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tv   Worldwide Exchange  CNBC  June 18, 2013 4:00am-6:01am EDT

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you're watching "worldwide exchange." i'm ross westgate. the headlines today from around the globe. to taper or not, the question vexing the markets and could they suggest an end to the fed's qe-3 may be ending just as the fomc is meeting today. more bad news for the auto sector. car registrations down 6% in may, the lowest level for 20 years. m&a's on the line in the telecom sector. deutschland shares rallying on a bidding war between liberty global and vodafone. and it is d-day for dish in its race for sprint. will a lawsuit over clearwire
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jeopardize the deal? plus, hedge fund manager dan loeb presses his case for sony, arguing for a partial breakup of the entertainment businesses. he discloses he's raised his stake to up over 7%. >> all right, it's tuesday. we're into "worldwide exchange." plenty to look at today. just keep your eyes on comments from mr. draghi, the ecb looking at deposit rates with an open mind. meantime, syria's topping the agenda at the g-8 meeting in northern ireland, but how does their nearest neighbor view the civil war? we sat down with israeli president shimon peres. protesters swept through brazil yesterday demonstrating against wasteful government spending. is the country fit to host the
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world cup next year? brazilian stock picks at 10:30. will dish make a dash for sprint? they raised its offer. dish must act before today's deadline if it wants to follow suit. we'll be in tokyo to look at the m&a around that. and greece's highest court has ruled that the prime minister's move to shut broadcaster ert was illegal. so, what does the future hold for the company? we'll get into that at 11:20 cet. the fed begins a two-day policy meeting today with the decision due tomorrow followed by bernanke's meeting at 2:00 p.m. the fed may begin to taper the bond-buying program and that anxiety popping up again after "the ft" suggested they could begin to taper in several months, depending on the economy but signaled this in no way means rates will go up. that led to a bit of a swoon in stocks during the session yesterday. the dow gave up more than 100
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points. robin harding, who wrote the article, then took to twitter to tell everyone to chill out. he later defended his piece on cnbc's "fast money." >> the fed has a one-week blackout during which it doesn't say anything to anybody. so, people need to react to the content of the story rather than the existence of the story. and what i've seen happening today, and i think we saw it happening last week, too, is the market was reacting as if there's some secret bat signal coded here. >> asked if the article was timed for the greatest market impact, harding says he has nothing to do with that, that "the ft" sends out pieces when they write them. i mentioned mr. draghi as well. he says the ecb is looking at negative to positive rates with an open mind and with all intended consequences, rates becoming more effective. again, another measure we looked at on the considered possibility of having a break on deposit facilities, speaking in jerusalem. we will continue reflecting on all those measures.
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we are ready to tackle them with the unintended consequences that they may entail. that's in jerusalem. meanwhile, in northern ireland, it's been day one of the g-8 summit, which saw clashes over syria but progress on trade as george osborne claims the u.s. and eu are on the verge of the biggest bilateral free trade deal in history. steve is on the shores near the town where that is taking place. what do we think will be in this trade deal, steve? >> reporter: well, it's very exciting. let's face it, normally, we're very skeptical, ross, about g-8 and g-20. you've been to plenty of these meetings as well, and the substance is less around the rhetoric, but this time, this could be quite interesting. david cameron had a very good day, actually, yesterday, given the fact there were concerns about the gchq spying in 2009. to get that off the headlines and talk about a big, big trade deal which could be worth as
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much as $100 billion to both the u.s. and, indeed, the europeans, if and when they get this one done, it's quite encouraging. look, it's only the start of the process and people are already skeptical that this can be done in an 18-month window by the end of 2014 as well. there are already concerns about france and cultural exceptionalism for the auto-visual industries and concerns over agricultural, whether that would be in the deal or not, but if that happens, it would lower tariffs, make prices cheaper for the consumer, there would be more jobs and better gdp as well, so everybody ought to be happy if and when this happens as well. let's listen in to what the european commission president had to say to cnbc about the prospects of the deal and why they were looking at bilateral, rather than multilateral deals now. >> while there is not a possibility as it was our first best a global agreement for all countries in the world, let's pursue this bilateral agreement but adding to the realization,
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not withdrawing from the realization. this is very important to know. these agreements are always more than what was achieved at a global level. and in this case, they are fully compatible with the rules and the doctrine. >> reporter: i think it's very interesting. we all know that doha has taken 12 years so far and failed to achieve its multilateral ideals as well. that's why people like the president are looking at trans-pacific partnerships and the europeans looking at a deal with the u.s. are now looking at bilateral deals as the way forward. it's a defeat for the doha round but success potentially for individual deals, ross. >> meanwhile, they've been talking about syria, steve. pretty tense atmosphere between obama and vladimir putin. so, how have we finished up on that? >> reporter: well, we haven't, and it's absolutely tantalizing. it is no surprise coming to this meeting that russia is on a different planet in terms of how they believe syria should go
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forward compared to where the g-7 is, and that's the issue now. does the g-7 go ahead with a commune qique of their own agai the regime in syria or go for a broader g-8 communique, which let's face it, could be a lot blander. it would talk about humanitarian efforts, it would talk about the desire to have some sort of convention for peace maybe in geneva as well, talk about condemning chemical weapons and getting more humanitarian aid into the country as well. so, you've got two paths forward here. you could either go the g-7 route or the g-8 route, which will be less palatable, but there are no doubts the divisions are enormous between putin and obama and people talked about their body language in the conference yesterday. i have to say for my part, when they walked past me a couple yards from where i was standing, putin seeming very relaxed as well, and obama, the highlight of my career today. i said how did the bilaterals in russia go? he said "excellent." there you go, huge interview, exclusive with cnbc.
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but the point being is, well, you've got to try. but you know, it didn't seem quite like the official picture showed, but clearly, they have big differences of opinion. as i've made the point previously, putin is head of the g-20 this year. if they want to see some progress in st. petersburg in september maybe on a couple of these issues, he's got to find common ground for the g-8 presidency of david cameron, but in the meantime, we are having a fantastic day here and the weather is extraordinary. summer is the best day of the year. >> absolutely. today is the day to play your annual round of golf over there. some terrific courses, steve. >> reporter: ross, you know, i did with joe yesterday and jeff, but i think you deserve a crack as well, seeing how you're the best golfer amongst us. i'm standing on the ladies tee, which is about my limit. this is about 125 yards from the men's tea. across the water from the left, to the right and the front and a
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slight decline undulation if the pin was at front. ross, you're perhaps the only man at cnbc who could handle that hole. >> the important thing is to get past the ladies tee, as you well know, otherwise it's a forfeit. >> well, this is about ten yards from the men's tee, so a categorical fail on that. >> in that case, we'll keep the camera around your head shot then. steve, thanks very much indeed for that. it does look gorgeous, doesn't it? in around ten minutes, we'll bring you the first part of the interview with israeli president shimon peres on syria. he says consensus may be hard to find. >> i'm not sure that we're in international community. we have a global world, which is different. president obama, meanwhile, defends the national security agency's top-secret phone and internet surveillance programs. in an interview with pbs "charlie rose" before he left for the g-8 summit, the president says they are legal and transparent, even though
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they're authorized by secret court. he wants to balance with the leaks of private contractor edward snowden. >> we're going to have to find ways where the public has an assurance that there are checks and balances in place, that they have enough information about how we operate that they know that their phone calls aren't being listened into, their text messages aren't being monitored, their e-mails are not being read by some big brother somewhere. they've got to feel that confidence. >> the president also hinted he may be looking for a new fed chairman, suggesting ben bernanke has stayed on the job longer than originally planned. >> ben bernanke's a little bit like bob muller, the head of the fbi, where he's already stayed a lot longer than he wanted or he was supposed to. but i think he's -- >> but if he wanted to be reappointed, you would reappoint him? >> he has been an outstanding partner along with the white
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house in helping us recover much stronger than, for example, our european partners from what could have been an economic crisis of epic proportions. >> and the president wouldn't comment directly on whether he'd reappoint bernanke, whose term expires in january. he's reportedly considering a number of people for the job, which could include fed vice chair janet yellen and former treasury secretaries timothy geithner as well as larry summers. deutsch boris says they will evaluate opportunities but their main focus is on organic growth. we'll see where we go if we get a potential breakup of nycu next with their merger. there's been plenty of buzz on china's short-term credit crunch. analysts say that's mostly due to the sharp drop in capital inflows. chinese investors reportedly asked the ombc to lower the
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ratio to ease the squeeze. this after china's benchmark bond repurchase rate hit 6.9% last friday, its highest since authorities started compiling the rate back in 2006. traders say beijing's reluctance to boost market liquidity appears to signal its confidence on the economy. and hong kong's listed chinese banks broadly lower today. investors shrugged off reports. they have increased stakes in the mainland lenders. they are refusing to pump more money into the interbank market despite a short-term cash shortage and it's hurting sentiment. the ratings agency says chinese leaders are vulnerable to the risks of shadow banking and interest rate liberalization. meanwhile, small optic in china's investment. they gained 1% higher from a year ago. foreign capital came in at just over $9 billion in may, up 0.3%
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year on year. it's the fourth month an increase since february when china recorded its recovery in fdi after eight strakt straigt months of declines. and latest data showed home prices in china's key cities continued to climb. average home prices jumped 6% year on year in may. this is its fifth straight month of increase. beijing and shanghai markets were amongst the top gainers. both saw increases of more than 10%. meanwhile, the rising home prices continue to make housing unaffordable for some chinese living in big cities. eunice yoon has filed this report on the country's urban underclass. >> reporter: if you're looking for slums in china, this is about as close as you get. as this documentary shows, young people cram into subdivided apartments, or in this case, a rooftop, to get a shot at pursuing their chinese dream in the big city. yua hua produced the film. she moved to beijing two years
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ago, and despite her college degree and job at a tech company, could only afford to live here. "it's crowded. the smaller rooms are 3 to 4 square meters," she says. "put in a bed and it's cramped. add a small wardrobe and you fill up the entire room." despite the frenzied housing construction, many newcomers to china's cities can't keep up with the high prices. the dark side of this nation's real estate boom. so, they're forced to live in scattered communities, often in illegal structures throughout the city. she and her friends pay as little as $112 a month for a closet of a room. >> translator: the most inconvenient thing for me is that i have no windows. >> translator: the most inconvenient thing for me is that i have no bed. ♪ >> reporter: these young accountants, teachers and musicians, can't pay for one of the newly constructed apartments, nor do they want to
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move to less desirable towns. >> translator: at least i don't have to live under ground. >> reporter: we're in a bomb shelter in beijing. there's a whole labyrinth of tunnels and air raid shelters underneath the city. because housing prices are so high here, people choose to live in these places. the government has pledged to build more affordable housing, but not soon enough for the urban underclass who pine for the basics of city life. "i want my own place to stay in beijing, a stable job and a great family," she says. "that's my dream, but it's hard to achieve." all right, meanwhile, let's kick off today's "global markets report." sixuan is in singapore. >> the fomc meeting kicks off today. asian investors have sat on the sidelines and gains and losses were muted with the exception of full shares. the kospi out-shined, ending higher 1%.
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the yen trading shy of the 95 level against the dollar. korean automakers and electronicsmakers made a strong rebound after their recent sell-offs. in china, the shanghai composite also reversed early losses to end marginally higher. we know that property majors lent support as the latest data showed china's average new home prices climbed 6% year on year in may, and we just covered that china's housing story in yunis's package. the whole concerns over the economic outlook and the shore-term cash shortage still weighed on sentiment. losses in some of the coal miners and steelmakers on the second row here, they actually capped the gains on that market. in japan, as the nikkei 225 eased 0.2% today in various volumes, but sony shares out-performed the broader index, jumping 4.4% today, this after u.s. hedge fund third point raised its stake in this firm. and down under, australia miners in banks mostly lost ground after the rba minutes
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disappoint. the vsx 200 fell as much as 1.2% before ending just marginally in the red. and that's all from me. back to you. >> all right, sixuan, thanks for that. we're just an hour and 16 minutes into trade in europe, weighted to the outside not by much, around 5-4 advancers out-pacing decliners at the moment. so, as far as the ftse is concerned, this is where we trade, just up 22 points, a bit of a mixture here. the german market is down 12 points 37 we'll get into the sectors. ibex and ftse up around 0.5%. a number of individual stocks as well that we're looking at today. let's just recap where we go with that. european auto certainly in focus this morning. fresh data showing new car registrations down 5.9% in may. that's a 20-year low for the month. mixed reaction, actually, not really impacting the automakers. dynamo's got the worst. and the worst performer had a drop in car registrations.
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its stock was up about a third of a percent. sales of renault posted a 10% fall. registrations also down around 11%. i mentioned mercedes daimler, the only manufacturer with a slight improvement, although the stock is the worst performer with a 0.7% increase. as far as bond markets today, treasury yields, 2.8%, a little higher, down the yield as are gilts. forecast to rise 0.1% for the year. inflation will be running at 2.6%. it was surprise 2.4% in may. we'll keep our eyes on that. and on the currency markets, dollar/yen is still around the 95 mark, firm against the yen. we're not too far away from two-month low of 93.75. it got volatile yesterday afternoon. euro/dollar 1.3382, pretty much
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on the four-month high for euro against dollar. aussie just worth taking a look at, weakening once again, fairly dovish minutes out from the rba. and we're not far away from that 33-month low of 93.25. still to come, one of barbra streisand, bill clinton, tony blair and mikhail gorbachev all got in common? well, they're some of the 5,000 people attending the 2013 israeli presidential conference. the event coinciding with president shimon peres's 90th birthday. we'll have an interview with the israeli leader after this. we went out and asked people a simple question: how old is the oldest person you've known? we gave people a sticker and had them show us. we learned a lot of us have known someone who's lived well into their 90s. and that's a great thing. but even though we're living longer, one thing that hasn't changed: the official retirement age.
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♪ the question is how do you make sure you have the money you need to enjoy all of these years. ♪
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former u.s. president bill clinton was in israel last night speaking at an event to mark the forthcoming 90th birthday of israeli president shimon peres as well as praising peres, clinton gave his view on the idea of palestinians being able to establish a separate state. >> i don't see any alternative to a palestinian state. i think that there's been so many years of kicking the can down the road while you had a pretty good government on the wes west bank, but you have a
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divided government because of what happened in gaza that it's harder to get the palestinians to trust negotiations. >> we've been talking about the possibility of peace in the middle east with the israeli president shimon peres. >> hi, ross, how are you? >> good. >> excellent. >> what kind of mood did you find him in? >> he was a bit opaque but generally charming. we talked about the possibility for peace in palestine/israel issues. we also talked about syria and the economy in israel, but in terms of the palestinians and the solution to that problem, i asked him, is there a long-term palestinian solution on the table? >> i think more and more israelis understand the time has come to close this portfolio peacefully, and the alternative, neither us or the palestinians,
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to live in tension or danger or to live in understanding and cooperation. i think, you know, the gaps are more psychological than real. i think the greatest problem we have is skepticism, misbelief. everyone thinks, yes, we want peace, it's impossible. it is a psychological arrow. we can. we have to understand that peace will not solve all the problems. and we know to have peace, we have to overcome any problems. >> central bank governor stanley fisher recently said that if you look at the budget and you look at defense spending, if there was an answer to the palestinian problem and you were able to cut that defense spending, that would actually help the economy. >> yes. >> do you agree? >> i do.
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look, when you have the government, the different departments are spending in accordance to the proportion of their units, it is disproportionate to security. the security answers not the size of your own country but the size of your dangers. dangers are larger than countries. >> so -- >> so, what we have is to reduce the dangers. >> so, the promise of a better economy stharks enough to get israel to the negotiating table with the palestinians? >> i think we have to do it any way, and economic reasons are an additive to it. >> what will be the cost to your government, if a solution isn't found? will there be more violence? >> the problem is not only violence, you know. hate is a problem. you know, i can see two souls of
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nations in our time, a nation that gives and a nation that takes. the united states became great by giving. europe went bankrupt by taking. taking empires. when you have empires that create enemies. enemies are extremely costly. economically, humanly, and they went bankrupt finally at the second world war. they gave up all their empires. the united states in their history was on the giving side, creating friends, creating understanding, having an influence, and i think, we, too, we have to take the giving line, not the demanding line. >> there you heard president shimon peres talking about the policies of peace, pushing for peace. he's coming up on his 90th birthday in august, but he says
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he's hoping for peace. >> what hope does he have now in what's occurring in syria? >> he's worried about the destableation in the region and also saying time is short but he says it's not an international community problem. he says we're living in a global world and even that the arab league should take responsible. unfortunately, we've seen qatar and saudi arabia funding disparate rebel groups for months, but only now is the ambassador of egypt being pulled, so quite a response to syria. >> hadley, thanks for that. we'll take a short break. still to come, hundreds of thousands of protesters marched against soaring living costs in brazil ahead of the world cup. so, is the country ready to host the biggest show on earth? we'll look at that. plus, the latest print of inflation out of the uk. [ male announcer ] i've seen incredible things. otherworldly things. but there are some things i've never seen before. this ge jet engine can understand 5,000 data samples per second. which is good for business. because planes use less fuel,
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and these are the headlines. to taper or not? that question vexing the markets. the "ft" suggests an end to qe-3 might be ending just as the fomc gets set to meet. not good news for the auto sector in europe. new car registrations down 6% in may. they have now hit the lowest level for 20 years. m&a's on the line in telecom and deutschland shares rally on the prospect of a sbiding war between vodafone and liberty global. and it's d-day for dish in
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its race for sprint, but will a lawsuit over clearwire jeopardize the deal? plus, chinese banks struggle with a short-term cash crunch, but housing prices continue to climb. that's put china's central bank in a tight spot. meanwhile, we have the latest inflation numbers out of the uk. the annual rate of cpi up 2.7% on the year, 2.7% on the year. we were looking for an annual rate of 2.6%. it was 2.4% in may. may was -- sorry, in april. i was going to say the april number was much weaker than we might have thought, up on the month .2% as forecast up 0.1%. core cpi running 2.2% on the year. that is as forecast, the core cpi. rpi at 3.1%, as expected, the
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annual rate as far as that is concerned. just trying to see if we've got anything in the o&s saying what the breakdown of that was. i'll get that in just a second. we've also had producer prices as well rising less than expected. prices month to month unchanged as the forecast year on year 1.2%, the output prices of exports food and tobacco up 1.1%. input prices contracting, minus 0.3% in the month of may, though forecasts unchanged. producer prices weaker than expected, the annual rate of inflation a little bit stronger than expected. i finally found it. the o&s saying this morning that they're pushed up by airfares, motor fuel, clothing and footwear. a small downward contribution from food. so, a mixed bag of data on inflation from the uk. probably won't do anything, though to change what the bank
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of england will be doing next month, either. meanwhile, ftse 100 is up top of the session, up 0.4%. on bond markets, we have seen -- sorry, the rest of the indices are fairly mixed, as you can see. xetra dax, cac down. bond markets, yields heading a little higher on glts along with treasury yields. and dollar/yen's a little firmer today, up to 95.22, still not too far away from the two-month low of 93.75. sterling just coming back slightly post that inflation number. as i said earlier, europe's struggling auto sector weakened further last month. new car registrations down nearly 6% to 1.04 million units, the lowest level seen in may for 20 years. citron is the worst performer. with the numbers, stefan's in paris. >> reporter: hey, ross.
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only 1 million vehicles were sold in may in europe. it's the lowest level, indeed, in 20 years for the month of may, and it's dashing hopes that the car sector was recovering in europe. you remember, we had a 1.7% increase in april, but it's really disappointing for may. and without a sharp recovery by the end of the year, we're heading toward a much more negative yield than what we were expecting. on the first five months of the year, european car sales dropped 6.8%. they expected a 4% contraction of the car sector in europe because of the economic crisis, rising unemployment and also because of the lack of credit. in terms of renault, this was the worst performer in may in europe with a 2.2% decline, twice the european sector. they are also facing a 10% decline, meaning french carmakers are losing market shares. if you compare with the biggest
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carmaker in europe, 2.8% contraction on the month. it's negative for the month but it's out-performed the car sector in europe, which means that they are gaining market shares even if it had a negative performance. france, if you want to talk about individual market, france is facing the worst, one of the worst performances in europe with a 10.4% contraction in may. that's to compare with 9.9% decline in germany and 11% increase for the british market. over to you. >> yeah, stefan, i don't know whether you saw this, but they're now talking about britain overtaking france as europe's second biggest automaker. they're penciling. on current trajectories, which of course we all know may change, 2018. what do you make of that? >> reporter: yeah, even if british carmakers are now owned by international investment companies, so they're not british anymore, there are still a significant number of factories in united kingdom, therefore, they are still
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producing a lot of cars in france. a big number of factories in the country, but they are shutting down some of them. they are about to close the factory which is in a paris suburb and theyed in clear that without an agreement on the labor conditions in france, their carmaker would shift its production outside the country. that's the reason why unions accepted recently the deal with the management of renault to be more flexible and to, basically, work more for the same salary and the largest carmaker is trying to secure a similar bill with unions at the company. without these deals, yes, the production will continue to decline in france, and yes, britain will take over the leading producer in france. >> labor flexibility, you say one of those key issues. stefan, thanks very much indeed for that. meanwhile, the heads of greece's three-way coalition government will resume talks tomorrow to try and reach a compromise deal on the
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closed-down state broadcast ert. this is after the country's highest court ruled that the prime minister's unilateral decision to shut the broadcaster was illegal. the court did not reject the closure of the broadcast itself, allowing all parties to claim a degree of victory. the finance minister said broadcasts would be restarted as soon as possible. elsewhere, violent protests continue to mar the confederations cup in brazil. hundreds of thousands of angry demonstrators clashed with riot police in various cities last night. protesters argue the cost of hosting three major sporting events in three years is putting a strain on public services with schools and hospitals lacking funds. the unrest comes a week after a 10-cent hike in bus fares was introduced, coinciding with the start of the confederation games in rio. while that's going on, what are investors to do with brazil? joining us is jose martine suarez, head of research.
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thank you for joining us. >> thank you for having me. >> it is an extraordinary few years for brazil with investments they have to make. how much of a strain do you think it is putting on the country? >> well, i think this protest has been a little bit disregarded by markets. you know, the market hasn't really adjusted to this. so, it proves to a point, and i was actually talking to some investors last week about it. you know, this is becoming brazil, like turkey, is becoming a modern democracy. the right of people to protest. it also highlights a bit of a characteristic of a modern democracy. so, from the investor side, i think they've been brushed aside a little bit and i think investors have looked beyond that. from an idea perspective, and i think that proves the points that we are trying to highlight in brazil, we think that there is value there for the first time in a long, long time. the road may be bumpy, but we're starting to see some good ideas there. >> what are you basing that value on? i mean, the rail clearly has
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weakened a lot. as we've seen the dollar, sort of dollar increase in value. aren't there risks associated with that? a year ago, they were complaining about the strength of the currency and now they're complaining about the weakness of it. >> that creates ideas. the financials have a little bit more leeway from an interest rate perspective. i mean, even exporting companies may find their products a little bit more palatable. so, all three large ideas very, very visible from international standards, which benefit from the weakness. >> and of course, they're loosening up now on all the currency controls they've put in, right? >> absolutely. the lifting of the tax on the derivatives, on the fx derivatives, that has certainly helped investor interest. brazil over the past couple of years has suffered a little bit from exactly that, the over hyped expectations of future
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growth. and to a certain extent, inve investors were disappointed. but if you look closely at market from a bottom-up perspective, the consumer story's still there, the real wage growth. you know, it's still an economy full employment. we wish a lot of the european economies would have that situation. i find it difficult to find good talent at a reasonable price there. we have a team in brazil, 15 analysts there, and it's just an antidotal evidence, but it is proven to point. >> marfrig, what do they do? >> marfrig is a meat producer, one of the largest meat producers in brazil, and cernig is a utility company. >> okay. why do those two -- >> well, marfrig enjoys from the fact we're the commodity cycle, brazil is one of the lowest cost producers in beef. so, in a scenario where foods demand is still on the rise, we think they're going to do very,
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very well. we think that the balance sheet issues are going to be overcome. so, it's a restructuring story as well. on the cemig side, utilities in brazil have suffered quite a bit from the utility bill and the tariff provisions. what we're saying here is going forward, that's already in the price, so going forward, the outlook looks good. >> cemig, as we come back to talk india as well. we just got a spanish t-bill auction just come out, six-month t-bill auction, maximum yield 0.85%, higher than the 0.5% on may 14th. no surprise about that. we knew that was going to happen. 12-month t-bill, maximum 1.4%, 1.015% on may 14th. so, that's a bit of a jump, 40 basis points or so from the 1%. a bit to cover on that, too. that's expected to cover a little bit weaker. and they're raising the money, but it's just costing them a little bit more. meanwhile, heavy monsoon
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rains in north india triggering floods and causing houses to collapse. the areas most affected are near rivers where the rising water levels are submerging streets and destroying building. 11 people have died so far, 50 are missing. we'll keep our eyes on that, but jose, the thing about india, of course, is recently, they're at all-time lows. how is that impacting your thoughts on india? >> on the fx situation, it's little bit different from brazil because we're not talking exporting industry. one of the ideas that we have there is, despite the tragedy here, the fertilizer company. we think finally the demand for fertilizer's on the up. prices are a little bit more subdued, so this holiday of investing in agriculture. i'm actually going india next week to see a lot of the farming activities. so, that's one of the ideas.
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from a financials perspective, also it's a localized business, so it's a little bit off the investor -- >> do you hedge out? are you hedging out, the currency risk? do you hedge that out completely? >> we'll leave that for the investors. i'm a stockbroker, so. on the financial side, we are a little bit wary of the sector as a whole. we have one idea, which is the commercial vehicle, because we think it has turned around, which is sudan. other ideas. let me see. the i.t. services -- >> yeah. >> -- industry, probably the large-cap idea, they're doing very, very well and i think the valuation is on their side. tech mahindra, smaller play, less liquid, but i think on the acquisition trail, they're doing well. and finally, even though they've had a horrible time recently, titan, the jewelmaker, because of gold. i think the recent weaknesses has given us an opportunity to be a factor.
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>> interesting thought. good to see you, joe. >> thank you very much. >> thank you for coming in. jose martin soares, head of marketing research at espirito santo. heading to turkey, protests in the recent weeks. it's the first time the government has talked of military intervention. meanwhile, german chancellor angela merkel says she is appalled by the crackdown on protesters but did not talk about the suspension of talks on turkey joining the eu. we are getting continuous news out of the paris air show, meanwhile. boeing's announced a customer for a stretch version of the 787 jetliner. it says north american will be the first customer. united airlines is converting ten 787s to new 787-10s. also, british airways, singapore airlines also now 787-10
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custome customers. it is the stretch version. let's just call it the stretch version. i think it's easier. all right. still to come on the program, will dish make a final dash for sprint? rival softbank's upped their offer. today's the deadline for dish to do the same. we'll discuss the battle of the bids from tokyo, next.
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the blisters were oozing, and painful to touch. i woke up to a blistering on my shoulder. i spent 23 years as a deputy united states marshal. we'd get up early and, and stay up late. there was a lot of running, a lot of fighting. i've been pretty well banged up but the worst pain i've experienced was when i had shingles. i was going through some extremely difficult training, and i couldn't do it. when we were going through pursuit driving, i couldn't put a seat belt on because the pain that would have been caused by the seat belt rubbing against the shingles would have been excruciating. when i went to the clinic, the nurse told me that it was the result of having had chickenpox. i had never heard of shingles prior to that point and i had always been relatively healthy. the rash, the itching, the burning that i experienced on the side of my neck and my shoulder, i wouldn't wish it on my worst enemy.
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now, daniel loeb's battle to get sony to spin off its entertainment unit continues. overnight, his hedge fund, thirdpoint, revealed it's added 5 million shares to its stake in the japanese giant with more. we have the story from tokyo. hi, shishiko. >> hi, ross. after boost iing, thirdpoint is one of sony's largest stakeholders with a 6.9% holding. in a letter to sony's ceo kazuo hirai, they urged the board to sell a 13% to 20% stake in its entertainment arm. dan loeb argues that sony's entertainment business is worth about $10 billion and the sale of stocks could raise as much as $2 billion. mr. loeb continued that sony could boost its share price by following his proposals, but he
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did regret to acknowledge that sony is regaining its edge with new playstation 4 game console and new smartphone models. sony said that the company will review mr. loeb's proposals but declined to comment on the specifics. some analysts are saying that these proposals are positive for sony and its shareholders, since it would boost its value. sony's shares rose 4.4% today and the company will hold its annual shareholder meeting on thursday this week in tokyo. back to you, ross. >> all right, shuchiko, thanks for that. sprint is suing dish network to block its offer for clearwire. they claim dish is trying to coerce them and rejecting sprint's competing offer to buy the rest of the company it doesn't already own. this comes as dish is also facing its last chance to increase its $25 billion offer for the company. locked in a bidding battle with softbank, dish raises national security concerns over the japanese operator's entry to the
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u.s. market, while softbank's ceo slammed his rival's bid as wrong, incomplete and illusionary. last week, softbank sweetened its offer then to $21 billion. joining us for more, takashi to toakawa in tokyo. thanks very much indeed for joining us. it's a very complex situation, as we can see. anyway, the first question is, what does dish have to do today to stay in the race? >> what dish has to do, i think you correctly pointed out, it is a complex situation. what dish has to do is to provide proof to the special committee over at sprint that its offer is superior, that it does have enough funding to match softbank, to best softbank's offer, and to bring an offer to the table that's best in final as sprint's special committee has asked for
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in a couple hours' time. can they do that? i think that's what we're all waiting for right now. >> yeah. the financing side seems to be the most interesting, and i suppose it would also -- how much of a question mark would there be if, for this sprint deal, for this dish deal, sorry, how much debt would be left? >> with regards to that, i think i'll start with, with softbank's bid for sprint, they basically, what they did to sweeten the offer was transfer some of these funds that they've earmarked for capital expenditure to equity, thereby sweetening the offer. what dish has to do -- now, they don't have any certainty on funding, even though sources have been telling dealreporter over in north america that their offer is superior, they do have extra funding available, but they have no proof of this. and they also have to prove to
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this special committee and to sprint shareholders that a sweetened offer by dish won't leave sprint so levered that they won't be able to compete against their competitors, including at&t and t-mobile over in the u.s. >> yeah, meanwhile, the sweetness of the softbank offer, and they've done well in japan because of the iphone, but the u.s. market's a little bit more competitive. >> that's right. as you correctly pointed out, the u.s. market is more competitive. now, in addition to at&t, we have all the major carriers with access to the iphone. much of the success over in japan has been due to the exclusive distribution rights to the iphone. they've talked about synergies, cost savings. they do have the treasure chest to fund sprint's investment into
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expansion of their 4g network, but can they match these synergies? i think a lot of shareholders, a lot of analysts have been questioning whether or not these synergies will materialize. i think we'll see that in the next couple months. >> yeah, and then we've got a battle going on. how does the -- sprint's clearly trying to get the rest of clearwire. i know dish came with a spoiling bid for that. what happens to clearwire? how does clearwire play into all this? >> we had that development today where a lawsuit was filed in a delaware court. now, with softbank want sprint, they also want clearwire in order to gain access to what clearwire has. they are not going to buy sprint without clearwire. what dish tried to do with their tender offer for clearwire is, basically, it's more of a
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tactical move where they would complicate the softbank bid for sprint by coming in as an interloper. i think we all see this. at the end of the day, what the sprint board is saying is support us, support the softbank offer, let us have clearwire, and we'll provide more value to shareholders going forward. so, we'll see in the next couple of weeks how this fans out. >> all right. just stay there for a second, because we've also got other news in the sector. liberty global now also set to push vodafone's buttons, got a rival bid for cable deutschland, their biggest cable operator, confirming it received an offer worth around $7.5 billion. vodafone's initial bid apparently $7.2 billion. it is the world's second largest operator, considering raising its offer.
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so, cable battles going on here as well, takashi. is this a sign that whatever's going to happen, the consolidation is now back in vogue in this sector? >> consolidation is one story. i think with the german deal is vodafone -- this deal was about cost synergies for vodafone. with liberty coming in, i think they have been open in the past couple weeks about their openness to coming into this situation, their openness to acquiring something in germany, which is europe's biggest telecom market. it's hard to say at the moment. it was just announced, the liberty bid for kabel. but off the top of it, what it looks like is a tactical move, a defensive move by liberty. so, it doesn't fall into the hands of vodafone, its competitor. and i think questions are going
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to arise about competition issues. vodafone was just about to increase its offer for kabel as well. it's something to keep an eye on. >> yeah. takashi, good to speak to you. thanks for that. takashi towakawa. smithfield foods says it will review the letter sent back for the value calling for the company to abandon its $4.7 billion planned merger with the chinese shuanghui. it says it would be worth more to split into three businesses and sold. they say they considered several offers but the shuanghui deal provides shareholders with significant cash value. smithfield foods in frankfurt down 1.2%. europe has recorded its lowest share of global m&a since 1998. according to deallogics's latest
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report, they have built over $300 billion this year, down 29% from the same period last year. britain remains the most targeted country for the fourth year running and now represents 22% of europe's total m&a volume. quick reminder of the agenda in asia. tomorrow we've got trade numbers out of japan as well as same-store sales for the month of may. over in malaysia, inflation data will be out. all right, we'll take a short break. any thoughts or comments? e-mail still to come, taper speculation has got traders in a tizzy once again. we'll talk to head of global strategy robert butland. the second half hour of "worldwide exchange" comes right after this. [ kitt ] you know what's impressive?
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this is "worldwide exchange." i'm ross westgate. the headlines today. to taper or not? that's the question vexing the markets once again after an article in "the ft" suggests an end to the fed's qe-3 may be ending just as the fomc gets set to meet. more bad news for europe's auto sector, car registrations down 6% in may, the lowest level in 20 years. hedge fund manager dan loeb presses his case with sony, arguing again for a partial breakup of the entertainment business. he discloses his raise in stake of the company to 7%. m&a on the line in the
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telecom sector. kabel deutschland rising on a bidding war. plus, d-day for dish in its race for sprint, but will a lawsuit over clearwire jeopardize things? all right, if you've just joined us stateside, welcome to the start of your global trading day here on cnbc. we have the latest snapshot of investor confidence in germany with the headline sentiment index at 38.5%, stronger than the 38.1% expected for june. 37.4% was the may figure. that's helping the euro/dollar a session higher. 1.3390 was the high on the euro/dollar hit recently. how do u.s. futures play in
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right now? well, after the volatility we saw again yesterday, the dow in the end up 0.7%, is called a little higher this morning, currently 45 points higher. the nasdaq at the moment above fair value, 6 1/2 points above fair value, the s&p 500 at the moment nearly 4 points above fair value after being up 12 yesterday. it's only 2% now the all-time high hit on may 31st, the s&p, despite all the falls and volatility we've seen. the ftse cnbc global 300 ahead of all that is fairly flat, as you can see. european equity markets are fixed. ftse 100 seeing some green this morning after falls yesterday. it's just trying to tick a little bit higher. as we move it on, show you where it stands, just up 0.33%. xetra dax down 0.33%. inflation came in stronger, 2.6%, for the month of may. producer prices.
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xetra dax is up, ftse mib is up 0i7b 2% at the moment. european autos up , fresh data showing new car religiogistrati coming in weaker than expected and somewhere down at a 20-year low for this particular month. citron had the weakest sales, shares fairly flat. shares of french rival renault also not doing particularly well, down 10%. fiat were among the laggards as well. the worst is daimler, but funny enough, as far as car registrations are concerned, they have a slight improvement with a 0.7% increase. on the bond markets, treasury yields 2.17%, fairly flat during the session today. ten-year gilt yields at 2.11%. spanish yields are still below the 4.6% mark. dollar/yen, little stronger against the yen, not far away from the two-month low.
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95.12 is where we stand. the aussie/dollar is weaker, dovish of the minutes, not far from the 33-month low at 0.9477. and the euro/dollar just below 1.34. so, we are actually right now on that fresh four-month high. that's where we stand in europe ahead of the u.s. open. to recap the asian situation, sixuan is with us again in singapore. sixuan. >> thank you, ross. asian markets were a bit mixed as investors stayed on the sidelines waiting for the fed's policy decision. japan's nikkei 225 under a bit of pressure but managed to close above the key 13,000 level. china's shanghai composite finished a tad higher, despite worries about short-term cash crunch. property stocks actually let their support as data showed despite cooling measures, china's housing measures in may jumped 6%, marking its fifth straight monthly gain. and the standout performer was
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south korea. the kospi gained nearly 1% today, thanks to strong gains in the tech and auto space. lg electronics and fk gained about 4% today. and hyundai motors also ended its losing streak with a 3.8% jump. and bear in mind that the yen currently trading around the 95 level against the u.s. dollar. so, taking the pressure out of some of these south korean exporters. and sony was another big winner today. its shares climbed to 4.4% after u.s. hedge fund thirdpoint raised its stake in the country and started the campaign to push them towards selling off part of its entertame busineinment busi. sony shares have more than doubled this year. that's all from me. back to you, ross. >> thank you, sixuan. the fed begins a two-day policy meeting today, the decision due at 12:00 eastern tomorrow, followed by ben bernanke's press briefing at 2:00 p.m.
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investors are concerned when the fed will begin tapering its bond-buying program. that anxiety cropping up again after the "financial times" suggest mr. bernanke will suggest the fed could begin to taper in several months, depending on the economy, but signal this in no way means, of course, rates will go up. that once again led to a swoon in stocks. the dow gave up more than 100 points and then the "ft" economics editor, robert harding, who wrote the article, took to twitter to tell everyone to chill out and later defended his piece on cnbc's "fast money." >> the fed has a one-week blackout during which it doesn't say anything to anybody. so, people need to react to the content of the story rather than the existence of the story. and what i've seen happening today, and i think we saw it happening last week, too, is the market was reacting as if there's some secret bat signal coded here. >> and then asked if the article was timed for the greatest market impact, harding said he had nothing to do with that, that "the ft" sent out pieces when they write them, citing the
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fed's one-week press blackout before its meetings. cnbc, just a reminder, will have coverage of the fomc decision and bernanke's press conference all kicking off tomorrow, as i said, at 2:00 p.m. eastern. joining us with his views, robert buckland, head of global equity strategy at citi research. good to see you. why are we in such a tiz over this whole smoldering tapering issue? >> i think there's a bit of a perception out there that markets are being propped up by a lot of, not just fed easy money, but easy money from central banks all around the world. so, that's what's making us twitchy, that we're going to have some of that easy money taken away. >> yeah. we'll only have it taken away if the economy's improving, right? >> yeah. to use the dreadful market cliche, it's data-dependent. so, they'll only take it away if they feel the cheap money has been doing its job in turning around the economic data, and there are tentative signs that the economic data is getting better, but it's not running
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rampant. so, i think i agree with the point from the "ft." i think we need to take it in a progressive way, rather than a revolutionary way. >> yeah. the sentiment yesterday, they had a seven-year high, there is some good data. it is a slow, modest recovery. there's nothing to suggest otherwise, is there, for investors? and at some point, the fed can't keep buying. so, even if they go from $80 billion-odd -- like, if they went we're going to go from $80 billion to $70 billion, the actual real impact of that is natural, isn't it? >> $70 billion's still a big number. >> exactly. i'm just saying if that's what they said in september. >> sure. >> seems to me the only thing we have to fear is fear itself. >> yeah. sometimes the story becomes bigger than the event, if you know what i mean? so, i think effectively, you're right, we're going to see a gradual reduction in unprecedented easy policy that we've seen from the fed in the last year and a half, but it will be a trackable process. it is data-dependent.
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>> well, then it comes down to this point. is the market only propped up because of central bank liquidity? and if we just looked at the -- are we saying we have to actually look at the economic fundamentals it doesn't justify current prices? >> i think there are some markets that have been greater beneficiaries of this cheap money, and they're the ones with the most to fear, so i'd always be worried about any market anywhere in the world that's blasting through all-time highs. we've got junk bond yields below 5% the first time ever in the u.s., and those asset classes which are almost on a 30-year tear, they're clearly going to be the ones that may be most vulnerable to this money taken away. my asset class, the equity market, has not been particular ly for the last ten years, so we're less concerned about equities. >> and even with all the volatility in may and june. >> the all-time high is pretty well one set in 1999, okay? so we've been going nowhere for 13 or 14 years. u.s. treasuries have been going a long way for 30 years. >> u.s. treasury is up 46 basis
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points in may on the back of this. this is the biggest danger from the equity market from a quicker back-up in bond yields? >> i've had people saying to me, robin, i'm worried about 1994-type events when bond markets go pretty nasty, but even that was a temporary pullback of the market. i think it can create volatility. that's what we're seeing right now. but i think ultimately, if interest rates are going up because the economic data's getting better, the economic data getting better should help profits and that should be supportive -- >> there's also this view that, of course, the reason equity's done so well is just because yields have got so low everywhere else. when you see bp corporate debt offering 2%, and as i think you mentioned this to me a few weeks ago, and the dividend is 5% -- >> sure. >> i mean, you know, that is the thing -- isn't that the thing that are pushing equities higher? >> well, i think our view is that equities are slightly the cheap side of fair value, but
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bopd to remember. and the expensive asset classes will be most vulnerable to the withdrawal of this cheap money. equities, there will somebody volatility, but we think they should be able to digest it. >> okay. good to have you on. stick around. more to come from me. robert buckland with us today from citi research. for more, logon to read why mural roubini says the quit from qe will be treacherous and hurt stability. what else is on the agenda in the u.s.? cpi is out, forecasted to rise 2% with or without energy. also june housing starts are expected to jump more than 11%. and look for earnings from adobe systems and la-z-boy. israeli president shimon peres has told cnbc that syria's instability is a worry for the region. in around half an hour, tune in to why peres believes there are reasons to be optimistic.
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and a recap of the headlines if you've just joined us this morning. traders digest promises from the ecb's draghi while looking ahead to qe from ben bernanke. europe's new car registrations slumped in may, lowest level for the month in two decades.
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more pressure applied on sony by hedge fund manager daniel loeb as another letter is fired off to japan. couple of other stories we're following today as well. commerce bank is to cut 5,000 jobs after reaching an agreement with labor unions, according to a number of reports. the german bank employs 54,000 staff and the redundancies are aimed to get them on a competitive footing by 2016. meanwhile, lloyds bank group's ceo says the cost of spinning off some of its verde branches would be 1.6 billion pounds, pretax. he said there's also -- the chairman saying there's no pitch proposal to go ahead with the sale of the branch's two co-op either. he apparently said two approaches for the branches, as we wait potentially for the chancellor tomorrow night. george osborne, to lay out a timetable for privatization of
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lloyds, even if he doesn't do so for rbs. meanwhile, still with us is robert buckland from citi research. robert, what is interesting right now, and we talked about this search for yield, are investors in companies still saying to ceos i need a yield? so, i need a return that's based on either share buybacks or dividend policy. is that still the key driver? >> yeah, one of the most striking pieces of data i've seen over the last two or three years is that u.s. companies are paying back more in dividends and share buybacks than spending on capital expenditure. so, they're paying out more on dividends than they're spending -- >> has that ever happened before? >> no, it's unpriecedented. clearly, shareholders are putting pressure on to get out of the business. i think the frustration for central bankers, therefore, is that companies are cash rich, but they're not necessarily turning that cash into new capital expenditure, productive capacity, and most importantly,
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jobs. >> which would also explain disconnect, i presume, between asset prices and the real economy? >> right. the risk is that instead of creating a boom in jobs, the fed is creating a boom in share buybacks. >> right. and is there anything they can do about that? not a lot. >> we've asked policymakers on your show, actually, to give us an answer to that question. it's very much seen as that's a political, fiscal decision to be made. we're in charge of interest rates. all we can do is keep interest rates low to try to get the economy going. >> what does that also mean for the long-term investment value of those companies, if they're not -- if they're now paying out more back to investors than they are investing in their own future, where does their long-term future growth come from? >> well, financial theory would tell you that investors will take the capital out of those mature companies and recycle it into less mature companies and find growth opportunities elsewhere. however, i suspect where a lot of that cash is going is to be spent on people's lifestyles
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effectively, almost performing the job of the bond market. i think the capital expenditure will come back, but i'm not sure it will come back as aggressively as policymakers want it to do. >> all right, robert, stick around. it's a fascinating topic. also still to come, greek state broadcast ert could soon return to air after a court ruling in its favor, but has the contentious affair dealt a blow to the government? we'll discuss with an athens insider after the break. as we go to that break, remind you where european equities stand, just weighted to the up side on the dow jones 600. ♪ [ agent smith ] i've found software that intrigues me. it appears it's an agent of good. ♪ [ agent smith ] ge software connects patients to nurses to the right machines
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if you've just joined us this morning, futures are indicating a higher open at the start. the s&p currently implied to open six points higher. the nasdaq called up nearly 60 and the up 3 1/2. in greece, they are resuming talks to try to reach a compromise on the state of the -- on the fate of the state broadcast ert. this after the country's highest court ruled the prime minister's unilateral decision to shut ert was illegal. but the court did not reject the closure of the broadcast outright, allowing all parties to claim a degree of victory. finance ministerance stanera
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said they could see rebroadcast start as soon as possible. athens protesters took to the streets last week posing a fresh challenge to the government after just one year after elections. joining us from new york a, forr member of the greek parliament. eleanor, thank you very much for joining us. if you're overseas, looking at what's happening around ert, you say is this more systemic actually of a wider problem here that we have in greece of actually getting some structural change, whether you agree or not with what you should do with ert? >> well, i completely agree with that. ert and the decision by which ert was closed gives complete, if you wish, explanation of what's the problem in our country. we have discretionary decision-making at any level, including the highest level of
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government decision-making. and the wider problem is that we don't really have a very well-functioning public service and public sector. we do need to do structural reforms within the public sector. we followed a very bankrupt way of doing it with starting with one, the least, if you wish, of the problematic elements in public sector, the highest problematic element in the public sector is the collection, the tax collection agency that no one is daring to touch for the last three years. >> why? why, when everybody knows that is such a glaring problem, why has nothing been done? i mean, if you can't do anything during this -- if you can't use this crisis as an excuse to get to grips with it, when are you? >> well, that is the absolute questions i'm having as well and everyone else is having and, actually, even worse. we want to make the plotter a little thicker.
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we have had greek people being on non-austerity waves. people have had wages decreased by 50%. the business as usual, or are we really going to change? and that's the big question that leaders, political leaders are asked to provide an answer for. and frankly speaking, i don't think they're really giving one. >> what will happen if they continue not to give an answer, do you think? because you say the people feel like they've made a huge sacrifice, and yet, nothing seems to have changed. >> well, what is going to happen, i'm afraid, is that we will probably have some sort of social disorder or unrest, and that's something we should av d avoid. the best of our abilities. because the last thing you want to have is an unrest in the
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cities in athens or other big cities in greece. and we need to have a national plan of rescuing the country, which we still don't have. three years in the crisis, we still don't know how to move ahead and where we want the country to get to. so, we really need to generate trust again, trust between the citizens and the state and we need to generate trust also among politicians themselves. the three-party government was thought it was generating or providing the impression that a bit of of trust was being created, but also a lot of people ask is it really trust or is it just the fact that we have a convenience? >> elena, thank you for that. elena panaritis joining us from new york. still to come on the program, on the verge of the biggest bilateral trade deal in history. that's the take of the british chancellor as g-8 talks between
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the eus and the eu continue. we will have the latest from northern ireland when we come back.
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all right, you're watching "worldwide exchange." if you've just joined us this morning stateside, welcome, after some of the swings and gyrations we saw on fed tape reports yesterday, which caused a bit of volatility for the u.s.
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markets. u.s. futures are indicating us to open higher again. 0.7% gains for both the dow and the s&p. right now the dow is called up some 54 points above fair value, the nasdaq is currently 9 points above fair value and the s&p 500 at the moment is around 5 1/2 points above fair value. european stocks have been a little more mixed today. the ftse cnbc global 300 is flat, as you can see. european equities, the ftse slightly firmer, up 0.5%. inflation numbers stronger than expected. xetra dax is down 12 points, despite the sentiment indicated was better than expected and the ftse mib is up 0.25%, the cac down. 100-point swings for the dow yesterday at one stage as we look ahead to the fed, which begins its two-day policy meeting today. that decision due tomorrow at 21:2 12:00 eastern. then we have mr. bernanke's
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press briefing at 2:00 p.m. investors concerned about what will happen. concern dropping up after the "ft" suggests mr. bernanke could begin to taper in the coming months but this in no way means rates will go up. final thought from robert. robert, how do you think we will trade through? what do you think mr. bernanke will say? how do you think we'll trade through it? >> well, we're expecting tapering to kick in over the next four, five, six months, as many people are. i think that may be choppy for equity markets, but we're recommending to clients that they buy into that weakness. >> okay. when do you know, when do you know when is the weakest bit? >> it could be any time this summer. it could be any time this summer. but if we see 5%, 10% off global share prices, which we could see, you know -- shares are volatile. we've all got to get used to that. >> right now looking at value asians, u.s. or europe? >> actually, we prefer emerging markets. so, we prefer the emerging markets asset class, deeply out
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of favor at the money, not too much hot money in it. >> are you saying that the weakness in emerging market currencies that we've had because of the rising dollar and funds coming out is -- >> sure. i'd be more worried about it for emerging market bonds than equities. emerging market equities trade on a sort of ten-year relative low against the rest of the world. we see value there and buy them into weakness over the summer. >> robert, good to see you today. thank you for joining us, robert buckland, head of global equity strategy at citi research. and now if you've just joined us, a reminder of the headlines. to taper or not? that's what we've been talking about. it's also the question vexing investors after the article in "the ft" suggests an end to qe-3 might be ending. dan loeb argues for sony and a partial breakup of the entertainment business as he discloses his raised stake in the company. and m&a on the line in the telecom sector. kabel deutschland shares rally on the prospect of a bidding war between liberty global and vodafone. plus, it's d-day for dish in its race for sprint.
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will a lawsuit over clearwire jeopardize the deal? meanwhile, president obama is defending the national security agency's top-secret phone and internet surveillance programs. in an interview with pbs's charlie rose before he left for the g-8 summit, the president said they are legal and transparent, even though they're authorized by secret court. he also says he wants to encourage debate on the balance between privacy and national security, an issue sparked by the leaks by the former nsa contractor, edward snowden. >> we're going to have to find ways where the public has an assurance that there are checks and balances in place, that they have enough information about how we operate that they know that their phone calls aren't
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being listened into, their text messages aren't being monitored, their e-mails are not being read by some big brother somewhere. they've got to feel that confidence. >> the president also hinted he may be looking for a new fed chairman, saying mr. bernanke has stayed on the job longer than he originally planned. the president wouldn't comment directly, though on whether he would reappoint bernanke, whose term expires in january. he's reportedly considering a number of people for the job, including fed vice chair janet yellen and former treasury secretaries timothy geithner and larry summers. meanwhile, the british chancellor of exchequer, george osborne, says he's hopeful of concrete progress on tax avoidance as the g-8 ministers meet for a second day in northern ireland. our man on the ground there is steve on the edge. in some ways, the g-8 has been hijacked by geopolitics, but the british government would very much like to try and get some agreement on their agenda on,
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you know, clamping down on corporate taxation avoidance as they see it. what hope is there of getting some agreement? >> reporter: yeah, i'm going to try to keep the view on this one, but the mention of tax, ross, people's eyes just glaze over and think all right, is it time to get my coffee? but actually, it's very interesting for the individuals, and indeed, for corporations who watch this program as well because those corporations, those multinationals have been under a lot of criticism as of late, haven't they? the googles of this world, the amazons of this world, about tax jurisdictions and moving around cost centers and what have you to minimize their tax bill. there is a difference between avoidance and evasion as well and those companies will say they have done absolutely nothing illegal, and it is the complexities of the u.s. and, indeed, the uk tax systems when are a great example of how companies can bypass the system. so, cutting out the complexities is something i've already talked to george osborne about. we talked about this in moscow as well and he said he was making great strides on that front as well. he also then talked to me, though, about coordination on the tax front. and herein lies the problem.
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it's all very well for europe to coordinate on a tax front, to eliminate havens within jurisdictions that are affected by britain, and the rest of the eu, but when you try to move that to a global basis, therein lies the problem. let's say you have 90% of the countries signing up for this. then the other 10% will see an inflow of income, aine flow of that cash which isn't being taxed elsewhere. so, to get a full global agreement is very tough. now, i've been poring through, believe it or not, all 15 pages of the oecd report, which is being given to the leaders here on taxation, and they've got a few ideas. they think there should be basically more transparency, more shared i.t. systems, common legal frameworks as well and sharing of information across the board, and that would help minimize some of these tax issues. and clearly, it's a very thorny issue, but it could have real relevance for a lot of those corporations that our viewers are invested in as well, because if suddenly the amazons of this world had to pay a lot more tax on international earnings, that has a ramification on the bottom line. >> yeah, absolutely.
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and steve, look, we can see this nice golf course behind you, but that still means you are inside the security zone. you're part of the security approved. i understand some of your friends have been trying to reach you. >> reporter: yes, yeah. some of my antiglobalization friends. me and them are like that, i can assure you. but it's true, actually. there was an incredibly good-natured anti-g-8 protest within the last few hours. these people you can see on the screen now, they basically trampled over barbed wire and were confronted by an enormous police cordon, and there was a little shouting, a little bit of a standoff. then one of the guys with a megaphone turned around and said, come on, guys, the bus is here, and then they all traipsed off again. having been through mayday riots, anticapitalist riots, poll tax riots, i've seen a lot over the years and you and i have had a few lockdowns in these areas. they were all incredibly well-natured. they made their point and went home for tea, perhaps to finish their student dissertations, so it was nice indeed.
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>> i don't know about lockdowns, but we've had a few lockins. that's a slightly different thing. >> reporter: that was in our heyday, ross. let's have another key topic of conversation. i started on tax and if anyone's still with us, one of the big topics of conversation on both sides of the atlantic is this, michelle obama's fringe. apparently, it was of the unruly locks and our u.s. audience will be familiar with this. she's had a new hairstyle since about april and she's generally got the thumbs up from the u.s. press, and indeed, population, but she was having a little bit of a problem with her fringe in the last 24 hours. and every single northern irish newspaper was running that as a near front-page story. so, tax and trade may be interesting. michelle obama's fringe apparently a little bit more interesting for some of the readers out there. >> well, as long as people are getting -- i actually thought it looked pretty good when she addressed the schoolchildren yesterday just after the president touched down. steve, thanks for that. good to see you. that's the latest from there. also we heard at the g-8, the
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president and his russian counterpart vladimir putin sticking to different views on the crisis on syria. our handley gamble is with us on set. you've been speaking with israeli president shimon peres on his views on that situation as well. >> i have. it's a difficult situation for israel, ross, because you have, on one hand, if a side stays, you have problems inevitably with hezbollah because the hezbollah fighters in the south of lebanon are helping the assad regime, and if assad were to go, you could have a sunni radical regime in place. so, i asked president peres if he thinks, how big of a worry, basically, is this situation in syria, is the destabilization of the region. >> yes, it worries me, but may i say that i watch history in two ways, by its events, what's happening, and by its development we see on a daily basis. for example, if a king kills a king, it's an event.
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looking at world, i can see developments and i should mention one or two. the arab world is something like 250 million people. 99 million are already online, the internet. i believe this development, and they're going to double it, that makes the younger generation better informed, having open eyes and look for an alternative way of life. the average age of the arab world is young. they are just 26 years. it's a great advantage. for the time being, we can see the clashes between the past world and the incoming world. it has nothing to do with israel. but on one point, that is the peace with the palestinians. >> do you think that the international community is doing enough? >> i'm not sure that we're an
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international community. we have a global world, which is different. international means it's a collection of nations that act together. globality means there are no borders, and nations cannot do much on their own. >> so, if there is no international community per se, would that mean that, in terms of syria, israel might, in fact, have to act? >> it's not only the problem of international, the problem is national. and i think many arabs do understand that it is not threatening other people but threatening their own union, and i can see already a thrust to get rid of them. >> so, you see there president peres. he is worried about the situation in syria, but he's not necessarily looking to the international community to do much about it. he's saying it's a global world without a global government. now, the high-tech exports from israel make up nearly half of the country's exports and are valued at more than $18.4 billion a year. that's by the country's central
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bureau of statistics. president peres says technology is crucial to israel's future economy. >> we cannot become an industrial country. we can and we are an innovation land. believe as a laboratory rather than an industry. so we have exits and we have innovations and that's what makes our economy flourishing. >> is it political risk that's keeping these companies from staying here, putting their capital here? >> no, no, no. we don't have enough people. we are a small country, so we don't have enough workers and we don't have enough consumers, but we have enough innovators. the country's full of able people, and it is them moving the economy more than any system. >> so, that's president shimon peres talking about the innovations in that country, talking about how they're supporting the israeli economy.
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>> all right, hadley, good stuff. thank you for that. good interview. sony's biggest shareholder's pushed the company again on a proposal to spin off part of its entertainment business. how will the electronics giant respond? more details next. [ male announcer ] we've been conditioned to accept less and less in the name of style and sophistication. but to us, less isn't more. more is more.
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if you've just joined us this morning, the headlines. traders are looking to promises from draghi while looking ahead for qe clues from ben bernanke. europe's car registration slumped in may, the lowest level for the month in two decades. and more pressure applied on sony by hedge fund manager supremo dan loeb as another letter's been fired off to japan. other stories we're following today. former kpmg partner scott london is accused of securities fraud, says he will plead guilty to devolving information in a case that forced the accounting firm to resign two accounts over sketches. in an exclusive interview with cnbc outside of court monday, london didn't deny any of the charges against him and knows he portrayed kpmg but insists this is the only time in his career he broke the law. >> i've been there just about 30 years and nothing like this has ever happened before. i had a clean record, no
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violations of anything. and you know, unfortunately, you know, this, you know, ended up getting, starting as something small and ended up getting pulled into something a little bit bigger, which i obviously regret. i'll regret every day of my life. >> london claims he had no idea his former friend and golfing buddy, brian shore, made $1.3 million on illegal trades. shore gave london gifts in exchange for the information which he says totals around $70,000. london faces up to 20 years in prison. now, neil sedaka once sang that "breaking up is hard to do," but that's exactly what two big investors want sony and smithfield foods to consider. kelly tausche is live in the states with more. kayla, what's mr. loeb up to now? >> reporter: ross what a lead-in there. i have to give you credit on that. thirdpoint, the hedge fund founded by dan loeb is once again urging sony to partially spin off its entertainment business, a move it says could
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boost the stock by as much as 90%, this outlined in a letter overnight that thirdpoint sent to soiny ceo kazuo hirai. loeb offered to put a thirdpoint representative on sony's board and suggested the company create what he calls a semi-independent governance structure. he says sony has failed to create the synergies the shift into entertainment promised when it bought columbia pictures way back in 1989. loeb does welcome sony's reported decision to hire financial advisers to assess his proposal. sony has said the board will review thirdpoint's offer but declined comment on the hedge fund's latest letter, which comes right before the company holds its annual meeting this week. checking sony shares in tokyo today, the shares were up as much as 4% at one point, and you can see 4.5% right there at $20.36. shares have more than doubled this year. smithfield says it will review
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the offer by starboard lp on monday that calls for the company to abandon its merger with china's shuanghui, saying smithfield would be worth more if it split into three separate businesses and sold, not sold as one big business. smithfield says the board considered several breakup scenarios but that this current deal provides shareholders with what it calls significant cash value. in germany, smithfield has been up on this news but it's currently down about 1.33%. ross, we'll send it back to you. >> all right. thanks for that, kayla. meanwhile, lloyds chairman win bischoff in the uk, as the bank was saying there was no pressures to sell. it broke up in april. why does no one believe him when he says i was under no fiscal pressure? >> everyone believes the deal was heavily supported by the government, in particular george osborne, and today the select
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committee have been grilling bischoff and the chief executive about why was the verde deal taken so far? by the way, just downgraded by moody's again. why was it allowed to go on and why didn't the other bidders get a better look in to buy the bank, given everything that's happened. of course, the chairman and the chief exec both deny there was any political comment, say it was all done on commercial grounds, but it cost 1.6 billion pounds to do it. >> expensive mistake. thank you much for that. we'll keep following that story and hear from the chancellor tomorrow night on his plans in terms of lloyd and privatation as well. another day, another twist in the saga between sprint, dish, clearwire and softbank. it's quite a collection. we'll try to handicap who might come out ahead in this telecom tussle. [ male announcer ] i've seen incredible things. otherworldly things. but there are some things i've never seen before.
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all right, u.s. futures are pointing higher, european markets, meanwhile, have been a little bit more mixed during the session today, but we are at the best levels of the day. the ftse 100 up nearly a percent. what are investors to do with the fed beginning its meeting this morning? this is a recap of some of the thoughts. >> the rate cycle has had more comebacks than frank sinatra in terms of is the rotation happening, is it not. it does look as if rates are still pretty low as far as it was saying there. and perhaps, and we've been saying this for a long time that the next movement is up. >> the market is certainly positioning itself for an upward move in rates, not anything dramatic, but an upward move in rates. and we'd stick with that trend. we think that the curve should
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bearish statement, which means that back end rates rise. the front end is still anchored by fed policy. >> there's no reason why the stock market can't continue to rally through a period of fed tightening. it's done it almost every other time the fed has tightened before. so, he has to send that message in for the equity markets. bond markets are a different story. interest rates are going to be higher. bond markets have a little bit of a tougher haul ahead of them. >> so, it's all about the fed the next couple days. futures ahead of the session today indicate a higher start. the dow currently called up some 65 points, the nasdaq is currently called higher by 11 1/2, the s&p currently called up nearly 8 points. and those futures are at the best point of the morning as well. meanwhile, sprint is suing dish network to block its tender offer for clearwire. the suit claims dish is trying to coerce them into tendering shares and therefore reject sprint's competing offer to buy
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the rest of the company it doesn't already own. the suit also comes as dish faces a deadline to decide whether today whether it will sweep its $25.5 billion bid to buy sprint after softbank raised the cash portion of its merger agreement last week. tim jim, thanks for coming in. the clearwire deal is a bit of a spoiling tactic. just what does dish have to do today to stay in the game for sprint? have they got to show they've got the financing? >> yeah. there are a lot of things that i think are blocking them, especially with what softbank came out with. their bid is really good and i think everybody's kind of leaning that way anyway. softbank brings a lot to the table. they bring expertise of operating the 2.5 gigahertz, which is a lot of the spectrum that clearwire has. they've got the financing. i think that's the key thing in this deal. with the softbank deal, you're not too highly leveraged, you have a lot of capital going forward to build out ooze fast as you need to do to be
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competitive in the u.s., their synergies with handsets, and plus, the deal's pretty much here. they've got the majority of the approvals. all they need is the fcc. the dish deal is starting from scratch in terms of approvals, so you're talking a deal a long way out in a very competitive wireless market, and i think that's one of the weak points of that deal, is that you've got to wait a long time when everybody's getting aggressive in this market and that's a long time to wait. >> there is one question about softbank, and that is what value add softbank brings. >> right. >> you know, in japan, they had exclusives to the iphone and that was a far less competitive market. >> right. well, i think one thing they do bring is expertise in terms of operating at the 2.5-gigahertz spectrum. it's a little different spectrum than we operate here and they boast much higher data rates over there, and i think that's one of the things they feel they can bring their expertise to increase the data rates because they almost kind of laugh at the data rates we use here and say no, it's way too slow here. that's one of the things we're
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going to look to improve when we come and start ramping up the network, but they are operators. they are telecom operators and that's probably one of the issues with dish is that they're not and they're looking to buy out the whole company, take this over. and there are opportunities there to make video mobile, which is a little bit different and that is a wrinkle to the plan that may be attractive to some, but they don't have an expertise in terms of operating a wireless network, and that's another issue. >> when push comes to shove it sounds like you think softbank and sprint will close a deal at some point. is that what you would expect? >> yes, yes. now, whether there are a couple more wrinkles in between, who knows? but i do expect that to be the ultimate outcome. >> jim, good to speak to you today. thanks for joining us this morning. jim mormon, telecoms analyst at s&p capital iq. that's just about it for today's edition of "worldwide exchange." coming up next, "squawk box," the countdown to the opening of markets stateside, also counting down to the start of the two-day fed meeting. whatever happens, we hope you have a profitable day.
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good morning. it is fed day. the fomc gathering in washington to start a two-day meeting and global markets are swinging wildly and widely, as investors try to guess what the central bank is going to say. it is tuesday, june 18th, 2013, and "squawk box" begins right now. ♪ ♪ benny and the jets ♪ good morning, everybody, and welcome to "squawk box" here on cnbc. i'm becky quick along with joe kernen and andrew ross sorkin,
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and yes, it is june 18th, which we can't believe, because -- >> oh, my. >> yeah. you know what this means, guys? in about four days, the days start getting shorter again. >> yeah. >> anyway that two-day fed meeting is clearly the most important story to the markets this week. investors will listen for details on when the central bank may start scaling back its $85 billion monthly bond purchases, a topic we discussed with former fed chairman alan greenspan just a couple weeks ago. >> tapering, obviously, is the first thing, but tapering, remember, it's still increasing the size of the balance sheet, and that means it's going to be a little bit more difficult to reverse it. and i'm a little concerned that the reversal procedure is a little more difficult than we think. the markets are not going to give us the leeway that we would like. >> tomorrow, the fed is also expected to provide an update on its economic projections for 2013 all the way through 2015. that decision on rates will be announced at 2:00 eastern


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