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tv   Worldwide Exchange  CNBC  November 21, 2013 4:00am-6:01am EST

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hello. you're watching "worldwide exchange." i'm ross westgate. die verging europe, stronger than expected growth in germany as manufacturing and service industry. but it's a different matter in france. all sectors contracted activity in november. goldman sacks gets burned. bad betts in the market may be
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behind a drop in revenue last quarter. and the prime minister has replaced his long standing finance minister with a political unknown, but does it change the investment climate? we'll hear from the former prime minister. >> announcer: you're watching "worldwide exchange," bringing you business news from around the globe. hello. welcome to the show. we kick off with the latest data out of europe. the market eurozone pmi is coming in weaker than expected. the flash number, 51.5. it was 51.9 in october and investors expected it to tick up slightly to 52. divergence between germany and france. the german composite numbered ticked up to 54.3. the french number, i'm afraid, ticks down. french services at a four-month low, manufacturing at a
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six-month low and the composite, 48.5, 50.5 in october. we saw in the second quarter. negative growth for france and now we are getting contracting activity, as well. chris williamson is global chief economist at market that helps compile these numbers and joins us now. chris, how on concerned should we be about france? >> it is a concern that it's slipping in the wrong direction. risk of recession here after small declining gdp in the third quarter. we're running at a level consistent with 0.2% contraction in french gdp. so that is a concern. it's a really difficult story, though, because the survey data is not just ours die verged from the gdp data earlier this year which shows a surprising uplift in the second quarter of the french economy. we didn't get that at all. our picture is a french economy that has turned around alongside the periphery and it's now bumping along at a stagnant
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level. the danger is you're going to get those headlines which is signaling this renewed recession and that's going to damage business confidence there. >> yeah. and we come at that point when a lot of incident vesters have ridden the cyclical pickup earlier in the year. they've poured money into european equities now wonder wlg they got it a bit wrong. >> well, i think you overplay this for two reasons. one, these are very minor down shifts. but when you look at germany, germany is doing well. its pmi is consistent with gdp growth around 3% creating jobs. you've got services expanding, manufacturing turning up, exports are doing well. and neighboring economies are being pulled up alongside that. so it's looking like france has become almost -- >> but at the expense of others. >> well, in some respects you
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could say that. but in other respects not because supply chains feeding german industry across europe are on the uptick. spain is a good story so far this year, even shown by the pmi. they've been picking up. we're not going to break down today for spain. but spain has done well in terms of productivity and it's feeding into german supply chaines and that's bringing spain up. that's the story we want to see more of. france is looking a bit like an outliar at the moment. >> okay. chris, stick around. you're with us for the first half hour today. also still to come, as german coalition talks crawl towards the end of the year, there is the possibility avenof fresh election. we're going to be in paris. two bosses at the french unit of
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ikea are under allegations of spying on its employees. and with recent warnings from the luxury sector that luxury goods is on the way, we'll get the latest on the sector from the southeast asia luxury conference. that's under way in singapore. plus, the chinese vice premier continues her trip in america on the heels of beijing's latest reform pledges. we'll have a view on what it means for u.s.-china relations. and we'll be hearing from the ecb chief mario draghi. he's addressing a conference in berlin on industry and growth. but first, we are just over an hour and five minutes into the trading day. european equities down again today. take a look at this shot of the dow jones stoxx 600. the ftse yesterday was down some
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17 points and we're in the red again this morning. currently another 24 points, 0.3% lower. the xetra dax moving further away from the record high that we've been at, down 0.6%. this morning, france with the pmi numbers is off 1%. the ftse mib is down 0.3%, as well. a sharp move higher in treasury yields post the fed yesterday. 2.78% is where we stand. now, as far as currency markets are concerned, the dollar/yen has been the big mover, a four-month high of $100.63. euro/dollar, weaker this morning. back under the 1.35 we were trading at yet. we're about a euro below that at 1.3419. pound/dollar, 1.6091. but the aussie has been here once again by the hsbc low. we'll get into that. 0.9274 aussie against the
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greenback. sixuan has the update for us in singapore. >> thank you, ross. asian markets are selling off with the exception of japan. the nikkei 225 outshined ending higher by almost 2% at the dorm. in china, the pmi numbers came in weaker than expected and some say we could see more down beat numbers in the months ahead. the china market still managed to end just a tad lower. and the hang seng index lost 0.5% today, pulling back from its ten-month high. meanwhile, south korea's kospi tumbled 1.2% from heavyweight samsung electronics down over 2%. australian shares extended its four-day losing streak and ended lower by 0.4%. let's check on the stocks in china, continuing to be driven by recent reforms, those include agriculture stocks.
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and some stocks surged on expectation that the city will become the next one to set up a free trade zone following shanghai. telcos got a lift on reports that 4g licenses will be issued by the year-end. but chinese property majors weigh on the index on reports that beijing may soon set up a national network of housing information. the registration system is one more step towards housing transparency in a property tax system so the big players tumbled some 3% to 4% today. back to you, ross. >> sixuan, thanks for that. >> the hsbc market manufacturing citi 0.4%. a touch lower from the 50.9 we saw back in october. what does that mean for the economic growth momentum?
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chris, define your own tea leaves for us. >> it's a mixed story when you mix into these numbers further. you have an output index which rose to its highest in march. which bodes well for gdp growth to actually accelerate in the final quarter. on the other hand, the auto book numbers have waned again. going forward, we may be turning downwards again. renewed export orders is a particular concern. in october, we run a survey of all these companies in china globally. look at all these expectations. it was a down beat message.
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so this really substashates the story that markets are -- next year. >> and if we get tapering, it could be more? >> yeah, that could lead to further outflows from the countries with investment. >> one thing is, this survey, some before of what we've seen in the plenum announcements and reforms. and i wonder how much potential is there for that? and it's a slow burner, i understand, but how much potential is there to encourage private firms to feel better? >> absolutely. emerging markets need to do more structurally to change their economies because there was always in-flow of money. when that's dried up, it's revealing structural weaknesses. and the decision, as it's been
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referred to, highlighting all these changes to take place. maybe that will be confident to lift the outlook, the prospect of these companies from these crisis lows we saw in october. >> it's just beats down the chain, doesn't it? >> it feeds down well. it feeds down the chain across asia. >> that's what i mean. >> yes. so we saw in japan there, the bank of japan is worried about the outlook for the region and indeed this same survey, when we looked at japan, i was expecting japanese companies to be very upbeat. we've had great pmi numbers hitting record highs in japan. then you look at what the outlet is, it's one of the weakest in the rich world. it's exceeded only about brazil. obviously, japanese companies, i think what's happening domestically, but looking at
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what's happening around in the world, especially in asia, because where is the demand going to come from once this first stimulus rolls throw. companies aren't convinced at all, i don't think. still to come, the merger from germany's social impasse could coalition talks actually crumble? we'll get to berlin for the latest right after this. ♪ ♪ stacy's mom has got it goin' on ♪ ♪ stacy's mom has got it goin' on ♪ ♪ stacy's mom has got it goin' on ♪ [ male announcer ] the beautifully practical and practically beautiful cadillac srx. get the best offers of the season now. lease this 2014 srx for around $369 a month
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negotiates from iran and six world powers are lit down for a second round of talks in geneva today. yesterday's meeting was deemed positive by the eu's chief and the iranian foreign minister. hopes are for an interim agreement when talks conclude tomorrow, so u.s. secretary of state john kerry says america will not let any deal be used by iran as they ploy to buy time to increase its nuclear capability. later in the show, we'll ask what each potential outcome of the talks with iran could have
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on the price of oil. that's coming up in the second part of the show. meanwhile, it's been more than eight weeks since angela merkel's election victory. so far, no deal has been struck. talks have been put on shaky ground as the social democrats with a future alliance with the left. so what is going on? roland berger is founder and chairman of roland berger strategy consultants. i see there's been some newspaper reports that we might even face the possibility of another set of elections. >> no, i don't think so. i think we will have the agreement between social democrats and ranking democrats. the content of the talks go to
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penging increase, minimum wage, about rent rage, about more expenditure and welfare, things of which will not be in the line that the voters were voting for. >> we have to make sure we don't roll back any of the reforms of the last decade some say. are there worries that they might? >> i think the danger is there. you know, they are talking about reducing the pension age again, which will be absolutely against the further reforms and a few other things. if you look at the numbers, germany has increased its labor unit costs in the three years.
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if the government adds additional loads to the business and introduces less flexibility, particularly in labor markets, it will certainly lead to decreasing growth and the minimum wage will lead to an increase of the economy in germany which is not what would be in the best interest of the citizens because tax revenues would be lower and the social contributions would be lower. >> and you talk about the competitiveness of the german economy, but the latest pmis this morning south it's doing rather well for others in europe, particularly the french economy which appears to be flirting with recession again. we still have a political zone on how to take the eurozone forward. they can't agree on a single
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wind up mechanism for banking, for example. are you concerned about what seems to be a growing economic and political divergence between the founders of the single block? yes, we must confess there is a disagreement on the european level. there is no agreement yet on banking unions. there is no agreement on how to finance potential european new bailout programs. there is no agreement on potential mutualzation of debts in the eurozone and the french have totally different interests and totally different ideas about the future of the european economy than germany. on the other hand, i think if the french government is about to return to reality, and while
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the german government is moving to the left, maybe they meet each other halfway. >> where is halfway? >> halfway is that germany increases its contributions to the bailout funds and transfer some money to the periphery and the french may be more open to some reforms, but through labor market reforms and pension reforms because we need, of course, a strong eurozone economy as a whole because germany cannot be the locomotive of the eurozone economy, even if this is always thought about. but germany alone is too weak and germany is increasing its exports to the eurozone
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significantly and decreasing its import from the eurozone. it's not germany alone which can contribute to the growth of the eurozone. >> and you mentioned that part about the eurozone. are europeans wasting the time that they've been bought by mr. draghi? >> i think mr. draghi did the right thing. he has a clear reform agenda for all european countries, germany included, of course, because germany has a responsibility given the large current account surplus. but i see them being hesitant about implementing those reforms, well as we know,
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ireland and sxan made some progress and even exiting the bailout fund. so i see some lights at the end of the tunnel, but it's not all bright. >> roland, thanks for speaking with us. two top bosses of the french unit of ikea have been placed under formal investigation on allegations that they spied on employees. stephane has more for us from paris. what's been going on? >> this is ikea france, ross. the ceo of the companies are being questioned by the police over a spying allegations. back in 2012, one of the union workers at ikea claimed that the management of the company was spying employees, especially the ones which were having linked to unions.
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to do so, they were granted access to police records. such records are strictly confidential and only policemen or prosecutor could access to this document. ikea at the time launched an investigation to find out what was going on and from that the method of the french management where against the value and the rules of the company after this investigation four managers of ikea were fired, including the head of the security. the ceo of the company claims that he wasn't aware of such practices at the time. and he took all the corrective measures when he learned about it. this is probably what he's going to tell the french police again during this investigation. it could have some implication on the french police. there was probably some complicity by the police to give ikea this document. back to you.
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now, when it comes to the luxury market, china has dominated discussions in recent years. deidre found out more at a well healed gathering in singapore. >> we have been here at the international "new york times" luxury conference all morning speaking to some very well dressed people and. >> big heavy hitters in this industry. china has been a topic, but perhaps not the way it has been in previous years. some companies are faring better than others. >> all of north america is consistency growing in each term of investment. we probably are employing more in the united states than in china at the present time.
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i think it's not a surprise because the american economy is very good macroeconomics and you see probably more understandable stable scenario. >> we spoke with tom ford. >> as the customer becomes much more in the population large, much more sophisticated, i believe the infrastructure will expect really high quality products. you get value for the price that you pay. so we arrived at the right time. >> even though their suits retail for about $4,000 to $7,000 u.s., he says he is going to see demand pick up in china. i'm deidre morris reporting from here in singapore. >> looks like a good party. fortune magazine is expected to unveil its top business
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person of the year. who do you think is the best business person of this year? join the conversation here on "worldwide exchange." e-mail us, worldwide@cnbc.com, tweet @cnbcwex or direct to me @rosswestgate. there you go. we'll take a short break. still to come, change is in the air in poland. the prime minister has replaced several top cabinet officials, including the well respected finance minister. we'll find out what the company's former pm thinks about the reshuffle and what it means for foreign investment into the country, as well. we'll get the latest from warsaw. more to come from today's "worldwide exchange." i'm only i. i've got a nice long life ahead. big plans. so when i found out medicare doesn't pay all my medical expenses, i got a medicare supplement insurance plan. [ male announcer ] if you're eligible for medicare, you may know it only covers about 80% of your part b medical expenses.
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and these are the headlines from around the globe. the fed re-ignites thoughts tapering might come this year. it's a different matter in france where all sectors contracted in november activity and that's dragged the eurozone composite pmi below forecasts. goldman sachs gets burned.
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regulatory filing shows bad debts in the currency markets. plus, we're going to be live in warsaw in a bid to prop up the government's popularity. the prime minister has replaced his long standing prime minister with a political unknown. does it change the investment case? we'll hear from the former prime minister. meanwhi meanwhile, we're just getting the latest snapshot, even, of uk public finances. the uk public sector intervention, 8.708 billion versus the 8.242 billion in october 2012. 6.83 billion versus 6.155. we will pick up on that. the underlying of net 54.8 billion.
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8.2% lower than the april through october period in 2012. so the -- they say that the net debt financial sector is 1 is.2 trillion in october. 5 55.4% tripped up by the treatment of royal mail sales. they got a benefit from the royal mail when they had to take on the pension scheme, as well. but anyway, public finances improving slightly in october is the key take away. although some sort of thought they might improve more than what we got. chris, your view of the uk at the moment. the pmi is at the highest? >> right. combined across the three sectors, highest in 13 years. >> that's one of the high series? >> absolutely, yeah. even manufacturing, highest in the world, beating even the likes of fast growing taiwan
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sales korea. a very good story. that does highlight the growth we're going to see in tax receipts. their new projection webs they'll be looking healthier than they were before. so it's a very good picture of public finances. >> any worries about housing markets or is it being based on the wrong areas of the economy? >> obviously, the housing market is a bit concerned. i think the overall message is that desperate, that -- but i think if anything, the bank of england is not doing much of
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business confidence at the moment. which is causing a lot of businesses to scratch their hands and households. interest rates start rising in 2014/2015 and three quarters of them expect a rate hike to start within the next two years and half in the next year. so very different from what the bank of england is saying. >> the concern is how appropriate it is to keep rates that low for that long. >> chris, thank you for that. chris williamson, global economist at chief market.
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>> we turn our attention topoland today. the prime minister has brought a shake-up to his cabinet. it's led some to suggest the move will give him more control over financial policy. how is it being seen? let's get out to jeff. how much of a political upheaval is this? >> very good morning, ross. the finance minister who is now leaving his post -- six years. one of the longer lasting ministers in any portfolio in the polish government. so somewhat of a surprise that he is now being replaced given that he has a strong international reputation. but he is not a popular man here in poland, and there are a number of reforms attached to him that people are happy about
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the retirement age has been lifted and the government has taken some of these private pension assets that bolster the balance sheet, not necessarily a popular decision. so we have now a 38-year-old economist who has stepped into the job, has no real political background. his name is mathias sturrich. we talked to him over many years and he is a very strong economist and he does understand the dynamics in this part of the world. but, again, those arguing that because he has no political background, maybe that means he will be influenced by mr. stus. very nice to see you, sir.
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should the international investment community be worried about this change in finance minister post? >> mr. rustowski has been an excellent finance minister. he knew the situation in the history of poland. in europe, you could have a finance minister for six years. but the government has to look forward. it has been second term in office. but the prime minister would like to serve a third term, which means that we have a six-year term perspective. and simply younger generation is entering the office and he's, what, 23 years junior, so -- >> quite a lot younger. so does this mean that donald tusk takes more of the finance
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ministry portfolio for himself given that mr. sturick has limited political experience? >> this is very good, as you said before, economic -- highly respected in the community. not only in poland, but also in central europe. of course, could be politically supported by prime minister who also reached this quite well. but we have to think about the future. he will look beyond the bunch of 2014 for the financial agenda for the next years to come because poland is building his economic development on continued growth. because we have been growing for the last three years as the only country in europe.
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but at the same time, we have to think about austerity and young's gentleman is perfect for that job. >> there are critics who argue that the polish government has actually stopped this faux-gram of reform or it seems to have stalled. why is it off the agenda here? >> i think the tale of the change is sometimes underestimated by some observers in poland. when we change the retirement age, it was a big shout in opposition, but at the same time we, for example, changed retirement conditions for military service men for the police. but we increase, for example, but ten years the possible date
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of retirement. we change the model and with 1 million people in opposition to the government, they call for -- or demand the referendum on this issue. and the big fight in the parliament, but starting from the next year, the six years will go to the school. so in each department, i would -- maybe for some opponents or observers it doesn't look enough tough and radical. >> people have complained to me here. they say in the '90s there was a real spirit of entrepreneurism. people felt that nothing was banned, they could reach for the sky. that helped poland grow and develop very quickly. now they say there are too many regulations that the government is not consistent, the tax
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treatment is not consistent across the country. what we need is to return to some of that excitement and enthusiasm. how does this government, in its second term that feels a little tired, get that energy back for poland? >> if we look into facts, and we look, for example, very much at where the bank doing business ranking, we have been improving the conditions for the medium size company from the position in the world up to 45 place this year. so every year we include it. actually, it means that we are changing in the right direction. the difference between today and the past is in the early days, as you collectly indicated, there was no regulation at all. it was freedom to do whatever you like. institutions sometimes are good,
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but sometimes could be a little bit awkward, obsolete, and improvement is conducive to the business. >> sir, it's been a pleasure speaking with you. thank you very much for giving us your time. ross, we have some important data points today. we'll have a look at industrial production for october at about 2:00 and we'll get the latest minutes from the central bank. we are going to go off and talk to the central bank chief and we'll play some of that interview later on cnbc programming. but they have record low interest rates here and, depending on who you read on the economist side, some expectations that rates may even go lower. but for the time being, i'll send it back to you. >> we look forward to that.
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don't forget, you can head online as well as take part in our poll. we're asking you, which country offers the best investment opportunity in the region, hundred battery, romania or poland? let us know your thoughts. elsewhere, troika is planning to join a developed hybrid vehicle necessary china. we have the story from tokyo. >> hi, ross. this is actually a very big decision for toyota. it's long been reluctant to put hybrid necessary china over concerns of technology leakages. it's been developing all of its main components from factories to motors in japan and then shipping them to china just for the final assembly. this had pushed up prices of its local prius models currently selling at double the price of gasoline cars. through the joint development, toyota hopes to boost its market share which now stands at a mere
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6%. toyota wants to appeal to the chinese government which has introduced a new fuel efficiency regulation to cope with the country's heavy air pollution. that's all from nikkei business report. back to you, ross. >> thanks for that. have a good evening in tokyo. we just have this news out from china state controlled bright food. they acquired weetabix cereal and now say they're considering a hong kong listing fob weetabix food. they acquired a stake in that deal. about $1.9 billion including debt. you could soon be able to invest in weetabix. would you have to be encouraged to have that? what's on the agenda tomorrow? it will be a lighter day for
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data. the bank of japan releases its economic report and third quarter household spending is due. corporate report cards are due. and hong kong's next media. and the new reit begins trading in tokyo after its new ipo. cnbc will hear exclusively from its president. still to come, france has thrown support behind the european banking union. but is this the answer to the eurozone troubles once and for all? we'll get into that when we come back.
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german software giant sap says it plan toes offer cloud services in japan. the move marks more inroads into japan. eunice has been speaking exclusively to the co-ceo about the company's plans in the country as well as his views on china's recent reforms. >> i think this idea of a consumption driven economy at the same time you have such an emerging middle class, the urbanization effect that's taken
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place in china. so our ambition has always been to innovate in china for china. >> the government has been indicating that they're going to be streamlining the ipo process in shanghai. do you see sap listing in shanghai during your tenure? >> it's certainly an opportunity for us. and it's certainly something we have discussed. .i think it's entirely possible that we would do that and it's entirely likely in the next year or two that we would consider this strongly. it's on the drawing board. sab miller warned currency movements would undermine its future results. >> i think you said they had a bit of a currency hit. i think the market was expecting that. but the real story here is that their volumes are up and sab, for them, emerging market story
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hasn't taken the debt that people were worried about. there was a sensation or a fear that those sales might be declining. as we're seeing from today's results, that's not the case. we've seen declined in europe, 4% down in europe, 3% down in the u.s., but actually, the standout story has been africa. and south america. but really, africa is a key there partnership spoke to allen clark earlier this morning about the company's global footprint and what that meant for the results. >> we think we have delivered a good set of results for the first six months. it's been a strain, but we've had volume growth, good growth in our net producers revenue on a basis of around 4%. operating profit in the 7% range and, of course, an improvement in our earnings per share. and a lot of that is due to our footprint and exposure to markets. the emerging markets have, again, been good for us.
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>> the story, there seems to be a lot of grace there. you've taken a bit on of a currency hit on the ground. the earnings are very good. >> africa is a fantastic story, actually. there's been quite a lot of coverage in the recent while about a slowdown in emerging markets, but certainly within our footprint and geographies, we don't see that coming through. so good gdp growth, improvements in disposable income and, of course, consumers aspire to products such as those that we market across the continent. we see good growth now and we believe into the future. >> of course, not all emerging markets fail. it has led to impact earnings in china. the company has very little pricing power. >> profitable is difficult in china. we have been quite clear over the years. i think that it is a long-term growth story. the volume there is strong. we now have a very good market
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share position. we've seen good growth in the first half again in china and we see very strong growth in revenue, net producer revenue in china. so what we are seeing at the time is a premiumzation of the chinese bmi market. that is principally what's driven the stronger revenue growth that we've seen service the volume growth. so profitability will continue to improve in china, but it is a long-term gain that we're involved in. >> long-term means 10 to 15 years? >> it could be as long as that, yes, that's correct. >> the other key issue for sab is is the bear market going to return to the m&a drivers that it was in about three to five years ago? and according to mr. clark, yes, they are. in recent years, people have been talking about sab being the target. but mr. clark did not rule out another big deal for sab leading investors to postulate that
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things like their african joint venture might be on the table. >> all right, helia, thanks for that. good stuff. we have some comments out from chinese premier. it says china's economy has stabilized and improved the second half and he has full confidence that they will achieve economic targets for this year. more importantly, he says they will further deepen the comprehensive reforms that will maintain the long-term sustainable growth. so they will further deepen the reforms which they announced pretty much at the end of the last week. the third plenum reforms which people have decided are fairly comprehensive. now, the french president, francois hollande and his italian counterpart have thrown their weight behind the banking union asking it to be top of the agenda at december's eu summit. speaking in rome, the french
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leader talked to the importance of a united approach when it comes to regular hagz. >> banking union is nothing else in the capability that will be conferred on the eurozone and at the eu to avoid, prevent, impede and regulate any difficulty that could arise around the issue of credit. if we regulate the banking union, it will mean acting positively on the crisis. it means giving the eurozone the next weapon to prevent the crisis from reproducing. >> they've called on a full time chairman to oversee finance ministers in a bid to improvement governance of the euro group. this follows a similar agreement between france and germany last ma. hi, elise. >> hi, ross. >> it's all very well to sit there and say banking union, but it seems to be absolutely no sense of agreement or call between france and germany on how we get to full banking
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union, particularly around how we wind up banks and who should pay for it. >> yeah, exactly. i think the main problem is that the germany doesn't really want to let go in the direction of a joint fund to support banks or at risk to file. and they don't want to run the risk that some banks within some countries of the eurozone that in the past have been in trouble, continued to take advantage of the fact that there is somebody going to support them in case of troubles. france and italy are in a different situation. they -- obviously their economy is much weaker than what germany is and we've seen like their way of facing the recession, has been very different from what we've seen for germany. so it's not surprising that there is still some disagreement
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between the main eurozone countries. also in the direction of the banking union and joint funds to support the banks. >> how is this going to play out? we see this divergence growing again, french pmi is contracting. the composite number going down, 8.1%. then they're facing a technical recession once again. the german numbers getting better. how does this all play in? >> it's a gain of eye vergencesies in the way that two countries, not only those countries, but for other countries in the eurozone have managed to face the recession. germ germany was in a very different situation. they managed to make steps before the recession hits. italy and france have a problem as -- still structure problems. so they've seen a very bad reaction of their labor market because of the weaknesses, their
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rigid did rigidity, they're still there. it's not surprising that pmi in france at the moment are not gaining momentum. they're going down because the labor market is weak and domestic -- >> is there going to be enough structural reform to keep encourage investors who got excited about the cyclical recovery we saw earlier in the year? >> well, there has been something, but not enough, i would say. that's one of the points that they were discussing during the summit yesterday. between italy and france. the creation or the coordination in terms of investments. they need something more coming from the eurozone as a whole to support their investment and to support investors, to actually take advantage of the recovery or the slight recovery of the economy. they cannot do that just by themselves because they still have structural weaknesses. >> angela merkel speaking at the
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moment, she's cutting the central projects in the next four years. one would hope it would engineer growth, right? i mean, i would prefer that to be the central project rather than cutting debt. >> yeah, definitely. all policymakers are at the moment working in the direction of creating supportive growth. they need to find their way out. they cannot do that by themselves. the ecb is doing its job and the fiscal policies need to get in the direction, of course. >> thanks so much indeed for that. angela merkel is speaking at a conference where we'll be hearing from mario draghi at 11:30 cet. we'll take that in the second hour of "worldwide exchange," which is coming up right after this. ya know, with new fedex one rate you can fill that box and pay one flat rate. i didn't know the coal thing was real. it's very real... david rivera. rivera, david. [ male announcer ] fedex one rate.
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you're watching "worldwide exchange." a thursday in the red for equity market as the fed minutes re-ignite fears tapering could come this year. die verging europe stronger than expected growth. but it's a different matter in france. all sectors contracted in november. that's dragging eurozone composite pmi below forecasts. goldman sachs gets burned. regulatory filing shows bad debt in the currency market may be in
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the region for the big drops in the bank fading revenue last quarter. and we're in warsaw in a bid to prop up the government's popularity. the prime minister replaces the long standing finance minute with a political unknown. does it change the investment case? >> announcer: you're watching "worldwide exchange," bringing you business news from around the globe. >> it's a warm welcome to you if you just joined us state side. angela merkel is currently speaking at a conference in berlin. mario draghi will be stepping up to the podium a little later. we will be dipping into what he has to say. angela merkel for his part says the prime focus for the next few years must be cutting debt. there are those who think maybe the prime focus should be engineering growth. the reason why one might say
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that is we've had disappointing numbers out of the eurozone. not in germany, but certainly in france. u.s. futures, down about 9 points. the s&p down 3. above fair value. dow is some 34 points above fair value. the s&p 500 currently around 3.5 points above fair value. the ftse cnbc global 300 has been down during the session, off about 0.3%. the ftse 100 yesterday was down 17 points. we're flat at the moment, just down two. public finances in the uk, by the way, getting better. not quite as good as we thought they were going to be, but it does look like for the year the government in the uk is going to borrow less and the office of budget responsibility was originally forecasting. growth has come in better than we thought it would be. the xetra dax is down 0.5%. the cac 40 down 0.6%. divergence in these two economies for november. what we've seen is the composite number in france down into
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negative territory, 48.5, and in germany, stronger than expected of 53.2. but bear in mind france contracted, not by much, but these activity numbers suggest we might get contraction in the fourth. if that's the case, france could be back in recession. ftse mib up 0.1% at the moment. on the bond markets, keep our eyes on treasury yields, we saw them back up during the session yesterday. lower than where we were, but just below 2.8% on the yield. 2.78% at the moment. gilt yields, similar amounts across the board here in europe. on the currency market, the dollar got a bit of a boost from the fed minutes, as well. dollar/yen is the one we've been most focused on at the moment. back over 1100. four-month highs against the yen. 104.7 is what we see. could this be the occasion where the dollar consolidates a move, a break above 100 which it has failed to do nearly all year? elsewhere, euro/dollar has come
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back down, 1.3434. this time yesterday we were around 1.3534. that's the trading right now in europe. the nikkei is doing very well, indeed, unlike the rest of the equity markets. sixuan has all the details for us out of singapore. sixuan. >> right, ross. it's a split showing for japan and the rest of asia. the nikkei 225 outperformed, ending higher by almost 2% as the dollar/yen broke above the key 100 level as you just mentioned. in china, the pmi data came in weaker than expected. but china markets still managed to attack it lower. and the hang seng index pulled back from its ten-month high. south korea's kospi lost 1.2% with heavyweight samsung tumbling 2%. australia shares extended its four-day losing streak ending down by 0.4%. let's check on sectors in china continue to go be driven by recent reforms. this includes agricultural stocks boosted by those land
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reform hopes. telcos surged after, of course, news 4g licenses will be issued by year-end. there were reports that beijing may soon set up a national network of housing information. the registration system is one more step towards housing transparency. the big players tumbled from 3% to 4% in today's trade. that's a look at asian markets. back to you, ross. >> thank you, sixuan. have a good evening in singapore. minutes from last month's fed meeting showed members agreed that they could start tapering their bond buying program in the coming months if the u.s. job market continues to improve. they considered slowing purchases even if there's no clear evidence of strengthening.
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most fed watches think a december taper is unlikely, but january is coming into play. the minutes show the fed wrestling with house communiques that even after it starts cutting back, rates will still remain near historic lows. and this is as the senate banking committee is voting on janet yellen's nomination to be the next fed chairman at 10:00 eastern. the penalty expects to back yellen and pass the nomination to the full senate. what does it all mean? john hanes joins us on set. jaup. >> ross. >> good morning to you. >> good morning. can we get a taper in january and not upset investors? >> i think there are two different types of investors. the trading investor tries to position himself for the next three to six months and then there's the long-term investor who understands i think that you have to withdraw qe at some time. if they are withdrawing qe
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sooner than later, it's probably a good thing. traders, yeah, maybe there's a reason to take -- if it's december rather than january or february. but it's a good thing. we've got to get qe out of the system. we have to go back to capitalism as we knew it in the first place. as people really understand what qe is and think hard about it, it is the federal reserve standing in the way of a broken banking system. if we don't have a broken banking system, we don't need qe and the sooner we realize that, the better. >> there is that argument, maybe it's bad, therefore, we shouldn't do it. >> there are distortions in the markets, clearly. and those are the more nervous disposition think it's all over the equity market.
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i don't. i think the equity market is responding to real economic signals, not to excess liquidity. but if you do feel that way, then -- >> well, there are distortions. a zero yield environment, it causes massive distortion. then you have to work out how much of the zero yield is because of qe, which is what it's designed to do. >> exactly. and there's the other side of the coin. has it had some decent impact upon the real world and real economic activity? and i think it has. the policy of being easy monetarily, whether it's qe or any other way is having a real impact on the u.s. economy and on global economic growth. so i'm of the firm belief that next year we will see an acceleration of the world economic growth for the first time in three or four years and it will be driven by china and the u.s. and europe. and if that's the case, then it's a good thing to see the back of qe. >> this idea that january is now
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in focus, there's one problem with january, is that we could be heading into another road block in washington. would that be reason in your mind to not taper? >> i think they'll take everything into account. it's a road block in washington actually is worse than last time, which i cannot imagine, then certainly they will do what they did last time, which they will go you guys need some more time-out and they'll push the thing down the road. but i don't believe the republican party misunderstands the message that was given to them by the electorate in very direct terms and by their pay masters more broadly. corporate america was very, very explicit in the message that they gave to the republican party. if they want to ignore that, fine, but then they are in trouble at the next midterm elections, which are only nine months away. u.s. secretary of state john kerry will sign a memorandum of
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understanding which he delivers a speech later today. the event closes the latest round of u.s./china talks and will be the final stop in liu yandong's trip. she says it will encourage world peace and development. joining us on the phone is perry link, professor emeritus from princeton university. thanks so much, indeed, for joining us, perry. i'm just wondering, how is the planned reforms that have been announced, how might that change the perception of china in the united states? >> oh, i don't think that will change much in the united states. the announcements are vague. the u.s. public is even less equipped to understand the nuances, if they're there in the
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first place in that fairly obscure kind of verbiage that has come out. >> yeah. i wouldn't think so much from the public perception. i was thinking more from a corporate and political section of america. >> i'm sorry, you want to know if the third plenum announcement is going to -- >> yeah. reform china and open up markets, let markets decide how to on work to encourage private enterprise more, i'm wondering whether that gets greater support from american korccorpos and political classes, as well. >> i think if they believe it, yes. but the key of these pronouncements, one never knows what it might mean until action follows or doesn't follow. international companies have had quite a bit of trouble in china with roadblocks that this very government had set up pt so the
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announcement of deepening reforms as the vice premier has put it sounds good, but the proof is in the putting and we just haven't seen the pudding yet. i'm not in the corporate world myself, but that's certainly the way i think they would react to this kind of announcement. >> right now, where do we have a good understanding? where do we have cooperation? and where are we agitated? >> between the two governments or the two people? >> no. i mean the government, the u.s. government. >> well, the flash points are clear. the chinese communist party has announced that there are nonnegotiable terms. for example, the taiwan issue, the tibet issues, the southeast asian sea and the east asian seas have had troubles recently.
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that's a bit more negotiable and flexible. so those are the ones that catch attention recently. >> yeah. what do you think -- this is clearly an enormous market, okay, for china and u.s. firms. do you see any progress in terms of production of rights? one of the issues is black markets and firms being ripped off, as well. do you see any progress being made there? >> well, the legal system has been undergoing over two or three decades slow reform. there has been progress. there are a lot of prosecutors and lawyers in china who are pushing in the right direction. but at the top of the system, it still remains the case that the communist party trumps the legal system. it is not an independent legal system. every u.s. corporation and every
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individual in china who wants to -- who gets in a case has to face that fact, that if it's low key and if it's at the bottom of the system, the mechanics will work. will it becomes so that it conflicts with the interests of a well placed party person -- and that could be at the local level or the provincial level or the top level -- then the legal system doesn't work and one can never rely on that. >> perry, good to talk to you this morning. thanks so much for joining us, perry link, professor emeritus of east asian studies at princeton university. tapering might again in the next few months. this is weaker than expected growth in france weighs on the eurozone's composite pmi. even goldman sachs makes a bad bet every now and then as filings suggest investment bank was burned by currency trade in the third quarter.
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and just reminder, germany's angela merkel is delivering a speech from berlin in a major economic conference as she has finished. we'll hear from the ecb president mario draghi. more on that when we come back.
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we're in poland where the prime minister has announced a shake-up of his cabinet where he's hired a finance minister with no political experience. geoff is in warsaw. the question is whether this enables donald to take more control, i guess, over financial policy. what's the view? >> yeah. it's interesting, this one, ross, because i know the economist that covered this region have been kicking this one backwards and forwards over the last 24 hours. and the immediate response was to say, well, look, this new economist who comes in 38 years old, no political background, that clearly means that mr. tusk is taking more of the finance portfolio for himself. but i think you have to look at
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this as part of an election campaign over the next two years to 2015. the party has fallen in the polls, they've been overtaken by the opposition and the current finance minister is largely perceived as a liability politically. so i don't think this move is so much about him taking the finance portfolio as it's about getting rid of someone in the government who is not popular with the polish people because of policies like moving up the retirement age for retirees and putting in someone who, over the next two years, perhaps, will not rock the boat politically. but is seen as maybe independent of previous policy actions. but we'll have to wait and watch. the budget for 2014 is already on the books. and we have this election campaign in 2015. so no significant change of
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policy direction expected here for the government. we did get the opportunity, while we've been here, though, to talk to former polish prime minister mr. bieletski who advises donald on tuk on economic affairs. i challenged him and said, look, this is an economy that used to grow at 5% or 6%. now they'll be lucky to make 2% here this year. is part of the problem that reforms have stalled? he denied that was the case. let's listen to his answer. >> if we look into facts and we look, for example, very much at where the bank is doing business ranking, we have been improving the conditions for the medium sized company from eighth position in the world up to 45 place this year. so every year, we improve it. so, actually, it means that we
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are changing in the right direction. >> and just a couple of things to think about, ross, for our audience who maybe haven't thought about putting money to work in this part of the world. there's challenges for the polish economy, but the market outpaced the ftse 100 this year. if you buy government pace, you'll get ten year delivering a 4.5% yield and better debt metrics that you see some a lot of the peripheral economies. just a couple of things to think about there. i'm going to tootle off and have a chat with mr. belka at the bank. if you're interested in currencies, make a point of keeping in touch with this polish story. rates could be lower than 2.5%. that would have some impact. as i say, that interview with mr. belka still to come on cnbc programming.
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back to you, ross. >> we look forward to that, geoff. polish pronunciations must be about the hardest on the planet, i would think, for an english tongue. >> yes. well, i know the joke has been said before, but i'll say it again. what we need here is an air list of emergency vowels. that would sort out some of these words. because when you see a combinations of ks, zs and ys, you do have to -- you pause a couple of times before you take a run at it and invariably, you get it wrong. >> still, i think you're doing a very good job. as one who has mispronounced many polish names amongst others, i'm full of admiration. don't forget, you can head online to read more on our emerging europe series, as well as take part in our poll. we're asking you this week which one out of the ones we're
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visiting is offering you the best investment opportunity? hungary, romania or poland? let us know your thoughts. [ male announcer ] this store knows how to handle a saturday crowd. ♪ [ male announcer ] the parking lot helps by letting us know who's coming. the carts keep everyone on the right track. the power tools introduce themselves. all the bits and bulbs keep themselves stocked. and the doors even handle the checkout
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cme group: how the world advances. angela merkel is delivering a speech in berlin.
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she's come out with germany ready to work on treaties in order to introduce banking union. although there's a big difference of opinion between germany and the likes of italy and france on how you might wind up failed bank and whether you put any money in the pot to do it. she's said it makes no sense to weaken german competitiveness by artificial means, which seems to be a bit of a stab at those who say germany's surpluses are in excess and do something about it. coming from both the u.s. treasury and now an investigation for the european commission. mario draghi, the president of the ecb, will also be following angela merkel at that conference and we'll dip into that. john hanes is still with us from investec world management. john, there's a lot of money that flows out of the united states into european equities over the last six months. now, though, we'll take a look at the french economy and the pmis. the cover seems to be peeking over. is that money being misplaced or
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not? >> no, i don't think so. i think there's always some warming and cooling of the water. but i think the -- the story over the last 12 months has been things getting worse more slowly. the story over the next 12 34 months is things getting better. it's quite pro found when the key reasons for the downturn in the first place was the financial services industry effectively seizing up, the financial system seizing up. and that has a multiplier effect. so when those gears start to move, they start to value the system and things get quiet a lot more quickly. so i actually think what's happening in the states is people are sensing a repair in the financial system to the point where it becomes a growth promoter again rather than the drag on growth which it has been for the last three or four years by voluntary means. the banks have been tied up by the regulators in order to make them fit to lend again. next year, they're fit to lend. we're off. and i think that's what the money coming in from the states is thinking about. >> okay. we'll take a pause.
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angela merkel is just winding up. when we come back, we hope to hear from the ecb president mario draghi. remember, his whatever i it takes speech moved markets. next, deposit rate speculation grows. what might he say about that? we'll be back.
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this is "worldwide exchange" if you're just joining us. the fed minutes re-ignite fires that tapering could come this year. die verging europe, stronger than expected growth in activity for germany's manufacturing and services industry. a different matter in france where all sectors contracted in november. that dragged eurozone composite pmi below forecasts. goldman sachs gets burned. the currency market may be behind the big drop in bank trading revenue last quarter. >> announcer: you're watching "worldwide exchange," bringing you business news from around the globe. if you've just joined us in the states, a very good morning to you. welcome to the start of your global trading day. u.s. futures indicating a slightly higher start. after the pause we've seen over
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the last few sessions, right now, the dow is some fully 5 points above fair value. about 10 points above fair value for the nasdaq. the ftse cnbc global 300 is down 0.25%. european equities have been down, but are starting to turn up. the ftse 100 is now flat. the xetra dax, the cac 40 down 0.3%. the ftse mib up 0.4%. divergence as shown by the pmi. contracting on the composite number for france. this, remember, after the economy contracted 0.1% in the third quarter. and these activities numbers play out through december. they'll be concerned now they'll be back in a technical recession. germany, on the other hand, having better than expected activity numbers. and this comes on the top of minutes from last month's fed meeting, which showed minutes agreed they could start tapering their bond buying in the coming
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months as the government continues to improve. they've considered slowing purchases, even if there's no clear evidence of strengthening. most fed watchers think a december taper is unlikely, but january is coming into play. still with us is john hanes from investec world. john, a lot of the markets we've seen, a big jump on the markets, 20 odd percent gains for u.s. equities. a lot of that has been down to expansion of multiples. is that gain over? can you do that any more? >> i think it's pretty much over. it's -- if you look to next year, we're optimistic, as you've seen from our comments. we think the world economy will accelerate and that will produce some decent earnings growth, which is much better earnings growth than we've seen this year. but the quid pro quo for that is interest rates have to move up a little bit as qe comes off. so the valuation back drop is much more challenging. we will be further through the cycle. as i said, we've expanded valuation quite a considerable
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amount. so i do think we shouldn't expect any more from our equity markets than will be delivered by earnings growth. but i think we should expect that, that there's still enough room for that. plenty of doubt. >> in some ways, carl icahn was right when he said they haven't done enough with top line. >> top line is okay. it's moving forward. the issue here is it's about last year the expectations were actually quite low. >> right. >> so it doesn't matter that we underperformed the initial hopes for growth in the world and that we got pretty negligible earnings growth out of the negative economy, maybe 6% or 7% is what it's going to end up with this year. what mattered is you had some growth and you didn't have a recession or systemic move back into the crisis we had. for that, people were prepared to pay up because they realized at some point they would get the growth. now is the point. we now need that growth. >> we need the growth.
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okay. is there concern that -- let's look at this on a global basis. is there concern that growth in emerging markets is going to underperform and that will, you know, hit the rest of the pie? >> that certainly is what the half of the world that doesn't believe in the world continuing to improve is worried about. i am not worried about that. i think people worried about china are massively offbase. essentially, they're in control of their own destiny. they have enough money to fix the hole in the banking system. while that hole is there, their money is going nowhere. there is no fragility in that system beyond their ability to deal with the problems. i think that the measures they're taking now to adopt and more fully imbed a transition to a consumer society, okay, they have a cost now, but they make their earnings and is their growth more valuable. it is more securely based going forward, assuming that they implement the slightly vague promises they've put in place. but i think in the near term,
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they have -- it's entirely in their control, whether or not they accelerate the economy or decelerate it. they said they're not going to decelerate it. i'm fine with that. u.s., i don't think they're going to choose to juggle the precipice. i think they've shown that's a bad idea. we know where they're going. >> there is one thing, the impact of -- just the -- the sudden impact from tapering, the dollar will strengthen and that will make china less competitive amongst its peers. >> well, i mean, i'm not dismissing the fact that there are real economic impacts or real price impacts from qe being withdrawn, but i'm suggesting that the pace of withdraw can be control and that the markets are, to a degree, braced for that. plus, if you withdraw qe, it's because you believe the real economy is supplying liquidity on its own. it doesn't need it. and that is, i think, the point that people are misunderstanding. you take qe away when the banking system is functioning
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properly. so the banking system steps into that hole. that, i think, is our interpretation of the evolution of events. some people may disagree. we'll find out who is right in the next year. >> and you -- part of that story is you've add japan, as well. >> japan is a leverage play on our optimistic view of the world. >> john, thanks so much for joining us today. john hanes from investec world and investment. as we say, the ecb president mario draghi is getting ready to deliver his speech from this berlin conference on strategies for more growth. we'll wait for him. meanwhile, some of the other stories we're looking at today, goldman sachs was burned by several bad betts in the currency markets in the third quarter. these previously undisclosed mishaps played a big part in the revenue stunts during the quarter which led to executives defending the firm's trading strategy. goldman, anticipating the fed
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would start its bond buying program, took positions in the emerging markets. but then when the fed as announced it would keep the program is place, the bank was hit with big losses. down 0.6% today in frankfurt. yumm brands will keep its china and india units separate as part of a restructuring program. yum is the biggest restaurant operator in china, but it struggled in the last year because of some food scares. the stock up 0.3% in frankfurt. amazon plans to start rolling out its black friday deals. it will release daily deals about every 10 minutes. it includes a 50 inches l.e.d. tv, popular video games like fifa 14 for $25 and up to 60% off clothing. customers will get free shipping on eligible items or unlimited
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tuesday free shipping if they're an amazon prime member. amazon stock down 0.75% in frankfurt. still to come, chrysler is driving towards an ipo possibly by the end of the year. but if it was up to the ceo sergio marcioni, that offering would never happen. more details, straight ahead. mine was earned orbiting the moon in 1971.
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we've had pmi data today out for both china and the euro scope. this is sort of the equivalent of the ism data in the united states. .it's casted some doubt on the strength of the global recovery. activity on china's factory floors is speeding up at the same pace as last month. the estimate from hsbc and market manufacturing says pmi for november came in at 50.4, a touch lower than the 50.9 we saw back in october. and that's because export orts a orders are slippinging which suggests china's export growth may be losing some momentum in the third quarter. germany's manufacturing was the bright spot, it expanded more than expected, but france continues to be a drag on regional growth. the manufacturing index stepping to a six-month low in
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contraction territory. the services component at a four-month low. the french composite number in contraction territory. now, it didn't do much for european equities early on for that number, but futures have turn around. as a result, things are looking slightly brighter for european equities. we're off 0.1 for the ftse 100. down 0.3% to the xetra dax and cac 40 down 0.4%. the ftse mib up 0.3%. meanwhile, "fortune" magazine is set to unveil its best business person for the year of 2013. we've been asking who do you think is the best business person of the year? let us know. get in touch with us by e-mail, worldwide@cnbc.com, tweet a l @cnbcwex or direct to me @rosswestgate. one of those might be sergio marcioni. now the revitalized automaker
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may be one accept closer to becoming a publicly traded company. seema mody has more from the united states. hi, seema. >> hi, ross. barclay's, morgan stanley and ubs were added to help underwrite its ipo. now, reports say the automaker could launch the offering as soon as next month. chrysler filed paperwork for an ipo in september after majority owned fiat couldn't reach a buyout deal with the company's second largest shareholder, a retiree health care trust affiliated with the uaw. while the ipo could still happen, analysts think the fee ya and aviva trust will come to terms on a buyout because chrysler's market value will be set. some analysts say it's worth about $10 billion. now, when chrysler was bailed out in 20309, the u.s., fee iat
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agreed to a deal. it was set up in 2007. it was supposed to be funded with cash. the union agreed to take a stake in chrysler in lieu of cash. the u.s. government has since cashed out of its stake and fiat has grown to 58.5% while the trust owns 41.5%. fi fiat's ceo has said he wants to merge the companies, creating the world's seventh largest automaker. chrysler has become a machine for fiat. while chrysler has seen north american sales jump nearly 50% since 2009. checking shares of fiat in milan, we're flat on the day, although up about 8.5% over the last six months. ross. >> he's an interesting chap, marchionnie. he never wears a tie. normally he wear as a deep navy
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blue sweater. he did change for a black tie event and put a black sweater on for that. >> really? but no bow tie? >> no bow tie or anything. just a black sweater instead of his navy blue one. we sort of met in the middle, i guess. >> reminds me of what we see in silicone valley or the tech world. >> that's okay. thanks for that, seema. have a good day there. now, the strong u.s. consumer appetite for new cars which has steered the likes of toyota towards record profits may not last. the north american ceo says he expects about half a million more calls will be soldov overa next year. jim lentz says new cars will be in their driveways market years. european equities taking a hit after fed minutes suggest taper could begin in the next
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few months. this as weaker than expected growth in france weighs on the eurozone's composite pmi. and even goldman sachs makes a bad bet every now and then. the investment bank was burned by currency trades in the third quarter. ya know, with new fedex one rate you can fill that box and pay one flat rate. how naughty was he? oh boy... [ male announcer ] fedex one rate. simple, flat rate shipping with the reliability of fedex. just by talking to a helmet. it grabbed the patient's record before we even picked him up. it found out the doctor we needed was at st. anne's. wiggle your toes. [ driver ] and it got his okay on treatment from miles away. it even pulled strings with the stoplights. my ambulance talks with smoke alarms and pilots and stadiums. but, of course, it's a good listener too. [ female announcer ] today cisco is connecting the internet of everything.
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yep. got all the cozies. [ grandma ] with new fedex one rate, i could fill a box and ship it for one flat rate. so i knit until it was full. you'd be crazy not to. is that nana? [ male announcer ] fedex one rate. simple, flat rate shipping with the reliability of fedex. just a bit of news out of turkey. police have shot and wounded a suspected bomber near the prime minister's office. they detained an individual suspected of carrying an explosive device outside the prime minister's offices. meanwhile, if you just tuned in, u.s. futures turning around slightly at the moment. and getting higher. the dow is current currently some 46 points above fair value,
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about 10 points above fair value at the moment and the s&p 500 is about 4.5 points above fair val value. on the agenda in the states, we've got weekly jobless claims out at 4:30 eastern, forecast to drop by 4,000. at 8:30, we get october ppi. prices are expected to drop 0.2%, but inch up 0.1% when you exclude food and energy. the november manufacturing pmi numbers are out just before 9:00 a.m. and at 10:00, it's the philly fed survey and october leading indicators. the st. louis fed president james bullard speaks about the economy this afternoon. dollar tree, gamestop, target, abercrombie & fitch report before the open. gap and pandora after the close. and the senate committee votes on janet yellen's nomination to become fed chairman. it's expected to pass the
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nomination to the full senate which would be expected to vote in december. yellen only needs five republican toes suppos to suppoe confirmed. policymakers have talked about tapering in the next few months if the job market continues to improve. as a result, oil prices have been trending lower after the minutes. brent dipping below 108 early this morning. this is also, as growing optimi optimism, that world powers might reach a deal with iran on its nuclear program. but wti could reach support from yesterday's eia supply data which shows stocks falling far more than expected last week. joining us with his thoughts on all these oil related, harry from bnp paribas. good to see you. >> good morning. >> let's kick off with the fed minutes and the taper effect at the moment. how much is it likely to be that
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there's a growing consensus that politics aside, we might get a january move or december, even. >> bmp paribas is forecast for a tapering in march. we don't think the economy is going to be recovering fast enough for them to make a decision. clearly, obviously, the fed is emphasizing data dependency, the jobs report, etcetera. for us, what means in the near term is that they're not going to start tapering. that shouldn't have any impact on the dollar and its currency. as long as they don't taper, the dollar won't remain where it is and won't appreciate. as a result, of course, that helps commodities alone, including oil. >> but as they do this morning, think there's a chaps, the balance of risk will change, the dollar will get stronger. >> that's true. a lot of people are thinking about that. if you recall what happened in june and again in september, listen to the fed. data dependency is a key here. so as long as the economy doesn't recover sufficiently,
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there's no reason for them to start tapering early. why would they waste all the effort over the past two years and basically decide to do something prematurely? it doesn't make sense. so when the economy is strong enough, they'll taper. for now, the dollar is unlikely to appreciate and therefore, for us, that's supportive of commodity prices in general. meanwhile, major powers resumed talks yesterday with iran over its nuclear program. an interim report might be within reach. what does that mean, sir? >> i like the conditional about that. might. certainly these negotiations have broken down. they are going to start again. we honestly don't think there's going to be a break through. recent numbers indicate france has a tough sense of what he wants to get out of these negotiations. it's very unlikely that the u.s. could live with something that is not showing sufficient
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progress. we think that these negotiations only delay the inevitable rampup intentions. >> you think we get a ramp up? >> absolutely. the longer this is protracted, clearly the greater geopolitical tension is going to ensue. perhaps over the next six months, brewing of geopolitical tensions will, again, prop up prices. for now, we're simply negotiating. it's a delay in something that is inevitable. >> if we get a ramp up, harry, and demand and supply equation remains kind of where we are at the moment, on its own, where could that potentially send france? >> well, it could easily regain the summer highs we saw at 115 to 120. that's fairly sensible. then depending on the outcome of how these tensions play out, we could move higher. really, at that point, it's hard to tell where the price could go. >> meanwhile, in the short-term,
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what happens with the spread between brent and west texas and nymex? we had this stock data out yesterday. it's pretty good down on this. you know, is that -- are we going to see a closing of the fed or not? >> well, for now, the spread is going to remain relatively wide. there are a lot of seasonal factors affecting wti and depressing it relative to brent. refineries and crude inventories are pushing. i think ultimately what we're looking for is basically for runs to resume in the u.s. and bring down those stocks in curbing. >> all right, harry, always good to see you. just a quick word, as well, on china. slightly weaker data on the pmi number. is that going to feed through? >> ultimately, the number is above 50. so china is still expanding. they're going to reach their 7.5 gdp growth target. i think that's supportive. >> thanks, harry. it is time to tell you that the
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obama administration has rejected fair home capital's plans to recapitalize fannie mae and freddie mac saying the only true way to revamp the property market is repricing. he moves to recapitalize the lenders which was seized back in 2008 requires congressional approval. we've been waiting for the ecb president mario draghi to deliver a speech from berlin on strategies for more economic growth. we've now heard that he will speak later than originally scheduled. we will bring you more of what he says later on cnbc. we thought we would hear from him during this program, but alas, we have been let down. it happens sometimes. our apologies for that. but we'll get his comments during the course of the day on cnbc. coming up next, "squawk box" and the countdown to the opening of trade stateside.
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whatever happens, keep it here and have a profitable day. good-bye for now.
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good morning. today's top stories, the taper questions just won't go away. plus, a new day and some more data with key reads on jobs and inflation. and the state of the consumer retail earnings dominate the agenda. it is retailer reporting month, as it always is, a month late. that's everyone else. but thursday, november 21st, 2013, and "squawk box" begins right now.
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>> fed minutes hinted at the idea that tapering could begin sooner rather than later. they were talking about it coming in the coming months. take a look at the futures this morning after all of that. you're going to see right now. futures are indicated higher this morning, up by about 52 points for the dow. s&p futures are right now just about five points above fair value. among our market newsmakers today, we have mario gabella. he's going to help us pick some stocks that have room to run. that's starting at 7:00 eastern time. also, coming up at 8:40 eastern time, we have pimco's mohamed el-erian. it was pretty funny watching some of the readings and some of the takes on this afterwards. people say their heads were spinning as they went through the

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