Skip to main content

tv   Worldwide Exchange  CNBC  November 4, 2013 4:00am-6:01am EST

4:00 am
welcome to world whied exchange. these are your headlines from around the world. stocks rise with heavy volume of trading in hsbc as the bank posed a 30% rise in pretax profit also saying it's cooperating with the u.k. authorities. the low cost airline forecasts a drop in profits for the first time in five years with shares trading sharply lower. >> we have very little visibility at the q 4.
4:01 am
what's different this year is q 4 doesn't have easter but this year it does so the comparables are tougher. i expect it to recover as we move into next summer. alka tell luce sent is trying to shore up its balance sheet. and a settlement for sse capital. a deal will be signed today for the landmark case against the embattled hedge fund firm. >> announcer: you're watching "worldwide exchange" bringing you business news from around the globe. good morning. we have some breaking news to share with you this morning. let's just dive into the eurozone latest manufacturing pmi printout for october. it's risen to 51.3. this is the latest in line with what we had from the flash
4:02 am
number, 51.3. so no change in the second reading effectively. it is slightly higher than the number that we had back in september, which was 51.1. the output index has risen to 52.9 consistent with the flash number. so these numbers coming in today shouldn't do much to shock the market too much. in terms of the output prices index, this is at 50.5 so that's just off slightly from the flash number. overall, the headline number is consistent. here'shers's a look at the dollar. more signs for a growth in china's domestic economy. the october reading came in at 56.3. that was from september's 55.4. but it's not all smooth sailing. the subindex of new orders fell indicating possible weakness ahead. sectors such as real estate and
4:03 am
food and drinks also showed contraction. let me tell you what's coming up on today's show. the battle for blackberry comes to an end as the deadline draws closer for potential suitors looking to outbid fairfax financial. we have the latest at 11:30 cet. then the greek government looks to help them achieve a better gdp in the third quarter. we speak to the ceo of the greek hospitality firm. at 10:45 cet. then over to cairo. former egyptian president muhammad goes on trial. -- mohammed morsi goes on trial. ross is meeting with the deputy prime minister of poland to discuss the merits of e.u. membership at 10:20 cet.
4:04 am
this is a look at the overall tone across european markets this morning. you can see mostly a sweep of green. just a couple of red bars along the bottom here, but overall we have a positive tone. the core is performing. the overall benchmark trending higher by 14 sub 1%. some of the gains in the u.k. reflected with the ftse gaining to 6,770 points. up half of one percent. it will be holding around this level, 1/3 of 1% this morning. we're getting close to 4,301 points this morning. the swiss market has been a little bit tentative in the morning. it was in the red ten minutes or so ago. it's just popped into the green. six points tacked onto the smi. a couple of stocks to show you
4:05 am
about. some of the big movers out there on the back of a whole lot of news out there. the low cost carrier cut its second quarter target in four months. ryanair says the demise of italia says it would help his company recover. >> one of the great opportunities for us with the 175 aircraft order says alatalia will continue growing. the italians will continue to bail it out. it will continue to create huge opportunities for us. >> air italia seems to be responsible for a lot. you can see the stock price in air france klm drifting 1.6%.
4:06 am
alcatel-lucent is down 6.5%. we're going to have more on both of those french docs when we catch up with stefan in paris in half an hour's time. hsbc, we had the numbers out this morning. in line with expectations. 20% higher going through the stock price today. 2.5% is what we're seeing. i want to move on to bond rates and show you what we're seeing. we have a lot of risk and loving attitude. there has been a pickup in the ten year treasury, 2.61%. huge focus on the u.s.gdp. the treasury had pushed lower. we're climbing back out there and the markets are wondering whether we're looking at a december table or if this is a q 1 story. the italia market, 4.11%.
4:07 am
holding at the low 4s on the yield. you can see how wide the differential is. gilts, we have 2 point be point 61%. the gap has closed quite significantly. for its markets, it's been a story about its strength. we're softening up a little on the dollar yen trade. 99 is the level that foreign exchange traders see as capitalist for the chart watchers. the australian dollar, just under the 95 handle. we've got some support for sterling. there will be more action coming from the ecb, at least if not this month, dovish prospects. we might see more action from the central bank over this way. let's get up to speed with
4:08 am
asia. let's see how the trading has been happening. we're being joined out of singapore. >> they kicked off the week on a sluggish note. most markets in fact ended in the red. investors remain cautious ahead of the jobs report later this week. markets in japan and india were shut for public holidays. china markets outperformed by just a bit. but chinese property developers were under pressure today. this on news that shen jen will raise the amount on new home purchases. meanwhile, in south korea banking stocks were down sharply. this after the country's financial authority said combined earnings of the country's lenders fell 14.5% in the third quarter, mostly due to
4:09 am
soft index income. australia is out of favor. westpac lost 1.2%, this despite the bank posting a record profit for the fourth straight year. investors worried that the ungoing price market could hurt the banks market. back to you. >> thank you very much for that. let's move on to another story we're following for you. cnbc has learned that ssc capital and u.s. prosecutors are expected to sign documents today settling the landmark insider trader case. it includes a guilty plea on at least one count of securities fraud but no admission of promoting insider trading within the firm. the plea will temporarily halt sec's fund as a running firm. it will have a fine of $100
4:10 am
million. blackberry's future may become clearer today. it's expected to complete due diligence on the order to take the firm private. fairfax is struggling to raise financing. several banks have declined to take part concerned that blackberry won't be able to reverse its fortunes. interesting when there's so much money floating around it wouldn't be hard to raise the money. two individuals are trying to raise the money with the chip maker qualcomm. let's look at how blackberry shares are performing. so far over the course of the last couple of weeks, stabilizing a little bit. we had a pop in the last session, 1.5%. rather, as we're seeing in frankfurt today, so far, 33% lower is how they've been traveling. september was when the offer was
4:11 am
launched. you can see since then there was a move higher. they're not expected this will go through given the way the shair price has been coming back. as twitter gets set for its ipo, they have a public that is skeptical about the company. some 36% of americans say twitter stock would be a good investment but 47% disagree. twitter's future may depend on ad revenue, but more than half of the users say they haven't noticed ads on the site. on the eve of twitter's ipo, there's a new user, katy perry, 45.6 million fans. i think i'm at 1700.
4:12 am
she's taken the crown away from justin bieber who has 46.49 million followers. do they buy them or are these all natural followers out there? every week cnbc is asking you to talk the trend. we'll bring you the results and show you the september imts swing on any given subject. so get involved. the more you take part, the better swing or the better sample we actually get. this week we ask how will twitter close on its first day of trade, higher, lower, or flat? i guess it is depending on how much it is priced and how much is left on the table by the advisors, investment banks. this is one of the key questions when it comes to an ipo. we'll head to trader you can see the trend. use #traderpoll. special treat for you this morning. still to come on this show,
4:13 am
there she is, miss america. she's the first indian american to take the crown. lands in london on her world tour. she's making a special stop in our cnbc studio. we'll go behind the glitz and glamor of the pageant world. we'll talk the business of beauty. that's 11:40 so stay tuned for that one. big question. you come up to these interviews. it's slightly different. what should we be asking miss america? get your suggestions in. e-mail us at worldwide at cnbc. also at twitter or go direct to me. it's like asking those questions at the miss america pageant. this is your opportunity. well, you notice that i am sitting in the chair keeping it warm for ross. so where exactly is he? i think he's on the road somewhere. ross, where are you? >> is that a cunning plan, miss america comes to the studio today and i've been sent out? is that on purpose? >> ross, you're a hard act to
4:14 am
follow so i need to sort of bolster the excitement on the show somehow. >> i feel very hard dumb guy indeed. you need to send her down here. look, yes, i am at the annual meeting of the c bh i on track for global success is the theme of this particular meeting and according to the cbi, that means we need to stay in the heart of the european union. it's worth around 3,000 pounds, they say, to each british household, but if we're going to do that, we need to reform it. what kind of reforms are going to work? what are the chances of success? and how much support will we get from other members of the e.u.? we'll get the views of the deputy prime minister and finance minister of poland coming up next in the first on cnbc interview here on cnbc. we continue from cbi when we come back. ♪
4:15 am
♪ hey [ male announcer ] when we built the cadillac ats from the ground up, to be the world's best sports sedan... ♪ ...people noticed. ♪ something like a phenomenon, baby ♪ ♪ you're something like a phenomenon ♪ [ male announcer ] the cadillac ats, 2013 north american car of the year. lease this cadillac ats for around $299 per month with premium care maintenance included. because what you don't know, can hurt you.urance. what if you didn't know that posting your travel plans online may attract burglars? [woman] off to hawaii! what if you didn't know that as the price of gold rises,
4:16 am
so should the coverage on your jewelry? [prospector] ahh! what if you didn't know that kitty litter can help you out of a slippery situation? the more you know, the better you can plan for what's ahead. talk to farmers and get smarter about your insurance. ♪ we are farmers bum - pa - dum, bum - bum - bum - bum♪
4:17 am
we are at the annual meeting of the cbi. they say their members are supportive of staying in the e.u. their businesses. they say it's around 4 to 5% the
4:18 am
value of gdp. john quinn lan is stating the case for membership. he's talking about the things that are needed to be done to reform the e.u. he has looked at the alternatives and has dismissed them as he told us today. >> british business would be poorer with less influence if we were outside of the european union. we've looked at some of the options, the norwegian option, the swiss option. none of them give us the benefit and influence that being active members of the e.u. does. we want to be in the e.u. but we want a reform. we don't want to settle for the status quo, but we want to do even better. >> so those are the options that he's dismissed. if we're going to stay in, we're going to need reform of the e.u. some of those reforms the e.u. must be open and competitive, building a single market that's fit for the 21st century, more
4:19 am
outwardly. trade deals with the united states. legal safeguards for those within the eurozone and those that are staying outside like the u.k. as well and also look at making his working time director opt out permanent and the case for more national decision making on things like employment law. so, does this stack snup can we reform the e.u.? let's get a view of a fellow member. we're joined by the deputy prime minister of pole lan and the prime minister. thank you very much for joining us. you're going to go on stage when we finish speaking and talk about the e.u. what do you make of the cbi's position, what you've heard this morning? >> well, it sounds very much as if that was the polish government's position. it's almost exactly the same. we think that the e.u. is central to poland's growth prospects. we think it's central to
4:20 am
europe's growth prospects. we think it's central to the u.k.'s growth prospects. we think it would be very bad for the u.k. and for europe and therefore for poland if the u.k. were ever to seriously think about leaving the union. >> this position that the government has is predicated on reforming the e.u. that's a big task, isn't it, to deliver a services single market in the e.u. we tried for years. we looked at the lisbon agenda as being an abject failure. >> the lisbon agenda was miss constructed but a single services in the e.u. is something poland fought for very hard in the early part of the last decade. unfortunately, french and german obstruction of the time blocked that. we're very glad to see the united kingdom is determined to achieve something that we've
4:21 am
been arguing for for a long time. >> what about other measures? would you support a permanent opt out of working time directive? would you also support more national regulation over things like employment law and what john is describing as lifestyle regulation? >> well, i think we certainly want more flexibility in labor markets. i think it's better if that's achieved by reforming the labor type directive rather than giving particular countries opt outs. i mean, it's the nature of the single market, that everybody is subject to the same rules. it's better if the rules are less con straining and i think we should be going that way. we certainly feel and there's a large group of nations and member states that would agree, that their scope for making that labor time directive and other labor market directives more business friendly. >> what about the architecture
4:22 am
of the e.u.? because clearly they're never going to join the our sfloe how can we make sure the architect, the european commission, parliamentary a semblance works for what is effectively a eurozone and what is not in the eurozone? >> that's very important for us because we aren't in the euro stone and we don't expect to join them in the near future. i must say that we've found a great deal of understanding, particularly on the part of some of the most important eurozone member states like germany, for the need to maintain that balance between eurozone and noneuro group countries. and usually the eurozone in terms of creating new institutions which are vital if the eurozone is to strengthen itself and at the risk of its collapse should be definitively -- definitively
4:23 am
ruled out, we find that eurozone countries are very willing in the creations of these new institutions to actually lean over backwards to create a comfortable space for those of us who are not in the eurozone. >> and a final point, the cbi starts, the government starts at the moment is to say we stand, we negotiation and we try to reform and we renegotiate. if we can't reform and we can't renegotiate, there will come a point where people will say we should negotiate a different position within the e.u. now you say how important brittain is to the european union. angela merkel was talking about that. would there come a point where actually you would say, okay, it is worth actually maybe the u.k. having a special relationship within the e.u.?
4:24 am
>> i'm not sure it would be a particular problem for the e.u. it would be a particular problem for the u.k. if you look at the position of countries like switzerland or norway, basically what happens to them is after the decision is reached within e.u. institutions within brussels, they're invited in and told, this is what's been decided and you're going to have to implement it in your own country because otherwise you're going to have to leave the single market, the european economic area. effectively, it's almost saying let's get out of the -- let's get out of the conference room and subject ourselves to the dictate of those who stay in it. i think it would be absolutely folly from the point of view of any country to go that route. >> good to talk to you. great to talk to you. >> cnbc will be visiting poland. we'll look to get some insight into the country. >> we'll be looking forward to having you as guests. >> thank you for joining us.
4:25 am
that's the deputy prime minister and finance minister. coming up a little bit later we'll be joined by the ceo of hays. i'm hosting a session on how do you get more competitive in this economy. the skills gap is something that's really showing up. it impacts things like immigration laws. more to come from the annual conference of cbi. >> speak to you in just a bit. let's just recap on some of the bank numbers we've had today. hsbc profits rose 10% in the third quarter largely in line of expectations as the bank benefitted from a cost cutting exercise. it had hurt the earnings in 2012. the u.k. based bank revealed it was cooperating with an investigation that said the probe remained at an early stage. here's a look at the shares. the top performer on the ftse. 2.5% on the up side over the course of the last three days, 3.5%.
4:26 am
james ferguson is founding partner at the macro strategy partnership and joins us in the studio. james, give us your views on how the hsbc numbers looked. >> what's interesting about hsbc, it went into the crisis with the best sort of capital buffer of any of the u.k. banks and that has really proved its salvation. it's managed to generate more and less crystal lieization. it seems weird to think when we look at the u.k. banks, which bank got hit hardest. if you look at the beginning, which would get hit the hardest in terms of having the biggest losses as a portion of having starting assets, it was hsbc. hsbc had the capital. they were able to fund the process of these losses. there we are, five, six years later with a bank that looks reasonable. it's a good yielder. highest yields in the ftse. it's showing genuine earnings growth. it doesn't appear to be too much to worry about in the way of the balance sheet.
4:27 am
>> what interests me about this bank is that it was one that has been chasing new merging market growth story. i don't think we see a bank like that, they can lose the focus on the domestic market. it still seems to have maintained a strong grip in the u.k. in the mortgage market, retail banking market as you had many other banks coming out of the crisis. you used that to its crisis. >> don't forget, hsbc had its problems and mistakes. no one gets out of this one. hsbc and the shanghai banking corporation of course started off in asia, bought other u.k. banking assets, managed to mix u.k. banks. it was really the move into america where things have gone wrong. they've largely pulled out of america. it's very costly to pull out of america. that's where most of the losses have come from. they were able to do that. you're looking at a pretty robust bank that's still got some exposures if things start to go wrong in asia, particularly china.
4:28 am
and of course as you were just alluding to in your news piece, find, etc. as a basic rule, it was able to take the hits much like the big u.s. banks. it's taken the sorts of hits over the last five or six years that historically tip pi phi what banks in the crisis have. >> i don't know if any banks haven't had a fine of late. we'll pick up on this conversation with james ferguson staying with us. still ahead on this show, the u.k.'s cooperative groop cedes control. we're live from london to tell you more.
4:29 am
4:30 am
4:31 am
>> announcer: you're watching "worldwide exchange" bringing you business news from around the globe. let's give you some headlines. shares in hsbc rise to the top of the ftse 100 as the bank says growth in china is stabilizing. after delivering a 30% rise in third quarter pretax profit. turbulence for ryanair. a drop in profit for the first time in five years. its shares trading sharply lower. >> we have very little visibility into q 4. what was different this year is
4:32 am
q 4 didn't have easter in it last year did so the comparables are tougher. we expect this to continue into the winter and then move into next summer. alcatel-lucent has a last ditch effort to shore up its balance sheet. it's driving its shares lower. the u.k. construction output continues to rise like a phoenix from the ashes. this is the latest comment from market economists. we have the numbers crossing now showing us that in the month of october 59.4 is the reading versus 58.9 in september. so an increase is what we're seeing coming through. it's the highest level since september 2007. so construction certainly picking up across the u.k. this is consistent with the property market as well. the u.k. gilt futures have
4:33 am
turned low. it has crossed on the wires. we're going to try to bring out that board for you and show you how the gilt market is fairing. you can see sterling has spiked there with 159.52. so the currency has lifted and futures have turned south lifting the yield across the board. the ten year up a fraction, 2.65%. let's take a look at a couple of other markets for you. european markets have been moving firmer across the board here in the core here. the ftse, .4%. the dax is a modest move high. the cac and the ftse mib tracking a bit of action this morning. let's move on to bond markets. we had looked at gilts. we have bond yields coming down south 1.69%. little bit lower on treasuries. 2.62% and italy 4.11. so in stark contrast you can see
4:34 am
how the gilt yield is moving. foreign exchange markets, the move higher in sterling as well but it has been a story of dollar strength and dollar yen rates moving closer to the 99 mark. 139.07 but it's up to the 138 level we've seen. a lot of chatter in the markets that we might see some ecb action. blackstone is boosting its real estate exposure in china. it's taking a 40% stake in shenzhen based scp which owns 19 malls in mainland cities. the price tag wasn't disclosed, but the sources say blackstone is investing around $400 million. chinese lender icbc will also take a 6% stake. many chinese property groups face foreign restrict shuchbs and have been looking to alternative financing. china's construction bank
4:35 am
has its eye moving forward. this comes as ccb did its biggest overseas deal last week. there's nothing else imminent, mr. wong did meet with regulators in germany and the u.k. last week to test interest. and china's banking regulator is warning it will step up actions to head off any rise in bad loans. cbrc chief said banks should make more effort to tackle mpls, especially in areas facing capacity. he says banks should find new channels to absorb loan losses and he says any financing to overextend in industries isn't allowed. back home the cooperative bank has revealed details of a plan which will plug a 1.5 billion capital short fall and secure the future for the troubled lender. under the plan the co-op group cedes control of the group to a group of u.s. hedge funds.
4:36 am
let's get back out to helia who is live. helia, a hefty cash injection. do you think this will secure the future for co-op or is it a bit of an interim life line? >> well, hopefully it will. they're a bit cagey about what impairments will mean coming down the line. i was on a call with the chief executive ian sutherland who admitted the bank had lost its way a bit. that is probably the understatement of the century because as you know, the rescue plan, this 1.5 billion pound plan that was forced on it by regulators has meant a 462 million pound cash injection, 125 million will come from the bond holders, the hedge funds like aurelius, monarch, silver point who are taking up to 70%. the point is that this bank which is going to be listed on the london stock exchange sometime next year, what are its chances of success? we're talking today about
4:37 am
profits not returning from the bank to about five years' time. they've got a huge bad debt portfolio that they have to run down and until they can get that from the control, it's not going to be clear when they're going to come back into profit and today that was all about that. they've got a cost cutting program that's going to target about 15% of the branches. what that means in job cuts, i don't know, but it's a huge deal for bank regulation because it's the first in this country, first example of a bank bail in. that's why it's important. >> helia, i have to ask you about fx, not in contrast of how the profits have been but the ongoing fx probe. what are business leaders telling you at the conference? >> yeah. you're absolutely right. we saw last week seven banks named. we saw a number of people suspended. six people were suspended from barclays for alleged fx
4:38 am
manipulation. we had the senior executive on earlier. i asked him how worrying that was, especially in the aftermath of the libor scandal and what that meant for barclays and the industry in terms of learning from past mistakes. >> many of them are working on cultural programs to really make sure people belaf in accordance with the ethics that are required by any bank so, you know, we just have to wait and see what this turns out to be before we make any judgments, but i think what it does not mean is other than the banks are determined to get that house in order, determined to deal with the past, and determined to do what they should be doing, which is to help the british economy grow. >> i think the news for most banks will be worrying about this probe and how dramatic it is. remember, there are still investigations from regulators across the u.s. and the u.k. into fx, into istafix, into oil and gas. so there's a lot of bank
4:39 am
scandals that we're still uncovering and we haven't come to the end of it. i think eyes will be watching what happens in the coming weeks. >> helia, thank you very much for that. joining us from the cbi conferen conference. let me come back to you. banks are struggling. this is one many hoped would challenge the high street mainstream lenders. do you think co-op does have a chance of having a future here in the u.k.? >> well, yes, but the co-op didn't arrive as the co-op, co-op plus. the baggage that came. one of the problems with banks trying to break into new areas is although even with sort of the legacy of the attachments of the britania legacy, as we saw with many of the mutuals that tried to make themselves very quickly banks, playing by the numbers, this is the amount of leverage we can get away with, it doesn't mean that they're making sensible loans.
4:40 am
it means that you have the nonperforming loans as a consequence. just to move outside of that comfort zone is as potentially dangerous as not establishing them in the first place. >> good point. thank you for joining us for our discussion on banks. james ferguson. equity leaders may have their head in the sand when it comes to addressing some of the industry's pressing problems, including liquidity and innovation. that's a new survey from investech fund finance. simon, it seems to be heyday again. you've come up with this report suggesting that the industry is holding itself back. tell us about the report. >> i think you have to look at private equity as an industry not made up of one sector but multiple sectors. when you look at some of the feedback that we have from the industry leaders that we speak to on a regular basis, they said
4:41 am
there are three things that came out. one, the industry needs to deal with reception and how it tackles what's being seen. we've seen private equity being lumped in with the co-op story. it's a hedge fund side rather than growth capital. ten year money from pension funds and it has to focus on adjusting itself for the future rather than in the here and the now. >> is it a fair criticism when we know that many of these private equity firms don't do what they used to, which is buy the firm, load it up with a whole bunch of debt and sell it on in a few months time? these are private equity managers that are trying to extract returns? is it fair to say they're not focused on the long term? >> oh, no, they're absolutely focused on the long term in terms of their businesses but when you're raising the money in the ten year cycle and you're raising money for the pension
4:42 am
funds, you need to know your strategy and how you differentiate from your competitors. the numbers in 2007 there were 93 funds that were raised. in 2012 there were 32. so there's a huge shift of the amount of capital that's coming into this industry and that's why i say when they're looking forward in the next ten years about how they differentiate themselves. that comes down to how they innovate themselves and how the industry's evolving. >> how do you innovate in this industry? there seems to be a lot of cash available in these days. i've caught up with a whole bunch of private guys and they seem happy about the conditions. it doesn't seem as though the environment is tough enough to come up with a different fund that fits a different profile of the pension funds. >> i think there's a big shift from defined benefit to defined contribution. making liquidity within the sector critical. by its liquid nature that's an illiquid asset. when you are moving into that
4:43 am
side, you need to have different products available. >> what different products? i don't know what you mean when you say innovation. >> the majority of private equity firms are ten year funds. they invest and then divest over the remainder. the top funds still continue to raise that money. brand names, the top performing. if you're going to make an investment for ten years, you have to be sure that you're backing the top, top quality managers. the other managers that haven't had successful -- when i'm talking about successful, you're not in the top quarter. how are people innovating, deal by deal? they're raising money on a single deal going out to investors and raising money. you see the canadian pension funds, etc., building up that direct investment team to be able to make single investments alongside managers. that's wherein novation comes. but private equities, it moves slowly. >> let me just bring this story to you because that has been a
4:44 am
lot of talk around blackberry at the moment. blackberry's future could become more clearer. fairfax equities is expected to complete due diligence on the $4.7 billion offer to take the firm private. they're struggling to raise financing. they assume that blackberry won't be able to reverse its fortunes. the co-founders are working on a joint bid for the company with private equity capital firms and possibly the chip maker qualcomm. here's a look at how the blackberry shares have been challenging. how can they not raise money in this market? >> i think the money that's being raised for these large deals is coming from the institutional market rather than the bank finance market. so that makes the market far more susceptible to volatility. i think when you look at relationships that banks had with private equity houses, the money isn't flowing in. the high yield has come
4:45 am
significantly and plug that gap. >> just quickly on the co founders coming in, this is a recurring story you see with buyouts. do you think they know what they're dealing with and perhaps it's about the ip invested in a brand not so much the actual hand sets? >> i think blackberry has had a phenomenal story in the past. i think it's lost its way a little bit. when you have the co founders coming back in, there is normally something within that business that gives some value. the public markets aren't seeing. remember, public markets to the private, you've got a far longer run time to actually make those changes and extract the value. >> lovely chatting to you this morning. thanks so much. simon hamilton, global head of investech finance. alcatel spf lucent is trying to shore up its balance sheet. let's get out to stefan for more in paris. stefan, tell us about the raising here. the stock price has been moved
4:46 am
around a little bit as a result. >> reporter: yeah. 155 million our rows. it's the capital hike that's been announced this morning at the start of the broader transformation plan to strengthen the equity and also to lower the debt level and to push the maturity of this debt along with the capital hike. alcatel-lucent will issue high yields of bond, $750 million and will put in place a new credit line of 500 million euros. regarding the capital hike, holders of existing ordinary shares will receive one right for each existing share. the subscription period will start november the 19th and will end on november the 19th. according to traders, it's going to be roughly a 15% solution or seems to be the answer. they're not going to sell their business to nokia.
4:47 am
that was an ongoing speculation on the market. they raised their recommendation on the stock to neutral from under performing. market reaction is still touchy. >> we've had many discussions about it. now there's some tough conditions that air france kellum have set out. what do they include? >> this morning they denied that it asked air italia to cut 5,000 jobs. that was a report this weekend by the italian newspaper. air france was asking according to the report 5,000 job cuts before investing into alatalia was planning. it's much more than the market speculation for a couple of weeks. according to the report it's not the only condition that they would like. it wants to significantly lower the debt of 1 billion euro.
4:48 am
air france-klm has a 25% stake. last month it gave its green light for the 300 million hike. so far they've confirmed that they're going to subscribe to the capital hike. it has until mid november to make a decision. >> stefan, thank you very much for that. have some developments in egypt to tell you about. the trial of the deposed egyptian president mohammed morsi was set for today and it's been adjourned according to state media. this is after morsi was apparently chanting in court. he was chanting down with military rule in the courtroom according to reuters sources, so he has apparently disturbed the proceedings with his chanting. he was on charges with 14 other islamists on trial inciting violence. this has now been pulled to a halt. also until morsi actually wears his prison clothes according to stories crossing the wires as
4:49 am
well. still to come on this show, as greece's finance minister gets set to meet with the troika, will tourism help turn the tide for the mediterranean nation's economy? we'll discuss it after the break. farmers presents: fifteen seconds of smart. so you want to drive more safely? stop eating. take deep breaths. avoid bad weather. [ whispers ] get eight hours. ♪ [ shouts over music ] turn it down! and, of course, talk to farmers. hi. hi. ♪ we are farmers bum - pa - dum, bum - bum - bum - bum ♪ ♪
4:50 am
♪ hey [ male announcer ] when we built the cadillac ats from the ground up, to be the world's best sports sedan... ♪ ...people noticed. ♪ something like a phenomenon, baby ♪ ♪ you're something like a phenomenon ♪ [ male announcer ] the cadillac ats, 2013 north american car of the year. lease this cadillac ats for around $299 per month wpremium care maintenance included.
4:51 am
4:52 am
exchange." greek finance minister says tourism will help achieve a better gdp result in the third quarter. 17 million tourists are expected to land in the mediterranean nation bringing in billions. joining us now is pellia legos who is ceo of hotel grain. we have the prime minister david cameron starting to speak at the cbi conference. i'm not sure we're going to take it. here are live shots. i'll keep you updated with what he's saying. there's a look at his speech at the cbi. sorry for that interruption. let me come back to you and ask you about the greek tourism state of affairs because you
4:53 am
claim in your company press release it's been a great turnout in greek tourism. what are you seeing? >> i think tourism is the vehicle of greek economy to recover. our prime minister gave us a sign that lets tourism be the first victory. this was a fantastic year. our numbers actually -- we estimate that the arrivals will be 17.5 million this year. we are aiming higher for next year and ourselves as a hotel and tourism enterprise, our association has make a business plan with mckenzie that we are going to work a plan that we will reach 21 million arrivals in the future. >> so you have 70 luxury residents across the greek countries. how big are you? >> greece is a fantastic place, a paradise for small boutique
4:54 am
properties that they offer experiences. they are not so big. they are more for the family business but they offer hospitality and nowadays i can say we are very much value for money. greek islands are looking fantastic. infrastructure is becoming better and better. >> it's interesting how you say value for money. that's one of the main criticisms for a lot of people over europe. going to greece isn't a lot cheaper than going to other european cities. how do you counter act that when talking directly to your customers. >> when i say value for money, doesn't mean that i always mean cheaper, but the value of service you are getting from greece from educated, trained personnel and the value of quality we are offering on the greek islands is in comparison with other nations. we must take things in our hands. so we are working harder. we are looking better for our products and we are trying to
4:55 am
have good quality. that is very important. it seems like our efforts up to now, people are traveling to greece. >> i've spoken to a lot of italians and ask them how they step away from all of the austerity measures and the shenanigans of government and say focusing on business. they say you would never have a business if you listened to the politics. is it a major business increase? >> no, it is not. me as a businessman in tourism, i understand i have to fight and i have to fight for my world and my world is tourism. austerity doesn't help. now we are in the sixth year under austerity measures but somehow we all -- you know, economies go through cycle. we need more of a boost. tourism is giving us the moral boost we need as a nation and as a country.
4:56 am
>> what are the problems of raising money in this market. how do you access more funds if you acquire them? >> we don't exactly need funds. we are making a good effort, i have around me good, knowledgeable people that they are prepared to work hard. work hard is now a very important thing that's happening in greece. we are working harder than what we used in the past and it's a matter of we face hotels not exactly like business, we face them like theatrical stages. we have to create experiences for our guests, this is what we always do, based on fantastic greek cuisine and climate. >> can't argue with you on that one. thank you for popping into the studio to see us. >> thank you very much. well, we are just keeping in touch with the cbi conference. you can see the u.k. prime minister davideron speaking to business leaders across london. we are waiting for some headlines to cross.
4:57 am
we've actually just had a better read from the construction industry this morning suggesting that's also surging in october, but this has been consistent across the board. been getting a whole good batch of numbers. no doubt the prime minister is embracing that and using that in his discussion with leaders this morning. so we are going to keep you abreast of any further news in just a bit. let me also tell you what's coming up on the agenda in asia tomorrow. australia's central bank is expected to hold rates steady at 2.5% as its policy decision. rising property prices in the higher australian dollar. also have the hsbc market. services pmi. plus uab and sim sembcorp marine. we're going to talk about the interest rate cut in just a bit.
4:58 am
4:59 am
5:00 am
welcome to "worldwide exchange." i'm karen cho. these are your headlines from around the world. a settlement for sac capital. shares in hsbc rise to the top of the ftse 100 as the bank says growth in china is stabilizing predicting the asian pacific region are predicting a 30% rise in pretax profit. ryanair forecasts a drop in profit for the first time in
5:01 am
four years with the shares trading sharmly lower today. we have very little visibility into q 4. what was different this year is q 4 doesn't have easter in it, last year did, so the comparables are tougher. buy expect this pricing softness to move into the winter and then recover as we move into next summer. getting connected. the future of blackberry remains up in the air. the company's is lining up for the takeover bid. >> announcer: you're watching "worldwide exchange" bringing you business news from around the globe. if you're just tuning in, thanks for joining us on the show today. let me get you up to speed with how markets are fairing ahead of the u.s. open. a little green on the charts is the expectation. fair value, 6.5, 3.6 for the nasdaq and 1.5 for the s&p 500. we're looking for a slight numbering higher. it is a big day. gdp numbers coming out.
5:02 am
also the u.s. nonfarm payroll numbers. a little downbeat coming up. weak data suggests tapering could stay for longer. that's a positive catalyst for the markets and this environment again. let's move on to how europe is fairing. it's been the outperformer. we have come back from the highs we were enjoying here from the ftse. we're over half of 1%. a slight peel back. been around the highs, two for the year for the xetra dax. a slight move forward. .2% for the french market and the swiss market which has been out across europe just a fraction ahead this morning. couple of big movers out there to tell you about. ryanair shares have slumped in altitude. this is after the low cost carrier cut its fourth year profit target in four months. taking 11 plus plus percent. earlier ryanair ceo michael
5:03 am
elyria says the demise of air italia will help it recover market share. >> one of the great opportunities for us with the new 175 aircraft order in the next five years is the fact that alatalia will get smaller. no matter what the ruling they'll continue to bail it out again and again and again. it will continue to create huge opportunities for us. >> fortunes of alatalia creeping into another share today. alatalia is having impact in france. it's forced to deny reports that it's asked alatalia to cut 5,000 jobs. air france klm is moving south by 2% almost. al alka tell lucent shares dropping. we'll have more on that stock in just a bit. 6.8% lower is how it's doing.
5:04 am
hsbc should see shares moving in early trade but to the up side. it's the top performer on the ftse. 2 plus%. very high volume trade on the back of its earnings reports which came in in line with expectations. bond market, this is how we're performing across the board. ten year yield. we have seen the price firm up, 2.61%. italy back at 4.1 from 4.11. bonds weaker. the gilt price has been going south. 2.65%. this is after we had the latest construction figures that came out and it's the highest level we've seen since 2007, september, the month of that year. let's go to li xisuan. you have the chinese market in positive territory. >> yeah, you're right, karen.
5:05 am
asian markets in fact. a big week for china as hopes rise for reforms going into the communist party's third plenum. investors have positioned themselves cautiously. the shanghai come 'sieve ended flat and they gained a modest .4%. over in hong kong the hang seng index ended weaker by .25%. we also saw better than average retail sales in house price numbers from australia. the asx 200 reversed early gains down by .4%. let's take a look at hong kong banks. good proxy for china's economy. they pledged more preparations to handle any race in bank loans. the big four banks pared down their early gains to end mixed.
5:06 am
south korea has profitability concerns. uli fell in three weeks. q 3 profit dropped 84% from a year earlier while provisions for that debt nearly tripled. meanwhile, hana, kb financial and shinhan financial saw heavy drops. >> thank you for the update. cnbc has learned sac capital has set itself to sign documents today. it's going to have a guilty plea to securities fraud. it has no intent to plea to insider trading. the firm will be fined $1.8 billion, $600 million of which has already been paid in a
5:07 am
separate case. blackberry's future may be a bit more clear today. they're trying to take the smartphone maker private. reports say fairfax is struggling to raise financing. civil banks have declined to take part. reports say blackberry co-founders are working to submit a joint bid for the company with private equity firm and possibly the chip maker qualcomm. here's a look at how the blackberry shares have been performing down 53%. september when that bid was forthcoming, you can see fairly supportive also before the share prices tail off. that's a suggestion that there is a lack of confidence in the existing deal going through. let's give you a look at what's on the agenda in the united states. coming up, august and september factory orders will be on at 10:00 eastern.
5:08 am
august report was delayed because of the government shutdown. fed governor jerome poul and eric rosengren speaking about what the tapering will look like. perhaps we'll get a few more hints on what it will look like. earnings, cme group, kellogg, sysco, anadarko, marathon oil and plains all-american oil coming out. later this week investors turn attention to u.s.gdp numbers and also the ecb decision on thursday. that will be followed by nonfarm pay rolls on friday. yes, back to the grind, not the tuesday which we had last month. let's move on how the euro dollar has been performing. it has had a bit of a rocky session. 135 is where we're at. still up .001%. 138 was what we had gotten to.
5:09 am
let's get out to steven england. steven, there was so much chatter last week coming from all of the investment banks expecting some more ecb action. you can see a little change in the way people were thinking the euro might trade as a result. where do you think it's going? do you think the ecb will be forced to act again? >> well, we think that they will, but we don't think that they're going to do it at least until december. this is too early. what we do think we'll see is some change in the rhetoric. the inflation numbers that came out, both oncor and headline last week, were very, very low compared to the ecb's target. we think that they'll be more forthcoming in their comments with respect to the possibility of an ltro, possibly with respect to interest rates than they have been in previous meetings. >> steven, we saw your trade at 138.32 recently. that was the high. a lot of investors liked it because it was a play on risk. we had suggests we weren't going to get a taper any time soon,
5:10 am
this was one of the risk trades to play. so what happens from here? do people sell the euro and go elsewhere? >> well, yes. i mean, basically. what we've seen over the last week is this real inversion in terms of perception of which central bank is likely to be the most hawkish. the fed doesn't want to be hawkish for macro reasons particularly, but we think they're increasingly concerned about the expansion of the balance sheet. they own 42% of all bonds of maturity between 5 and 30 years, which is a huge percentage. so we think that for market reasons and portfolio reasons they'll back out. the market isn't prepared for that, and the positioning in the market suggests that investors were buying hyper fed dovishness in the month running up to the meeting. the opposite with the ecb, that the market expected the ecb to be relatively content,
5:11 am
relatively hawkish almost, not moving. the data that have come in suggest that the buying of euros that we saw prior to last week, that's at risk of being reversed. >> steven -- >> so weak euro, stronger dollar. >> weak euro, stronger dollar. if we look at how the dollar has been performing as well, there's a bit of a bounce back in the past week. coming up to pay rolls this week, what are they going to look like? >> you know, i think the u.s. data have come in somewhat stronger, actually, than investors expected. certainly the pmis were very strong. and the nice thing about survey numbers is that they -- the people who respond to surveys look past some of the temporary factors that affect markets. obviously the pay rolls will be affected, both by the government jobs that were lost and by the knock-on effects into the private sector. i do think the focus this week will be on the fed speakers. you mentioned earlier, powell
5:12 am
and rosengren today, whether they advance timing of tapering will be very important because the market still has tapering sometime, you know, maybe march, earliest january of next year. if they sound more hawkish with respect to tapering, that will be very material. >> there are so many nomalies with the fed speak might be more relevant. steven, we have the boe. a lot of people there's not going to be much action from the boe. is that a trade or is there something out there a bit sexier on your agenda? >> well, a month ago the bank of england was the most hawkish among g 4 central banks. it's probably perceived as the most hawkish among g 4 central banks. we also saw a lot of buying of sterling over the last couple of months. the question is whether they come up with anything that surprises the market at this point. but we don't really expect them to come up with a dovish message
5:13 am
in any sense. they're more likely to be affected by the slip stream of euro and dollar because sterling typically trades in between them rather than surprising the market on their own. >> thank you very much for the analysis. we've got plenty coming up for you including still to come, there she is, miss america. nina devaluri, the first indian american to take the crown lands in london on her world tour. she's make i a special stop here in our studio. we'll go behind the glitz and glamor of the pageant world to talk beauty. that's coming up in 30 minutes' time. what shall i ask miss america? get your questions in now. a bit like a miss america pageant where you get a whole different bunch of questions from judges. this is your chance to take a part. e-mail us worldwide at
5:14 am
or direct to me at cnbc.karen or twitter. we'll be back after this. mine was earned orbiting the moon in 1971. afghanistan in 2009. on the u.s.s. saratoga in 1982. [ male announcer ] once it's earned, usaa auto insurance is often handed down from generation to generation because it offers a superior level of protection and because usaa's commitment to serve current and former military members and their families is without equal. begin your legacy. get an auto insurance quote. usaa. we know what it means to serve.
5:15 am
5:16 am
here are the headlines for today. cnbc learns the hedge fund could
5:17 am
sign a deal today. hsbc could have growth stabilizing. and what makes for a blackberry takeover? the bid is lacking juice. still ahead on the show, a chronic skill shortage is hitting businesses around the world. would matters be any better for u.k. firms? after the break we return to the cbi conference where ross is with the ceo of hayes. opportunities aren't always obvious. sometimes they just drop in.
5:18 am
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. at bny mellon, our business is investments. managing them, moving them, making them work. we oversee 20% of the world's financial assets. and that gives us scale and insight no one else has. investment management combined with investment servicing. bringing the power of investments to people's lives. invested in the world. bny mellon. because what you don't know, can hurt you.urance. what if you didn't know that posting your travel plans online may attract burglars? [woman] off to hawaii!
5:19 am
what if you didn't know that as the price of gold rises, so should the coverage on your jewelry? [prospector] ahh! what if you didn't know that kitty litter can help you out of a slippery situation? the more you know, the better you can plan for what's ahead. talk to farmers and get smarter about your insurance. ♪ we are farmers bum - pa - dum, bum - bum - bum - bum♪
5:20 am
conference kicks off in london. the business lobbying group is setting out why it believes the u.k. will be the best place to remain within the e.u. ross westgate is at the event in london. ross, we've got the prime minister david cameron speaking at the moment. tell us about some of the dialogue taking place there. >> yeah, he's here. we can see him. he's over my right shoulder at the moment doing a question and answer session. he didn't talk about any speech, the cbi's position on the e.u., you'll be pleased about it, because it mirrors his own position to some degree. he's talking about, look, we're doing okay. we're on track as far as the
5:21 am
u.k. economy is concerned. we've created a million private sector jobs. they said that couldn't be done as they cut private sector and he talks about growth three times. we've done a job so far but there is more to do. how much more to do is the question. what more policies do we need? joining us with his views is alistair cox, the ceo of hays. 3 million private sector jobs we've created but what else needs to be done? how much more? >> i think the prime minister is the first to admit. we're at the start of the journey. it's taken a long time to get the economy to turn around. for the first time in five years it feels as though there is a positive sentiment in moving through the market. it's not just focused on london. the recovery typically starts in london and then emanates out. we're seeing a pickup in so many sectors and so many regions in the u.k., i think that's
5:22 am
encouraging. i'd echo the prime minister's words. i think we're at the start of the journey. there is a lot more to do. >> he also talked about how we need to do more -- better things with education. not enough 16-year-olds are gaining gc passes with math and english. he said we need gcc passes. how crucial is this? >> i think it's absolutely vital. education and our educational systems being aligned with the jobs we're creating today and the next 10 to 20 years is absolutely vital to create an economy where we're self-sufficient in our skills. we've been talking about education for a long time now. i think we really do need to start the progress to better orientate our educational systems. >> the prime minister has just left the stage. i think he's allowed a little bit of applause. he can disturb us doing that. is this education with businesses getting involved? is this businesses saying these are the skills we need to get
5:23 am
involved with either universities, schools, setting up learning colleges? >> i think that's a part of it, but i think business in general can play a greater part in terms of getting involved with schools, getting involved with higher education so that those establishments understand, what are the skills, either the technical skills or the life skills that young people need to be successful in the modern workplace and the jobs that were going to be created for tomorrow. at the end of the day we have 2.5 million people being employed in this country and yet there are half a million unfilled jobs today. there is a mismatch. >> why is that? >> i think because we're starting to see the friction in the employment market where the opportunities that are available and the skills that are available are not in balance. we've got too many of the wrong sorts of skills and not enough of the right skills so when i talk to my clients they're looking for engineers, they're looking for technologists, health care workers. we're simply not turning out those skills into the higher education. you drop down to the vocational
5:24 am
skills and apprenticeships. the prime minister talked about how we're creating 1.5 million apprenticeships. how to get people to start apprenticeships but to finish them as well. >> how does brittain compare with the united states, germany, or china. >> i think germany is a great blueprint, actually, how industry and business has integrated with business and society and say this is what we're going to need in the future. how can we collectively come together to put that jigsaw together so that we are producing people with the skills and the capability for the jobs that industry is going to create in the future. they're far more self-sufficient everywhere in this country. >> alistair, good to talk to you for the first time today. we'll be talking together about barriers to international growth. >> look forward to it. >> coming up this afternoon. just more duty i have to do, karen. i'm going to be watching "worldwide exchange" now though because i want to see some of your -- you have a guest.
5:25 am
how long, 10, 15 minutes? >> you're really annoyed that you missed out on this? miss america is coming up in a few minutes' time. >> i think there's a conspiracy. >> what are the chances you anchor 364 other days of the year and the one day you're out in the field we get a lovely guest for you not to interview. such is life, ross. but i'm sure there will be plenty of applause on the stage for you later this afternoon as well. well, it is the final day for potential blackberry bidders to be looking at financials the $4.7 billion buyout offer. the smartphone showdown coming up. here's how futures are trading ahead of wall street. a bit of green on the screen from some of the gains across the european session today. how do you make money in these markets? here's what some of the experts have been telling us this morning. >> quite a difficult period and i think that we're actually heading back. as people start to look into 2014 i think that could well be looking for, you know, further
5:26 am
measures from structured reforms, for example, for the pmi and we actually start to see that story develop again because where dollar yen is at the moment isn't really going to do it. >> after a couple of pretty tough years, frankly, for emerging markets, you're starting to see in the last two or three months emerging markets equities outperforming which is interesting because we haven't really seen any good news yet. so the market is starting to tell you that 2014 is going to be a better year than 2012, 2013. either we get firmer macro economic data that ultimately persuades banks to rein in stimulus or the liquidity continues. in fact, i think it's around 1730 that the stimulus keeps
5:27 am
getting pumped. it's good news for safe havens and good news for everybody. what airline? united. [ indian accent ] which airline, sir? [ passenger ] united. whoa taxi! [ british accent ] what airline, then? [ passenger ] united. all right. [ spanish ] what airline? [ passenger ] united. ♪ [ mandarin ] which airline? [ passenger ] united. [ arabic ] which airline? [ passenger ] united. [ italian ] where are we going? [ passenger ] united. [ male announcer ] more destinations than any other airline. [ thai ] which airline do you fly? [ passenger ] united. [ male announcer ] that's great, big world friendly. ♪
5:28 am
5:29 am
welcome to "worldwide exchange." a settlement for sac capital. cnbc has learned that a deal will be signed today in a case against the embattled firm.
5:30 am
hsbc says the growth in china is stabilizing predicting an upswing after delivering a 30% rise in third quarter pretax profit. turbulence for ryanair. a drop in profit for the first time in three years. >> we have very little visibility into q 4. what was different in year is q 4 doesn't have easter in it, last year did, so the comparables are tougher. i would expect this pricing softness to continue into the winter and recover as we move into next summer. getting connected. the future of blackberry remains up in the air as reports say the company's largest shareholder is struggling to line up financing for its takeover bid. >> announcer: you're watching "worldwide exchange" bringing you business news from around the globe. well, it's put up or shut up day for any potential suitors
5:31 am
looking to outby the fairfax financial for the floundering smartphone maker, blackberry. the canadian private equity firm has offered $9 a share for the tech firm and needs to make a definitive offer by the end of the day. reports over the weekend suggests it was struggling to raise financing. meanwhile, the founders are said to be close to forming a consortium to biz for the struggling cell phone maker. and while initial interest for blackberry seems to only come from the financial world, since the fairfax offer a dozen tech firms have been suggested as potential bidders but all are part of the former smartphone maker. you can see many names on the board here. shares in blackberry have traded under the fairfax offered price since the bidding opened suggesting that investors have been holding out for another serious opportunity. joining me now from cnbc
5:32 am
headquarters is scott thompson. scott, tell us your thoughts on whether fairfax financial will get the financing for blackberry. >> it's a good question. from what we've seen now, there hasn't been a lot of talk of financing actually coming through. you've got a company in blackberry that is obviously struggling and you have revenues that are declining fairly precipitously. however, you have a strong balance sheet so the assets are there. the business and how you might value the money to get into this transaction could be a little difficult and i think that's maybe what they're struggling with. >> let me ask you about some of the chatter from the technology companies because there's been an enormous amount of securities concerns of late. and there are suggestions that some of these tech companies and the likes of facebook might like the i.p. that blackberry has. the bbm, blackberry messaging is seen as very secure. do you think this is one of the saleable items that blackberry
5:33 am
has? >> you can certainly split pieces of the company off and put them up for sale. i think that the facebook conversations are more about partnering, more about trying to bring new services and new features to the platform more than they are facebook actually acquiring a handset product. so it will be interesting to see how that unfolds, but i do look for facebook potentially to partner with blackberry in ways, if the company's starting to be broken apart and sold into a services and hardware type of platform. >> there has been a huge amount of competition for that third spot in the smartphone market. we have seen a lot of android moves. microsoft coming in that spot. how hard would it be for a revived blackberry to wrestle the fortunes away from microsoft? >> well, in the smartphone business it's very hard to regain market share once you've lost it. it takes quite a bit to get back
5:34 am
into the game. that's the problem that blackberry is looking at today. it may be smarter just to move into more of a defensive mode if you're blackberry. maybe supply hand sets that have been broken that have not -- move into more of a defensive mode, not an offensive mode and maybe pull back on the blackberry ten innovation that you have. in that case you have a steady stream of cash, a steady stream of revenue, high margin revenue in the services business that you could potentially run off. that's probably what fairfax and several others are thinking when you look at bids for this company. >> how much of the market chatter can you separate out? on any deal there is usually a lot of pr that goes into this trying to suggest that there's tension in the bidding process. do you believe that all of these players are interested in blackberry? >> you know, i think everyone's kind of getting a look at what the company is, what the company can be. it makes sense that these companies should look at this
5:35 am
opportunity. i don't see a big strategic fit for many of these companies. i think they may be interested if they can get a portion of the company, i think the company in its entirety is going to be tough to match with some of the suitors that have been looking so far. >> thank you very much for chatting with us today and getting your perspective. scott thompson, analyst. here's another look at how u.s. futures are fairing today. we have a bit of green on the board. this comes after a striet bounce on friday's trade. the markets are coming off some of their peaks of late. looking for another catalyst and we might, in fact, see that this week. we have a whole bunch of fed speakers perhaps giving us a window into the time of tapering which has been driving the sentiment. the u.s. nonfund tables. so far the markets hold open slightly wider.
5:36 am
the u.k. being one of the standouts. 1/3 of 1%. we were tracking half of 1% higher. we peel back from those levels. u.k. construction numbers were supporting a feature for the u.k. market. you can see in the periphery still ahead but not as much as the core. let's take a look at the top stories we're following for you today. the justice department reportedly wants u.s. airways and american airlines to agree to a package of broad concessions in order to get approval for their merger. both sides have gun settlement talks -- have begun settlement talks. they're discussing the possibility of giving the airlines some gate slots at several u.s. air ports including reagan national in washington where they're the dominant carriers. . u.s. airways stock is up a whopping 68% firmer. there can be more trouble
5:37 am
for lululemon. they had to pull back yoga pants on their shelves. they were too sheer. the recall cost millions in sales and they have forced the resignation of ceo christine day. now lululemon is fielding complaints about quality. a small number of consumers are saying pants are too sheer and some are falling apart after a few months of wear and washes. they're basically unwearable. here's how the stock prices are doing of late. you can see taking the stock down 11 plus%. still to come, miss america is making a special stop on her busy world tour to pay a special visit to cnbc. nina davuluri. i couldn't say your name. looking forward to having conversation with you. come take a seat. we'll be back with you in just a few minutes' time. mine was earned orbiting the moon in 1971.
5:38 am
afghanistan in 2009. on the u.s.s. saratoga in 1982. [ male announcer ] once it's earned, usaa auto insurance is often handed down from generation to generation because it offers a superior level of protection and because usaa's commitment to serve current and former military members and their families is without equal. begin your legacy. get an auto insurance quote. usaa. we know what it means to serve.
5:39 am
bny mellon combines investment management & investment servicing, giving us unique insights which help us attract the industry's brightest minds who create powerful strategies for a country's investments which are used to build new schools to build more bright minds. invested in the world. bny mellon.
5:40 am
>> announcer: you're watching "worldwide exchange." miss america 2014 has been breaking down barriers at home, becoming the first indian american to take the crown and now she's becoming a global ambassador for the competition embarking on her post win world tour. nina davuluri is miss america 2014. joins me in the studio. thank you for coming. >> thanks for having me.
5:41 am
>> one of the great parts of your job is you get to embark on a great deal of travel. this is the first time in london. >> i'm here on behalf of our clothing sponsor. it's going to be a wonderful exciting year. >> how many stops are you making on your world tour? >> oh, my gosh. i don't know. i travel 20,000 miles a month. i'm in no place longer than 48 hours usually. it's quite busy. >> let's get to some of the remarks that were made when you first won the crown because the blogosphere went into overdrive. did the backlash surprise you given that you've exposed this underbelly of racial prejudice in the united states. >> sadly it didn't. i had experienced similar remarks on a much smaller scale when i won the title of miss new york. i knew if i won miss america it would happen on a larger level, and it certainly did. the silver lining with everything that happened though is that for everyone negative comment, tweet or post, i
5:42 am
received hundreds and now thousands of positive words of encouragement, support, and truly love from not only americans but people all across the world and that's been so amazing. >> we've heard a little bit about your career and missions as well. you want to become a doctor? >> i do. i'm currently in the process of applying to medical school. i just won $50,000 in scholarship money to further my education so it's going to be definitely -- certainly will help. >> is there a normal life after miss america. people think this is the precursor to fame and fortune. becoming a doctor is a lot more normal? >> miss america is very much a scholarship and service based organization. so we call it a year of service for a reason. i work with several different service organizations and am an ambassador for them. it's a year of giving back really. >> i want to ask you a little bit about being an ambassador. in some ways miss america is seen as a very attractive
5:43 am
friendly ambassador for the states. you fly in here and there are many negative allegations about american spying on allies, on the europeans. is it fine for the americans to be spying on its friends? >> well, i certainly hope that the story develops a little further to get all of the information so until that comes out i'd be interested to -- i'll then formulate my opinion. >> okay. very diplomatic. i think that was in less than 30 seconds that you get in a window when you're answering miss america questions. >> right. absolutely. >> lovely. thank you so much for stopping by to see us today. >> thank you. >> great to have you in the studio and good luck with the rest of your travels. nina davuluri, miss america, 2014. it's been a tough month for the obama administration marked by the rocky rollout of the president's new health care program. a new survey shows while americans are aware of obama care, not that many have tried to sign up for coverage. let's get out to bertha coombs. is this a lack of interest or many people can't get online to
5:44 am
sign up? >> it's hard to say but i would imagine the technology problems certainly are adding to this. the survey by the commonwealth fund finds that 17% of americans who are potentially eligible for coverage under the affordable care act, known as obama care, have visited the new health insurance exchanges to enroll in a plan, either by mail, phone orion line. the commonwealth fund is a private foundation that supports independent research on health care reform. the poll was conducted between october 9th and october 27th right in the thick of all of the problems that we've been seeing with the website. 60% of people say they are aware of the marketplaces. that's up from about 1/3 in a survey done earlier this year. one in five adults who visited an exchange say they enrolled in a health plan. those who didn't say they weren't sure they could afford it or were still deciding or had technical difficulties with the site. more than half of people who are potentially eligible but haven't ebb rolled yet say they're
5:45 am
likely to try by march 31st, which is the end of the open enrollment period. among the survey's other findings, 21% who visited the insurance exchanges have been young adults, ages 19 to 29 which is an important cohort. when it comes to signing people up, half are between 30 and 49. a majority report the entire experience has been challenging. 70% of adults who visited the marketplaces rate their experience as fair or poor. that's probably over estimating it. more than half say it's been difficult or impossible to find a plan with coverage they need and 61% say they couldn't find a plan they could afford. the federal insurance website was down again this weekend for what's called extended maintenance. there will be more hearings on capitol hill this week, this time on the senate side. marilyn tavener testifies tomorrow and health and human services secretary, kathleen sebelius, you see her there, she
5:46 am
goes in front of the senate finance committee on wednesday. they were just up on the hill last week on the house side, karen. this is probably ease -- these hearings probably aren't going to stop. there are a number of committees looking into this. >> do you think the obama administration can use obama care at some point to become a public -- a positive public relations exercise? >> well, it just depends. they really need to get a lot of people in. if you start getting people in who can find insurance and they feel good about the affordability of it, certainly then that becomes a testament, but at the moment they really have really big hurdles to overcome with this main way for people to sign up in some 36 states. just yesterday on the sunday shows obama administration was kind of, you know, talking down some expectations on enrollment numbers. one of the white house advisors
5:47 am
yesterday saying i can promise you the numbers are going to be low when they finally do start reporting them later this month. >> bertha, thank you very much for the update there. here are your headlines today. the end game for sac capital's saga. they learn the hedge fund could sign a deal today. hsbc predisabilities growth in asia as they predict a 30% rise in pretax profit. and what next for blackberry. reports suggest a fairfax financial takeover bid is lacking juice. still to come on the show, kate kelly joins us with the latest developments with sac straight after the break. [ male announcer ] how can power consumption in china, impact wool exports from new zealand, textile production in spain, and the use of medical technology in the u.s.? at t. rowe price, we understand the connections of a complex, global economy.
5:48 am
it's just one reason over 70% of our mutual funds beat their 10-year lipper average. t. rowe price. invest with confidence. request a prospectus or summary prospectus with investment information, risks, fees and expenses to read and consider carefully before investing. ♪ [ male announcer ] more room in economy plus. more comfort, more of what you need. ♪ that's... built around you friendly. ♪
5:49 am
yeah. i heard about progressive's "name your price" tool? i guess you can tell them how much you want to pay and it gives you a range of options to choose from. huh? i'm looking at it right now. oh, yeah? yeah. what's the... guest room situation? the "name your price" tool, making the world a little more progressive. cnbc has learned sac and
5:50 am
u.s. prosecutors are going to sign documents to settle the case against the hedge fund firm. cnbc's kate kelly is going to join us on the phone. kate, we know there's going to be one guilty plea, but set the scene for us. >> reporter: karen, years after investigating and negotiating this deal, this is a long-awaited announcement between sac and the government. essentially it will accomplish many things. the government will be extracting what is in many ways a record fine. a total payout of sac of $1.8 billion. 1.2 billion of that is new. another 600 million comes from a prior settlement in a separate but related case in terms of the issues involved. the other thing is sac will be pleading guilty to at least one count of securities fraud and probably additional pleas, perhaps a count of wire fraud as well. i'm told that although the case made against sac in july was quite elaborate in terms of how prosecutors argued that they had promoted and sort of constructed a pattern of insider trading
5:51 am
within the firm, sac won't go so far as to make the promotion of insider trading but they will cop to securities fraud and in so doing they will lose their registration as an investment advisor. now what does that mean? that means that after a short grace period sac will no longer operate as a hedge fund which it has since 1992. it will probably become a family office managing only the money of founder steve cohn and some certain employees, his family members as well. while they hope to reregister, karen, i'm told as a hedge fund down the line, really this is the end of an era for one of the most successful firms in history and one that still manages to this day about $13 billion. >> thank you so much for setting the scene. we'll come back to the developments throughout the course of the day. kate kelly reporting for us for cnbc. here's a quick look at how markets are performing right now. we're still holding on to much of the green across the european nation. we've pulled back on some of the highs, up about half of 1%.
5:52 am
a lot of it is driven from hsbc. you can see a cross even the periphery they have some modest increases. a tenth of a percent. the u.s. market will try to move into positive territory. the stock today, brand new trading week. the markets have been traveling around the highs of the session as well so we've got much coming up this week in terms of u.s. gdp numbers and the u.s. trading numbers. let's go to ben lick ten stein. joining us from chicago. ben, the markets, we have a lot of countries still around this tapering program. what's your feeling on how investors are positioned coming into this week? >> well, i think for the most part the investors and traders have taken on this mentality that the status quo remains. as of recent, again, even last week we had fed meeting and we had the announcement that we continue. there's no talk of taper for the most part. we continue to push that out.
5:53 am
the market although it has pulled back off the recent extreme highs really has not breached any major levels of support and for the most part continues to hold this very well-defined trend to the upside. if you look at the s&ps on a weekly chart, they're skyrocketing into new highs and the pull back hasn't been seen on the weekly chart. it was short lived last week. even today kind of narrow range activity. we're seeing a low volatility environment. we're seeing status quo bid activity remain and for the most part i think that should continue. i don't expect to see any high energy or any major moves, if you will, and the only real concern right now out there for investors is that the russell has started to pull back a little bit. that being a broader based representation of the market, i personally and i know a lot of others tend to look at that for a little bit of direction. so canary in the coal mine if you will from the russell. i'm not 100% sure. considering this market continues to establish areas of
5:54 am
value to the up side and as i mentioned now a couple of times, it has really yet to breach any major levels of support on the recent pull back. >> ben, we've got some data out this week, nonfarm pay rolls and gdp. how messy do you think the numbers are going to be? can analysts, investors, traders pull anything out of that this week? >> well, there is a lot of uncertainty going into it. i think that goes without saying especially considering that we're on the coattails and as the dust continues to settle from the recent economic and federal debacle, if you will, regarding the debt ceiling and government shutdown so i think there's going to be a lot of uncertain tia soesh yated with it. those are the numbers we have to look forward to. i think the attention will be directed towards those numbers throughout the week. i don't expect to have a major high energy type trade. the s&ps are balancing out right around the 1750 level establishing areas of value
5:55 am
around the 1750 level. so, again, until we see the dollar, until we see gold, until we see the bonds with some real high conviction, high initiative type activity, i don't expect to see anything change in the s&ps. i think we continue to see a grind higher. minimal short lived limited pullbacks and rejection associated with those pull backs. that's really what we've been seeing. >> let's get into a couple of sectors, ben. at these levels it is tricky. you do have to be a very game investor to dive in. where would you be looking if you think there's some value out there still? >> well, i've been a strong fan of the tech sector. i still think there's an enormous amount of pent up demand personally and from the people that i work with on a regular basis all sort of feel the same way. again, as i mentioned though, what's a little bit concerning is the emerging markets. we have the russell coming off significantly relative to the other majors. the divergent type activity is the most concerning. what i like to see is i like to
5:56 am
see that conformity, if you will. the s&ps, nasdaq, russell all down at the same time. unfortunately what we've been seeing is the dow kind of lagging in terms of its enthusiasm 209 up city -- to the up side. the russell is rolling over in the last week. whether that is some sort of sign in the near future to come, anyone's guess. we'll be keeping a close eye on it. >> we saw all of those warnings. thank you very much for joining us. one story to leave you with. the new york city marathon returned sunday after a one-year absence with big crowds and heightened security in the wake of the bombings in boston in april. last year's race was canceled just days after hurricane sandy devastated new york and new jersey. nearly 51,000 people started the marathon which goes through all the fire burrows. cnbc's own courtney reagan ran and finished in 4:55. what a trooper.
5:57 am
well, that's it for today's show. i'm karen cho. thank you for ross westgate and myself, thank you for watching "worldwide exchange."
5:58 am
5:59 am
6:00 am
good morning, everybody. welcome to "squawk box" here on cnbc. i'm becky quick along with joe and andrew. in our headlines this morning, documents settling the insider trading case against sac capital are expected to be signed by the hedge fund and prosecutors today. the deal includes a guilty plea to one count of securities fraud. kate kelly will join us with the late nest a minute. in the meantime, bids for blackberry are due today. there there's a tentative bid. other parties said to be vying for blackberry include serberus, qualcomm and the co founders. tri-point homes is trying to buy the company for


info Stream Only

Uploaded by TV Archive on