luggage. and it's been a rough time. a big story in the market this morning, japan is officially slipping into a recession. this comes as a bit of surprise to investors. they are down by nearly 3%. we will be joined in just a moment with more on what this means for prime minister shinzo abe. first,


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