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tv   World Business Today  CNN  August 10, 2011 1:00am-2:00am PDT

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but i'm not an expert on that. >> well, it will be a fascinating year, t. boone pickens, thank you very much. >> sure. thank you. that's all for us tonight. good morning from cnn london. i'm nina dos santos. good afternoon from cnn hong kong. i'm andrew stevens. you're watching "world business today." these are our top stories on wednesday, august 10th. investors regroup after days of heavy losses as the u.s. federal reserve vowins to keep rock
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bottom. when it comes to steering the economy, we'll tell you how beijing is being penned in by china's soaring pork prices. stock markets are up, but after the collapse of confidence that's hammered equities over the past few sessions, investors are wondering whether the panic is really over. tuesday's federal reserve meeting appears to have been the trigger for the rally in europe. the gains there partially reversing the spectacular falls of recent days. european indices are heading higher. a asia followed that swing. the dow posted its biggest gain this year. here in hong kong the stock exchange has just closed. the hang seng recovered some of that but still has quite a way to go. it lost almost 12% of its value over the past three sessions of
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decline. nina? >> andrew, none of these markets are down in the double digits. let's see how they're doing just an hour into the trading session. we've got, for instance, the dax up in excess of 1.75%. and the ftse 100 and the zurich smi. we have central banks like, for instance, the federal reserve coming out with statements saying it's going to be keeping rates on hold for at least the next two years to come. we did see the dollar falling in response to that yesterday, but now what we're seeing at the moment is a little bit of strength in the euro at 1.4373 against the greenback, 1.6251 is where the british is and the yen is at 76.70 at the moment. here in asia the markets have closed obviously, and the
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relief rally we first saw in the u.s. certainly spreading across this part of the world. take a look at australia. it's up 2.6%. shanghai up by almost 1%. the nikkei up by more than one. back to australia for a moment, there's been welcome news for the budget airline tiger airways. almost six weeks after its planes were grounded by the country's airline safety regulator, tiger aways australia is preparing to take to the skies again. the ban of its flights has been lifted. the share prices you see there already soaring up by nearly 2%. turning now to a ban of a different sort, a court? germany ordered samsung to stop selling the tablet in certain areas. it's a major victory for apple in its long-running legal battle
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in a battle that will take a bite out of its market. the galaxy tab copies several features from the ipad. it's expected to appeal the ruling. samsung down by about .5%, nina. let's circle back and take a look at what happened on wall street on tuesday. as we were saying, stock markets there rallied on the back of the news that the u.s. federal reserve plans to keep interest rates at historic lows for another two years to come. america's central bank also said it's prepared to use a range of tools to keep the u.s. economy afloat. here is how things looked at the close. the dow jones industrial average was up nearly 430 points. the nasdaq gained more than 5% as you can see on the chart. the s&p 500, the broader index ended the day up about 4.75 of
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one percent. significant gains there. >> absolutely. after what we've seen over the past few days, very nice to see that. the reversal wasn't particularly smooth on the dow. the index opened at around 10,800 points. it was up and down pretty much all day long, but it fell to 10,600 after the announcement by the u.s. federal reserve. and then the rally started, leaving it nearly, as you know, 4% higher by the close of trading. that rally may have been short lived because u.s. markets appear to be on course for a lower open when trading begins on wednesday. this is where futures currently stand in the pre market action. we can take a look at those numbers now. maybe we can't. there they are. the dow is absolutely flat at the moment. it was down earlier in the day. the nasdaq composite showing losses around .35%. pretty much the same with the broader s&p. remember these are volatile numbers as we lead up to the
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opening of wall street. it looks like we'll be seeing more volatility on the markets in the days and weeks ahead. that's a message we heard from a number of traders on the floor of the new york stock exchange. >> reporter: the market will continue to turn as long as there's a lot of uncertainty. there's political uncertainty both here and abroad, economic uncertainty both here and abroad. until you start to see stabilization of the macro reports, and the macro even more than the political is going to be what the market focuses on. they want to see better manufacturing numbers, better growth numbers, jobs created. you start seeing that not only here but abroad, then you'll see the tone of the market change immediately. >> ken pocari is not the only one with reservations. earlier our pauline chu spoke with the founder of the kwon taum fund, jim rogers. >> here in ab yeah it means mass
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destruction of currencies an inflation all over the world. we're all making money off of it. but it's terrible, terrible news. now you have more currency debasement and more inflation. >> you had been bullish on the yuan and the aussie dollar. does that mean your view changed on this? >> no. this is making them go up. the aussie dollar is about to rally because of this. you see the u.s. dollar. >> reporter: going down because people realize, well, they're just going to print more money. they're going to keep interest rates artificially low. this is not good for america. this is not good for the world. >> jim rogers there, pretty discouraging view. he has been a long-term and loud bear when it comes to u.s. economic policy. more now on the outlook form the markets. let's go to etx capital senior trader who joins us live from london. we saw the relief rally.
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it's kicked and to asia and to europe. how much of that is ben bernanke? >> well, it's ben bernanke to a certain extent. looking at the markets they were relatively over sold. we saw the equity markets selling off dpor almost two weeks now. we got to the point whereas set prices were extremely cheap. selling was indiscriminate across the board. even quality assets getting sold off sharply as well. therefore, value investors came into the market, and the markets pushed higher. ben bernanke has had a positive effect by keeping interest rates on hold at the current level till mid 2013. what could have boosted equity prices higher is if you talked about qe 3. >> absolutely. do you think just by saying interest rates are going to be kept on hold and they do have tools to use if necessary is going to be enough, or would you
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expect qe 3 to happen? >> i do expect qe 3 to happen at some point in the near future. i don't think the u.s. administration has much left in termination of tools in order to spur economic growth. whether this will spur economic growth is something entirely different. what we've seen with qe 1 and qe2 is asset prigss. equities and commodities have moved higher. that doesn't necessarily reflect on the economy as well. we haven't seen a move higher in economic growth. this is what i feel will happen with qe 3 as well. >> we've got some better clarity, i guess, after ben bernanke's speech yesterday. what about the eurozone, though? what about the black hole of the debt crisis. that is still such an uncertain outlook. that is going to remain a big drag on equities, isn't it? >> it will in the longer term. what we've seen in the last few years certainly with the ecb stepping into the market and
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buying italian and spanish debt, we've seen the yields on the ten-year notes come down quite dramatically. they were trading above 6% previously with greece, ireland and portugal, once their ten-year yields traded at 7%, they turned around and said we need bailing out because our interest levels are unsustainable levels. fortunately for italy and spain those yields have come back around to around 5%. hopefully they'll continue to come back down. if they don't, it's very difficult for the eu and the ecb because they have very little left. >> okay. we've had a pretty healthy bounce on wall street. asia wasn't bad either. europe not so strong. where do you think the market is going to go from here over the next couple weeks, over the short term? >> over the near term i expect trading to remain fairly choppy when we're seeing these bouncs.s
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if we start to see the economic factors kick back in again, the negative economic factors, it's unfortunately back down again and we could see another wave of selling coming into the markets. >> all right, manoj, thanks so much for joining us. britain ice prime minister at this hour is chairing his second emergency meeting in two days. tuesday was a quiet night in london, violence ripped through other british cities. in a moment we'll look how rioting is impacting the british economy and british business. stay with us. [ female announcer ] what if your natural beauty could be flawless too?
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from cnn hong kong and london. welcome back. you're watching "world business today." >> a tense but hopeful calm hangs over london the morning after 16,000 police managed to keep the peace.
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officers responded quickly on tuesday night to break up groups of young people. there were no reports in london of widespread looting, vandalism or arson. sporadic violence broke out in several other british cities including manchester. a library and supermarket burned. in nottingham a mob fire bombed a police station. authorities said they made more than 760 arrests since the violence began on saturday. the maker of the popular blackberry device is taking some heat. media reports say research in motion's free blackberry messenger services was among the services that helped many rioters communicate and organize. one member of parliament is calling on the company to suspend the service. the company announced publicly it will cooperate with authorities and someone hacked the company's blog, nina.
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the riots have had hundreds of businesses, vandals have set fire to dozens of shops and buildings across london and other cities around the united kingdom. the association of british insurers estimates the damage could be in the tens of millions of pounds. for many small businesses and their owners, the loss of their livelihood is, of course, taking a very personal toll. cnn's atika shubert joins me. this must be pretty damaging stuff for people who have plowed their life savings into small businesses to see them torched across london. >> exactly. i was in west london yesterday, a quiet, pretty residential area that was suddenly trashed on monday night. i spoke to one owner of a kids wear and maternity wear shop, she put her life savings in it and it's been trashed as a result. she's devastated. here is what she had to say.
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>> you were showing this to me earlier. >> it was a little romper suit, it stinks of alcohol. >> this was used as some sort of mole tav cocktail or something. >> maybe this is what set the car on fire. maybe i shouldn't be touching it. it's probably evidence. >> just an article of baby's clothing. what would anybody -- >> it's just mindless. i'm not saying my business is any less deserving or more deserving or any other business. why smash in the coffee shop, the cafe, the book shop? people frightened for their lives last night. >> fortunately we did not see a repeat of that kind of violence in eeling last night. it was sporadic and isolated. a lot of communities fighting back. a lot of people standing guard by their shops, trying to identify people on twitter on who might have been looting in
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their neighborhood. we're starting to see not just the police on the streets but the community trying to take a stand. >> obviously social media has played a significant roll in helping to rally these thugs on the streets of london unwit inningly. we should talk about income and equality. in the united king done, many 16 and 17-year-olds unemployed. that rate is rising. is that part of the reason we're seeing these riots? >> i think it's a big part of it. just from talking to some of these younger kids, when i was out on sunday night and when i was in brickston the other day, there's a lot of frustration and anger. this is basically a venting of that frustration and anger. a lot of them said we don't have job prospects. we don't know what's going to happen if we get out of school. their benefits have been cut. something as small as youth clubs, budgets for youth clubs being totally slashed and now they're gone. that means these kids have nothing to do.
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they're out on the streets and basically looking for trouble. the recession has hit them hard, unemployed is high. they're angry, they're frustrated. they don't seem to know of any other way to get -- to be heard. this seems to be their way of doing it. it's not right. doesn't excuse it, but it may explain a little bit of what's happening. >> then again, not the only people facing cuts. the police force is having to get on the streets and deal with this day after day has also faced cuts. what about the policing of all of this? it seems as though david cameron has taken quite a bit of flack for that. >> he is. he's taking a lot of heat for it. the idea that the mayor and prime minister didn't come back until after three days of rioting, that's something staying in the public's mind. things are quiet in london, but it took 16,000 cops on the streets. a lot of people say it could have taken leps if they nipped this in the bud earlier. the cuts have really affected
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police staffing as well. so the police now have to say, well, how are we going to manage these kinds of disturbances? are we going to see more of them if we see our own budgets being cut? this is what boris johnson, the mayor, is saying this morning, maybe we should take another look at how we're cutting police budgets. >> atika shubert, thank you very much for that insight. andrew? britain's chamber of commerce sees the riot's economic effects as potentially reaching far beyond property damage, calling on the government to act quickly and decisively to minimize the impact. >> what our members are saying is that this could have a profound impact on the economy, and the government needs to be seen to act and deal with it. this is not just about a few streets in london, but this is about businesses having to send their employees home early. it's about businesses having to close, restaurants have to close
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which at a very time when we have a very fragile economy is the last thing that we need. >> interesting side note here, too. has apparently removed a police night stick from its uk site after the weapon suddenly became one of the top-selling items. also on the list of top-selling items, baseball bats. it's not clear who was buying them or why. fires blazed and police battled protesters with teargas and water cannon in the streets of another city on tuesday thousands of kilometers away from london. this battle took place in santiago, chile. violent demonstrators broke away from a peaceful anti-government protests by tens of thousands of teachers, parents and other students. they're demanding the state take control of public schools from private companies and reduce the cost of college education. many say they can't afford to give their children a quality education.
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still ahead here on "world business today," boeing gets a flurry of aircraft orders, and jen delgado will have your business traveler's forecast. we'll be back in just a moment. ? get the contacts you've got to see to believe. acuvue® oasys brand contact lenses with hydraclear® plus technology, keeping your eyes exceptionally comfortable all day long. it feels like it disappeared on my eye. [ male announcer ] discover why it's the brand eye doctors trust most for comfort. if you have astigmatism, there's an acuvue® oasys lens for that too, realigning naturally with every blink. ask your doctor for acuvue® oasys brand. when i got my medicare card, i realized i needed an aarp... medicare supplement insurance card, too. medicare is one of the great things about turning 65, but it doesn't cover everything. in fact, it only pays up to 80% of your part b expenses. if you're already on or eligible for medicare, call now to find out how an aarp...
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singapore airlines are expanding their fleets. cafe is buying 12 boeing aircrafts, all 777 class planes. singapore is ordering eight boeing 777s. the price for both carriers is believed to be several billion dollars. they expect their first deliveries in 2013. to weather now and wet and windy conditions seem to be hitting the united kingdom. let's check your business traveler's forecast. jennifer delgado is standing by at the cnn weather center. good morning, jen. >> good morning. a very wet morning through parts of the uk. i said this yesterday, we would be dealing with stormy conditions through parts of the uk. rain coming down quite heavy, has been over the last several hours. more of that rain will continue to work in from west to east. we'll also be dealing with problems withstanding water. today heading out there, you want to be sure you're being careful and checking ahead for some travel delays.
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as we go through the next 24 hours, we'll continue to see the heavier rainfall moving through the uk. then a break from the rain as we head into thursday. things are fairly quiet as we see an area of low pressure move out of parts of eastern europe and into parts of russia. today temperatures a little cooler for your business travelers. we're talking about the lower 20s, 30s down towards the south, including madrid, rome as well as athens. as we look across parts of china, look what's happening once again. we're dealing with storms. we eel continue to see this through thursday, as well as potentially through friday. a stationary front in place. let's go to a live view of hong kong harbor and a gray day across the region. we have one of our producers in town from hong kong. i think he's pretty happy to be enjoying better weather here in atlanta, it has been very hot and humid, but across southern parts of china, really quite dreary. we'll continue to see the heavy rain as i take you to our graphic. here is where you'll see the
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heaviest rainfall anywhere in rain. we could potentially see about 15 to 25 centimeters of rainfall, also talking about rain moving through parts of the korean peninsula as well. finally i leave with you with something coming out of space, one of the largest solar flares popped up on august 9th. this image coming to you courtesy of nasa. look at this, you can see the solar flares happening. this has a core roenl mass ejection. this one was classified as an x class, one of the strongest out there, a 6.9. actually strong enough to disrupt satellite signal as well as communication devices. more "world business today" in just a moment. won't disrupt that. stay with us.
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. from cnn hong kong, i'm andrew stevens. >> i'm nina dos santos at cnn london. welcome back. you're watching "world business today." european stock markets have been open for just over an hour and a half in this trading session. the rally appears, as you can see, to be using a little bit of its momentum. stocks originally had been gaining on the back of the news from the federal reserve out just last night in the united states saying they're planning on keeping interest rates on hold at their current historic lows for the next two years to come because the economic picture is too weak at the moment. that had given markets a shot in the arm, most notesbly, the dax which is currently up about .8%. some of these markets losing momentum. the cac 40 currently down by .09%, 3,173 is where we
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stand. that's a market that has lost ground on the back of concerns that the eurozone crisis could affect countries with aaa credit ratings, for instance, fran. the ftse was up about 1% when it started trading today. as you can see, it's rapidly losing those gains, currently up only by about .5%. the zurich smi is a market down in excess of 18.9% year to date. you wouldn't have thought that switzerland would have been one of the places to lose the most during this recent market row, but it has, losing earlier gain, up only .6%. >> still a lot of volatility out there and a lot of fears in the markets, nina. here is how trading ended here in asia today. remember, over the past six days, the msci asia index which
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is a broad measure of all the asian markets down by something like 13%. the rally in that context is good, but certainly not great. the nikkei up by 1%. the hang seng up 2.3%, shanghai up less than one. australia markets having a strong day. australia in bear territory, about 20% down from its peaks. coming up again today, a very, very sensitive to commodity prices and the outlook for the global economy and ben bernanke saying lower interest rates are going to be remaining for some time, certainly helping the outlook for the global economy to get over its current weakness. there is a rally there again. not convincing. a lot like europe, we have a long way to go before we're out of this black patch, nina. >> all eyes on the u.s. session when stocks get trading over there later today. one day after wall street's biggest loss of the year, yesterday the dow jones industrial average posted its biggest gain of the year. that was on tuesday.
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it closed up 430 points or nearly 4% at the end of trading. the nasdaq for its part jumped more than 5%. when it comes to the broader s&p 500 index, that gained nearly 4.75%. alison kosic takes us through the bumpy ride. >> the dow had wild swings moving 200 points higher and falling 200 points in a matter of minutes at one point during the day. at the closing bell, the dow rallied 429 points, most of that coming in the final hour of trading. that's the biggest gain of the year one day after its biggest loss. the nasdaq jumped more than 5%, the s&p 500 up 4.75%. much of the volatility came after the federal reserve's statement on the economy. some say wall street was looking for a confidence boost but didn't get it. others say there was a relief
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rally after the fed announced the economy is weak and it's continuing to give support through reinvest through the previous economic stimulus. the good news from the fed, it plans to keep interest rates near zero for another two years. you can expect another choppy session wednesday as the market continues to adjust and find its equilibrium following weak economic data from last week, the s&p's downgrade of u.s. debt and the fed's comments today. corporate earnings are still coming in as well. before the bell we'll hear from macy's and polo ralph lauren. after the close, cisco systems and news corp. will post their results. i'm alison kosic at the new york stock exchange. as uncertainty continues to talk the markets, worried investors have been piling into gold. that's pushing the price of the metal ever higher. gold hitting another high of $782.50 announce in electronic trade. it came back to 1762 in a week
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that saw it breach the 1700 barrier for the first time. completely opposite story for oil. steep price falls as traders anticipate lower demand from a spattering world economy. right now oil is trading at just over $81, a rise of more than $2.00 a barrel. the lower oil prices will help stimulate economic growth a little bit, won't be the impediment they once were when oil was around $100 a barrel. nina? >> some of these commodities have a clearer trend than stock markets. the recent worldwide drought has wiped trillions off of world markets. hedge funds even to make money even when stock markets drop. i got a rare glimpse inside one of them as it koepd with this week's financial turmoil. the world hedge fund industry manages no less than $2 trillion in assets globally. 70% of europe's hedge funds are based here in london.
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i'm off to spend some time one of them to learn a few trade secrets. lex van dam has spent two decades trading in the market, he's now a partner of a $700 million hedge fund and family office. with management fees of 2% on fees and 20% bonus, it's lucrative but all-consuming. >> must be quite stressful? >> really stressful, especially at the moment. up 7%, down 7%. >> in our city all day long between seven and five i see behind my screen. i go home and watch the market from home. at night i wake up probably once or twice to look at what's happening in asia. it goes on and on and on. >> hedge funds use sophisticated investment techniques that enable them to make money when the markets are rising and funny, like short selling, the borrowing and selling of a stock with the hope of buying it back
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later at a cheaper price. >> your memories about the credit crunch, was it a particular difficult time? >> the credit crunch it was extremely difficult, everybody was depressed. lots of people got made redundant. they thought, this is never going to be okay again. then a year, two years later, people tell you that everything is fantastic again. >> so what do you think, harry? should we buy this stock or should we wait? >> i think it's a great infrastructure play on the internet. >> most hedge funds pretend that what they do is really, really difficult. it really isn't. you try to identified good companies that you want to own, and i think those people can actually analyze it themselves. >> this is serious technology here. what are you looking at? do you need all these kind of screens? >> unfortunately you really do these days because there's so many different asset classes that trade and they're all correlaters. everybody looks at everything.
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everybody is paranoid. everything is correlated. for every human trade that happens, there's probably tendon by computers. >> you have a check of gold here, right? >> uh-huh. >> it's at 1700 plus. is that expensive? >> there's not enough of it. they can't print more of it. i'd rather have it than a piece of paper that the government can print. if you have money, you buy gold, buy government bonds and put your cash in the bank. >> which means this 43-year-old dutchman is not just hedging his bets, but keeping his eye on the big picture, too. it's not very often you hear a hedge fund manager tell you to keep your cash in the bank. we'll have to see when he decides to cash out of that trade. >> it's amazing. an interesting report, nina, watching him with those screens. i struggle with one touch
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screen. dealing with that sort of technology, you have to be all over it. very interesting that he says there's nothing to it, either, demystifying hedge funds. good stuff. anyway, the chief of azian, the association of southeast ashian nations says the regional economic blok is an attractive safe haven in these troubled times. ramy inocencio joins us. when you look at it, does it bear up under scrutiny. >> depends on which country you look at in aus an know. the ten-member nation is not a monolithic nation. i spoke with four analysts throughout the day today. one from hsbc singapore, another from singapore's institute of international affairs, another
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from the asian development bank in the philippines and another from the institute of southeast ashian studies. i wanted to get a lot of these people in on this conversation. they all agreed that indonesia is the anchor for asean right here. that it's the most stable. for example, the fourth largest country in the world with 240 million people. that means that they have a huge consumer base. that consumer base allows them to keep on pushing consumer demand there. especially with a lot of young people in the country, there's a lot of veracious consumers out there, for tech, for example. it also has a growing middle class. they can afford more stuff basically, buying telephones, buying cars, getting loans for homes. they're going to be able to get those from banks -- bank loans. in fact, the banks are more and more liquid right now. monetary policy is actually accommoda accommodative. that's from the senior economist for asia pacific. he says interest rates are
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stimmive. indonesia is relatively insulated from the rest of the world markets. decline in the u.s., decline in europe isn't having as much of an effect as it has on other countries that might have stronger or wider links to the west. >> when i was down there, the world economic forum, certainly a lot of positive news from the indonesian economy. it's good good resources, too. there are problems there. it's not all that rosey. >> the jakarta composite fell 13% in the last few weeks. it has risen to 8% recently. it got smacked by everything going on in the u.s. and europe. here it's a question of timeline. short term versus long term. if you want to be in it for the short term, maybe you shouldn't be in it because that's going to be so much more volatile.
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if you're in it for the long term, we're talking about emerging markets. >> a classic emerging marketplace. >> exactly. then you can stay in it for the long term. most asian economies are recurring and volatility is inherent for these economies. if you're for the risk yourks get into this market. >> indonesia, does asean, is it attractive for other countries? we've got singapores, philippines, thailand as well. >> on the list after indonesia the philippines comes in as second. they say there are a lot -- there's a lot of monetary foundation there and interestingly they rely 10% on remittances. over the past several years from the first financial crisis in '97 to the second one a few years ago, remittances actually stay the same. that 10% provided a little bit of a foundation for the economy there. in terms of the worst country or
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the least stable country, it turns out that singapore makes that position and partly is because singapore is so connected to the world economy. >> connected to stroke exposed. depends if it's going up or down. when it's going down -- the singapore economy was down something like 10% for a couple of quarters because it's such a trading hub and exports and trade are so vital to it. interesting stuff. thank you very much, ramy inocencio, our asia business analyst. >> we'll stay with asia after the break. while many countries are struggling to spur growth, china is struggling to contain it and also struggling to control inflation there. one product is driving prices way up. why china has a problem with pork. imagine... one scooter or power chair that could improve your mobility and your life. one medicare benefit that, with private insurance,
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welcome back.
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you're watching "world business today." the markets are hoping for more tightening in china. chinese food prices up more than 14% over a year ago, partly driven by a 57% jump in the price of pork. pork prices are contributing nearly two percentage points to the country's overall inflation rate. this is a really big indicator of trouble for any attempts to tame china's run dloet away inflation. pauline choiu takes a look at this. >> this is a local hong kong restaurant that's been in the same family for 60 years. pork is a main ingredient on the menu. the recent price rises in pork has started to put pressure on this restaurant. for example, take this can of spiced pork used in a lot of the different dishes. one month ago this can cost $1.90. now it's $2.27. that's an increase of 20% in
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just one month. so now the owner is starting to think about raising prices on the menu. >> we have two branches, we'll sit down and discuss this issue. in the next one to two months, there will be a price increase on the menu. >> the rising price of pork is flaying into the inflation picture in china while other countries are trying to spur growth. china is trying to slow down growth and reign in inflation. in the month of july the inflation numbers came in at 6.5%. some analysts say 20% of that figure is from the rising price of pork. beijing is trying to alleviate this problem by doing a couple of things. beijing is releasing strategic reserves of frozen pork and also investing $385 million into commercial pig farms. economists are hoping these measures will start to tamp down inflation in china which is the biggest problem facing the country.
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pauline choiu, cnn, hong kong. why are pork prices on the rise? these republican the three main prices. on the one hand, it's cyclical, prices bottomed out, farmers stopped raising hogs and that created a shortage of pigs and pork meat. also an increase in demand duing to the growth in the middle class. and rising grain prices mean it's more expensive to produce the pork meat. china is actually home to half of the world's pig population. 446 million pigs are raised there. that amounts to almost one pig per three citizens in the world's most populous nation. up next on "world business today," the latest moves on the market. we'll find out what people are making of the fed's latest pledge of record low interest rates. we'll see you in just a moment. [ man ] i got this new citi thankyou card
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welcome back. you're watching "world business today" right here on cnn. and now for another look at the stock markets here in europe, they've been open for almost two hours' time. this is where we stand at the moment. we started in bullish territory, erasing some of those gains. most notably the cac 40, now in negative territory though it touched a lower point about half an hour ago. now down by .05%. here in asia the markets closing higher this wednesday. there was something of a relief
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rally, certainly after that big performance in new york overnight. hong kong and australia leading the way, both up by around 2.5%. they still have a long way to go, down 13% over the previous six days trading. a start, but certainly a long way to go, nina. >> one of the reasons the markets have been moving quite so much is because of the statement we had out of the fastball. the u.s. central bank overnight. u.s. stocks took quite a wild ride on tuesday as the fed vowed to keep interest rates low until at least mid 2013. in the fed statement chairman ben bernanke promised to do whatever it takes to keep the u.s. economy afloat. as lisa sylvester reports, bernanke may not have that many tools left in his box though. >> reporter: the economy has been sputtering along. last quarter u.s. economic growth was a measly 1.3%. the federal reserve acknowledged consumer spending is down. the housing sector still taking a beating and things are not
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looking good on the job front. investors have been looking to the fed to work its magic and get the economy moving again. to that end the federal reserve gave the markets a gift, pledging to keep interest rates near zero at least through mid 2013. >> they're speaking directly to the markets. they're telling banks and bondholders, bond investors that they can count on ultra low interest rates for at least 24 more months which is a pretty major statement i think. >> reporter: that means low cost for americans to borrow for a house or a car or to take out a college loan, at least for another couple years. until the now the fastball only said it would keep interest rates low for, quote, an extended period, without spelling out how long that was. but the central bank did not commit any new funds for bond purchases that would pump money back into the economy to kick
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start growth, something investors had been hoping for. the fed is trying to steer the economy away from dipping into a second recession. some economists point out its tools are limited because interest rates are already very low. >> the fed just doesn't have that many bullets left in the holster. it can't lower interest rates very much. it could buy a lot more assets. but it's not clear that would make much difference. >> the fed couldn't go any lower with interest rates, so it gave the next best thing to keep it going longer. investors clearly saw it as good news and responded. one interesting thing, though, to point out, is there are 12 members of this federal reserve committee that sets monetary policy. three of the members voted against the action worried about inflationary pressure. they went against chairman ben bernanke on this one. that's a pretty rare thing to see. lisa sylvester, cnn, washington. that about wraps it up for this edition of "world business today." thanks for joining us.
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nina and i will be back later in the day. for now, farewell, i'm andrew stephens in hong kong. >> i'm nina dos santos in london. see you again soon. -- captions by vitac --
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