tv Worldwide Exchange CNBC August 12, 2009 4:00am-6:00am EDT
here in europe, dutch bank ing disappoints with a surprise loss in its banking division. >> i'm bertha coombs in the u.s. expectations are growing. federal officials say an economic recovery is still taking shape, there are still dangers. >> health low and welcome to cnbc's "worldwide exchange." global equities a little softer today as we go through the european open. the ftse cnbc global 300 down 0.5% one hour into the european trading session. stocks have gone for a dip
today. but if we pull up the european bourses for you, we'll show you exactly where we stand. there we go. off 0.5%. ftse 100 off 0.5%, xetra dax off 0.16% cac 40 off more than 0.3%. dollar/yen 9 5.24. euro/dollar, under pressure. down to the low 1.41. big day for sterling today. the bank of england quarterly inflation report in an hour and a half where we hope to get more understanding of why the bank thought it necessary to extend its quantitative easing program. christine. >> hey, ross. here in asia, you mentioned software markets are very soft here today as investors brace for what the fed will say in its statement. nikkei 225 off its ten-month highs, down 1.4%. kospi down 0.8%.
shanghai composite getting whooped today severely because of data coming out from china and, of course, the sharp lending figure. all these raises concerns about the pace of the recovery in china, so that pulling these two markets lower, hang seng down 3% and the bombay sensitive index down almost 2%. the eia report is due out any moment now. nymex light sweet crude down 14 cents, $69.32 a barrel. brent is trading lower as we speak, trading around the ranges of $72.13 a barrel. well, the weekly u.s. inventory data will be releasedlty 10:30 a.m. new york time. a dow jones forecast calls for oil to rise by 700,000 barrels. gasolines and distillates expected to drop by 1.3 million and distillates by 300,000
barrels. >> christine, i'll be headed to the floor this morning. as far as futures right now, we are trading to the down side. a lot of caution ahead of the fed. one good thing that did happen yesterday is we had a successful treasury auction. we had a $37 billion offering of three-year notes and those went very well with a decent bit to cover and the thing that people were watching was foreign demand. there's new sort of rules about how they count the foreign demand, but it came in at well over 62%, which would mark a record. 3.44% for the 10-year bund yield this morning. today we will have a auction one hour before the fed decision. the ten-year yield has come in, 3.65%. taking a look at gold this morning, it is trading at this
hour -- there we go -- off almost about 3 points at $942. christine. >> hey, bertha. joining us now for market strategy ahead of the fed decision is franz winsel and ajune know mahindra, managing director at hsbc. gentlemen, thank you very much for being with us. ajuneau, let me start with you. what could the fed do that could possible out of investor confidence? >> at this point, not very much. if they give any hint that rates could raise, that could rattle markets because nobody is convinced about the sustainability of this margin.
whether that's sustainable over the next three to four years i think is the question in the markets. and the fed shouldn't be seen to be trying to stifle that at this stage. certainly there's no evidence of inflationary pressure, etcetera. but on the other hand, if the fed takes a dovish stance and says it's going to extend the program to buy long-term securities in the markets, that could bring in fears that the level of u.s. debt is becoming, perhaps, unsustainable and raise fears about the long-term health of the fiscal and the debt situation in the united states. so it's sort of if you do if you don't situation. i think they're going to remain pat, not sea very much, say the minimum required and, you know,
just hope that things pan out pretty well over the coming months. it's a rather difficult situation. >> it is, indeed. >> franz, what do you think the fed will say? >> well, we're basically in a broader sense, we would more or less agree. however, we would say nevertheless, over the next 12 months on so, the economic recovery is, according to our forecast, basically taking place and that should more or less push the fed into the shoes of first stop or lower down the quantitative easing and second, maybe in the second half of next year, expect some rate hike. but until then, we think we have no idea and no hope, no fear that the fed would have ever, whatsoever have to hike rates at this juncture. markets are producing in rate hikes by the end of this year.
>> one of the things that's interesting is that the markets seem to have felt as though the banks had turned the corner. and in a sense, we've had a bit of a relief rally and that's moved us higher as far as equities. but we've got some analysts saying -- dick bove saying they're running on fumes. we also had a congressional oversight panel saying some of the regional banks could still face more trouble. is that something that is likely to impact the fed and something that we're not really counting in just yet, franz? >> we basically would entire agree with the statement currently and that is something which transpired from the q2 reporting season. all the bad loans are basically increasing. default rates are rising. and what we saw was a kind of knee jerk injection by all the stimulus programs which helped the banks in a broader sense.
but the underlying problems for bad loans, they're still there and there's clearly still a headwind for the banking system and for some banks in particular, in particular again in the u.s. >> ar june ya, are you in agreement with that ? >> yes. to that extent, i think we are in for a period of intrainspection for the next few months. i think it will be a quiet summer going forward. they're adequately affected in the price. markets have seen basically a pe expansion, a rerating, if you like, back to the pre-september '08 levels which i think are warranted by the current levels of economic activity. certainly in asia we're seeing a pop-up in ex ports and industrial production, etcetera. in china, i think they've done
their bit to aid this rerival. so i don't see many pit falls ahead. the question, really, is would we have sustainability in the longer term? and that unfortunately nobody has a decent handle on as of yet. >> and yet, arjuna, we're putting something under your name which suggests you have a positive view on equities in the next 12 months. is that the case? if so, where do you get your risk exposure? >> well, like i said, the emerging markets are doing some of the heavy lifting here. we've seen an interesting rac t ratcheting up of ex ports in the last quarter and certainly the gdp numbers that have come out from second quarter tends to underscore that point and you're seeing this spreading across all major emerging markets, as well. what is interesting in the u.s. is that ex ports have come off
significantly and the likes of caterpillar are showing gains on the back side of the market. longer term, we also feel that the rising of the savings rate in the united states has peaked. indeed we saw in the second quarter gdp numbers the high savings rate has been adjusted down to 6.4%. so it's not as dire as we thought it was, sort of the retraction of u.s. consumer spending. if that trend continues, then i think long her term, there are green shoots to be seen. >> franz, looking out on a 12-month view, do you see green shoots of recovery? and if you're looking at a more cyclical bias, do you look at emerging bias? >> basically, on the first on the green shoots, we expect an economic recovery into 2010 taking place, albeit a fairly
shallow one, but it is not far from the consensus. as far as markets are concerned, we were continue to tell them into a more cyclical bias. here i'm talking about europe, maybe even japan, which has been a failure, a disappointing scenario so far, a disappointing market given that they are having a strong headwind in economic turns. but still, there, it should be benefiting from the strong upswing in asia that is taking place and that is something which you should collect to play over a 6 to 12 months view. >> franz, good to see you. thank you so much for that. franz wenzel and ar june na mahindra from hsbc. shares of nestle came out at his.
ing is expected to return to the black in the second quarter, but the market number for the dutch group was well below the number analysts had been expecting. ing revealed that its drop in dividend for the year. the group's cfo says economic conditions are still challenging although there is some sign of recovery in future markets. and the future of continental's ceo is in the balance. the board is holding a meeting in hahnover today and will decide the fate. the move destroys an agreement that the biggest shareholder made last year to respect continental's independence. >> ross, the world's largest miner, bhp billiton report add
33% drop in annual profit marking the company's first proof fall in seven years. now, the slide in metal prices and demand calls for the profit to fall through june. bhp says demand looks to be improving, but says it's still too early to tell if that's due to fundamentals or restocking. in london, it is trading down 0.9%. stay tuned to cnbc because our colleagues in the u.s. will be speaking to the ceo of bhp billiton, marchus kloppers. you can catch that around 14:40 cetp.ius kloppers. you can catch that around 14:40 cetp. the arrest of the austral n australians and chinese prosecutors are officially
considering putting them on trial. australia has confirmed the arrest and is speaking legal representation for whu. shares in sydney ended higher. in london, taking a look at how that stock is doing, as you can see, in london it's trading down 3.1%. bertha. >> christine, economists are lining up behind ben bernanke saying he should be reappointed to a second term as fed chairman. in a wall street journal survey, they say there's a 71% chance president obama will ask bernanke to stay on. economists say there is little to be gained by changing leadership as the u.s. comes out of recession. two-thirds believe the recession has ended. they expect gdp growth to remaybe above 2% for the second half of the year. most don't expect the fed to raise rates until 2011 or later.
applied materials reported a smaller than expected third quarter loss and says it's seeing improved demand. their equipment and display equipment picked up. applied materials expects fourth quarter results toot least break even and revenues derived 10% to 20%. although conditions are improving, the ceo says business is still at historically low levels. >> it's hard to tell right now exactly what's going to happen. the u.s. economy has really been trying to get to a bottom here. i think it's very close to a bottom and how people are going to -- both parents and school attendees are going to spend going back to school. we really won't know until probably middle of september. >> amat shares were procedure than 2% higher in frankfurt at this hour they're up 2.25%.
if there's anything you myselfed in our program or in another show, if you want to see more of that interview, check out cnbc.com where you, of course, will find videos, stock information and blogs, as well. >> and still to come on today's program, uk employment numbers are due in around 14 minutes. what will that say about the health of the uk economy?
okay. global equities today are a little weaker as far as the ftse 100 is concerned. a number of stocks have gone ex dividend. there are lots of things for the market to look ahead to. we've got the unemployment report coming in in just under 10 minutes time. the bank of england's quarterly inflation report will be looking at the inflation forecast, maybe get an insight into why they extended into the evening.
4,654 is where we currently stand. stocks are a little firmer right now. the french construction company is higher after being bought out last week. tui travel is lower as well as fresnillo. that's where we stand in london. sylvia has the wrap for us in frankfurt. >> ross, what can i say? the market is flat lining if you look at the dax. on the fundamental side, we're waiting for the fed. on the technical side, the futures market is playing the consolidation story so a bit of pressure on the downside. we had frankfurt out with traffic numbers. they certainly were glum, but better than in the previous month. we've got an interesting piece of data out from the ifo institute, the euro zone business climate. it's really still -- the numbers are still in back for 12:00 our
time. makes very interesting reading because as far as current conditions are concerned, we're still very much in the doldrums. but as far as expectations are concerned, things are picking up speed. 76 points in the second quarter and 93 points for the third quarter for expectations for business expectations. i don't know where this optimism for the euro zone is coming from, but there it is and that makes a better reading from the overall index from 55.1 in the second quarter to 63.6 in the third quarter. that would support the story that the economy is coming out of the trough. but at the moment here, only in the expectations rather than in anything else. overall market, of course, we're still looking at conti and the power struggle between continental and chef ler in hahnover. >> still very quiet for the
french market today. less than 400 million euros traded since the opening this morning. it's much lower than the usual volumes on the market. that being said, in a financial sector, for instance, all the banks are trading lower on the back of ing, which posted weaker than expected earnings for the second quarter. societe generale is up 1.8%. credit agri goal is up more than 2.5%. that's the biggest decliner on the cac 40 so far. on the other side of the board, we've got chipmakers in good shape. smaller than expected loss for the second quarter. st microelectronics up 1.2%. for the month of july, earnings are almost in line with expectations, 0.7% from july last year, due to lower prices in raw material, for instance, prices of energy dropped 18%
from the same month last year and talking about the energy, we had earlier this morning and still now weaker session for the oil sector, including the oil produces total which is almost flat right now underperforming the french market. that's the story in paris right now. now let's have a look at the asian markets with saijal in singapore. morning, saijal. >> hello, stephane. it was a weak picture here in asia. the big loser was the shanghai composite. it fell to a four-week low, down 4.7%. a couple of reasons, one person is saying this market may be overrun and that prompted the sell-off. we had this data out yet yesterday that showed bank lending is falling sharper in july and now have concerns that this could be less money in the market. the hang seng index fell 3%. the nikkei 225 down from a
ten-month low. that market closing down 1.4% lower. banks hold you've as well as the exporters. i want to talk about earnings and specifically bhp because we got results reported at 30% slide in its full year annual profit. first of all, in seven years, this slightly beat expectations. they came in at 10.7 billion. expectations were for 10.2 billion, i should say, u.s. dollars. now, the key thing here is they said on a above side that the evidence for demand seems to be picking up for places like north america as well as japan. but they say they're not sure if that's because of real demand or restocking. they did say restocking in china is pretty much complete. we could see some number of upgrades on this. now, the key or the question mark is the cash flow because they had record net operating cash flow about $19 billion. what they're going to do with
that, the company said they're currently looking at nonorganic growth opportunities. now back to bertha in the u.s. >> thanks very much, saijal. here and around the world, folks will be waiting for that statement from the fed, the announcement due, as it always is, at a quarter past 2:00 new york time. we get june trade deficit numbers out at 8:30 new york time. then at 2:00, the monthly federal budget statement will be released just ahead of the fomc and department store giant macy's reports results of the ohming bell along with liz clay born and sara lee which makes products that range from ballpark hot dogs to kiwi shoe polish. but i just like their sweets. toll brothers reports results before the open opinion shares
i'm christine tan. in asia, bhp reports a slump in metal prices and demand. >> i'm ross westgate. here in europe, dutch financial ing disapoints with a surprise loss in its banking division. >> and i'm bertha coombs. in the u.s., all eyes on the fed and whether ben bernanke and company will say enough risks remain in the economy to warrant quantitative easing. >> that's obviously going on be a focus of the markets a little later. we've got numbers coming out from the uk employment and uk quarterly rates, as well. stock markets have been sluggish because of all of this coming on stream. the ftse 100 is off 0.2%.
the smi is being dragged down by weaker than expected earnings numbers from nestle this morning. right now we want to know what's going on as far as the unemployment picture is concerned. the ill jobless up 220,000 in three months from june. the rate, 7.8%, higher than the consensus rate since october 1996. the claimant counts up 24,900, pretty much bang in line on the claimant count. the lfs to 28,9 3. average earnings, up 2.5% in the month of june. a little stronger, the consensus of plus 2.4%. but the average earnings ex bonus in throughout june is the lowest on record. it was up 2.67 in three months
to may. so that is where we currently stand. the unemployment rate up to 7.3%. tom bozer from national australia bank is with us for his reaction. >> not too much surprises there. if anything, the claimant count was weaker than we had thought. remember, a lot of school leavers are staying on now with prospects in education so poor. on the wage sfront, note a lot of wages are priced rpi which is currently running at minus 4.9%. household income is still being squeezed. >> total unemployment, if my calculations are right, just under 2.5 million at the moment. what are we going to hit, tom? >> we look for about 3 million unemployment sometime next year. again, i think there will be
some delays. we've got a lot of training schemes to come on board. unfortunately we have several large monthses of rises ahead of us. >> we want to learn if they'll give us any clues as to why they extend quantitative easing. what do you think they'll say? >> i secretary inflationary pressures were lower because of the softness of the labor market, wages which are your key real indicator of leading inflationary pressure were going to remain soft so they could revise down their forecast. maybe they've got a slightly smaller output gap than the market is looking for, but overall, innation will be lower because the economy, if anything, has been weaker. >> tom, stick around. we'll talk about the fed, as well, and what they might say coming up in a few moments time.
we ran through the stock markets. let's see what sterling's reaction was. we were lower today, anyway, against the dollar. 1.64. of course, it weakened after last week when we got more quantitative easing. the data is probably pretty much as in the range of what we were expecting. u.s. -- sterling steady a at 0.8595. christine. >> markets here, a little profit taking going on as investors stayed cautious ahead of what the fed might say. the shanghai sxosit is down 4.6%. bank lynding slowed sharply for the month of july. that is raising concerns about the pace of recovery in china. it dragged down the hang seng, as well, down 3%. bertha, it's all about the fed today here in asia.
>> it is. right now we have extended the losses we saw yesterday. dick bove, who said a lot of the banks are operating on fumes and that led to a bit of a sell off. this morning, dow futures are down about 15 points below fair value. lots of caution ahead of this afternoon's decision ahead of the fed. we also will have a debt auction coming just before that. there were be a $23 billion debt offering issuance of a ten-year note, yesterday's three-year debt auction went fairly well by all accounts. so we've got the ten-year yield coming back in this morning from yesterday, what we saw earlier in the week to 3.66%. let's bring in right now tom and you talked about the boe and we'll be looking to see what kind of comments they make about why they're extending quantitative easing.
do you expect to hear something concrete from what the bond program does? that program is due to come to a close at the end of september. would it be good news if they extended it or would it be better news if they said they didn't need to? >> clearly some in the market are calling for a recovery. we think it's far too soon to do that. pe we expect the fed will take the same decision. the problem they have is as soon as they need they've stopped purchasing bonds, we're going to see trains in the esb market and in asian markets. the fed is giving liquidity to those markets. they've got enough head room to signal they might do more but without being explicit about it. perhaps best to come out with a message. >> and as far as ben bernanke, i
don't know if you were among those economists polled, but the wall street journal is out with a poll today saying most economists support him. with alan greenspan, it was a given that he would be renewed that we're not used to this kind of handicapping of a fed chairman being renewed. what is your thought on that as far as ben bernanke? >> well, of course, we have had it similar in the uk with the reappointment of governor king. perhaps it keeps central bank governors honest if they know they have to go through a re-election process. given any recovery is pushed off to 2011, you need to person to got you in here to get you out. perhaps it's no bad thing. >> hey, tom. this is christine here. in japan, data showing wholesale prices sfel a record 8.5% in july. a lot of people are saying that could limit the boj's extent of
how they want to exit. but my argument is maybe they could be forcing the about boj to be taking more stimulus measures. >> you're right in the sense in which what we are seen globally is when quantity teefb easing policies have been pursued, the currencies have fallen dramatically. we'll get a much weaker dollar should the fed announce anything at all. given japan's structure account surplus, which has been widening, if they want to support inflation, they can do something about it and perhaps an extension would be no bad thing. >> all right, tom, good to have you with us as always. thank you very much for that, tom voss sa, head of market economics, national australia banks. iea is just releasing its oil market report.
the iea added signs ooh a bottoming out is patchy. total nymex supply has been revised to the up side to 51 million barrels a day. for more on this particular report, we have david fife joining us now. david, good to have you with us. first of all, in your report, you cited a stronger outlook for asia, in particular demands rebounding in china. is that pick up, you think, from asia strong enough to offset weakness seen elsewhere? >> i think it is going to take time to seep through. we have revised up chinese demand for the remainder of '09 to 2010 to about 100,000 barrels a day. bur it is being offset by a continued weakness in europe and to some extent in the u.s. for the second year running in 2009, we're basically not seeing the traditional seasonal summer driving season in the u.s.
and that is keeping a cap on demand levels overall. >> what is happening with global gas/oil demand? i mean, you sort of highlight normally that's the one that's the key indicator for you, david. >> yeah. i mean, that's looking pretty sluggish and we've seen a shift in the overhang in consumer inventories moving from crude into products. and it's particularly the middle of the barrel, heating oil and diesel and kerosene where that overhang is persisting and that tends to undermined some of the claims for a sharp rebound in industrial activity. so we're being a bit cautious. we see demandover all remaining weak through the remainder of 2009, but then pick up again from early 120. >> yeah. and you talk about your sort of a quiet driving season in the states, david. obviously, everywhere around the globe, people are much more looking at the sort of cars
they'll buy in the future with scrapping schemes. do you think that trend will have sort of a meaningful impact over the next few years? >> i think it will take time to seep through, but you know, we've seen the instance in the u.s., the cash for clunkers scheme there and the uptake of that scheme has been a great success. i think it will take time, but i think even over the next three, four, five years, you're going to see that making end roads into fuel consumption. and, you know, efficiency is something that governments can do something about, can do something to encourage and have a real impact at the margin on gasoline demand and on diesel demand. >> david, in your report, you also talk about the fact that there's an awful lot of regulatory scrutiny and movement to tighten what kind of limits in terms of trading. what kind of impact do you think that would have on the price? do you think that's something
that could actually hurt the market? >> i think we've cautioned for some time now, indeed, we've been talking about this for the past couple of years in some of our reports. we just caution regulators and policymakers to be aware of the potential knock on impacts of what they put in place. what we don't want to do is destroy liquidity in the market and, therefore, i think position limits have to be handled carefully. but i think, you know, the cftc and others who are looking at this are more than well aware that they need to tread carefully there in terms of what they're doing. and they also need to look at, you know, differentials between regulation between different markets. because if you just tighten regulation in one set of markets, then you'll just have a migration of activity elsewhere. so a degree of international standardization is desirable, as well. but that's going to take time to
feed through. all we would say is if you choke off liquidity to too great an extent in any market, you'll increase volatility rather than staunch it. >> david, thank you very much for your views, david fyfe from the iea. many thanks for that. bhp billiton, the world's biggest miner has reported its first annual profit fall in seven years. for more on the earning else as well as how the resources seconder is looking, michael lang from qualm securities company joins us from hong kong. michael, good to have you with us. when you look at bhp billiton's earnings, somehow do you think, you know, how resilient is this miner to the we've seen? >> it can be seen in cash flows.
this again was a growth year on year. the cash on balance sheets increased from $4 billion last year to almost $10.8 billion this year. >> so where do they go, michael? after this sort of slump now, what happens over the next couple of years? >> well, that is the exact question investors should be asking when they look at bhp. bhp over the last year has taken a conservative stance and tried to protect itself against the volatility of commodity prices. that's reflected in the balling. what we're looking for from bhp right now is we're looking for a direction forward. we want to see a change in the conservatism that the board's management team has historically taken and we're looking for a more aggressive stance in the market. we're looking to see bhp use the $10.8 billion they have on their
earnings sheet effectively. >> how much can bhp continue to ride on the china demand or the stimulus we're seeing there? >> well, iron ore demand in china came in at 56.5 million tons. industrial output is 10.8% up month on month. 20% of bhp's earnings come from iron ore sales. the rest of their commodity portfolio is still looking very strong. i agree with bhp's sentiment and outlook that the markets are very uncertain going forward. however, the breath of their commodity group that they have and the strength of their cells i think will continue in the long-term, particularly as china is consuming so many of these gz. >> michael, can we switch and talk about what's going on with rio tinto and the rio tinto staffers who have now been charged? is this something that is impacting the market? is this something that is quelling any sort of activity
from other iron ore producers in the country or is china just too big a market to ignore? >> my personal opinion is on this particular issue, analysts need to have a look at whether or not they think first of all these charges are actually going to stick. and if these charges do stick, what sort of penalty rio is going to face. my personal view is rio would face a billion somewhere from $500 million to $ $00 million. in terms of your second point as to who is going to benefit in this whole situation, vale is currently the beneficiary in the short-term. in january 2008, they walked away from negotiations. i think ultimately china wants to get to a situation where there is an amicable meeting of
minds, so to speak, between the iron ore suppliers and the china/iron ore steel association. >> a lot of things happening behind the scenes we're not aware of. michael, thank you for your views. good talking to you. stay tuned to cnbc because our colleagues in the u.s. will be speaking to the ceo of bhp billiton, marius kloppers. that's at 8:40 eastern. let's turn now to india. ayesha faridi joins us live from mumbai from the india business report. ayesha. >> thanks for that, christine. it's a bad wednesday for the indian economic markets. it's sliced through 4,600, 4,500 and has even broken the 4,400 market in trade today. it's recovered from the low point of the day. just about half an hour can ba, we were seeing 2% cuts for the sensex and the nifty.
the bodder markets reeling under pressure there, as well. in fact, most technical analysts do believe that 43.50 thereabouts is now the next resistance thorn for the market. the big losers in trade are the entire technologies space. you've got realty which is facing a lot of pressure in trade today. so these are the two weak pockets. besides that, a whole hoeft of these heavyweight counters have also been weak. but economic data has been very positive. we have market expectations about 7.8% across the board growth, but currently, the market is more worried about the global weakness that we are seeing. with that, it's back to you. >> ayesha faridi, thank you for that. ross, back over to you. >> continental is holding a
meeting today to decide the ceo's fate. this would be replaced by elmar dagenh art, the head of scheffler's unit. patricia, what's going on? why have things changed? >> well, lutz put it this way. of course things always change when one company takes over the other. what has changed is the question about future strategy and future financing and this, of course, off this meeting and the takeover from sheffler. it's very stormy out here. i hope it's not an indication of the supervisory board meeting which would start around 1:00 cet. one thing for sure, it seems a deal has been struck, some sort
of compromise, meaning not only will neyman will have to go, but also the chairm of the supervisory board and this is exactly where the compromise lies because the reason why sheffler was ousted and what they tried at the last stormy meeting was he wanted to look at refinancing huge debt filed over $10 billion and they need to raise capital. this was more or less not at all at the last supervisory board meeting of $1.5 billion. this kind of capital raising would dilute the holding of the sheffler family. continental is very unhappy with mr. kursa because they think this chairman coming from sheffler is bias because he's a lawyer for the law firm working for sheffler, saying that he represents more sheffler's
interests. today could be decisive. big question marks after front door's meeting if we see both of them leave. what about the refinancing? what about the filing which is supposed to be sacred until 2014? >> patricia, thanks for that. we'll catch in with you a little later. coming up, all is quiet on the equities front. at this hour, trading volumes are unusually low. are traders awaiting the fed or is something else going on? >> yeah. and as far as currency markets are concerned ahead of that, dollar/yen, 95.53. the yen has been higher across the board today.
you're watching cnbc's "worldwide exchange." let's find out where the dollar and euro are tracking. nick, how is the fed going to impact the dollar? >> i think the fed will be good news for the dollar. basically, what we've been seeing here is that since last friday, the dollar was actually doing quite well on the back of good payroll figures coming out of the u.s. people were starting to think hold on, things may be out changing here, maybe instead of a risk aversion being good for the dollar, that's going to be bad for the dollar. so good news coming out of the
u.s. will help it. i don't care there's going to be that sort of change going on here and i think the status quo will continue in the sense that as far as the fed is concerned, it's probably going to give a far more cautious view of the u.s. global economic recovery. you know, that's hardly surprising when you actually look around the rest of the world and see, really, what's happening. i mean, you can look at china. we've had some news out of there today that's not particularly positive and sterling has been reflected and things like the shanghai composite is down a nasty 4.7% earlier. so i think the fed is much more likely to give a more cautious, dovish assessment of the global economy than a lot of people were expecting. and the rest of that, this whole business, and we've seen risk aversion returning, the fact that people are going to be more careful will play in the dollar's hands again. that's my story.
>> nick, clarify your story for me. it seems as though if the data starts looking good, then people will trade the dollar on fundamental and say, okay, this is a good play. it will be strong. but if the data is bad, then we'll be back to risk aversion. >> so what is the bottom -- the bottom line there is dollar wins, dollar wins. >> you think so? because the dollar seems to go down even when we're -- >> the dollar is having a rough time. this is the whole thing. it's this response to risk aversion, this response to whether or not the dollar is a safe haven at bad times and whether or not this will continue. people thought this was going to change on friday because of the payroll figures. the dollar benefited from good news, something it hasn't been doing before. but i don't think that that basic correlation has twaelg changed here, bertha, in the sense that the dollar should continue to benefit from the
fact that, you know, this economic recovery is not going to be as strong as people anticipated and investors are going to start becoming more -- once again, becoming more risk aversion. we've seen commodity currencies amongst the currencies like the aussie dollar and the canadian dollar. >> all right, nick, thanks very much. i'm not sure whether the dollar does well when things do well or whether things do badly. we'll have to keep watching. nick hastings, thank you. still to come this morning -- >> i like that debate. coming up in the next hour of "worldwide exchange," we will bring you up to speed with all the top stories making headlines across the globe. >> plus it's auction week for treasury bonds. we'll ask our next guest what the appetite for the crucial ten-year note auction is today.
i'm county ask the. i'm christine tan. in asia, bhp billiton warnings of slumping prices and demand. >> and i'm ross westgate in europe. the dutch electric is group reports a surprising loss. >> and i'm bertha coombs. the fed is front and center today the and the big issue, will ben bernanke and company say more quantitative easing is warranted?
hello. if you're just joining us in the united states, welcome tort start of your global day with "worldwide exchange." we broadcast live from the u.s., asia and europe. so far this morning, u.s. futures have been pointing to a continued slide. we did see that slide yesterday on financials after analysts dick bove said he thought a lot of the banks were operating on fumes and we also had that congressional oversight panel expressing concerns about banks. right now, though, we've got futures fairly flat. we've got dow futures just about three points below fair value or so. of course, a lot of caution ahead of the federal reserve statement that is due out at 2:15 new york time. as usual, watch the street signs to get that decision live. taking a loot at bond yields, in germany, we've got the ten-year bund at 3.44%. we've got in-line figures coming
out of the uk. taking a look at the ten-year note, we had yields come in yesterday after a successful auction of three-year notes. that went pretty well and had good foreign demand. the critical ten-year auction today happens one how have hour ahead of the fed. yield right now at 3.66%. ross, it will be a big day for the bond market. >> absolutely. already a bit of data out in the uk. unemployment in the uk, the wider measure up 220,000, so we're inching towards 2.5 million in the uk in unemployment. the claimant count pretty much as we expected, as well. the unemployment data data is nudging up. industrial output down 0.6% on the month. minus 17% on the year and that is weaker than forecast. we're looking for dips -- sorry,
to rise 0.3% on the month and an annual drop open minus 0.2%. so the industrial output is still weak. and fought as good as we thought it would be. on the stock markets, bouncing off their lows today, european stock markets two hours into the session, we have gains for the xetra dax at the moment. autos, health care, media and retail, we're seeing a little weakness in other sectors today, particularly food and beverage on the back of nestle figures disappointing. on the currency markets, the yen has been stronger across the board today after focusing on what's going on in china. christine will talk about that. but the yen has been a beneficiary. dollar/yen, 95.59. sterling is weaker against the dollar. looking ahead to the inflation report coming out from the bank of xwlnd in half an hour, christine. >> it's all about the fed, fed, fed, here in asia today. data sidelines, just waiting for
what the fed will say and do. taking a look at the markets, the nikkei 225 really pulling off or coming back from ten-month highs yesterday. down 1.4%. the kospi down 0.8%. the shanghai market tumbling today, down 4.6% on concerns that much of the lening driven economic growth in the first half of the year, you know what, may not continue into the second half given the mixed data we saw overnight yesterday. the hang seng is down 3.03% and the bombay sensitive index down 1.1%. in terms of oil, this is how the picture is looking. we did get the iea report now, tumbling -- falling 37 cents, $69.08 a barrel. and brent is off, as well, off 58 cents, $71.88 a barrel. ross. >> okay. joining us now we have some of the issues of the day, chief strad strategist.
we've got the calling inflation forecast a little later, which we'll talk about. let's start off with the fed today. what are they going to do when we hear from them? how is that going to impact risk appetite, do you think? >> i think overall it will be a slightly negative for risk appetite. there are three things we need to watch out for. what do they think about inflation? are they going to continue to say it's not a problem? are they going to continue overall to issue a slightly negative assessment on the economy? and last but not least is what are they going to think about the asset bursting program. are they going to say we're going to stick to the current program without setting a time for the new program if there is a need to? these are the three things. i think it's going to be a balance between the three things. i think overall, i can they're probably going to say -- i don't think that they're going to announce a new purchase of a treasury. and the market may exaggerate
from that, the bond market may take away that, oh, it could be nearing towards the exiting of the current strategy. so i think that probably bonds could sell off a little bit. and i think that basically i think bond yields may edge just a little bit higher. however, i do think that the stock market is going to do the bringing down of yield for the fed. the stock market -- i think the stock market may be a little bit nervous after that because they said there's not going to be that much quantitative easing any more. probably the market may be hurt. yields will come back down. i think the dollar will be pushed a little higher. >> i was going to say, i was going to ask you about the dollar. it's interesting because we were wondering whether things have changed for the dollar, whether we're now focusing on the prospect of interest rates climbing at some point next year and therefore risk appetite in terms of the correlation of the stock markets going up and the dollar down, vice versa is now breaking down. will this be a key event in
deciding that? >> not really, no. as long as we do not get a clear signal from the fed, what it's going to do regarding the purchases of a treasuries, i think the same relationship, the same relationship between the dollar bond yield and stocks will continue, meaning we may see a slightly higher u.s. dollar. and i think that bond yields are going to have to actually retreat a little bit. why is that? mainly because of nervousness from the stock market. this strong market that we're seeing, what is it doing? it has capped the commodities, the crb. now they're moving from a capping process to a retreating process. i think that is helping to bring down further the shanghai index. the eye mergeling markets and these accelerate the rebounding process in the u.s. dollar. it's true, last friday we saw
both the dollar 0.stocks going up and yield going up. i think the dollar is going to continue to push higher, but the reasons are going to change. it is no longer going to be improved economic prospects. it's going to be risk aversion. this decline we saw in shanghai is very hard to ignore and implications of the sensex in india and in brazil yesterday started to retreat. i think when we go down at the end of the summer, it's going to be more a risk aversion and the dollar is going to gain mainly against the british pound and the canadian dollar. >> ashraf, what does that portend as far as for the u.s.? a strong dollar in this case would be bad news, wouldn't it? >> yeah. it would be a bad thing, bertha, if we're talking about 7% to 10% increase in the u.s. dollar from now, from these levels. do i think it's going to happen? probably not. you know, when you look at the
other side of things, what does that mean for the euro? unless we break below 1.37, i don't think we're going to be preoccupied with the negative repercussions of a stronger dollar yet. but it is a very good question that you raise because now we need everything we want from earnings and with earnings going up mainly because of cutting costs, do we need every bit of help we need, that is from a falling u.s. dollar? you're right, it's not going to be there in the next earnings season, but i don't think it's going to be a major problem. >> ashraf, great thing, you'll be with us throughout the hour. so sit tight and we'll come back. we have much more to come on the program. coming up, sterling has been under pressure. the head of the bank of england inflation reports. we're going to go live to the uk central bank as all the details
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debt? joining us now to discuss is anthony gibbs. he's a senior broker and ashraf is still with us. the expectation, anthony, is that the fed will say we're not going to buy bonds any more. i don't know if we have a chart, but it seems as though that program didn't really work so well if the point was to keep rates low since they announced the program back on march 18th, we've seen the ten-year rate get much closer to four when it had been below three. >> yes. well, i think the -- i think the real benefits of qe has been to prevent rates going up because at some stage, the inflation risk in the u.s., the treasury market will tell the fed that they have to act and put rates up. we're some way away from that at the moment, but if you have qe basically in the short run interferes with the signal that the treasury market will give to the fed.
we've seen this in the past, that the fed will have to put rates up and they'll be forced by the treasury bond yields rising and the curve and they want want to try and flatten the curve at some stage. obviously, when you have steep curves and qe taking place, this distorts what would happen normally in a government bond market and government bond markets in the past have told the authorities, we're telling you now that you're behind the curve. honestly with qe, it distorts this situation, it postpones the event and makes it more difficult tore forecasters to work out when they have to take it and exit strategies and all these things. until the qe stops and we know it stops, then the market is going to have a rather nasty reaction. and i think yields are going to rise substantially. >> but they don't want yields to rise substantially now. therefore, do they have to nod the improving data without giving any detail about it? >> yeah. i think the output gap is so
wide that this gives them time before they have to again i couldn't sayinly worry about inflation. but we've seen that there's an article i think from one of the ex state governs basically pointing out the situation of where inflation expectations were. and you've seen from 2008 how they've rapidly risen and houbl haven't fallen back. so at some stage, you'll see a situation and the qe is coming to an end and that is the thing where the fed has to tread carefully. if you cut rates to a level where they can't go down any further, meaningfully, you then introduce qe. you would think the mirror image would be to start taking qe off before you start putting rates up. >> let's bring ashraf in here. it's interesting. you mentioned the uk. i word whether there's likely to be in inbuilt disa-appointment
if the dead doesn't say we're doing more because the bank of england did it. but the press would certainly build that up. >> yeah. for the case of the fed, i think -- like i said earlier, there are three elements. if the fed says we're stilg still thinking that inflation is not a problem, and we're still thinking there is weakness in the economy and we are going to be aggressive in announcing a new batch of treasury buy, then i think that will be sort of really overkill for this thing called the u.s. dollar and i think the dollar may come under severe pressure. but the question i have for you, anthony, is going back. there's been a lot of emphasis here on quantity. what about the element of time? which is basically how long it will take for the new batch of 50 billion to elapse. they could probably give exercise the choice to buy those over a slower period of time, over a longer period of time, that that in and of itself may
be described as sort of less easing, so to speak. no? >> yes, indeed. i think part of the surprise to my mind was the fact that the $50 billion is going to be completed in a three-month period. obviously, they did 125 in a short period of time. it could effectively a longer period, but it's still a short period, only $50 billion. and the feeling is that this will be the end of it because, you know, originally 150 was authorized. they did 125. they've only actually gone back and got another 25 billion. so it isn't huge. i mean, the numbers are very big. the reality, the extent of it is -- >> yeah, could the same apply for the fed? could they just do what they've god got to do in a longer period of time? >> the fed has an advantage which the uk didn't have, which is the many more liquid markets in the states where the uk has the guild market. so the emphasis has been on the government bond market where the u.s. has been in a different
process with the asset purchase scheme spread into many different areas which hits the target far more effectively than the uk's version. that's probably the reason why we feel the fed won't extend because they've had a more effective qe program and it was big perpendicular. >> i agree. there's a lot of talk about the treasury component of that program. or about mortgages. they still have -- they have not touched much of that target at $1.2 trillion. but it's interesting because the current program is going to run out in september. and to what extent will the bond market interpret that as crawling towards an exit strategy? >> well, we'll leave that one up in the air. anthony, thank you so much for joining us. ashr ashraf, sticking around. >> right. the winding down of earnings season, waiting on the fed or
of 25, 30 points at the moment. it's rounding off the bottom this morning. we're getting some gains in a number of stocks, particularly vg group today is doing fairly well. we had unemployment figures came in pretty much as we expected, the wider measure continuing to fall. we're down near 2.5 million, total jobless in the uk. there's no pressure at all in terms of wage inflation. so that might well be highlighted in the quarterly inflation report. sylvia is in frankfurt with an update on that market. >> before we head into the equity markets, just a quick number on the line that we had before, the ecb with its so-called quantitative easing. they've published numbers only late yesterday of the $50 billion covered bonds they wanted to buy, they bought, hang on to your seats, 5 billion so far. that's an awful lot, isn't it?
in terms of where we're heading on the market, we're flat lining, but with a positive tint at the moment. it's a market driven by the technicals on one side. we have consolidation modes and we're waiting for the fed. that's a reason to sit on the fence and do nothing. we had numbers out for e.on. we had numbers out for commerzbank. traffic numbers from halfport, they weren't bad. ifo coming out with euro zone business sentiment, that is dramatically better on the expectations from a reading of 76 to a reading of 93. but current conditions are up sugar creek or down sugar creek, whichever, with 23 points or so. but there is -- there seems to be all indication that we're
coming off the trough. and we've got board room drama at continental. so a mixed bag out there. stephane, how about paris? >> it's way below the average level we have on the french market. still, a mixed session for the cac 40. up 0.2% right now with still the financials dragging the french markets lower on the back of ing numbers, which were lower than expected for the second quarter. societe generale, credit agri goal trading lower, as well. on the other end of the board, we have one of the top gainers on the cac 40 which yesterday in the united states posted a lower than expected loss for the second quarter, so that was positive news for the whole sector for the semi conductor, st micro, the second biggest gainer up 1. 8%.
it's also a day with economic data in france. we have inflation figures for the month of july. prices were up 0.4% for the previous month and 0.7% from a year ago. this is due to lower price of raw material including lower prices for oil, the oil companies are trading lower as is the case for total after the price of oil declined yesterday for the fourth session in a row. let's have a look now at the asian markets. >> the shanghai composite falling at a week low. concerns with drop in lending. the data came out yesterday and that could mean less money flowing in the markets. you saw that spillover effect into hong kong, the hang seng index ending 3% lower. japan's nikkei 225 down 1.4%. we saw sell-off in the banking stocks as well as the exporters.
just a mention of suporro, this is a brewer. what was interesting is they denied a nikkei report. but just out now, they have agreed to buy a 21.65% stake in beverage company poka. they didn't name a price. analysts had speculated that the price would be around $10 billion yen. bhp reported a 30% slide in annual profit. first of all, in seven years, the net coming in at 10.7 billion. seemed to be expect ages of 10.2 billion. kia motor reporting results, in fact, posting its best profit in 5 1/2 years. now i'll send things back to bertha in the u.s. >> thanks very much, saijal. here investors are going to get a couple pieces of economic data while waiting for that fed announcement which is out at 2:15 new york time.
in the morning ahead of the opening bell, the gap is expected to widen by nearly $3 billion to just over 1.78 billion dollars. the federal budget is also set to be released. and we're going to get earnings from macy's. acid will liz claiborne and sara lee, who makes everything from ballpark hot dogs to kiwi shoe polish. i don't know how that all blends in. meanwhile, toll brothers will be reporting results before the opening bell, as well. analysts are looking for more declines and revenues for the home builder. shares are down about 4% year-to-date. that is your global stock watch. >> still to come, will there be
it is just about half past the hour. here are the tom business stories from around the world. in the u.s., all eyes on the fed and whether ben bernanke and company will say enough risks remain in the economy to warrant further quantitative easing. >> in europe, dutch financial dis appoiappoints with a surpris in its banking unit. >> and bhp reports a slide in annual profits for the first time in seven years. they cite a slump in me get metal prices and demand. >> hello and welcome to "worldwide exchange." if you're just joining us in the u.s., we have a lot of kaet now. we're waiting on the bank of england which is going to hold a press conference to talk about its rate decision and quantitative easing decision
recently. in the u.s., futures have been fairly flat as you would expect on the day of major fed decision and fed statements. that is really what everyone is going to be watching for this afternoon. right now we've got dow futures just about a couple of points below fair value. taking a look at the tep-year yield, it's going to be an interesting day. we had a successful three-year note auction yesterday, massive $37 billion. but today, the ten-year might be really hard to read today because it's coming just an hour ahead of the fed decision. it's a $23 billion offering, but it's going to be very difficult to rooi read what kind of demand because people are likely to be pleasant wait to go hear what the fed is going to say. that program is due to end in september. how is it looking in europe at this hour? >> we're a little mixed because
of everything we're about to hear. we're just getting that inflation report from the bank of england. i'll bring you snaps of what we've gone go the as we teen in to what mervyn king has to say. >> confident has recovered someone from its collapse last aus item and can strains in financial markets have eased. around the world, the policy stimulus has been extensive. at home, bank rates have fallen almost to zero. the mpc has announced a program of asset purchases totalling 175 billion pounds and further, hundreds of billions of pounds have been directed to supporting the banking system. nevertheless, nominal indicators remain and the balance has a long way to run. the activity in the uk economy has continue to fall. the level of gdp is around 6%
below its peak and manufacturing output is more than 10% down on a year ago. unemployment continues to rise. the recession appears deeper than the mpc thought likely at the time of the may report. but as the impact of destocking has turned around and the effects of the lower exchange rates and the policy stimulus have begun through, the pace of retraction has moderated. it's likely that output stabilized in the middle of this year and business surveys and other short-term indicators suggest that growth is more likely than not to resume over the next few quarters. nevertheless, given the depth of the recession, to erode the margin of spare capacity that has been created will require an extended period of robust growth. and the sustainability and
strength recovery will be affected by necessary balance sheet adjustments, household and public secretary erps. recovery could be slow and protracted. the policy committee has a nominal target, 2% for the measure of cpi inflation and the nominal side of the economy has been especially weak. the growth rate held by companies and households has fallen from an average annual rate of about 8% in the five years before last you a item to 2.5% now. total money spending in the forty kwarers to 2009 q1 fell by 4%. a fall of that magnitude has occurred in only two other episodes since 1900. and if it persisted would be inconsistent with meeting the inflation targets in the medium
term. that is why the mpc has been taip taking action to inject money directly into the economy. the aim is simple. to increase the supply of money and so boost nominal spending in order to meet the 2% inflation target. in turn, that will aid recovery. the ability to conduct asset purchases to boost the supply of money does not depend directly on the banking system's ability to lend. but constraints on the supply of lending will diminish its effectiveness in stimulating a recovery. it will take time for banks to repair their balance sheets and they face considerable challenges in replacing those sources of funding that dried up in the financial crisis and the temporary support provided by the public sector.
our continuing operations in corporate credit markets are helping to ensure that for some companies at least an alternative source of finance is readily available. the financial sector is the most obvious, but not the only sector that is likely to restructure its balance sheets. households may face more in financial crisis or may continue to buffer savings to garner against times ahead. and the public sector will over time need to adjust its finances to a more sustainable position. such factors mean that the pace of recovery over the next few years is highly uncertain. chart one on page 6 of the report presents the committee's best collective judgment of the
range of outcomes for full quarter gdp growth assuming the bank rate follows the part implied by interest rates and that the stock of purchase assets financed by the issuance of central bank reserves reaches 175 billion pounds and remains at that level throughout the forecast period. the stimulus to demand combined with the turn around in the stock cycle and the effects of the depreciation of sterling is likely to drive a recovery in activity. but the likelihood of a prolonged period of balance sheet adjustment in the financial private and public sectors means that the committee judges that the risks are weighted towards a relatively slow recovery. chart on page 8 of the report shows the the i to inflation
under the same monetary assumptions. in the short run, inflation is likely to be volatile. >> below 1% in the you a item of 2009. they say with the qe and bank rates on hold, it's likely that the inflation will hit their target in mid 2011. they acknowledge that they see some slow economic recovery. the timing of which is uncertain. but here is the key thing, credit conditions are likely to remain restrictive. high levels of public 0.private debt will slow spending. the gdp forecast is a little higher than it was in may and at the risk of a sustained economic contraction has reduced but effectively, the economy should grow on an annual basis towards the end of the year, but they're still being very cautious about the growth rates. ashraf is with us. your reaction to what mr. king has said? >> he's doing a good job of explaining the surprise we saw last week, which is to expand
quantitative easing. he's saying we need that to try to go back to normal. the traders looking at this, they want to know does the bank of england think inflation will be below the target? it will be in a three-year period. but on a shortened basis, there's a risk that it's going to fall below 1% as early as the fall. but he did also say, like you said, the conditions do remain tight. i think that on this sterling that is more of a negative impact, even though sterling is holding above that key level of 1.64, i'm not sure what the guilds are really doing here. but again, when all said and done, you know, next week, you know, you'll be looking at this. it's, again, the period of time over which is going to do this quantitative easing. but i think this is a very good job. i think ben bernanke and his friends are watching this and how to be perfectly balanced in issuing the policy statement and is doing a very good job. but still, at keeping balance, but i think it's a little bit
slanlted to saying that the risk remain to the downside. >> yeah. there's one comment here, bertha, that will lead us into the next discussion, mr. king saying it's very conscious that this extraordinary stimulus will need to be withdrawn at some stage, of course, which takes us right into, you know, what the fed might have to tell us. >> that's right. speaking of which, let's bring richard sparks into this conversation. he's coming to us from cincinnati. one of the things i found interesting about what mr. king said, richard, was that quantitative -- these asset purchases that the mpc is doing have a limited impact if the banks don't lend. that's one thing we're saying here is that the u.s. and the fed, they've bought up bonds and the yield have gone up over the last few months. they continue to buy up mortgage purchases and the banks are very
restrictive in terms of lending. >> you're absolutely right. every time you have a crisis of the proportion this has had, you're going to have a reaction trying to ensure that going forward, an individual, a company or even a large sector is protected from my risks going forward, that they will slip back now and into that morass. you see banks that are very hesitant now. even if you take et down to the individual level, you see that the data shows that people are saving, especially in the united states where savings are very rare. you see people saving at an unprecedented rate. people are hunkering down in order so they can weather whatever storms come on the horizon and it's going to take a lot of time as the gentleman from london said in order to see
this through. it could be very protracted. but the biggest risk is that the money that's being pumped into the system isn't being put back out there in order to stimulate spending. >> all right. i'm going to put this question to both of you and ashraf. what is the perfect statement that the fed needs to give this afternoon with regard to what it's going to be doing about quantitative easing? starting with you, richard. >> well, in my opinion, the markets always look to stability to be the factor. they don't want to have to guess. so i think the statement needs to be very clear. it needs to be balanced. it does need to, i think, address the issue of -- which i don't know if it will, that we just talked about of whether or not the banks are actually using the money that's put into the system.
>> this needs to take note as far as what we are having in the labor market and the jobless claims without to exciting the bond market. basically, when they do that, they are probably going to have to say that the risks do we main to the down side, we'll still expect a contraction into the end of the year and i do not think they should be very specific as far as what they're going to do with the asset purchase program and either they will have to specify a time as to whether to buy more or whether they even have to buy more. i think they just have until september and i think they should use that. they should not trigg thor an excessive decline in the u.s. dollar nor excessive -- nor a trigger an overshoot in the bond
yields would seem to be on an upward trajectory. however, bertha, i think what is interesting, i said earlier, i think that the prolonged risk aversion falling a global market, they are going to do the job for the fed in bringing down yields or i guess and preventing yields from revisiting that 4%. >> richard, this is christine here. as you all try to second-guess what the fed is going to say and do, what do with your investment strategy in the meantime? >> well, first off, i don't think it's a good idea to focus too much on the short-term. this fed announcement is expected to be more focused on what they say rather than what they do, which they're expected to do very little. so i think you need to focus on strong sectors in the market and focus on a little bit longer time frame so that we can kind of weather the storm. as i said, if the recovery is protraekted, we're going to have
some ups and downs and so taking the longer term view, i think, is the much better way to do it. >> richard, we're going to leave it on that note. thank you so much for getting up and joining us this morning. ash love is going to stick with us for just a little longer. still to come this morning, the bank of england has delivered its assessment of the british economy. now the markets are waiting to see what the fed's conclusion is. and as a progressive customer, you get to use any of our concierge claim centers. so i can just drop off my car and you'll take care of everything? yep, even the rental. what if i'm stuck at the office? if you can't come to us, we'll come to you in one of our immediate response vehicles! what if mother won't let me drive?
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okay. before we look at the final session, a final thought from ashraf. >> ashraf with, do you think wh happens to emerging markets is going going to drive us more than other events? it sounds like the tail wagging the dog. >> yes. if you could look at the impact on the dollar from commodities. for the good reasons, for the good economic numbers rather than just fear. every since that composite index has fallen and has been unable
to recovery that one single day in three or four days and it has now backed down to the lowest level in three or four months and we're seeing, you know, india, we're seeing the russian index coming back down. rather than just looking at what defines risk appetite from the g5 equities, you want to look at the emerging market equities because these are the users of cash. cash is usually denominated in u.s. dollars. when these guys say, we have to take a break, we have to come down, this risk aversion goes back to the yen. but it will go back to the dollar and that's why we are seeing this. this is very interesting because if you look at the dollar index, you know, the one against a basket of fixed currencies, it was looking at that 72 level, it reaches a double bottom and it came back up. look at the crv index, a commodities index of a lot of commodities. it had a double top. it has to come back down. oil couldn't do much more above
73. we are back again to the same old story. a rising dollar for the wrong reasons, for fear, not for cheer. ashraf, thanks for joining us today. >> a lot going on today to follow. joe is going to tell us how we're going to cover it on "squawk box." >> thanks, ross. a former fed insider is going to tell us about the options that ben bernanke and company might have right now to guide this decent hopefully economic recovery. our guest host, though, standard, nouriel roubini. he saw the recession coming. when he's on, it's usually doom and gloom, but this time he may be letting at least a ray of sunshine in and revising or at least clarifying his tune about the u.s. economy. but faber is the editor and publisher and gloom, boom and doom. marc faber here, he'll give us a
short-term look for the markets and what's working right now. you usually, even though there's a boom in there, there's usually some doom associated with mr. faber's outlook. and also the black swan theorist, nassam tabel on how this will rank. they call it the great recession as if that's what we're going to stick with. we have the ceo of global mining giant bhp billiton. we'll get his outlook on everything from the dollar to the global commodity prices which are obviously linked even more so in recent weeks. "squawk box" will start right at the top of the hour after a weekday yesterday led down by the financials. so we'll see whether we can make a stand here and continue this uptrend or maybe we're going to consolidate a little here and take a breather, ross. i know in europe, nobody is around in august.
but that's your right to do things -- ig that that's your right. sun tan lotion is good to go long in august. but here, we pretend we're working here in august. >> it's a faint, right? it's a faint. those three guys you've got, you've got roubini, faber and tabel, if they all say same thing, request i'm not sure if that would be a counterindicator or what. but that's a good lineup, joe. >> we're going to call it dooms day webs, but maybe that's -- i don't know, do we get viewers when we're preaching doom and gloom? i don't know. we have some rays of sunshine. >> if they have a positive tone, it will be interesting. good to see you, joe. looking forward to the program. >> before we get glum and gloomy, we're going to jack bur regionan for a look ahead of what to expect today. these days, wouldn't it be great if saving money happened
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"squawk box" is going to have the three horsemen of the apocalypse, as our producer calls it. what's the best stigz of the fed? should they say they're going to end it? should they say they're going to continue? which is the best thing? >> bertha, i think they have to say they're going to end it eventually. everyone is looking for a strategy. the question is how are they going to word it? that is one of the few things that we're looking for out of the statement and will be looked on favorably by the market. >> the other thing that will be critical to watch, we're going to have ta ten-year auction. do you kind of write off that auction if demand is week? >> either way we're going to have to pay attention to the 10 and the 30. we were the old all that interesting is going to streak ahead to the curve. let's see if we're surprised now.
it seems different this time. we saw what happened in asia last night. we're starting to feel the market turning just a touch. there might be more knew jans playing in this auction than, say, the last couple auctions. and as far as equities, jack, do you think are we just seeing a breather here or could this be the saturday of something bigger as far as a pullback? >> the big question, bertha. i think what we're looking at right now is we have to take a big step back from the october '07 high and to the march '09 low. we've just seen a perfect 382 retracement to 1015 is in the s&p. for all you technicians out there, that's exactly what you would want and i would take a quick 5% to 15%. but i am not all that friendly with the market with these levels, probably leading right into the three horsemen. there you go. >> terrific. thanks so much, jack. jack bouroudjian, thank you so much for joining us from the cme. that's it for this program. for christine and ross, i'm
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