and europe slowing down, their sales in europe continue to increase so they've seen no slowdown in europe. they said that they will increase their advertising over the next six months. so things look really well for them in 2012. >> tom: for many of these established companies it is the emerge markets where they are seeing significant growth, isn't it? >> well, that's what avon thought. avon thought they were going to get this winning area in brazil and they made a lot of mistakes in their brazilian market so that really hasn't panned out for them. it's not just overall. >> tom: finally ata salon, ulta, big winner. 72 and change. close to a 52-week high. opening more stores next year. are the ambitions already priced in? >> well, you know, that's the worry here when you see a stock hit a 52-week high. but as you mentioned it is a square footage story. this company only has less than 400 stores. they can go up to a thousand storesment and they're really just doing so well. they're doing all the right things. they're selling large scale cosmetics like a sephora but this is a private company

think that's what policy makers in europe are doing. so we don't seem to be truly on a path toward a long-term solution. and until we seem to be on that path, i think volatility driven by europe is with us to stay. >> susie: the big worry for many investors is that europe's financial problems are going to cause a recession in the u.s.. what are your thoughts on that? >> there's two transmissions coming out of europe. there's the financial system, so let's say a major problem with one of the big european banks, con teen-age unin the banking -- contagion in the banking system. that i'm worried about. what i'm less word about is that a recession in europe necessarily pulls the rest of the world down with it. net exports from the u.s. to europe only account for 1.3% of u.s. gross domestic product. so in and of itself, europe doesn't crush the u.s. economy. there are other drivers, and i think that will be the case. so i'm less worried about the economic contagion, i'll a little more worried about the financial system contagion. >> susie: so

as you say, europe imports a lot. european member is the biggest economic zone in the world f you look at it as one. so we will get impacted by lower demand. second the european banks are interlinked. and they're coming under enormous pressure and they're selling. so there's a lot of assets that are going to hit the markets as they delever and they will have to delever. and finally risk references and animal spirit. it's like a big cloud. a lot-- including pimco right now is cautious, on the sideline saying you know what, this is an incredibly volatile market. yesterday we were down 200, today we are up 200 this san incredibly volatile market. the right thing to do right now is to wait before you engage your healthy balance sheet. >> we have 30 seconds left. real quickly what is your investment strategy ghooing 2012 and what do you say to invest invest-- individual investors and what they should do. >> so our strategy remains generally defensive and only selectively offensive and i would say if you thought 2011 was vo

europe was put on notice tonight. after the market close, standard & poor's placed 15 european countries on "negative credit watch." that means the countries' credit ratings could be cut. tom, the warning even applies to the euro-zone's six aaa-rated nations, including germany and france. >> tom: susie, european government credit ratings may be cut, depending on how much progress european leaders make at their summit on friday. s&p cited several reasons for the warning, including tightening credit conditions in the region, continuing disagreements among european policymakers on how to resolve the debt crisis high levels of government and household debt and the risk of a recession in the eurozone next year. >> susie: joining us now with more analysis? bob doll, chief equity strategist at black rock. john what are the odds now of a credit downgrade after this credit watch warning that you issued tonight? >> well, the standard definition of credit watch is one in two likelihood or more of a credit downgrade. imperically

banks have a large exposure to europe. the european economy is doing very poorly as you suggest, clearly that would put stress on u.s. banks, capital and liquidity so that could have implications for credit availability in the united states. third, if europe were to go into a deep recession this will also be quite challenging for financial markets for the u.s. equity market and other financial markets so that also would have negative consequences to household wealth, consumer confidence and also affect the u.s. economy. >> some economists predict there will be a breakup of the euro. i would like to ask mr. kamlin and mr dudley how the break above the euro would affect u.s. economy and do you believe that will happen or won't happen starting with mr. kamlin and then mr. dudley. >> thank you, congresswoman maloney. in reference to that, and as i said earlier, the europeans authority are deeply committed to their project of political economic unification and deeply committed to the perpetuation of the euro zone which means in

what can happen in europe? what can go wrong in europe? is what adds up to, in a nightmare scenario, a systemic risk. >> reporter: but much depends on whether the dollar continues to strengthen against the euro. when that happens, crude-- which is priced in dollars-- becomes a less attractive investment to buyers outside the u.s. there are other reasons oil prices could suddenly spike, most notably troubles in oil- producing nations: >> we have the iran story-- between sanctions by the e.u. and/or an attack to rid them of their nuclear program. we also have russia. we are seeing protests in russia, the second largest oil producer in the world. >> reporter: add to that worries about turmoil in north africa. >> egypt, syria, yemen-- all three of which have some oil production, but they also have much greater ramification-- instability there has much greater ramification across their neighbors. >> reporter: given the tug of war in the marketplace, many experts think energy prices will remain volatile. this time of year also tends to be a low-

never was the danger that europe could implode so great. >> but with europe implode if the euro fell apart? away from the main summit players, we asked around and found that many people are taking a relaxed view. and if you have scrambled eggs, you cannot get the individual eggs back. you cannot have scrambled eggs and then say, "i want my eggs back." >> many politicians feel the same, even if they are reluctant to say so. we asked a leading think tank if the eu would fall apart without the euro. >> competition, the common market, a joint trade, foreign policy and tariffs. all 27 member states have a great interest in that. even the british do not want to see that core part of the european project abolished overnight. >> at this stage, no one knows if the summit will bring a solution to the crisis. but for some people at least, there is still a gleam of hope for a brighter future. >> eu leaders agree on the urgency to find a sthe eurozoned pressure is perhaps the greatest on german chancellor angela merkel. the world has looked to germany to lead the way out, and chancellor merkel ha

but the longer the trouble exist in europe, the more risk. that could affect the currency here, pushing up inflation be on the current level. -- beyond the current level. >> mexico was watching the crisis closely. most foreign investors come from the european union. spanish taylor's come here to seek out new customers. the market is the main source of revenue. we have to bear in mind that the u.s. is mexico's biggest commercial partner. the real effect here is the u.s. prices on the the side of the border. mexico has been warned about its dependency on the u.s. economy and has sought our trading partners in europe, but mexico may have to wait longer for those opportunities. >> the governor -- the former governor of illinois, rod blagojevich, was sentenced to 14 years in prison. prosecutors said uconn is used his powers of office from the moment -- said he misused his powers of office from the moment he took office. >> it is an incredible story, and one that sums up just how dirty u.s. policy -- politics can get. there was a sad thing today, a

job market couldn't overcome growing worries about europe today. the dow fell almost 200 points, the nasdaq lost 52, and the s&p 500 was down 23.5 points. new claims for jobless benefits fell 23,000 to a nine-month low. but investors are growing nervous about the future of the european union, as leaders of member nations hold a two-day summit in brussels. we'll have more on that in just a moment. but first as erica miller explains in europe doesn't solve it's debt crisis it could have serious consequence for the u.s. >> reporter: the stakes are high as european leaders try to save the euro-zone from crushing debt and keep the union from unraveling. economist cary leahey sees serious risk europe could soon experience its own "lehman moment," the banking collapse that triggered the 2008 financial crisis. >> depending on how pessimistic you are, i'd say the chances of a lehman moment in europe are probably between at least one in three. so it's extremely high. >> reporter: with credit drying up across the region, european banks are having a tougher ti

we also need a europe of growth and of jobs, a europe of responsibility, certainly, but also a europe about solidarity. honorable members, let me now move on to key elements of the new fiscal compact. first it includes the commitment to ensure that as a general rule national budgets shall at least be balance pped and that such balance is defined as annual deficits not exceeding 0.5% of gpped. to give this national depth break or golden rule, member states commit to enshrine it at constitutional or equivelebt level and have competence to review proper dispenization of this commitment. this is sustainable long term fiscal policies and a strong signal to market that is european governments are serious about their new stability culture. secondly, the excessive debt procedure under article 56 of the treaty which as you know applies to all 27 member states will apply in the stricter way for the euro member states. in the future, the states will commit to accept true aut malttissty for the deficit procedure from the moment when a member state breaches its commitment. the same aut mat tissty

has taken an adversarial position against europe as because europe was a rewrite their constitution sarkozy and merkel to try to accommodate their reconstruction and re securitization of all this bad debt david cameron in the u.k. saying wait a minute you can't do that so you see this conflict escalating between the u.k. and continental europe you've got two questions it's a let me answer each in part one is the fairy high level of borrowing by financial institutions and you're absolutely correct the u.k. is one switzerland also interesting enough is the other one and the argument in defense of that is these are banking sent so they borrow money in and they lend it out on the other side so you can't really look at the financial system balance sheets but the problem of course is banks are highly leave at it doesn't really matter where the money's coming from and where it's going if the people who actually have taken out the legs that pay back it doesn't really matter whether you're on proposed center or you're an entrepreneurial cent or you're a bankruptcy because that's what you're going to

and still offer money if and when europe needs it. >>guest: i would like to see some discussion of this opposed to an administration judgment that we put money through the i.m.f. into europe because that will just the beginning, i'm afraid. >>imus: bewelcome look like a joke the you have been critical of how we handle our energy, the pipeline debacle saying we are missing a golden opportunity to shore up our energy interests. >>guest: well, that is a very different situation. we talking about jobs in america, and investment of a canadian firm of $7 billion now. >>neil: beggars can't be choosers. >>guest: this is a balance of payment situation and the ability to export more refined products. and the president had a group of people around the white house two weeks ago and he found a convenience to do it in 20 13 but we have a bill to do it next month. if you get back to the europes, the implications have not come through, we are constantly --. >>neil: will we get through the next year? >>guest: i don't think so. this is a serious discus

europe itself is very discomfited. arguably one of the reasons behind the formation of the european union was a concern of germany, which by that point had three major wars. should be part of something else. there is a fine line, and everybody is now looking to germany to save the european union and to save the euro. do we have a role in this? anyone? george? >> i think we do have a role. people are looking to the united states to be destabilizing influence. >> people are quite attractive to our gridlock. >> to some degree. i think the real danger here is that as we look at the development against austerity measures in london, this may be a foretaste of what may occur here. >> the brits have run into a problem. they have cut some of their extravagant social expenditures, but they did not realize the unemployment, which is an argument to be made against republican proposals domestically. >> we are looking at the same potential here. no question we are looking at high unemployment with no real solution to solve it. >> an

>> so regardless of europe, we have to take seriously our unemployment crisis. i call it a crisis because we have long-term unemployment.

her fortune in europe. destination europe -- a multilingual media project by deutsche welle. >> more on that in a few weeks from now, but if you want to get a taste of this new series, please go online. at www.dw-world.de /destinationeurope, you can tap into a broad variety of multimedia resources in many languages. plenty to look forward to, but that is all we have time for today. thanks for watching and please tune in again the same time next week. for now from me and the entire global team here in berlin, bye bye.

is that the crux of the issue in europe? >> well, there are a number different issues in europe. one is, it is true that, from the face of it, you can say, yeah, the germans are bailing out the rest of europe. but if we look below the surface, at a much more complex set of issues, what we see is that the germans do save a lot. they save by putting their money into their local banks. their local banks want to give their depositors good return on their money. so those banks go look for good, or at least high yielding investments. what were those high yielding investments? well, they were u.s. asset backed securities. number one. and number two, they were high yielding government bonds, issued by other governments in europe. now, they've, the german banks have taken a big hit on their american debt, american obligations, and now they're being threatened with taking a big hit on their sovereign debt from the other governments. but we have to remember that those banks in germany were lending because, to these high risk, relatively high risk obligations because they weren't getting a h

is do you want to move to a united states of europe, federal states of europe. but inch by inch that is what they're moving towards. it is the truth that dare not speak its name. >> isn't that the point -- from the very beginning there were people in this whole experiment, the detractors call it an experiment, people who support it call it an evolution for europe and eventually that's where it was going, very slowly, but eventually that has to happen. >> well that is the argument you have been making. the former president of the european central bank came to new york and made a powerful point to a group of bankers which is if you look at the differential between unemployment rates and growth across the u.s. today, the regions, is actually larger than in the eu area. astonishing fact. the key point is that if you had a much more coordinated system, federal states of europe, you would actually have good chance of creating a much more stable union and real single currency zone. problem, of course, is there isn't a single treasury, there isn't a single issue of bond

>> mixed tart to trade in europe. mix signals from the edwards, s&p certainly threatening to downgrade 15 nations. losses around 1% for the dax, 0.5% for the paris cac 40. the worst being escaped by the london ftse and zurich smi, andrew. >> admit it, charles, i certainly have. i suspect a lot of people have. we all had a pretty good image about handling the debt crisis. what if the future was in your hands? could you do a better job than central bankers? now you can try. the ecb has created an app that lets you become ecb chief mario draghi. it lets you set interest rates while you try to keep inflation steady at under 2%. that's what the app looks like. if you follow the pattern, this is the feedback you get. not too bad. many would say in this case not bad is frankly not good enough. i was having a go at this on an ipad and i set interest rates at 0.75% and all these bells and whistles went off and was awarded the gold star central banker of the year so drop them to 0.75% and we're done. >> okay. that's it for this

this is europe's strongest economy, germany here. its main benchmark is down by 16% during the same period. the ftse has performed much, much better there. also france's main index is down by nearly 20% over the period and italy is one of those countries that people are concerned about, perhaps needing a bailout, seems as though that has been moved off the cards for the meantime. at one point, this country had bond yields spiking way beyond the levels that caused other countries, like, for instance, greece here to get a bailout, portugal, et cetera. if you take a look at the way their mark pets have performed, italy's midindex in milan is down 26% to 27% and the athens stock exchange has seen about half of its market value wiped off over the course of the same period. and the ftse is only down by 6%. andrew? >> yes. take a look at the numbers here in asia. this is the knee-jerk reaction to the news as it came out of europe. the markets here were open. that's how you see the interpretation pretty grim. not surprisingly, hong kong, one

there is no quick resolution to europe. >> susie: and everybody is worried about what happens in europe and whether it goes to recession and what that's going to mean in the states. once again, we heard the fed use the same three words. significant downside risk to the economy. when is that going to go away? >> you know, i mean, it really will take quite a while. that's the fed is moving on next, letting people know they're willing to do whatever it takes on communications basis to keep interest rates low until the unemployment rate gets a 7% handle on it, and it seems deflation threat from a recession in europe that could spread to a global situation if the euro implodes will be bigger than a lehman event. that's not priceed in now, but that's what they're worry body. >> susie: what are you expecting in terms of growth, the unemployment rate and could there be a recession? >> there could be a recession. there's still recession risks. i'm expecting the economy sell accelerate less than two percent in 2011 to 2.5% in 2011. that's good news. the unemployment is subpar growth. and the unem

will europe's central bank do its bit to stop another rate cut? >> there's a big difference between partners and being nude. >> an actress suing over what she says are fake photos tries to set the record straight. >>> also ahead -- ♪ >> and the city's the star is hollywood's movie machine reaches new heights. we're at the "mission: impossible" premiere in dubai. >> speaking of mission impossible, in europe some people could draw a few conclusions there as well. asian markets down, european markets are up, u.s. futures are struggling for direction. the instability is all down still to the future of europe which could be charted in brussels on friday. before that, though, the ecb seems set to lower interest rated for the second time in two months as it tries to kick start the region's economy. but with the ratings agency standard & poors put the not just euro zone governments but the whole eu as a whole on credit downgrade watch, recovery still seems like a distant dream. i wonder with this latest credit watch, nina, does it make a difference to p

it captures the moment europe split. 26 against one. the moment a british prime minister finally made a stand, say some. the moment others believe he was hopelessly outmaneuvered by the french president. >> you're in a room with 26 other people who are saying put aside your national interest, go along with the crowd, do what will make life easy and comfortable for you there in that room. but you say no. it's important that we get the things that britain needs, and so i decided not to sign that treaty. >> on the morning after a long night before, david cameron found himself alone at the e.u. summit table. he might have to get used to it. the leaders of france and germany and the european commission will now plan europe's economic future without britain. even countries now not in the euro will join in. when europe's leaders meet, it's quite possible that 26 will be in the room. one, you, britain, will not be there. how on earth is that in the country's interest? >> we don't want to join the euro. so i don't need to go to meetings of euro

in brussels we cross the jews van ourselves he is the president of the e s c steering committee for europe two thousand and twenty all right folks this is cross talk you can jump in anytime you want and i very much encourage it and if i can go to you first the december nine summit is coming up and there is a ultimatum on the table the french and the the judge germans are saying to the entire twenty seven member members of the european union give up fiscal sovereignty or else is it going to happen and if it does what does it mean. well i doubt it's going to happen but the point is that it is not the arms to the crisis it's addressing the wrong problem it's really it's addressing a problem of fiscal deficits which are a consequence of the financial crisis and it is that which they should be testing they're not looking at the causes of the crisis which is the broken global banking system instead they're looking at the consequences and trying to fix the school deficit and that's not can solve the problem ok james i mean it's interesting we're anxious because they're. threatening to downgrade e

and europe? >> it's a time to be emphasize quality. i would be selling low quality companies, low quality debt in i would be lightening up on small cap stocks on the united states. i'd be lightening up on come mod it is because they require a high growth in the world. and in europe there are certain value place but you have to understand the odds are stacked against you when the economy is shrinking as europe is likely to shrink for the foreseeable future. >> even if you have a value play, even if you have a stock that seemed undervalued. the fact is the overall economy and what it's doing in europe may have more of an impact than the companies you're investing in. >> and you're better off anything good happening in europe you'll capture through large cap united states companies with a global franchise. in europe there's no way to change the fact we're going to have a long period of headwinds, even significantly larger than those in the united states. so you've got to be careful over there. >> you arer still a believer that for the ave