tv Worldwide Exchange CNBC December 17, 2013 4:00am-6:01am EST
hello. you're watching "worldwide exchange." i'm ross westgate. the headlines today from around the globe. the fed begins what could be the most anticipated meeting in recent memory as debate swirls over whether the central bank will decide to taper sooner rather than later. can they agree on a deal? eurozone finance minister is under pressure to finally agree on the details of a banking union as the region's watchdog says banks are still loaded with
sovereign debt. and a slowdown in australia's mining boom catches up on revenues. it sent the nation's deficit looming well past earlier forecasts. plus, the prognosis with doctors, less than healthy. gsk will stop paying doctors for promoting its drug, a first for the pharmaceutical industry. >> announcer: you're watching "worldwide exchange," bringing you business news from around the globe. and welcome. you're now watching cnbc's "worldwide exchange." plenty to get through on today's program as we get into the christmas and new year's spirit. will there be much cause to celebration as far as assets are concerned? we'll speak to an expert who is advising caution on european equities in around to minutes. after months of rapid gains, the u.s. housing market appears
to be well on the way to recovery. but buyers beware, the seconder could cool off. we're going to check on housing at 11:00 cet. as glasso smith cline announces a shake up in its policy to promote drugs, we'll take a look at pharmaceuticals and the road ahead to industry. plus, it's been a dramatic couple of weeks in north korea, but could the event trigger wider instability? we'll discuss the political risks at a 10:40. but first, dominating the global investors, the fed, it begins a two-day meeting today with the announcements expected wednesday at around 2:00 p.m. eastern. it will be followed by ben bernanke's final news conference as fed chairman at 20:30 p.m. now, many believe the fed will hold off on announcing when it's going to stop tapering its bond buying program at this meeting. paul donovan is the managing director at ubs, joins us with
his own thoughts. how significant is it, paul, that there's a press conference? i mean, there's a scheduled press conference today. there's no scheduled press conference at the moment in january. they could easily announce one. and the markets are ready. are the markets ready for tapering? >> well, the economics profrgz is more than ready for tapering. if you look, the economic consensus is convinced tapering takes place by the end of the first quarter. the markets seems seem to be a bit more broadly spread out. now, there's been a growing expectation that tapering is going to happen earlier. but over the course of the last month, i've had clients saying they're not going to taper at all, they're leave it later, there's quite a lot of confusion there. the markets were ready for tapering in december. now i think there's an element of confusion. >> the shutdown in washington a few weeks later, they made the right decision. >> frankly, i don't think the
shutdown in washington has made any difference, it hasn't made. difference to the economic performance. if the feds really believe the shutdown in washington was a threat, it should have had something way before the policy announcement. i think it gives the opportunity to frame the contents but also for what is going to be the first key policy next year, emphasizing that rates are unchanged. >> and we've got a ahead around that point, obviously, because investors or assets are rather binary in the sense. we got a ahead around the fact that you don't have to be binary? >> i think that there is a growing expectation that there were two separate policies. the market confused quantitative policy. so it's easy to get them confused.
but there are distinct policies with distinct drivers. >> is it possible for them to say we won't start tapering now but we will start tapering in january? >> i don't think there's much point in doing that. i think they will hit, but they will actually move in january. >> then you'd have to have a scheduled press conference to announce the details for what you're doing. >> the problem with going now is that we are in the middle of the key retail sales period in the u.s. economy. you do not mess with christmas in america, ever. >> you can't stop that. people aren't going to buy taper because they're pulling back on asset purchases, are they? >> i think it depends on how it's portrayed. that might have an impact. even if it's a 5% chance, when the bulk of this retail sales in
the six weeks around christmas, leave it before christmas. it's only another 85 billion. nothing. >> like me, you bought all your christmas presents already. >> for the first hour today, now angela merkel is being re-elected as chancellor in a secret ballot in the bundestagg. not that secret. we knew she was going to be re-elected. i suppose the point is we don't know who voted against her. is that the point? did anybody? >> i actually don't know if anybody voted against her. but i would say probably perhaps some voted against her from the left or so. but in general, her own party was very close behind her. she literally has almost calmed
or stopped any opposition to her role in the cdu. but what we expect actually from the government for the next four years and where there might be disagreement, as well, with the social democrats, i'm going to discuss now with peter mataschek who is a political analyst with the policy institute. thank you very much for joining us. today will be rather a ceremonial day, i would say. what is the big -- what s st issue you are looking at for the next four years? what is interesting with that government? >> well, i think what is interesting is how the two partners will behind from the policies they'll perceive. i do not expect any major changes compared to the former government. it will be interesting how these two partners will get together and how they will govern together. >> we have been discussing quite
a lot that the social democrats might be the big losers of that grand coalition. do you think that it's going to happen? >> this was a widespread feeling among the social democrats before the elections which schans the resistance within the party against a grand coalition. i don't think this is something which will happen by law. this depends very much on the performance of the social democrats within the government and on whether they will be able to demonstrate competence on key issues which they lacked in the eyes of the electorate so far. >> so looking perhaps a little bit on what means the new government for an international audience or internationally, so will there be a lot of on change that it comes to international politics, eurozone politics? >> i think the issue will be the foreign policy where there will be changes among the policy
changes. both in europe in the european issues and on positions on the euro, there have been only minor differences between the christian democrats and the social democrats. all rescue packages have been voted among the two major parties. so i don't really expect major changes in this field. >> looking at the domestic policy, as well, what does a new economist mean for the german economy? are you positive or are you skeptical? >> well, i think at least the social democrats have negotiated well with the christian democrats. he has a strength in ministry. he has more competences than his predecessor. he will responsible for energy policy and for everything related to it. so it remains to be seen, whether he will be able to fill this ministry. but at least from the conditions
he has formed now, he is in a stronger position than the former minister was. >> one of the bigger surprises is becoming a defense minister. do you think that he is positioned by that move to become, perhaps, the successor to angela merkel? >> well, this ministry is a challenge for any minister. she will have the chance to demonstrate that she's able to lead this ministry which always may cause problems given the difficult circumstances and the deployment of troops abroad and the internal aspect of the ministry. so she will have at least the chance to demonstrate that she is a real leader and to qualify herself for higher positions. >> thank you very much, peter. so, ross, that is probably the
case, as well, in other countries. but i'm always wondering how you can change between being a labor minister or a family minister straight into the defense ministry. so i don't really know. do you know the answer? >> it's like being a journalist, isn't it? you qualify as a journalist and then you decide which area you want to be in. you could be crime correspondent, the next moment you could be doing sport. and then the next moment you could be doing business. so, you know, that's how i see it, anyway, annette. there you go. it's the same skills, just with a different topic. hi. thanks for that. meanwhile, ecb president mario draghi has urged lawmakers to finalize the details of a banking union as soon as possible. giving evidence to the european parliament, he warns the latest plans to wind up failing eurozone banks may be overly complicated. >> we should not create a single resolution mechanism that is single in name only.
in this respect, i am concerned that a decisions making may become overly complex. and financing arrangements may not be adequate. >> and it comes always the latest data from the european banking authority reveals that banks have been using increasingly cheap funds from the ecb to buy sovereign debt. 89% holding government debt in june, up from 78% in 2010 and italy with 76% up from 59%. the numbers will add to concerns that the link between weak banks and sovereign has not been broken. there is some reason to be optimistic about the spanish sector. six firms have lodged bids for an 89% in the stake rescued lender ncg banker. the strong demand suggests a growing appetite which until recently had been considered too risky by international investors. paul, picking up on the middle
story there, we talked about banks loaded up with sovereign debt. and that was the whole point of the ltro, anyway. >> yes. and it's very easy risk next year. if we see the feds scaling back on bond buying, u.s. yields rise somewhat, what does that mean? it means two things, rising yields elsewhere in the world and potentially given the communication problems that we had, it means increased volatility in financial markets. now, neither of those things are good for banks which are holding large amounts of sovereign debt or paper or whatever. and i think this is still a vulnerability next year. >> are the stress tests going to stress test the sovereign holding -- because at the moment, you get rated as the most you can have. actually, you're going to say maybe they're not and all this sovereign debt you've got is a risk. >> so with its impeccable logic, the ecb has said that the asset quality review will treat sovereign bonds asterisk free, but the stress tests will stress sovereign debt.
so sovereign debt is risky, but not risky fending on what you're looking at, basically. >> perfect. good. that's europe all over, isn't it? sums it up rather neatly. we have some comments coming out from mr. kerry. it's warning against china imposing the south china sea air zone. discuss can continue around that, of course. meanwhile, let's check in with global equities right now. we're just over an hour and 15 minutes into the -- an hour and 40 minutes into the trading day here in europe. you can see we're weighted to the downside. decliners outpacing advancers by around about 7 to 3 at the moment on the dow jones stoxx 600. yesterday, the stoxx europe 600 did okay. it was up. this morning, we're back down 0.5%. heads you win, tails you lose. xetra dax is down 0.5%. cac 40 is down 1% at the moment. the ftse mib is a part of 0.5%.
cgg is down 15.5%. this is the oil services, the geological survey company. they're going to compliment what they call a new strategic phase. i love that corporate speak. this is after they revise forecast down full year earnings between 400 and 420 million u.s. dollars. customers have been pushing back major orders. glaxosmithkline off 0.75% after it announced it's going to stop paying doctors to promote its products through speaking engagements. it will cut a link between compensation sales representatives receive and the number of prescriptions that doctors write. it comes amid a major bribery investigation into china, although the ceo suggests those two things aren't connected. zurich, up 1.4%. zurich insurance, it's post george quinn, the cfo is
replaced. quinn has been cfo since early 2007. he'll take up his role in may of next year. as far as the bond markets are concerned, we keep our eyes on u.s. treasury yields, really. the yield at the moment, 2.78%. a slight particular up, 2.87%. on the currency market, dollar/yen just below 103 at the moment. 104 was the five-year high that we hit on friday. euro/dollar, 1.3767. and sterling, we'll take a look at 1.6322 is where we stand at the moment. 1.64 is sort of the two-year high that we get. we heard the swedish krona is a little higher. sixuan has all the details for us in singapore on the asian session.
sixuan. >> thank you, ross. most asian markets traded to the upside as tin decks added 0.4% at the moment. the volumes were thin ahead of the fed meeting. in japan, the nikkei 225 ended higher by 0.8% helped by a stronger dollar trading near the 103 handle against the yen. china markets reversed early gains trading lower on profit taking and some liquidity concerns towards the year-end. the pboc refrained from pumping liquidity into the banking system today. facing urbanization plans failed to address the funding issue leaving some authority on the markets. and the shanghai composite ended lower by 0.5%. the hang seng endecks down by 0.2%. elsewhere, thanks to upbeat u.s. and european data, korean ship builders continue to lend support to the kospi by 0.2%. and australia paired down some early gains after a warning of bigger budget deficit ending the year to june, but still ending
higher by 0.3%. in terms of individual stocks, china steel producers will face more shutdowns next year as beijing tries to tackle pollution. last week's shutdown stokes worries and pushed up shanghai rebar futures to 111-week highs, but steelmakers came under prsh your in today's trade. back to you. >> sixuan, thank you for that. staying in singapore, the sovereign city state is working hard to improve its green potential to keep up with its growing population. we'll bring you that plan in detail right after this. [ male announcer ] the new new york is open.
we're considering our focus on innovation cities. right now, we go back to singapore and discover how it's responding to challenges of an increasing population. our very own deidre wong-morris is in singapore. hey, dee. >> good morning, ross. it is much warmer on this side of the world. you are seeing the landscape.
we're known for high growth, sometimes at any cost. but singapore is a perfect example of how you can have development as well as a sustainability. have a look. for singapore, going green is a national imperative. as one of the most populated cities in the world, it wants to be a global leader in green building and sustainable example. >> there are so many big cities in this region, jakarta and it's highly urbanized. so sooner or later, there is this need to do something, to make sure that the development is sustainable in these cities. so we thought, why don't we take the lead? >> bca wants 80% of singapore's buildings certified as green by 2030. it retrofitted its only
20-year-old bca academy to showcase zero energy building. >> we retrofitted an exiting building, providing shading, using solar chimney and having a very efficient cooling system. you put all this together, you can cut down the energy needed by half, which is very substantial. >> inside, natural light and more efficient air circulation provides further energy saving. but these can provide noneconomic benefits, as well. >> to get employees, good people, talentsed people to join the company, it makes a lot of sense for the business to embrace sustainability. >> the pan pacific hotel group implemented strategies from the start when designing this park royal hotel property. >> singapore authorities have a standard for developing buildings in the greenery that you need to add to that particular building. we are about eight times higher than that standard.
>> the result is an urban oasis, right here in the middle of singapore's central business district. 15,000 square meters of sky gardens, water features and open teara tearaces. a gravity griffin irrigation system keeps the green walls green that cools the guest room corridors. and a first in singapore, a new construction technique replaces some of the concrete slab with recycled plastic. these features can result in energy savings of anywhere from 5% to 15%. the hotel has a platinum rating in singapore's green scheme. >> this is what we believe this brand could look and feel like going forward. and it's a very, very good example with a very high benchmark, i would say, when it comes to sustainable building and living. >> the next step for singapore is to get into research and development, building a test lab at the bca to see how innovations from around the world fare in this tropical
climate. now, you'd be hard pressed to find a more innovative and more green city than singapore in the region or really in the world. but the question is how transferable are the lessons and the policies that singapore has had in place to make it such a city, how transferable is that to other cities around the region? we've been talking to guests throughout the morning or afternoon and they've been saying that it starts with policy. but they are optimistic that leaders, a new generation of leaders have their eye on sustainability to put more sustainable practices in places like china in particular which really need it. and ross, i'm sure as you can see the background behind me, if you'll remember, i paid you a visit in london. i think you're due for a visit here in singapore. >> i probably am, although i
probably won't be able to convince anyone to pay me. how are they going to get to the point where they reduce the amount that you use air-conditioning or the amount of energy you get to to -- because it seems to me it's obviously fairly hot where you're standing at the moment. that must be a huge drain. >> absolutely. you know, ross, as a canadian, it's very strange to feel cold inside and never feel cold outside. it can be quite a shock to the system when you go into some of the buses, even, or the buildings certainly and you see the huge adjustment in temperature. it is down right cold in a lot of buildings here in singapore. this is something that we've been talking about throughout our asian programming, as well, that needs to be taken care of. i will say, though, i have lived in hong kong and hong kong is even worse. hong kong, you walk by a building and the doors open, you get a blast of cold air. so by turning the temperature up just a few notches, it's -- can you imagine how much money could be saved and how much energy
could be saved, ross? over to you. >> yeah. exactly. dee, great suv. thanks so much, indeed for that. good to see you, as always. still to come, we're going to hone in on the bank of england's target. the inflation is hovering above the 2%. will that hold? we'll find out next. hi honey, did you get the toaster cozy? yep. got all the cozies. [ grandma ] with new fedex one rate, i could fill a box and ship it for one flat rate. so i knit until it was full. you'd be crazy not to. is that nana? [ male announcer ] fedex one rate. simple, flat rate shipping with the reliability of fedex. 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.
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the headlines from around the globe, the fed begins what could be another recent fed bank in memory. can they agree to a deal? eurozone finance ministers under pressure to finally come up with something on the details of a banking union. but the region's watchdog says banks are still loaded with sovereign debt. and a slowdown on australia's mining boom catches up on revenues. the country's deficit is ballooning. we have the latest inflation print on out of the uk. november cpi up 0.1% on the month and the rate has dipped down to 2.1%. there was a consensus it would
be at 2.2%. the annual rate is the lowest since november 2009. and the core cpi was 0.1% on the month running at 1.8% on the year. that is what it was forecast at. rpi up 0.1% on the month and up 0.26% on the year. i think that's a slight tick weaker than we thought it would be. the annual rate would be 2.7%. as far as the output prices and input prices are concerned, output annual rate last low in october 2009. output ppi running at minus 1% on the year. and that was forecast to run at minus 1.2% on the year. so sterling has weakened, as you might expect, on that inflation report. print weaker than expected, 1.63 against the dollar.
let's get reaction. paul donovan with me. paul. some pressure off the bank or not? unemployment is coming down faster. >> not -- i don't think it takes that much pressure off the bank. the bank of england is not talking about changing interest rates anytime soon. what it's talking about is, you know, is the stimulus for the housing market appropriate? we're getting the scaling back of the funding for lending scheme related to housing in january of next year. is the government's help to buy scheme appropriate. so the bank of england is not fefd on the cti very much. >> what has more is we've gone from sort of a no growth to a cost of living crisis. this it might help. >> up to a point. now, the problem here is we run into one of the great tragedy disof modern civilization. which is we don't have enough economists in the world. we have a surplus of irrational consumers.
consumers look at inflation based on what they buy frequently, which is food and energy. so if we start to see costs of food and living, people believe it's -- even in reality, it's as we've seen, fairly modest. so the politicians don't tend to react to rational economists. >> how long have wages been running below in cpi rate? >> well, the right question is -- >> just like an economist is saying, it's not how much you're paid per house, it's how much you're taking home at the end of the day. >> did the earnings data not measure that? >> no. average hourly earnings don't. what you need to look at is household income. in the uk, household income in real terms over the course of the crisis has fallen about 7%, 8%. so people, about 7% or 8% are
worse off today than they were before the crisis. >> how about average household bills in that time? >> that means if you're looking at average household bills, you're taking the household income and subtracting household bills and you end up with a 7% drop over a six-year period. there has been a drop up until now. the question is as we go into the recovery, what happens? do we see inflation ticking up in food and energy prices, but coming down, say, in services? in which case people are going to believe inflation is rung above what it actually is and politicians will worry about it. this is why we have all this nonsense about a fuss about energy prices in the uk. yet there's this huge political fuss about it because energy is something people buy regularly. you notice when energy bills go up. plus people become hyper sensitive to energy prices. >> overly sensitive? >> yes. >> you would switch the political debate somewhere else, would you?
you would say you're focusing on the wrong thing? >> yes. frankly, i would tell politicians to leave the economy to economists who know what they're doing. >> that's the only thing people really care about at the end of the day, isn't it, the economy. >> well, there are other things. >> well, primarily. i'm running out of money, then i can worry about other things. but if those things are an issue, that's what comes first. >> but they shouldn't be an issue at the moment. we're moving into a recovery phase. probably will be again next year. i don't think the uk is going to be suffering too many economic problems over the next couple of years. >> okay. have we got an osbourn boom in the way we had a loss and a boom, do you think? >> i don't think so, no. i don't think that the government has the ability to create a boom like that. you need to start off with a somewhat better starting point. remember, the government is still looking to make cuts in terms of spending and still looking to tighten fiscal policy
further. i think what you've got is a normal recovery from a weaker period. >> i mentioned house price annual inflation up to 5.5% in october versus 3.8% in september. so, you know, there has been a jump up in that. and on that point, stay with us, i want to bring in paris fernand head of equities worldwide investment. paris, have you been investing in the uk housing market? >> well, over the last couple of years, we've looked at several opportunities that play into a recovery in the housing market. and thankfully, we were quite early in anticipating what now is a widely held consensus that the housing market is recovering. so that is businesses from the house builders themselves to companies in areas and, you know, related areas like diy and merchanting. >> do you stick with it or not? have we had the best of it? >> well, i think that when we
look at the kind of -- the housing market looking forward, what we actually see is a -- a prolonged period of much better earnings for the sector. i mean, you think of the house builders, for example, they've been sitting on land banks that have been underutilized for quite a period of time. and the profitability and the demand picture should be relatively supported for the next few years. >> do you agree with ed milliband? ? he was ravaging on that the housing who had been holding on to so much land, they've been distorting the market. >> i don't think it's a question of holding land concurrently. we are in the position where the supply of land over the longer term is a real challenge that we face. but i think what you saw or what
you have seen is builders are doing a rational thing during the crisis, which is not building until they were confident that the demand was there. so i think the land banks they're sitting on has been distorting the marketplace. >> now up to date with currencies, the xetra dax on the ftse, down 0.5%. the low for the cac 40 off 0.4%, as well. after the year that we've had, bear in mind much bigger gains in the states in japan, of course, what happens next? >> if we stick with the uk specifically, i think we'll in a position for the market to continue to make further progress over the coming year. and i think maybe that will be driven by factors difference to what the wider market is expecting.
because most of the commentary that you will be reading will be focused on economic recovery and demand improving and that would be good for the companies and good for the market. and actually what i'm more interested in is the broader demand for equity. so this is kind of -- investors who have been holding a bond for the last decade almost, thinking now, looking forward about a much different picture for inflation expectations wanting to hold real assets and looking at equities. especially in the uk, when i look across the large caps, they look attractively valued relative to history. >> it's interesting, because the ftse is -- the ftse 250 has been a uk industry and the ftse 100 has been an international, out, you know, you buy a lot of resources. you think that's changing, as well? can you buy the uk and the ftse without -- or do you focus on
the ftse 250? >> well, again, investing in the uk market has been about investing in a broader range of schemes raerchb just the domestic uk. while you're right that there are more domestic plays within the 250, actually, there are many sort of small international businesses or, you know, reasonably good sized international businesses within the 250 itself. the perspective i have is when i think about the average investor looking for a conservative position which will both give a steady stream of income, but protect against inflation, then blue chip equities and the ftse 100 look, to us, to be sound investments at this point in time. >> what about eurozone equities? >> so i think in the eurozone, i mean, the paradox is that in the eurozone, we see this phase of optimism surge into the market in the last sort of six months. and i think that one of the
reasons it's driven that is because the skepticism around the eurozone has been persistent for such a prolonged period of time whereas people have been much more optimistic about the u.s. and the u.s. i think the recovery will be much more mixed. i think at the same time, factors that will drive the recovery will be prevalent in europe, as well. we would expect to see a greater feature next year, higher mergers and acquisitions activity. >> thanks for that. good to speak to you. we have a t-bill auction out of spain. maximum yield 0.872%. the three-month t-bill maximum yield 0.67%.
it's ticked higher from november. saputo wants cheese, it made up to $492 million offer for warrnambool. saputo's changes to the bid were criticized. the final offer is now a tenth offer since the bidding war broke out in september. it expires on january 10th. shares trading higher on apollo tire after its backed away from its bid for cooper tire. delaware supreme court agreed with india's apollo, that it could pay less given union demands and less disruptions. apollo can now walk away completely, but says it's
committed to trying to make a fair deal. and facebook will start selling video ads later this week. "the wall street journal" reports ads will start thursday and use news feeds regardless of whether people click on them. the ads will show up on smartphones and personal computers. video ads might help facebook capture a share of the $66 billion u.s. marketers will spend on televisions this year. facebook up 11.68% in frankfurt. meanwhile, have you made a list? have you checked it twice? has the internet been boiling your christmas gift secrets or spilling them, even? according to market research analysts, increasingly targeted online ads could be reveal to go friends and family what you have already bought them as pop-ups appear on shared family computers and tablets based on
your online retail purchases. so we want to know do you think targeted advertise sg a sign of clever technology or are ads spoiling your facebook experience and it's been ruining christmas because people know what you're up to? let us know. tweet@krns we can see or direct to me @rosswestgate. have you noticed, paul one search for something and then all of a sudden you get a tarted banner ad? >> i do. what i find ironic is wherever i am on the website, i'm always advertising the book that i wrote this year. i look for it on amazon and every time the ad keeps popping up. i've got about ten of them sitting at home. i would rush out and urge all the viewers to buy one for christmas. >> what is it called again? >> food. >> children will love it. >> fantastic.
now, it is very good. you gave me a signed copy. still to come on the show, political unrest continues to plague the north korean regime following the execution of a key political figure. following the break we'll ask will king jong un's government reach a breaking point? [ male announcer ] the new new york is open. open to innovation. open to ambition. open to bold ideas.
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tensions continue in china. toshiko has more for us from tokyo. >> hi, ross. the japanese government approved new national defense policy guidelines and medium term plans today to increase its defense capabilities and offer greater deterrent to neighboring china. the new plan will focus on integrating land, sea and air forces to mainly defend islands in east china sea to counter china's widening naval and air reach. it's called the dynamic joint defense force and the grand self-defense force will get new rapid deployment divisions on the amphibious unit. japan will buy new units such as ofsprey planes.
the government adopted japan's first ever national security strategy today. it started that china's assertive activities in the area are incompatible with international law and could lead to a confrontation. it said japan will seek more proactivity security roles for the self-defense forces abroad. the strategy stated the government would make new guidelines on export futures, as well. ross, back to you. north korea's public elite publicly for kim jong un. in the two years since its leader took office, the north korean regime has undergoing major transformations. reports continue of growing dissent amongst growing ranks. today's ceremony was one of several public appearances of kim jong unfollowing the dramatic arrest and execution of
his uncle last week. joining us with his thoughts on korea, john cochran from clsa. very good to see you. thanks so much indeed for joining us. how should we perceive north korea and what it means from here? >> well, north korea is obviously a very difficult place to understand. so overall, what we would say is we just need to be cautious. at the end of the day, they're literally in their own world. they're often referred toss as the hermit kingdom. the execution shows you that anything literally can happen. so really, with north korea, the key thing is to remain vigilant and above all remain calm.
>>. >> yeah. you're saying you know china has characterized this as an internal affair and as long ago accusations should remain verbal, little should change. how nervous should they be? if this is an irrational action, rehaven't had irrational actiones from north korea before. >> well, i think that china is well versed in north korea's behavior. and so if we think from a geopolitical perspective, the key issue comes for the chinese, they have the north koreans on their boards. what they want is they want north korea to behave. from the american perspective, they don't want north korea to be a failed state, they don't want nuclear weapons to be lost in any way. and the south koreans definitely want peace. so the chinese understand the dangers and so they will not provoke north korea at all unless they feel they are truly
pushed. and the goal here is always stability, given the severity of the situation should north korea fail. >> how does this all, then, feedback into south korea? because you were saying the fourth quarter looked like it's been a fairly good one, despite the strength of the won. >> the number one question i had tore investors on the day we wrote about the execution, was what do i do, do i buy, do i sell? we've always taken the view that the investment decision is much like the diplomatic one, which is from a diplomatic standpoint, because you can't have any conviction how your actions will be taken by then, the best thing to do is to give them clear conditions under which you will take actions upon their actions. often we hear n negotiations actions for actions, words for words. from an investment standpoint, it's the same conundrum. we can't say with any conviction
what north korea will do tomorrow. unless you have that conviction, it does not make sense to buy or sell unless there's something definitive in the news that says it's very clear that a certain direction is going to take place. what we really know from this is kim jong unhas become to build a new power. somebody who is essentially a threat to his control and now he will build on your leadership team. we shouldn't be surprised if there's some sort of provocation, perhaps some missile tests, you could see some shells as we've seen before. but ultimately, we should assume that north koreans are self-interested, they know if there was outright conflict, they would probably lose. in fact, they would definitely lose. so we think they are always choosing to take strategic strikes that provoke and hopefully extract aid from the global community and create a sense of crisis domestically to validate the regime. >> great to speak to you. thanks for joining us from seoul, shaun cochran from clsa. ukraine's president will
meet with his christian counterpart in moscow as you seeks to keep his country afloat. russia is willing to offer a credit line, but demonstrations continue in kiev about the prospect of a deal. many see this as ukraine selling out its national interest. >> we believe that the agreement provides the best way to address ukraine's short-term economic challenges. its signature, too, would send a powerful signal of confidence to international and to financial institutions. >> get some final thoughts with paul donovan, as well. paul, the risks next year, are they economic or political, do you think? >> i think it's politics. eventes and career, events in ukraine, we've got a lot of politics in europe, extremist parties are start to go gain ground ahead of the european elections. i think that's going to be a focus. the tea party movement in the
states may be quieting down for the time being, but it will be back. i think we can bet on that. it will be an issue, i think, as we go into the november elections there. and in japan, abe's government is pursuing what i think has been one of its underlying policy objectives, a more nationalists agenda. politics and political risk is back. and wsh of course, the problem we have as investors, market aren't really good. we haven't had to do it for the past 20 years. and now political risk is coming back. >> there's a lot of political risk this year, surely. none of it actually seems to affect the general movements. >> we didn't have political risk in the middle east. >> we faced the prospect of middle east. >> but not in the countries which matter for the markets.
they matter in a social sense, they matter in a humanitarian sense, they don't matter the markets. ultimately, markets are cynical when you come down to it. >> yes. >> i think that's the case with the united states, there was an understanding brinkmanship would be going would be but the u.s. would not be allowed to default. >> why is that potentially different? >> what we're seeing for the first time is the netherlands, finland, austria are getting more than 20% of the vote. and it could well be that the european parliament, which has been given more power in the last few years, could have a block of far right parties which are generally being voted in because they are anti-immigration, but they are also anti-europe. the problem i think is not
europe. the problem is if i'm out in des moines, iowa or out in the middle of asia and i'm trike to explain, you can't explain that in the midwest of the united states. investors are going to say 25% of europe has just voted to end europe and then we get a presentation problem for the eurozone again. >> paul, good to see you. merry christmas. >> and to you. >> great do you see. don't forget his book is well worth putting in your stocking. still to come on this show -- he's got a couple spares. >> ahead of the week of key housing data, our next guest says don't expect a full real estate recovery until after 2015. that and more in the second hour of "worldwide exchange."
hello. year wauc you're watching "worldwide exchange." the fed begins what could be the most anticipated meeting -- well, since the last one. will be fed decide to taper sooner rather than later? can they agree on a deal? eurozone finance ministers are on pressure to come to a deal on the banking union. banks are still loaded with sovereign debt according to watchdog. and british inflation falls
to its lowest level in four years. >> announcer: you're watching "worldwide exchange," bringing you business news from around the globe. >> now the fed begins a two-day meeting today with the announcement expected wednesday at 2:00 p.m. eastern. the statement will be accompanied by economic projections by individual fed officials. and we'll be followed by ben bernanke's final news conference as fed chairman at 2:30 p.m. many economists think the fed will hold off on announcing that it will start tapering its bond buying program at this meeting, but may signal that it could move in january. that's going to be the big focus, of course, as we've been talking about for investors this week. meanwhile, u.s. equities, the dow is up 129 points yesterday. the s&p 500 up 11. right now, we are just above fair value on the dow, ending by
around 8 points. the nasdaq is below fair value by 1.5 points. we're pretty much on fair value for the s&p 500. global equities so far today, has been softer, not by much as far as the ftse cnbc global 300 is concerned. and european equities, up 82 points. it's currently up 32 points. the xetra dax is down 0.3%. the french market is off 0.8% and we're down another 0.3% was as well. on bond markets, treasury yields nudged up during the session yesterday. the yield this time is about 2.85%. we're currently on the yield the ten year, 2.87%. gilt yields fall after we saw a slightly weaker uk inflation. we thought it would come in around 2.2%. as far as currency markets are concerned, that brought sterling in around 1.62 at the moment.
u.s./yen, just below 103 at the moment. that's where we stand in europe. sixuan recaps the session for us over in asia. sixuan. >> thank you, ross. most asian markets gained with thin volumes ahead of the fed meeting. the nikkei 225 ended higher by 0.8% helped by a stronger dollar thus trading near the 103 handle earlier in the day against the japanese yen. in china markets, reversed early gains trading lower on profit taking in some liquidity concerns towards the year-end. the central bank refrained from pumping liquidity into the system today. meanwhile, beijing's urbanization plan failed to address the funding issue leaving some authority on the on markets. the shanghai composite ended lower by about 0.5%. but thanks to upbeat u.s. and european data, south korea's ship builders continue to lend support to the kospi which ended
higher by 0.2%. meanwhile, warnings paired down after a bigger budget deficit end of the year to june. the asx 200 ended higher by 0.3%. hong kong's gaming sector led the gains after reports that wells fargo increased its forecast from mcccau's gaming revenue. wynn macau jumped almost 3% and other big players also rallied. back to you, ross. >> thank you for that. november cpi is out at 8:30 eastern. consumer price res forecast to rise 0.1%, both with and without food and energy prices. also at 8:30, we get the third current account figures. at 10:00, the national association of home builders puts out its monthly housing index later this week. we'll get two other reports on housing. the november housing starts and existing home sales. joining us with her thoughts
from ft. lauderdale, sherry olerson. thanks for joining us. >> good morning, ross. >> what is going to be the most notable impact as we move from what's been a fairly good 2013 into 2014? we've got new mortgage laws coming in. how are they going to play? >> absolutely. ross, ul inspect now, it's been about bouncing off the bottom. we are now fwining to brush against the top primarily because of wages and income have not kept up with the home price increases. for example, over the last two years, we know prices are up by 2%. wages by 3%. and particularly that first time buyer, ages 25 to 35. their job situation has only recovered by about a quarter. but what's really going to happen going into 2014 is due to the new dodd frank act rules that have to do with mortgage origination.
now, those start january 10th. here's the thing. to be considered a qualified mortgage under those new rules which gives banks safe harbor against lawsuits, a borrower's debt to income ratio can't be more than 43%. so their debt can't be more than 43% of their income. that's going to be a problem as home prices increase, i.e. the borrower's debt, but wages do not increase, i.e. the borrower's income. so we're going to brush up against that even more because of the dodd-frank rules. >> so how is that going to constrain sales and, therefore, prices? >> sure. the less folks that are going to be able to qualify for mortgages, affordable mortgages, means less folks that are going to be able to go out in the market and buy homes. so we would expect a number of sales to probably remain consistent instead of growing hugely. they're going to look more like they did during the second half of 2013 rather than the first
half where we saw sales still going up. and the prices were up by 10% or 12% across the board this past year. we're expecting about half of that increase in the coming year, due in large part to the increase in costs of being able to get a mortgage, folks who can't get what's called a qualified mortgage are going to end up paying more for their mortgage which means that's less money than they can pay for the house. >> we've got the expire for mortgage debt relief act. what impact is that the going to have? >> that is big. that expires at the end of this month unless it's renewed. it will not be renewed before the end of the month, but it may be renewed next year and retrough active. it louded people to sell their homes when under water. there's still about 9 million
people under water in the u.s. so with that act expiring, folks are just not going to be able to do short sales. if they have to pay income tax on that money that's forgiven. that could have a huge impact on sales in general. >> what has been supportive for the year, inventory fairly low because a lot of sellers are still under water. and we haven't had a, you know, a huge amount of construction. will either of those two things change in 2014? >> sure. new construction is improving slowly, but surely. but remember, we had years of activity, maybe a third of the normal activity. we'll finish 2013, ross, with about probably under a million in new construction. 2014, we're looking at probably over a million. but we're still a good way away from that 1.5 million, which would be considered normal for a normal market. but, again, we're going to keep bumping up against the issue with average americans not being able to afford the increasing price, particularly in new construction which tends to sell for a little bit more. this market so far has been
driven by cash buyers sxin vesters, not by average folks and not by first time buyers, which is critical to u.s. housing. >> sherry, always good to see you. thanks so much indeed for joining us. >> take care. >> thank you. angela merkel is going to be sworn in as the new chancellor in a third term of office today in berlin. annette is tracking the story for us and jones us now with a guest. annette. >> yeah, that's very much true. i'm joined by the deputy chairman of the cdu. angela merkel is not yet sworn in, but she has been voted in favor of. but there were some people saying no to her. is that a big problem? >> not at all. because we have a very, very big majority. a majority in the house is 311. she got 462 votes. so it's much more than necessary. we are quite happy and, of
course, it's very clear that some people from the spd are not in favor of angela merkel. that's normal. but we don't worry at all because it's more than 150 over the majority. we're happy. >> talking about happy nts, how happy are you with the coalition agreement? >> let me say it very bluntly. you can't have it all because we have to make compromises and we did a few compromises, indeed, and that was necessary compromises. unfortunately, we are not at our own, but we have to make compromises with the socialists and it could difficult. it was very difficult negotiations. that's why it took so long, more than 80 days after the election. we only are today capable to vote for the chance today to sworn in a chancellor and the other ministers. it's a very complicated matter. but i think we have quite a good contract and then we will work it out. >> talking about tax hikes or no
tax hikes, there is still -- yeah, there are rumors that it's not excluded in the coalition agreement, so in two years' time, we'll see higher taxes or rather not? >> not at all. angela merkel proms promised prior to the election that we will not increase any taxes and it's not necessary. germany has such a high income, we have a budget which is almost balanced. we don't northeast need any tax increase and we will not have it. >> let me ask you about the banking union. germany is said to be one of the biggest -- the biggest sort of skeptics, i can say, for that whole concept. are we hinder iing a fully fledd
banking union, germany? >> no. we want to have a banking union. but you have to come to a level playing field. as soon as we have a level playing field, then we can talk about banking union, but this that's be fulfilled first. as soon as that is ready, we will definitely have a banking union. we are in favor of banking union, but under certain conditions and the conditionalities are very clear on the table and all banks have to fulfill it, as well. >> thank you very much for joining us and your time before heading back to the parliament to hear angela merkel booel being sworn in, right? >> thank you. so ross, with that, i'm sending it back over to you. now we have a fully functional government against in place, as well. this is why for all of those banking structures. back to you. >> thank you for that. that's the latest from berlin, annette. meanwhile, mario draghi has urged lawmakers to finalize the
details of a banking union as soon as possible. giving evidence to the european parliament, he's warned that the latest plans to filling up banks might be overly complicated. it comes as data from the european banking authorities revealed that the financial snoozes have been increasingly using cheap funds from the ecb to buying sovereign debt. the worst offenders have been spanish banks, up from 78% in 2010. and italy's italian banks have 76% of their holdings of italian bonds up from 59% the. meanwhile, we'll keep our attention focused on ukraine. the european union demonstrators are rallying in independence square in kiev. this as ukraine official are in moscow to try and sign an agreement on aid. we'll have more when we come back.
of what is agreed. some lenders are still loaded with sovereign debt. plus, a boost for the pound as british inflation closes in on the bank of england's 2% target. [ male announcer ] the new new york is open. open to innovation. open to ambition. open to bold ideas. that's why new york has a new plan -- dozens of tax free zones all across the state. move here, expand here, or start a new business here
glaxosmithkline wants to stop paying doctors to use its drugs. the drugmaker would stop tying the pay to the number of prescriptions that doctors write. the announcement is the first of its kind by a major pharmaceutical firm. shares in glaxo today are down 0.6%. at the same time, gaxo could be one of the new beneficiaries of a new drugs next year. 2014 might be trickier for astrazeneca and eli lilly. joining us with more is james wade, senior analyst at data monitor health care. why are astra and eli lilly face ago tougher 2014? >> as we know, there's a big patent cliff at the moment.
and historically we've seen some big patents expiring and a lot of sales lost. next year looks to be a bit quieter in terms of that. as tra xetra and eli lilly have some key drugs coming off. they have nexium, and it's a big earner for them and that's coming off patent in the u.s. and also, we look at symbacort, which is their copd drug and that's coming off patent next year. so expect the combination of those two drugs coming off patent next year to lose the company close to $2 billion. so it's a big loss for their company, which has been struggling recently with other drug patent expires. and then we look at eli lilly. they've got two key drugs coming off patent. we've got cymbalta, which is a depression and cns drug. that's the big drug coming off patent next year. expect them to loose close to 15
billion. >> we just had the astrazeneca chart up. they have suffered almost a decade because of issues about generic competition. the ability to get new blo blockbuster drugs. they're just too big to get drugs that are going to justify -- get the sales that they need. this year, they've actually outperformed the ftse 100. there's a sense that maybe we got to the bottom for the sector as a whole. has the story structurally changed for the sector? >> i think we're in a bit of a lull. we saw some big patents expire in 2012. 2014, we're expecting pharma to grow by about 1% in revenue. but actually, when we look to 2015, there's some other big patent expires. >> are the big pharmas too big?
can they generate the new blockbusters they need to justify the size of staff and the size that they are? >> definitely having to change their strategy. we're seeing them become leaner. they're having to make cuts. we've seen a number of big pharma making employee cuts, r&d restructuring as they try and stream line their big portfol s portfolios. and the big debate at the moment is whether they specialize in one area or whether or not they remain quite diverse. but what we're seeing is definitely a cutback in how many -- >> do you think concentrating is the way to go? >> the two i mentioned, they are set on those being their key therapy markets. roche we see is the leader in oncology drugs and we look at their life cycle management with those drugs and they're very successful at that. >> we mentioned glaxo, as well.
what are they doing in melanoma? how important is that going to be? so these two drugs were approved last year as mono therapies. they've go the gone head to head against roche's drugs within the market. now we're seeing a lot of development. and the big approval we're expecting next year is the combination of gsk's drug. it's expected to have a higher efficacy. we're seeing patients developing resistance to the mono therapy. so this is expecting -- it's expected to be quite a big then in melanoma. roche is bringing out a similar combination in the future. it's a bit of a head to head in this market, as well. >> james, thanks so much for joining us, james wade. president obama is going to meet with several top executives or top tech executives at the white house. he's expected to discuss their concerns with the nsa's buying program, fixing the troubled
health care website and it comes after a day the judge ruled the nsa's collection of phone records is likely illegal. the president will meet with 15 executives, including apple's tim cook, yahoo!'s marissa mayer and google's eric schmidt. and smartphone penetration grew from 56% at the beginning of 2013 to nearly two-thirds of u.s. mobile subscribers today, according to research firm nielsen. the app top reading is the top for users. meanwhile, apple has revealed its top apps for the year and the winner is candy crush saga, the most downloaded iphone app in 2013. and facebook is going to start selling video ads this week. that's right. "the wall street journal" reports that starting thursday,
the ads will pay automatic news feeds regardless on whether people click on them. one of the first ads will be a teaser trailer. video ads might help facebook capture a share of the $66 billion that markets have spent on u.s. television this year. facebook shares up 1.6% in frankfu frankfurt. now, making the list, checking it twice. you might have even been online to take advantage of cyber internet holiday deals. but has the internet been spilling secrets from those you're trying to keep them from? targeted online ads could be revealing to friends and family what you have baltimore them as pop-ups appear to shared family computers and tablets or as we know based on your online purchases. so we're asking today, do you think that targeted ads is a sign of clever technology but is
it ruining christmas? get in touch with us, e-mail us, firstname.lastname@example.org, tweet @cnbcwex or get in touch with me directly @rosswestgate. targeted advertising and it all being repeated back to you. a good or a bad thing? still to come on the show, strong economic data voids market sentiment. will ben bernanke finally decide to taper in his final time at the fed? we'll leave you with a look at how futures are trading ahead of that meeting today. pretty flat at the moment. ♪ [ male announcer ] how could switchgrass in argentina, change engineering in dubai, aluminum production in south africa,
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this is "worldwide exchange." i'm ross westgate. the headlines today, the fed begins what could be the most anticipated meeting since september as debate swirls whether the central bank will decide to taper sooner rather than later. can they agree on a deal? eurozone finance ministers under pressure to come to an agreement with the banking union. and homing in on the bank of fwlnd's target, inflation in the uk down to its lowest levels in four years. plus, the prognosis for doctors, less than healthy. gsk has announced it's going to stop paying health professionals for promoting its drug, a first
for the pharmaceutical industry. >> announcer: you're watching "worldwide exchange," bringing you business news from around the globe. and if you've just joined us in north america, warm welcome to the start of your global trading day here on cnbc's "worldwide exchange." the dow up 129 points, the s&p up 11. futures are indicating a flat to soft start at the moment. currently the dow is, what, three points above fair value. the nasdaq at the moment is about 2.5 -- or 2 points below fair value and the s&p 500 is pretty much on fair value. the ftse cnbc global 300 has been fairly flat, as well, during the session today. and european equities, meanwhile, have been down somewhat. the ftse yesterday was up 82 points. it's currently down about 30. 0.5% lower with the german
market. the french market is down 1% and the italian market is down 0.5%. some of the other stories we're following today, cnbc has learned that u.s. authorities are probing whether jpmorgan tried to impede their investigation as bernie madoff's ponzi scheme. the company's reportedly negotiating a $2 billion settlement over several allegations of misconduct in its role as madoff's primary bankers. but before the settlement talks took hold in recent weeks, jpmorgan was aggressively fighting requests for information, that includes contesting an administrative subpoena issued by the inspector's office. jpmorgan in frankfurt, up flat. and the s.e.c. is seeking more than $1.1 million in penalties for his role in a failed 2007 mortgage deal. in august, a u.s. jury found
tourre liable for the deal which cost investors $1 billion in losses. the agency allegeds tourre failed to disclose a hedge fund manager helped choose and shorted the mortgage securities underlying the deal. back to the main focus, the fed is beginning its two-day meeting today with an announcement coming tomorrow at 2:00 p.m. eastern. the statement will accompany projections and fold by ben bernanke's final news conference as fed chairman at 2:30 p.m. many economists think the fed will hold off on announcing it's going to start tapering its bond buying program, but may signal it could in january. andrew joins us this morning. very good to see you. i had a guest on earlier who said, look, economists are all ready for the fed to taper. do you think investors are? >> yeah, i think the markets are
in much better position currently than they were six or seven months ago. you know, it was back in march when chairman bernanke first brought up the idea of taper and we had a very violent reaction in the fixed income market. where you had ten-year treasury yields moved up well over 100 basis points in just a matter of months. this time that taper is getting closer. what's interesting is the ten-year treasury bond market has been relatively subdued. rates have been right around 275, 280 here for a few weeks. so it looks like the fixed income market has gotten to where it needed to get to. and that is putting less pressure on the overall equity markets. i think it's -- the market is kind of ready for the tapering to begin at this point. >> you don't think they'll taper until march. how much of a different weight make to you if they did make an announcement tomorrow? >> well, i think chairman bernanke is probably -- he's likely to be definitive in terms of it's coming relatively soon.
i don't think they're going to do anything tomorrow. just because, you know, to me, a big part of the taper is -- that it's a signal of a change in fed policy. so it makes more sense to me for the new incoming chair, janet yellen, to really put that signal forward. so i think they'll be pretty definitive in terms of it is coming. so kind of put a stake in the ground. but i don't think they'll actually do anything. possibly january. i think more likely march. i mean, the other side of the equation is the growth is getting better, but there's really no inflation pressure whatsoever to speak of. and, you know, we'll get another piece of inflation data today with the cpi report, which will continue to show inflation pressures, you know, well below 11% on an annual basis, which is, you know, far below the fed's threshold. >> the signal, you mentioned this word, the signal, as an important way to look at it, actually. a change in signal. what is it that they are
signaling? they're going out of their way to say they're going to keep rates low. they might actually keep buying the full allotment of mortgage rates. so what is the signal that they're sending? they want to send a signal things are better. is that it? and, therefore? that's the signal, how should you react? >> well, that's it. i think the signal is that the economy is now on self-sustained footing. if you look at the employment report a couple weeks ago, it's one of the best jobs report that we've seen is in the recovery so far. not only did we do about 200,000 jobs, it's very broad based, as well. from a positioning standpoint, our strategy has been you want to be cyclical because as the economy is improving, and as the fed is signaling that growth is getting better, cyclical parts of the stock market should continue to perform well. and that's historically, if you go back when the fed has been at a pivot injunction, it's generally the cyclical areas of the market that will continue to
do well for some time. so they really start to clamp down. and that would be the next, you know, significant pivot in the market. but we think that's many quarters off at this point. >> all right. okay. that's what they would like to think, as well. andrew, stick around and get a cup of coffee. we'll cob back to you. still to come, mobile life says it's cleared up all the central pit bulls with its harsh financial statement. that's not cooling the war of words over the company between two billionaire investors. the latest back and forth between carl icahn and bill ackman, next. ♪ i wanna spread a little love this year ♪
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a fresh round of comments from two high profile investors who have been battling over the future of the company. joining us with more details, seem ma mody is with us stateside. >> hi, ross. that's right. herbalife says no changes to its financial statements. the nutrition and weight loss company says price waters completed its review from 2010 through 1013 and made no changes. herbalife shares spiked nearly
10% after being temporarily halted following the news more than doubling its 30-day average volume of about 2.5 million shares. today in frankfurt, we're seeing shares up by 10.7%. now, carl icahn tells cnbc he's satisfied with the company's reaudited results. icahn owns 17 million shares of herbalife as of the end of the second quarter. he believes the company is undervalued and has capital to spare. >> i've never really doubted that this is a viable company. i've -- you know, i guess i was one of the few people that bothered to read that report a year ago when they made so much of it. and when you read the report, if you bothered to read it, it was, i believe, nonsense then and i think all these criticisms are pretty much nonsense to begin with. >> now, icahn and other high profile investors such as george soros are on the opposite side of the trade.
the hedge fund manager has publicly accused the company of being a pyramid scheme herbalife has denied the statements. ackman says it's not the role of herbalife's auditor to determine if the company is a pyramid scream. that determination is depends on whether distributors earn more from recruiting new did it attributers than from retail sales to consumers who are not distribut distributeders. herbalife is a pyramid scheme that would be shut down by regulators. ackman has lost a substantial sum on his herbalife short. last month, he said his firm lost between $400 million to $500 million. >> thanks very much indeed for that. have a good day there stateside. meanwhile, facebook is going to start selling video ads this week. "the wall street journal"
reports starting thursday, they will start to on sell these regardless on whether people click on them. the ads will show up on the web and on smartphones. one of the big ads will be a teaser trailer for divergent. it could help try and capture a share of that said 66 billion marketers spend on u.s. television every year. facebook stock is currently up 1.9% in frankfurt. meanwhile, you've made a list, you've checked it twice, you've even been online to take advantage of cyber monday holiday deals. but has the internet then been spilling your gift secrets back to friends and family? according to experts in market research, a targeted online ads could be reveal to go friends and family what you've already bought them. because pop-ups appear on shared family computers and tablets based as we know on your online purchases. so we're asking today, do you think the targeted advertising is a sign of clever technology
and action? or are the ads spoiling your experience on facebook or other apps that you're ruining? is it ruining christmas? has somebody discovered what you've been searching for them? let us know, e-mail us, email@example.com, tweet @cnbcwex or direct to me @rosswestgate. seema, you're still there, aren't you? so look, has someone tweaked -- i mean, what you're buying them? fortunately you sit in a different place from me, so i can't see what you've got me. >> yeah. exactly. and we don't share the same computer. i think that there's a quick and easy solution to this. you have different logins in case you do share the same computer with your loved one. but no, that hasn't happened to me as of yet. i'm a huge fan of shopping online and i think there's ways to solve this problem. >> yeah. the trouble is, there's so many sides. if you don't agree to the cookie
policy, you can't get on them, can you? so you're a bit stuck if you don't do that. okay. it's still a secret, what you've got me is still a secret, seema. that's the good news. >> anticipation is building. but don't you worry, it will be good, ross. >> i'm very happy about that. thanks for that, seema. still to come, ben bernanke prepares for a swan song as debate continues to rage about when the fed will taper qe. and a boost for the pound as british inflation falls. still to come, as well, what are some of the top decisionmakers seeing in their crystal balls for next year? we'll get a first look at the results of the cfo survey from the association of financial professionals. [ male announcer ] the new new york is open.
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dunn dunkin' ddz down i cou tells hold cnbc this morning, once the british firm is earn way, he plans on turning his attention back to america. >> we're very strong in the middle east. we're very strong in asia. i think the next place is actually west of the u.s. we've got 200 stores west of the mississippi. and going back to about the growth story, that is what most of our analysts focus, that western growth story. they're not in california. we've got two stores there now. we're going 2015 in california? >> there you go. keep your eyes on that. european equities, meanwhile, today are softer. down about 0.3% for the ftse and
the xetra dax. cac 40 off 0.75%. the ftse mib down 0.2%. yesterday we were up 1% for the ftse 100. on the agenda in the united states today, we've got november cpi out tt add 8:30 eastern. consumer prices are forecast to rise 0.1% both with and without food and energy prices. at 8:30, we get the third quarter current account figures. at 10:00, the national association of home builders puts out its monthly housing market index. later this week, we also get two other reports on housing. november housing starts and existing home sales. senate conservatives meanwhile are unlikely to stop passage of the two-year u.s. budget bill this week. some republicans are expected to join democrats to vote in favor of the measure. the senate holds a procedural vote on the bill today. the final floor vote is expected on wednesday. the deal would avert a u.s.
shutdown next month and in of the sequester budget cuts. on monday, lockheed martin said it may revise its 2014 outlook if the budget bill basses. as far as the u.s. futures are concerned right now, pretty even stevens. the down is currently 16 points above fair value. the nasdaq is just on fair value, just above it and the s&p 500 is about a point above fair value, as well. some of the top corporate decisionmakers, cfos and corporate treasurers who control the companies' cash and investment res now optimistic about 2014 than they've been for any year in the past five. this is the take away from the annual business outlook survey from the association for financial professionals. joining us is jim katz, president and ceo at the association. andrew berkeley is still with us, as well. jim, let's kick off with you. what's making them more optimistic? what is it based on? >> well, i think it's based on a number of things. you're looking at revenue
growth, we're looking at hiring, we're looking at inflation. and all those business conditions seem to make a real nice holiday wishing and holiday greetings for next year into 2014 with inflation staying relatively low, which i know you just mentioned a couple of minutes ago. >> so does that mean they're going to allow those companies to invest more? will they hire more people or not? >> yeah. we actually asked that question and 43% were going to hire more people here in the u.s. next year, which is a very positive news for the economy going into 2014. >> how does that compare with what we've seen in previous years or compared to the sort of mid 2000? >> yeah, well, this is the best news that we've had since the 2008/2009 recession, as you mentioned, in fact last five years. so this is significantly better than we've seen in the past four, five years. so it's positive news for the
economy and for jobs going into next year. >> that's 2014 overall, but are there still concerns about the first part of next year? >> yeah, they are. they see a bumpy road ahead for the first half and then they see more growth going into the second half of next year. so i think they take a conservative outlooking going into the first six months, but then they see pretty good economic growth and job growth as well as revenue growth going into the latter part of 2014. >> andrew, what do you make of this survey and what it's saying to you? >> yeah, i guess the first thing i'd be interested in is if it was taken before the budget was passed or the house budget was passed or after. because i think that was certainly one of the big concerns you heard from a lot of ceos and cfos during the sequestration and the government shutdown was just the confusion coming at it from washington. so now that we have more clarity on that front, i could see where hiring plans would start to pick up for next year. i think the other one that you
often hear from ceos and cfos is just the health care, obama care complimentation. implementation. that's been a big issue on the health care implementation. >> jim, can you address those two points? >> yes. it was taken after the house budget vote. of course, like everyone in the business community, all the uncertainty didn't help in terms of cfos outlook. and yes, the health care, health we believe. so i think this is probably reflecting some certainty going into 2014 on both those issues. >> okay. jim, good to see you. thanks very much indeed for that. >> thank you. >> final thoughts now with andrew. andrew, we know you don't think taper is going to start until march, anyway. but look, so how are you setting yourself up for investment? after a year where the s&p is still up around 25% for the year, we've had this huge
rerating. what is the strategy now? >> well, generally, my outlook for next year is i think it's going to be more of a normal year and moore more of a normal year is in appreciation. i think a lot of that is going to come in the first half because i think interest rates will continue to work there way higher as the fed rolls out and does more than taper as the year begins. i think that's the first time the market is likely to see a setback. there's two other three themes out there. i want to look at areas of the market that are more manufacturing, capital expending exposed. we've had a big lack of i.t. capital spending for a number of years. i think that's something that could come back as hiring picks up and expansion plans build out next year.
and i think the other theme is generally the bond proxy type sectors like utilities, reits, telecoms, i think they'll continue to be under pressure certainly in the first half of next year as rates work there way higher. >> i want to get your view on another story, as well, or the implications of it. comcast currently exploring three options for a time warner cable bid. they could make a full takeover offer. the company could buy select markets and time warner cable will team up with another rival to make a bid. communications reportedly have interest in making an awful. a full takeover of time warner cable could face regulatory secretmy. comcast stock is not trading at the moment in frankfurt. time warner cable up around 0.6%. andrew, you don't have to comment on that specifically, but what's your outlook for more m&a next year? are they going to approve more deals? >> yeah.
i think absolutely. i mean, if you look at profit share of gdp, it's at an all-time right rye now in the u.s. equity market. companies are very cash heavy. they're waiting for more clarity on the economy and things to improve. and i think that's what you're starting to see. so i would expect more m&a activity next year. >> yeah. and look, you're going to focus in on -- i mean, you were talking about this. you're going to focus in on large caps rather than the small caps. what's your concern over small caps? >> well, too, one is the valuation. so they've had a big run. they're up a lot more. we've had multiple expansion in all the equity markets. we've had a lot of expansion in the small caps. generally, if you look at the makeup of the baskets, we want to be a little bit more exposed to non-u.s. growth. and that generally would get you to large caps, not small caps. small caps tend to be a little bit more based on the u.s. consumer, especially. and that's been a big engine. we want to be a little bit, you
know, broader outside the u.s. >> andrew, good to see you today. thanks for that. that's it for "worldwide exchange." coming up next, "squawk box." have a profitable day. d a lumins protein in jellyfish, impact life expectancy in the u.s., real estate in hong kong, and the optics industry in germany? at t. rowe price, we understand the connections of a complex, global economy. 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 re investing.
good morning. it's speculation, it's time for the fed to meet. but the global markets have to wait until tomorrow for a policy decision. but we're going to count down every 48 hours. in washington, congress is moving closer to final passage of the -- the word i'm not family wi familiar with. it might be bipartisan budget deal. and a multi vitamin a day can keep the doctor way.
not so, according to research. it's december 17th, 2013, as "squawk box" begins right now. >> i really can't say. >> baby, it's cold outside. >> i've got to go away. >> but baby, it's cold outside. >> good morning, everybody. welcome to "squawk box" here on cnbc. i'm becky quick along with joe kernen and andrew ross sorkin. we start things out this morning with the fed and the markets. the policymakers are going to be gathering this morning for the start of a two-day fomc meeting. there is an interest rate decision and an announcement set for tomorrow afternoon. and then chairman ben bernanke is going to hold a news conference. ahead of the meeting, there have been no shortage of taper speculation. aig's ceo on "squawk box" yesterday. >> well, we've been calling around and nobody will tell us over at the fed. no, i'm kidding. our very is very simple. that we see that the economy continues to be stronger than people think. we're not expanding as much as we should. that doesn't mean there's a weakness in it. i think there's a fear. i go ar