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tv   Worldwide Exchange  CNBC  August 6, 2013 4:00am-6:00am EDT

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hello. welcome to "worldwide exchange." i'm ross westgate. your headlines today from around the globe. europe is in the red after asian stocks excluding japan hit a two week low. the italian market trying to buck the trend ahead of its gdp in an hour. homes is where the heart is. an exit from the periphery boosts second quarter profits, focus also on the banking sector, standard charges due to report in 15 minutes. and let's keep talking. hedge fund investor dan loeb wants to continue the dialup with sony after it rejects his plan to spin-off its entertainment part.
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and australian central bank cuts. the aussie dollar rises with more to come. all right. warm welcome to you. another two hours of "worldwide exchange" to come. we kick off with a little bit of data out of italy. june industrial production not rising as much as had been forecast. the june industrial output up .3% on the month, down 2.1% on the year. it was seen rising up .5% on the month, down 3.2% on the year. and, of course, that will set us up for the gdp a little bit later. we will be in italy ahead of that. also, as i say, on today's show, we'll speak to rbs.
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it won't be enough to topple the aleta coalition. low cast airline easy jet gets into the business. we'll look at the food revolution at 11:20. and amazon founder jeff bezos agreed to buy "the washington post," the paper battles falling circulation. what does this mean for the business of media? more analysis with bertha coombs from the states. and also, we take the pulse of the solar industry with edward guinness, ceo of guinness alternative energy fund. got any thoughts or comments, please e-mail us, we kick off in the corporate sector. a bit of a sell-off for want of a spin-off. sony shares dropping more than 5% after the japanese firm rejected investor dan loeb's
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plan to spin off part of its entertainment arm. some losses after the hedge fund said it would keep talking with sony to find more shareholder value. in a letter to third point, the ceo defended keeping full control of the entertainment unit, saying it helped to drive synergies. sony agreed to sharpen its earnings picture when it comes to disclosing movie and music revenues. you said they wouldn't really bend to dan loeb's influence. where does this leave him now? >> well, i think the fact of the matter is that if there is more recognition about the fact that the japanese companies move a lot more in stake holder theory rather than shareholder theory, i think there will be less of the incidents happening. unfortunately i think that is not the case. now, where will it leave sony? basically they would have to continue to pursue the future growth pillars.
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in other words, they did very well this time around with their focus into higher value-added tvs and smartphones, et cetera, and for that reason they turned into black. but the thing that the investors are really look forward to is what they're going to do in transitional type of changes to take place in the future. and that's, i think, one of the things mr. loeb is also aiming for, what they're going to do in the future, especially on the growth areas such as entertainment. >> yeah. the question is whether they, you know, loeb is saying maybe marrow your product portfolio. should they be doing that? >> possibly or diversification. but what they really need is a focal point, scrap and build is something they now have to do because obviously sony cannot regress back into the areas of virtual integration like panasonic. they cannot do that. at the same time, they become far too big to become regressing back into the inonovative sony they were ten years ago. they're caught somewhere in between and they need to show
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direction of where they're going or they'll regress to being a niche player, or diversification which they claim, but really hasn't shown the fruit of what they have been targeting so far. >> as you say, they see the entertainment unit as an integral part. they see it as something that can aid success in the electronics division, the question is, they have so far failed to leverage position and content production to improve performance in consumer electronics. i mean, do we question -- have to question whether that is actually possible? >> well, i think synergyism between the two, i think there has been more of a cannibalization than anything else. i think the management task is really to reveal that this is actually possible. but, again, the methodology of that or the witness of that has really not been seen with sony and that's probably one of the reasons the investors have been frustrated over the years about the synergism of sony.
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and, again, this is partly due to the lack of directions and directions being indicated by the managerial strategic apex. >> it is a difficult choice. because if they do go smaller, i mean, there is, you know there is a list of companies, nokia, blackberry, who had very narrow definition of what they do in a product line and look what happened to them. >> well, i think sony cannot regress back into the -- considering the diversification already made and the size they already reached. such companies have made a transitional changes into other focal points. all the successful companies have done that. but we're not seeing seeds of that yet in sony, that's the frustration. they're doing well in the conventional business or regress back to a certain degree, we all know that's short to midterm goals and what we're looking for is long-term transitional structural changes to take place. >> very briefly, what would you invest in -- what do you think of the stock and the value in
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this company at the moment? >> well, we have a buy on this one, but it goes back to the questioning of the long-term strategics. many are waiting with expectation to come up with a lot more fruitful plans for the future, although we're not seeing this at the moment. >> sugiro, thank you for that. director of mizuhu international london. jeff bezos is buying the washington post publishing business and the namesake paper for $250 million, which would end 80 years of ownership by the graham family. he says this is a personal acquisition and is reassuring post employees and readers he'll preserve the journalistic tradition. donald graham said he and his niece decided to put the business up for sale earlier this year after looking at the books. they discussed a deal at the ail
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alan and company meeting in july. it will eventually change its name. shares topped $600 in after hours. the first time above that mark in five years. washington post very well known publication, top producer in the united states. the fallout from terrorist botulism scare rages on as product recalls continues. the fear is that it could have contaminated other products. in hong kong, 80,000 cans of cow milk formula are being pulled off the shelves. new zealand prime minister wants an in depth probe to find out what happened. fronterra closed up more than 1% after yesterday's sharp sell-off. now, costs $230,000 to make, and three months to prepare.
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and it flipped out of a petry dish this is the world's first synthetic burger, being cooked and eaten in london. scientists grew it from cow stem cells before adding a dash of beet juice, saffron. picking up the check for the project was google founder sir guy brin. it is meat, but not as we know t we have been asking, would you actually eat the burger if you had been offered it? it is gone now. join the conversation at "worldwide exchange," get in touch with us, e-mail us,, tweet at @cnbcwex or direct to me @rosswestgate. and if you're a vegetarian because you don't like killing cows, or calves, would you eat a stem cell burger? interesting. right. let's kick off today's global market trades with a look at where we are in europe. weighted to the downside now as
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you can see. decliners outpacing advancers about by 5 to 4. not huge losses for the dow jones. ftse yesterday, ended up around 46 points. we're down 14. another .2. xetra dax pretty flat as is the ftse mib. gdp data to look forward to and the ibex is up .15% as well. yes. .15%. the dow is down 45 points. nasdaq up for the final straight session in the united states. bond markets, we saw treasury yields yesterday around the 2.6% mark. just a little bit higher, 2.64%. not much reaction really during the session to the ism, nonmanufacturing index, slightly better than expected. ten-year gilts, look at the production today, still just below this 2.5%. italian yields lower today at 4.25%. now, big focus on the currency markets. australia in a second.
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elsewhere, euro/dollar, 1.33 mark. dollar/yen, still with a .98 handle. focus on the aussie/dollar, up around two-thirds of a cent today. australian central bank made cuts, and with more unemployment they cut by 25 basis points as expected to a fresh record low. mining boom has been tapering off. the central bank says global growth could pick up next year and a lower aussie/dollar may help exporters. but no clear signal on further cuts. so the ultra dovishness was removed and that's what helped send the aussie back off the three-year lows that we had. as far as the overall is concerned today in australia, still despite that just down five point points. elsewhere, the hang seng down 1.34% with the kospi and the
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nikkei having a better day of it, up a percent today. the yen retreated a little bit. also a reuters story that a japanese pension fund was looking to buy more stocks. that helping out the japanese story. now, as far as some other stories of concern, the french bank's bottom line is relieved of priovisions for its greek business. we'll get the latest from paris when we come back. [ male announcer ] i've seen incredible things. otherworldly things. but there are some things i've never seen before.
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all right, just getting numbers out from standard charter. shares up 1% before the earnings announcement this morning. we're just about to see what we get from the asian focused bank. so while we're waiting for those to come out, helia is with us. looking forward to them. >> very -- absolutely. >> let me run through some of this. profit before goodwill impairment and credit adjustment is up 4% to 4.088 billion. >> in line with expectations. >> good.
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capital ratio 11.4%, was 11.6% in the first half of last year. and -- >> how are we doing on goodwill? >> goodwill impairment charges of 1 billion related to korea. >> yes. that's what we're expecting, absolutely. >> right. so therefore 3.338 billion, operating income excluding its own credit adjustment up 4% and 9.75 billion. the profit after -- the profit after the goodwill impairment charge of 1 billion relating to korea is 3.325 billion. so they say we enter the second half with good momentum, high volume growth and excellent client activity levels. those are the essentials. >> yeah, i think the korea thing is the impairment, the writedown, the goodwill number is key, because investors were
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looking for that, analysts had been talking about that since june because they didn't acquisition a couple of years ago. and it really talks to, you know, what is the value of asian assets and can you grow by acquisition. that's a pretty big impairment hit. so noncash item, but -- >> yeah, more comments about korea, they said second half korea will also be very difficult, so we have taken a large impairment, no sign it is going to get any better. >> absolutely, absolutely. that's going to affect their consumer book as well. because the consumer debt levels in korea very high. and this is against the backdrop where we saw hsbc come out with disappointing numbers yesterday and there is concern about the emerging market story, where is the -- >> the asian -- these banks have benefited, right, from an asian growth story, and now hsbc clearly, that's -- we saw -- we
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saw this with diageo. >> bank stocks and beer stocks, exactly the same. >> yeah, well, you know what i mean, but they have been -- they have done well in investors' minds because they benefitted from information growth story. now, clearly there is a change in tune with diageo, there. >> with hsbc, the uk part of the bank is doing well. i think these banks have enjoyed ten years of growth while other banks have stalled quite substantially. yesterday, we heard from stuart gulliver saying emerging market has slowed, but we believe in the long-term picture. peter sands, the standard charter chief exec is expected to give some kind of commentary later today. i'll be listening to that call. and he'll be probably outlining where he sees that growth. the business world, i don't know what you can see on your screen, but one of the concerns that
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investors have this is wholesale banking. this is about 79% of the business. and it has grown incredibly quickly. and there have been some concerns about is this loan being written too fast who is it being written to, how solid is it? there are question marks over that. i don't know if the chief exec will address that, say, look, we're being conservative, we're being responsible, yes, we're growing, but possibly we have to reign is in. we have grown a lot over the last decade. >> no comment either about we hear this confirmation from hsbc, you have to pay higher salaries. the fascinating thing about it is if they're jacking up the cost space. >> look, i think most people in the city, most people in the uk would agree that bonus caps in the way that the -- are talking are incredibly helpful because the banks kind of profits are flexible, they go up and they're
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cyclical. if you tie yourself to a fixed cost like a high, high salary, then people are just going to either -- the talent will leave or you'll have to pay out too much. >> one thing between lloyds and the central banks, if it is in the uk, i want it, if it is not, i don't. interesting turn around. >> very interesting turn around. we have gone from china to the uk, but i just -- i just highlight, we're talking in china about a great story, a difference between 7 and 7.5%. so don't get too excited. don't get too excited. helia, for now, thank you. profit of credit agricole has surged after the french bank got a boost from the disposal of its greek unit. shares have rallied.
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stephane has been falling this in paris. they came out a little early, but i suppose bearing in mind what they say, they won't mind, stephane. >> the numbers released at 10:00 p.m., but it raised some questions in a short time this morning that perhaps they were out even earlier than this. as we have seen yesterday at the end of the session, positive reaction on the share price of credit agricole, but officially it was 10:00 p.m. yesterday, ahead of the official announcement. the bank announced a sharp increase of its net profit for the second quarter, because last year, ross, was impacted by some significant charges. one linked to the greek unit. so that's the main reason for the sharp increase of the net profit. if you look at the businesses, the cib division had a 38% increase in net profit under second quarter. but if you look at the large retail banking unit of credit agricole, the results were quite
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mixed on the quarter. it is true that the bank drew last year a line on its greek adventure, but now it needs to rebuild growth in the challenging economy. and taking also into account the new regulations in europe. the ceo of credit agricole said that is very cautious about the medium to long-term growth perspective, though it believes the bank will be able to report some significant -- significantly positive results for the full year. in terms of solvency, really improved its financial ratio. the ratio was at 10% at the end of june and leverage ratio, 3.5%. market reaction very positive. we're up 2.6%. just to let you know also, ross, tonight after the market close, the results from the french investment bank and we will have an exclusive interview with the ceo of the bank on cnbc, of course. >> all right, stephane, thanks for that. that's the latest from paris and credit agricole.
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italy, credit is reporting first half results later today, among other things jules decided to look at that. still in milan. what can we expect, jules? >> thank you very much, ross. we're expecting a first half results, this is the second largest bank in italy, but they also operate in eastern europe and northern europe too. what we're expecting them to confirm, the positive trends we have seen for the last couple of quarters, starting to see benefits feeding through, streamlined stock, while investors really focusing on is asset quality what is going on with the rising npls as far as italy is concerned in particular and provisions. we expect to see a quarter on quarter rise in provisions, of course, since seasonality and impact there and cross management for all of these banks feeding through, particularly given the head winds we have seen in europe. if we look at sanpaolo last week, they highlighted hungary and ukraine in particular as being particularly weak.
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keeping an eye on that in particular. in terms of the facts and figures, though, net is just income expects to come in around 3.4 billion euros. expecting to see a funding cost improvement there. deutsche bank saying a 1% quarter on quarter improvement and contrast with intesa that saw a decline there. keeping a focus on that. revenues of 5.9 billion euros and operating profits in the region up .2 billion euros. i'll speak to the ceo later this afternoon. hopefully i'll be able to bring you that in closing bell. if not, first thing on "squawk box" tomorrow morning. for now, ross, back to you. >> he's a good man to speak to. >> trying. >> good. okay. jules, we look forward to that. thanks for now. deutsche is feeling more confident about its outlook and raised its guidance for the year. operating profit for the second quarter of 619 million euros, rise of 14%. they thought the results were helped by the reversal of a
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provision. shares are down sharply this morning, off 8%, were down 10 after the steelmaker slashed its four-year outlook for the second time in a year. this year, they expect a pretax loss of around 400 million euros, four times the amount it forecast in may. they dlamed a steep drop in demand for cars, appliances and new buildings in europe. india, tata power reported a net loss on a day where the rupee hit a new record low against the dollar. let's get more, joining from mumbai, ekta. >> it is definitely quite a dismal day for the inr in terms of trade. we hit record lows in terms of the rupee today. 61.80 was the intraday low we had touched in today's trade and we do understand the rbi did step in and ask the banks to
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sell dollars on behalf of the rbi at 61.78. it does put questions on the results of the country as well, because once the rbi keeps stepping in in, in order to protect the rupee, it is a definitely quite pressured in terms of the results that the indian economy does have. and, remember, india has the tenth highest amount of resolve in the world in terms of forex. it will get depleted as much as the inr depreciates. you can see the impact on a couple of results which have come out with numbers as well. for example, tata power is reacting negatively to numbers. the finance costs have risen to over 900 this quarter. that seems to be putting a lot of pressure on tata power in terms of numbers and it is a net loss reported by them of over 100 cross. with that, back to you. >> thank you for that. have a good afternoon. still to come, a precarious coalition and the second worst debt ratio in europe.
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what glimpse of hope might gdp's numbers provide today. we'll go over the data after this. .
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these are the headlines from around the globe.
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europe in the red after asian stocks excluding japan hit a two-week low. the italian market tries to buck the trend ahead of second quarter gdp due in half an hour. home is where the heart is for credit agricole. stock rallying as the banks exit from the periphery boosts second quarter figures. standard charter falls after its first half results. hedge fund investor dan loeb wants to continue the dialogue with sony after it rejects his plan to spin off part of the entertainment arm. and australian central bank cuts rates to an historic low as the mining boom slows. the aussie/dollar rises. we have industrial production and manufacturing data out of the uk. june manufacturing output up 1.9% on the month, 2% on the year, forecast up 1%. another bit of stronger data. manufacturing output the strongest since june 2011.
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june industrial production also stronger than expected, up 1.1% on the month, 1.2% on the year, forecast up .6% and .8% on the year. that june industrial production figure, the strongest since january 2011. and therefore quarterly manufacturing output production strongest since 2010. more data out of the uk. follows a strong services pmi, the strongest since before the financial crisis. another bit of hard data here, this is hard data, which is stronger than expected, so sterling dollar back up to 153.82, leaves even more speculation about what the bank of england might say in the quarterly inflation report tomorrow. sterling stronger on the back of that. european equity a little soggy. off 46 points. today, still down a quarter of a
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point, despite the fact we have green on the board for france and italy. germany's completely flat. on the bond markets, gilts selling off on the back of that, yields are higher. now back up to 2.5%. treasury yields 2.65%. nudging back up, trade in that 2.75 to 2.75, 2.6, between the data and the bond report last week. currency market, sterling stronger. dollar/yen, little high, not by much. the italian prime minister apeeld for responsible behavior from the company's political parties in order to keep the country's economic recovery on track. we have been swinging around on mr. berlusconi's trial, own subsequent conviction. what happens now. julia is in milan, talking to unicredit now. we start on the politics as well, julia. i suppose the question is, is
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the italian economy doing what it's doing because of the politics or in spite of the politics? >> there is a belief here what is going on is in spite of the politics but unfair to the government to say they haven't made some moves forward in helping the situation support for smes. we have seen some support from the economy here coming. what we're hoping for today is to see a further improvement in the growth picture, a decline of 0.4% in the second quarter, better or slowdown in the pace of contraction we saw 0.6%, of course, in the first quarter of this year. so that would coincide or at least meet with consensus expectations of seeing some kind of positive growth by the end of 2013. the question is, what kind of quality of growth can we see in the economy here? if we drill down to the details, you have to remember what we saw first quarter of this year, not one positive contribution of any of the components in growth, could be a negative thing going
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forward, but looking at foreign demand, further stabilization in private consumption, in particular too. the question is, of course, the lightning that we see a more protracted spell now in political instability. and what happens with the pdl, and aleta's party, how does this thing play out and does that not confidence and does that not investment too because that was a huge drag on first quarter. it will be interesting to see what we get for the q-2 figures and, in fact, in terms of the political aspect, ross, i was talking to the chief economist of san fapaolo this morning and said the most important thing is the constitutional reform and making sure we don't have this ongoing useless electoral process where we can't make a decision, rather than economic reform and he thinks that's the right move to make. right now, it is about constitution and politics, rather monday than the economics of the situation. back to you. >> right, you raise a number of issues. stay there, jules.
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we'll bring in daniel antinucci. good to see you. if we get some growth what is the quality going to be like? is there any sign anybody is going to invest any more money in the future? >> i think when domes to growth, one has to distinguish two issues. the first is more cyclical. it looks like in the second quarter of the economy would have shrank but at a lower pace. so there is an improvement in the sense the recession will be easing somewhat, but this will mark the eighth quarter of economic contraction, the longest since it began in the early '80s. the second issue is more structural. i think the economy might profit later in the year. we have seen some uplifting in sentiment when it comes to the business surveys. surely on the manufacturing side, but also more recently on the services side. yet italy's potential growth is less than half a percentage point.
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as and when the economy stabilizes, the debate will be to what extent the country could bring back sustainable growth. and at this staple, potential growth is very low. in fact, one of the lowest in the developed world. >> yeah. yeah. as you say, when we get back to growth, absolutely. look, if they could change, we know the politics is playing a role here, if they could change the constitution, slightly, so the future elections we could get a stronger government, would that lead to greater investment and confidence? >> political uncertainty is not uncommon in italy. the sentiment is one of the ingredients that one needs when it comes to stronger growth, but a lot has to be done on the institutional side of things and the economic side of things. italy needs a broad program of reforms and the whole spectrum.
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>> and just how likely is that, given the relative difficulty that coalition government are having now? do you think they can continue to push on with the economic reforms the country needs? >> i think the economic reforms haven't happened, surely not on a grand scale recently. the process stopped short of reaching a critical mass. and after that, because of the instability we had this winter following the election results, there was less on the reform side. both institutional and also economic. i think this political uncertainty at a minimum might pass. >> do you think the market continues to give them the time that they need in order to enact these kind of reforms? i mean, they have record low funding costs. right now the situation is
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optimal for them to just get on with it. >> so far the market has taken a benign view on italy. that has to do with several factors. the first is that investors have been behaving as if they believe the european policymakers -- first and foremost, the ecb, but more broadly the idea that the european policymakers won't let force, realizing there is a carry trade to follow and this is what they have done. but at the same time, there are many risks ahead. and some are new, even away from politics. several important emerging economies are now slowing. so even aside of what is happening domestically, i think there are a lot of uncertainties. this is not to say the economic outlook hasn't improved a bit, and that is also related to what the government has been doing.
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for example, the program to pay down government arrears i think is possible, might give the sector some respite, one reason why we're seeing some upside surprises in the data, but as a whole, they don't suggest still they the economy has turned. >> what is interesting, daniel, we were talking about this yesterday, we look at cds of banks like monte paske, there is greater risk with italian banks, more concern about italian banks than spanish banks. i wonder whether you share that and i wonder what that reflects as well and whether that actually pans out. >> the dynamics i think are different when you compare those to banking systems. surely spain has taken steps already to strengthen capital in the banks, to restructure the sector. they borrow a little over 40 billion from the esm to do that,
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for example. italy is an issue that is connected with foreign domestic economic performance, parts of the banking system and so far has been less progress on that front. >> all right. daniel, thank you for that. jules, for now, catch you a little later. travel delays are expected on some of the world's biggest airlines after computer booking system crashed. sabre which operates the software confirmed the outage and said it was closely monitoring the situation after getting it back on line. the reservation system is used by a number of carriers. you can read more on this story on our website. meanwhile, shares of chinese company have been halted. an investigation that one of the subsidiaries is facing allegations of price fixing. company lowered the price of its baby formula products by 5% to
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10% in response to the probe. thoughts or comments, e-mail us, still to come on the program as well, australia's central bank may have cut rates, but the bank's dovishness is far from over, but the aussie doll/dolla rallied on the thought it might be. we'll get more into that after this.
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carl icahn is buying more shares of dell as he steps up his ongoing fight against the pc maker's buyout. he's bought 4 million shares upping his stake to 8.9%. icahn is dell's second biggest shareholder after michael dell. last week dell and silver lake partners agreed to delay a vote on the buyout as they boosted their bid. the stock pretty flat in frankfurt today. to compete with samsung, the world's biggest memory chipmaker, toshiba is making a major investment to increase production for the first time in two years. now more from tokyo. >> $4 billion investment, toshiba is claiming to construct
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cutting edge production with sandisk. they will build a new facility in their joint venture factory in the central part of japan and will split the bill by half. the plant's total output capacity is expected to rise 20%. the new facility is expected to start running as early as 2014. although japanese chipmakers such as renaissance technology have not performed well recently, toshiba holds the title as the second largest flash memory maker after south korea's samsung electronics. to compete with samsung, toshiba plans to makes to make chips at the new plant. they had been recovering with a growing demand on smartphones and tablets. toshiba has been running at full capacity since the spring, also helped by the weaker yen. toshiba shares were trading higher today ending with 1.4% rise. ross, back to you. >> all right.
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thanks very much for that. have a good evening in tokyo. standard charter, more on that. standard charter stock now rallied up 2.7%. looking at this earlier with helia who is back in the studio, your thoughts about -- i'm not sure why the stock rallied back up. must be something that happened post me analyzing the numbers. >> i think the numbers were in line with expectations. remember, though they did end quarterly reporting, they give guidance. that's close to the mark. so if the numbers had been very different to what analysts had been expecting, in the way that hsbc was, i think that would have spooked the market. but right -- exactly. you said it was all about expectations. >> always about expectations, how do we perform relative to our expectations. let's move from the asian focus
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standard charter to the british retail, retail sales up 3.9% on annual base nice july, the best -- another stat that is best performance since 2006. the figures mark the second fastest rise in sales this year, adding to the momentum for the third quarter uk data. comes on the back of industrial production, manufacturing data, also the best since june and january 2011. can't stop the uk economy. >> escape velocity, here we come. >> is it? >> well, remember, we're not quite lunar one, which is where escape velocity comes from, but the term basically means can we support -- can the private sector support the uk economy without stimulus, without fiscal or monetary stimulus? and i think we're at that tipping point. we had lots of good data. yes, the bric numbers are great. what is even better is that this
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growth is not just on online sales, it is people going into shops, the bricks and mortar asset. >> weather plays a huge part in retail. they talk about the heat wave wimbledon and the royal baby. i think good weather played an enormous part. >> huge, huge. we had six weeks of a heat wave in europe and the uk where it is very unusual. so really retail is a benefit from that. >> once in a lifetime. >> remember, weather is normally the excuse companies use for when numbers don't come in line. and two more days in easter. >> nothing annoys me more than the easter effect. doesn't matter when it is, early or late or in the middle. >> all about the future king george, as you rightly know. but basically the point you have to remember is, yes, we had good -- great uk economic data, good pmis as you said, good gdp growth, good consumer confidence, good consumer sales
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you know. >> sell. now is the time to sell. it doesn't get any better. >> we got the inflation report coming out tomorrow. >> i know. i don't think it is any better. is adam with us? adam, let's bring in adam coe. sterling, look, helia pointed out all the great things going on in the uk economy. surely doesn't get any better. now must be the time to say, okay, that's it. >> short-term, i think that may be a risk actually. and if the market is getting a bit of ahead of itself and expectations for the forward guidance, the bank of england tomorrow diminishing, then that probably is a bit premature. i think this is exactly the kind of environment where the bank of england does use forward guidance to stop the market overinterpreting a run of better than expected data. short-term, i have some sympathy with that. but longer term, we do like sterling. we think the consensus is very negative, unjustifiably so, the
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dwr data isn't decent. there isn't that much in the price to start with. short-term, yes, but longer term we like steriling. >> my favorite stat from yesterday, the composite pmi is the best composite pmi number of just about anywhere in the world. extraordinary. >> indeed. and particularly so, relative to expectations for the uk, if you think back two or three months, i think that's potentially a very powerful story longer term, that the hurdle for upside surprise has been low and the data is coming in well ahead of those expectations. and that we still think is a very positive dynamic. >> nothing like a royal baby. everybody says, you know, not the royal family, but, look, the royal baby -- >> one thing i would mention is we're still 3% prefinancial crisis issues in terms of the size of the economy. we're still dependent on a very kind of house and property
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dependent economy. we clearly have high household debt still. we still have highly leveraged as a government. so the question is are we getting the rebalance return to growth. >> and no, we're not. helia, for now, thank you. stay there, adam. we'll talk australia, the central bank cut interest rates to a record low. the country's cash rate at 2.5%. this is the rba's eighth move in an easie ining cycle that began 2011. the australian dollar rallied off the back of the cut. adam, is this because there was no real guidance about what happens next? is there a suspicion this may be the bottom or we didn't get the ultra doves we need? >> i think really there was some talk yesterday of them cutting by more than 25, particularly as the last window ahead of the election.
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and that that 50 basis point cut that some people were expecting didn't materialize was enough to get a bit of a relief rally in the aussie. i wouldn't say it is any more than that. we don't think the aussie reached the trough in its current cycle yet. and interest rates are still falling, expectations will probably overshoot to the downside. and i think the rally in the aussie overnight is probably an opportunity to get short. >> where is the troughs? we have been down low near 89. >> maybe mid-80s before we see any kind of traction. and build a base. i think several factors need to fall into place, not least bottoming in growth expectations in china. we don't think it is in place yet. so i think the considerable scope for further losses. >> how does the -- we know when we have an election in australia, how does that play? >> i think it is probably a less important factor in australia than in the countries that have
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the required severe structural fiscal adjustment. i remember the australian fiscal position is very solid, if there are reasons to be negative on australia, it is not the government finances, and for that reason, politics tends to take a bit of a back seat in australia relative to say the uk or the u.s. or periphery of the eurozone. politics i think is a distraction. the real story is the softness of the economy and the softness of the demand from china and what that means for australian interest rates, politics, a bit of a distraction in australia. >> yeah. the -- kevin talked about how we sort of expect things of change because of china. can they diversify away from china or not? >> to a degree, but ultimately the strength of australia's exports is driven more by price than by volume. where the volume goes doesn't matter very much if the price is set in china.
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it is difficult to shield the australian exporters significantly from slowdown in china if china is the marginal buy that sets the price of the commodities that australia is selling. >> okay. adam, thanks. very briefly, i mean, obviously aussie/dollar caught with what is going on with china and elsewhere. i'm wondering, dollar/yen, still fairly range bound, and all these currencies are competing together. what is your view on what happens to the yen? we got 103 and never really got back there. >> i don't think we will. i think my view is that essentially the big sell-off in the yen is now over. the capital outflows that the leverage community was expecting haven't materialized. i think there is a real risk they don't going forward from here. and actually the story continues to be one of the flows that we see being largely into domestic
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assets in japan. so i think the high that we saw in dollar/yen is probably the high. and we drift gradually lower from here, going forward. >> all right, adam good stuff. thank you for joining us. adam coe, ahead of currency strategy at rbc. the fbi reportedly found -- in the electronics system used to provide market moving data like the jobs report from being released early. wall street journal says authorities were alerted to potential holes in the system by bloomberg. the company says it discovered ways to circumvent the so-called black box, preventing the media from sending data before the official release time. the fbi has been concerned about suspicious trading activity ahead of economic data, but the journal says it hasn't found specific evidence where the system was compromised. as far as the agenda in asia tomorrow, a lot of attention will be on the technology and chip sector. toshiba giving its strategic update in japan. and umc reporting, remember
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that, second quarter results in taiwan. pharma earnings out of india including gsk. tata motors reports. and the bank of japan kicks off its two-day policy meeting. and just a reminder, $330,000, 250,000 pounds to make, three months to reap and it flipped out of a petry dish. yes, it is meat, but not as we know it. this is the world's first synthetic burgeburger, cooked a eaten in london. it was grown from cow stem cells before adding a dash of beet juice, saffron and bread crumbs to bind the mixture. picking up the check for the project was google founder sir guy brin. we have been asking you today, if you were offered a system cell burger, one grown in a test tube, would you eat it? let us know. join the conversation at "worldwide exchange," get in touch with us, e-mail,,
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tweet @cnbcwex, or direct to me, @rosswestgate. made with 3,000 separate strips of test tube grown beef. didn't look that juicy, though, did it? right. we'll take a short break. still to come, precarious coalition and the second worst debt ratio in europe. what glimpse of hope might gdp numbers provide? we'll have that in the second hour of "worldwide exchange" right after this. [ male announcer ] it's time. time to have new experiences with a familiar keyboard. to update our status without opening an app. to have all our messages in one place.
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we're in the second hour of "worldwide exchange." i'm ross westgate. a recap of the headlines today. volatile day in europe after stocks in asia hit a two-week low. investors eyeing second quarter gdp numbers out of italy. home is where the heart is for credit agricole. the stock rallying as the bank's exit from the periphery boost second quarter profits. the standard charter falls, and then rises after its first half results. let's keep talking. hedge fund investor dan loeb wants to continue the dialup with sony after they reject the plan to spin off part of the entertainment arm.
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and jeff bezos jumps in the newspaper business, buying the washington post for $250 million. italy's second quarter gdp has fallen less than expected as the recession extends to eight quarters. preliminary second quarter gdp down .2% on the quarter. that brings the annual fall to 2% on the year. we thought it would be probably .4%. 2.2% on the year. so the economy shrinking less than expected. perhaps this adds to the other signs we have seen the longest post war session may be bottoming out. but it is still the eighth consecutive quarter of
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contraction. no numerical breakdown with the preliminary estimate. only the activity had contracted in all of the main sectors of activity, industry surfaces, agriculture, it is said that required growth stood at minus 1.7%. this means if gdp posts a flat quarterly reading in the final two quarters of the year, over the whole year, it will be down 1.7% from the previous year. euro dollar, unmoved on that one. 132.65. julia has been looking ahead to this number. and we get her reaction from japan. okay, a little better than we thought, jules. >> yeah, actually. i think like deutsche bank had it coming down at 0.3%, so perhaps some expectation we could see a better number here. but couldn't hide it. 0.2%. that brings us in at down 2% for the year overall. that's the broader expectation
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we see growth for 2% this year. we don't have a breakdown now of just what is going on. but we need to look at what is going on with the broader demands, not just internally in italy, but foreign demand, private consumption too, investment, which was a huge drag. that came down 3.3% on the first quarter. want to be looking at what is going on in that number. but broadly, you know, better number than expected. so can't escape from that. and comes in at the same time as the -- pickup in manufacturing growth we saw for first time in two years last week and the services pmi. tentative signs of recovery here in italy. it seems that way. >> yes, though still eighth consecutive quarter of contraction. stay there. we'll bring in alberto gala. a better number, but still recession. when does it -- when do we get some growth? >> there are some signs of recovery in spain and italy. but we're very far from growth,
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far from recovery. i think what is necessary here are still very targeted reforms at labor markets and indication of italy, reform of the -- which has not happened and may -- with the current -- we may go back to divided parliament situation, if new elections happen again. so, these two key reforms have not been initiated yet. before we see a recovery, i think we need have some progress there. the political situation, as you know, is not yet completely stable, we don't expect a government to fall, but with such a divided parliament, it is going to be very hard to tackle the reforms that italy needs. >> yeah, i suppose the thing is is, look, italy is a country used to sort of political instability, why is it -- why is it having more of a marked impact this time? >> well, i think the -- we have
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come from 20 years of lack of reforms, but this time around it is not possible to solve italy's problems with a competitive devaluation of its currency as it was before the euro. this is the first heavy recession we have after the euro. and many of these reforms that italy has been meeting for the last 20, 30 years are much more important now to put it on a the same competitive level as spain which has already reduced the cost of labor, for example. so italy and france are lacking on this point, on this reform trend. and if they don't adjust like spain or portugal, they fall behind. >> good morning, alberto. can i ask you, both sides of the coalition seem to believe that moving forward is the right way to go. when do you expect to see that electoral reform and ultimately when do you see us heading back to new elections in italy? >> i think having a
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simplification of the electoral law is very unlikely under this government. unfortunately there has been a lot of discussion since the government started earlier this year. but the interests are just opposing and the problem is berlusconi's problem benefits from the current electrical law, which assigns more seats to the northern regions where his party is more powerful. he has no incentive to change the current system. i think it is going to be very hard. with regard to new elections, i think the risk is not this year. and perhaps it could be toward the end 206of 2014, could be 20. so berlusconi's incentive is to stay in parliament as he receives partial immunity from legal proceedings. he has no incentive to make the government fall. as he would also be not eligible to be a candidate in the case of new elections. so there is some instability,
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but it is a bluff. it does prevent reforms, but i don't think it will go into a new election situation. it is unfortunately bad because it prevents the real reforms from happening. >> do you think berlusconi pulls away from the pdl party or do you think he still is a significant part of it, given you're talking about elections in 2015, do you think he could still be part of that process then given he'll have served his time, whatever it is, the one year sentence at that point? >> well, by law, you cannot be eligible to be a candidate for -- until that, you know, that conviction ceases. so it is not clear whether he would be eligible in 2015, but, remember there are other legal proceedings under way as well. so we don't really know if it would be a candidate or if he would have to choose somebody else to lead the party. >> okay. alberto, thanks for that. stick around.
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we'll come back to you. julia, for now, thank you. that's the latest out of milan. let's bring you up to speed, the u.s. futures are currently trading, the dow was, what, down 45 points. nasdaq up the fifth straight session. s&p off two at the close. we're about six points above fair value for the dow. the nasdaq is, what, a point above fair value. the s&p barely moved. futures indicating again a cautious start for u.s. equities at the moment. ftse up, the best levels of the day. helped along by the better than expected gdp italian number and better data out of the uk and retail sales that was enough to bring the ftse into positive territory. the xetra dax up 13 points. ftse mib up a third. also helped drag the ibex up around .5%. bull markets, gilt yields a little higher this morning on the back of that data.
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2.48%. ten-year treasury yields, 2.65. yields in italy lower, around 4.25% at the moment as well. on the currency markets, euro/dollar, just getting up to a better level, 132.75, the high for the session. the dollar/yen, 98.30. the aussie/dollar, three-year lows. this is after the central bank cut interest rates for the eighth time in less than two years, down to a record low, faced with sagging business confidence. rba cut rates by 28 basis points. some thought they might go 50. the mining boom has been tapering off. central bank says global growth could pick up next year. also says lower aussie/dollar may help its exporters. there was no clear signal, though, on further cuts, which is why we have the slight bounce today. as we heard from mr. coe earlier, they think the us wh i aussie/dollar could get down.
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.8996 is where we stand right now. the market off five points use can see. hang seng down 1.3%. shanghai off as well a bit. kospi down a half percent. standout today in asia, the nikkei up 1%. the yen had got a little weaker during the asian session. also there was this report of reuters that one of the major -- was looking at buying more stocks. that's where we stand right now in asia. as far as the agenda in the united states today this is what we have got. the june trade deficit is out at 8:30 eastern. the forecast narrowed to $43.6 billion. charles evans speaks about the economy at 1:00 p.m. and on the earnings front, look for numbers before the open from cvs caremark, adm, dish net would, liberty media, gmm resort aepz michael kors. after the close, disney, 20th
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century fox, marathon oil and zillow. that's on the agenda in the states. on the agenda here on "worldwide exchange," credit agricole reports its quarterly results by mistake. the market still likes them. we'll look at them when we come back. [ male announcer ] come to the golden opportunity sales event and experience the connectivity of the available lexus enform, including the es and rx. ♪ this is the pursuit of perfection. [ agent smith ] i've found software that intrigues me. it appears it's an agent of good. ♪ [ agent smith ] ge software connects patients to nurses to the right machines while dramatically reducing waiting time.
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rekeep of the headlines this morning. second quarter gdp beats expectations. a billion dollar hit on the value of the korean operations, but the stock rallies. and washington post is being sold for $250 million to amazon founder ceo jeff bezos. more on that, amazon ceo jeff bezos buying "the washington post" publishing business including the namesake paper for $250 million. and it ends 80 years of ownership by the graham family. bezos says this is a personal acquisition and is reassuring post employees and readers he'll preserve the 135-year-old paper's journalistic tradition. the post company chairman and ceo donald graham said he and his niece decided to put the business up for sale earlier this year after looking at the books. hopefully they were looking at
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them a lot. graham and bezos discussed a deal in sun valley in july. the washington post company will keep its headquarters and online news sites such as slate and will eventually change its name. shares hit $600 in after hours, the first time that they have been above that mark in five years. and before closing just below, as you can see, at 597. a bit of a sell-off for want of a spin-off. sony shares dropping more than 5% at one stage today, ending down 4.5% after japanese firm rejected investor daniel loeb's plan to spin off part of the entertainment arm. stock pairs back some losses after they said it would keep talking with sony to find more shareholder value. in a letter, the ceo defended keeping full control of the entertainment unit saying it helped to drive synergies.
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standard charter suffered a billion dollar hit on the value of its korean business. they reported a pretax profit of $3.3 billion for first half of the year. the ceo says the writedown reflects the slump in returns across the industry. didn't say things would the question get a lot better. the stock up 3%. profits of credit agricole have come up to 696 million euros from 56 million a year earlier after the french bank got a boost from its greek unit. shares are up 2%. the numbers were released a little earlier, but bearing in mind what they said, i suppose stephane is in paris investors didn't mind too much. >> no wonder reaction is very good. last year was impacted by some significant charges for credit agricole, one charge on its
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greek unit and another charge on the italian bank. so as a result, the corporation was really favorable for credit agricole in the second quarter. in terms of businesses, the cib division had a good performance, up 38% for the net profit. more mixed for the large retail banking unit of credit agricole, the largest retail banking in france. results on the quarter were quite mixed. credit agricole now needs to rebuild growth on the market, which is still in a challenging situation. that's why the ceo explained this morning in a conference call. the bank needs to rebuild growth. it is cautious about the medium to long-term growth perspective, however. he believes the bank will be able to report for this year significantly positive results. in term of solvency, credit agricole had a leverage ratio at
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3.5%. >> stephane, thanks for that the latest on credit agricole. still with us is alberto. they sold out of empirike. credit is resilient to what is going on. does that mean risks in europe have diminished or we're choosing to ignore them? >> well, i think they have diminished. they will continue. i think europe is still a good place to buy bonds, to buy credit, corporate bonds, and bank bonds. because things are stabilizing like we saw for italy, for example, or there is green chutes across other kun feliz the periphery but we're not there yet in terms of our recovery. there is less risk. rates and government spreads remain low despite the political risk like we saw in portugal or italy. these type of political situations have become more
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isolated and less -- and cause less contagion. and the ecb is going to continue its easing policy. we have seen easing of collateral for abs recently. the european investment bank is planning three potential programs to increase lending to small businesses. all these things lead to the banking union also next year. and new bank stress tests which will be much more -- much more far and they will have a back stop from national governments and the european union. so the policymakers are taking steps to fix the system. we're not there yet in terms of having a recovery like in the u.s. we don't have rotation to equities. it is a good environment to buy bonds and buy credit. we have remained long throughout the summer on corporate credit. >> interesting. good to see you today. thank you for joining us. still to come, it costs the duty $330,000.
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it was cooked in a petry dish. may be meat, but not as we know it. would you eat this burger? someone has. find out when we come back.
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now, it costs $330,000,
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250,000 pounds to make, three months to prepare and came out of a petry dish. this is the world's first synthetic burger, cooked and eaten in london and carolyn was there to see it served up. did they offer you a piece? >> unfortunately not. only two volunteers who got to try it. i wasn't one of them, unfortunately. i don't know if i wanted to try it, because it is not juicy. and, you know, when it comes to a burger, you want it to be juicy and you want it to be affordable, right? >> yeah. i get the point, still, stem -- these are grown from stem cells. 3,000 separate strips of -- >> you're asking me about the biological technical details? >> i don't know. >> we can talk about the price. i wanted to know, will i be able to afford that burger and that's the question i put to the man behind it. the brain behind that burger. >> we have done some calculations where we come up with a reasonable price,
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actually with the current technology, which is around $70 per kilo, it is still high, but it is with the current technology, without implementing recycling mechanisms, without increasing efficiency so whatsoever. that gives me sufficient confidence that eventually we can scale it up and make it an affordable price. >> $70 per skikilo, that's a st price. before it comes on the supermarket shelves, some 20 -- 10 to 20 years, we'll have to pass. so maybe by then -- >> think of what you save. i understand making a burger from stem cells requires, what, 90% less water, 80% less grain, or grass than you have to take to feed a cow, right? so this is what they're thinking -- this is what they're doing. >> that's the goal. basically claims that it uses 60% less energy, 95% lower greenhouse gas emission and 98% lower land use compared with conventional production.
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so it is all about the sustainable production of meat. >> so, we have been asking people whether they would eat the burger. let us know. get in touch with us, e-mail us or tweet @cnbcwex or direct to me @rosswestgate. with us is andrew collins, managing partner at one hq. will this sort of, i suppose, laboratory food, do you think consumers will ever buy into it? if it becomes commercial? >> i think generally speaking consumers have a problematic relationship with technology. we love the advances that it creates for us, but we're suspicious of hidden side effects would be the answer to that. in short-term, i think the answer is probably no. but in the longer term, it may be that we have to accept this type of technology. that's what inoue ratinovation about. finding solutions for future problems. and with the growth and demand for meat globally then, it may be a solution we'll have to swallow. >> pun intended. good one. didn't put a gherkin with it,
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which i think is a good thing. >> maybe. i like the gherkin with it. i like it. >> okay. what did they say it tasted like? >> i think they said it lacked salt and pepper. it tasted like a burger, really, but not well seasoned one. >> looked like one of those cheap burgers, you know what i mean? like a cheap supermarket burger. >> it looked awful, but maybe they couldn't say anything. >> it looks cheap. all right. carolyn, thanks for that. easy jet, the british low cost carrier, setting up a cut price supermarket chain. airline's founder is looking to undercut low prices offered by budget supermarkets like aldi and middle. they will focus on nonbranded foods. there is no connection between easy jet and easy group.
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that he are complete they are completely separate. but the guy that founded easy jet is doing this. andrew, does this work? this is a -- this is -- the easy group has done car rentdals, launched the airline into food, i don't get it. >> it is tempt kwhg you'ing whe running a successful brand to stretch it, especially when you see growth. if you're running easy, which has a reputation for value, you see there are some synergies there. there are several issues. it will be highly competitive. retail is already playing that space. not going to let easy food have its own way. secondly, you're right, do we trust a brand that takes us on holiday to put dinner on the table? i think there is a question mark. also there is an issue for the brand. what easy has been good at is
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value, not just price. >> loads of people doing value food. >> absolutely right. so, you know, we don't -- >> they try to get into cola. >> again that has to go into the long list of seemed look a good idea the time ideas. and, again, picked the wrong competition. >> pepsi and coke are pretty competitive people. >> pretty competitive people. they got to be cautious about it. because what that brand doesn't want to become is a mark of impoverishment. >> is this a problem that you can overstretch a brand and therefore damage it? >> absolutely you can. sometimes a touch of hubris about these things, you can go a little too far. >> andrew, thank you for that. would you have eaten the burger? >> i would. >> you would have? good. andrew would have eaten the burger. let us know what you would have done. still to come on the show, the fed meeting and jobs report has come and gone. congress is on vacation for a month. earnings season is wrapping up. now the dog days of august are starting to settle in. are the u.s. markets in line for a bit of a swoon? we'll have some insight as we go
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to break. here are the futures and they're not indicating an awful lot either.
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you're watching "worldwide exchange." i'm ross westgate. the headlines today, a volatile day in europe after stocks in asia hit a two-week low. investors, though, like the gdp
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numbers out of italy. eighth consecutive quarter of contraction, but .2% contraction, better than expected. home is where the heart is for credit agricole. the stock is rallying. standard charter shares manage a quick reversal despite a 1 billion writedown in korea. let's keep talking. hedge fund investor dan loeb wants to continue the dialogue with sony after it rejects his plan to spin off part of its entertainment arm. old media meets new. amazon founder and ceo jeff bezos jumps into the newspaper business, buying "the washington post" for $250 million. now, the second time in as many days a big u.s. newspaper is changing hands. first, the boston globe being sold to the red sox. and john henry. now the paper famed for breaking
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the watergate scandal will have a new man at the helm. bertha is at cnbc hq in the states. joins us now. quite an institution, changing hands, bertha. >> it is. this is one of the premiere pap ev ers in the world. jeff bezos buying "the washington post" publishing business including the storied namesake paper for a quarter of a billion dollars. the sale ends 890 years of ownership by the graham family. bezos says this is a personal acquisition and he's reassuring post employees and readers he'll preserve the 135-year-old paper's journalistic tradition, while driving innovation. "washington post" company chairman and ceo john graham said he and his niece decided to put the business up for sale earlier this year after looking at the books. the post newspaper division reported an operating loss of
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$49 million through june. graham says they could have kept the post alive, but that wasn't the issue. it was whether they could keep it strong. graham and bezos discussed a deal in sun valley, where the deals happen. that was in sun valley, idaho, last month. the investment bank is the adviser on the deal. graham says he initially thought bezos wouldn't be interested, but he named a price and bezos agreed to pay it. at a meeting in january, graham says long time friend and former post board member warren buffett called bezos the best ceo in the u.s u.s.s u.s. the newspaper business is still important to the country. in a letter today, bezos says the value of the post does not need changing. the paper's duty will remain to its readers and not to the private interests of its owners. bezees saos says he won't be le
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any day to day operations since he's happily living in the other washington with a day job he loves. the board made this decision with a heavy heart but absolute conviction that bezos's ownership represents a unique opportunity. the washington post company will still own its headquarters and online news sites such as slate. shares hit $600 in after hours trading, first time above that mark in five years before closing just below it. here is a look at today's cover of "the washington post." graham to sell the post. their own headline. and we should know that this is not amazon buying the post. this is jeff bezos. billionaire, deep pockets, this is his own, own effort to try to save this storied paper. must be nice when you have those kind of deep pockets you can finance it all on your own. >> yeah, long history of individuals owning trophy assets like newspapers. is the climate in washington state, do you think, better than
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washington, d.c.? >> i would think so these days in washington state. you've got microsoft, tech companies that are doing fairly well. in d.c., you have gridlock, dysfunction, although with so many people always in washington, that is one of the better real estate markets we have seen in recent years since you have so many people moving there in order to try to get something done or perhaps try to get nothing done. >> a lot of lawyers moving there, i remember rightly from my days there. >> a lot of lobbyists. >> good to see you. thank you for that. have a great day. the latest on "the washington post" and jeff bezos. u.s. futures now, pretty flat really. s&p half a point above fair value. the nasdaq rallied for the fifth session yesterday. the dow was down 40 odd points. now 6 points above fair value. not much indication of where we'll go during the session at the moment.
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the ftse cnbc global 300, not far from the session high. good data out of europe. first of all in terms of industrial production figures out of the uk. ftse, flat at the moment. and italian gdp contracting .2%, eighth consecutive quarterly co forecast. so things theoretically going the right way. ftse mib up. ibex a performer as well. in europe now, what are investors to do today? a recap of some of the thoughts from some of the commentators we already had on cnbc. >> a lot of interesting opportunities here, the macro economic data is getting better. val ing with valuations are supportive. we think the best place to be invested is in europe and more cyclical sectors to take advantage of the improving economic data. >> countries where the external
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deficit is large and, again, we have been financed by short-term inflows. in that sense you point to the right countries, turkey, south africa, india, brazil, indonesia, those countries are more in the spotlight. >> as far as sterling is concerned, i think it is clearly undervalued. if you look at macro between the uk and the eurozone, it is very stark comparison. we saw pmi at 60. if you look at the fundamentals, then you would conclude that sterling should be stronger. >> sterling stocks have been shining brightly over the past six months. after long period under a cloud, will the outlook continue to be sunny? more to come from "worldwide exchange." [ male announcer ] come to the lexus golden opportunity sales event
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some stories we're following today, carl icahn is buying more shares of dell as he steps up his ongoing fight against the pc maker's buyout. he bought 4 million shares, upping his stake to 8.9%. icahn is dell's second biggest shareholder after founder and ceo michael dell. last week dell and silver lake partners agreed to delay a vote on the buyout as they boosted their bid.
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dell stock flat. a sell-off for want of a spin-off. sony shares dropped today, after the japanese firm rejected investor daniel loeb's plan to spin off part of its entertainment arm. the stock paired back some losses after loeb's hedge fund said it would keep talking with sony to find more shareholder value. in a letter to third point, the ceo defended keeping full control of the entertainment unit, saying it helped to drive synergies. sony agreed to sharpen earnings picture when it comes to disclosing music and movie revenues. as far as the agenda today, june trade deficit out at 8:30 a.m. eastern. chicago fed president charles evans speaks about the economy at 1:00 p.m. and on the earnings front, look for numbers before the open from cvs caremark, adm, dish network, liberty media, mgm resorts and
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mike at kors. after the close, disney, 20th century fox, marathon oil and zillow. analysts expect different profits when it reports second quarter results today. the u.s. firm is among a group of solar panelmakers that have seen their stocks shoot up in recent months. first solar up 55% this year. sun power trading at four times its level in january. but, of course, it follows couple of years of deep, deep depression. ed guinness is manager of the guinness alternative energy fund and joins us now. thank you very much indeed for joining us. dramatic performance from solar stocks. i think in some ways did we get to a point where there was nowhere else to go? >> i think that's right. when you say it had a difficult time, we looked at 14 solar stocks that are still around from 2007 and '08 and they have fallen from their peaks 96% from their low in 2012.
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they're back up 350% from there. but they're still down 88% from the lows. >> yeah. i mean, the -- clearly the problems they had as we had big stock prices, we had overproduction of solar panels, particularly in china. massive supply, lowering of prices, which they combined with a backup in demand. >> yeah. you saw subsidies being reduced. you saw the price of silicon, the raw material, falling dramatically, which enabled people to keep going, producing at lower and lower prices and undercutting each other and taking continuous writedowns. we're hopefully now through that. >> have we shaken that? what happened on the demand side? what is happening on the demand side now? >> demand was europe and germany. we're now seeing a transition to the demand into the u.s., japan, and china. the u.s. is now going to be probably the number three or four market in the world from having been nowhere three years
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ago, and japan introduced a new subsidy and will be -- >> why is that changing the united states so quickly? >> i think it is because the price has fallen and yet the subsidy regime in the u.s. remains the same. so the returns are therefore that much higher now. >> okay. you talk about japan as well. i suppose the -- have we also now dealt with -- have we shaken out some supplies? is there now sort of a -- have we got a flaw for supply and for price? >> there is definitely a contraction in supply. a lot of the tier two, tier three chinese manufacturers shut up shop, won't be opening up again. i think the challenge for the industry, though, is that, you know, the large chinese manufacturers are able to expand their capacity with relatively low cost and that will continue to be a problem for the industry going forward. >> yeah. and let's just talk about first solar today. t despite the stock performance,
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got a consensus earnings corporate share of 50 cents a share and they reported 152 a year ago. the profit, i expected, to dip. what do you make of them as a firm? >> i think they have been through a huge transition over the last four years. four years ago they were a manufacturer in thin film solar panels, the cheapest and low efficiency solar panels on the market. they saw with the decline in poly silicon prices, they would no longer have a competitive advantage on their panels. they positioned to becoming an installer and developer of whole installations and sites that enables them to use their panels. this means their earnings will be more lumpy and they're much more capital intensive but have a defendable competitive position. >> okay. which changes them as well. is solar now going to be competitive without subsidies? that's where we really -- this is going to mature, that's where we need to go. >> i think you are definitely starting to see unsubsidized
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demand in a number of countries. italy, spain, the middle east. actually, the price of electricity people pay in those countries is high. the level of insulation and amount of sunshine is high and we're see iing demand in a larg number of countries that are beginning to wake up to that factor. >> how much do you put into solar? how big of a role is it playing and what else you invest in? >> we have 30% in the fund in solar at the potential upside f where we are now is quite significant. i'll be it not a straight line. >> okay. good see you. thank you for joining us. guinness alternative energy fund. if you're just joining us, recap of the headlines, second quarter gdp this rinkz by 0.2% but beats market expectations. a billion dollar hit on the
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value of its korean operations. and the washington post has been sold for $250 million to amazon founder and ceo jeff bezos. will detroit have to sell its prized art collection to pay the bills? we'll have more on that and other stories in the final part of "worldwide exchange" right after this.
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president obama heads to phoenix in arizona to continue his summer tour. he's expected to call on congress to back a bipartisan measure to shutter mortgage giants freddie mac and fannie mae. the president will also renew
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effort for sweeping mortgage refinancing legislation. morgan stanley looking to sell a minority stake in the commodity business which evens three u.s. power plants and a pipeline. the reports say the bank has been shopping the u.nit for mor than a year. it isn't close to a deal. reports say the company isn't being pressed to sell the entire business, despite ownership of physical commodities. morgan stanley stock up .75% in frankfurt. chevron will pay a $2 million fine stemming from the fire at its richmond, california, refinery last august. smoke from the fire sent hundreds of residents to hospitals with breathing problems. the blaze also closed down the facility located in the san francisco, raising gasoline prices. richmond refinery accounts for 10% of the west coast fuel refining capacity. chevron stock up a third. and christies has been hired
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to find out the value of the city's art collection. christies will advise detroit. 6,000 piece collection includes a self-portrait of vincent van gogh, a fresco by diego rivera, and a casting of rhoden's the thinker statue. italian economy shrunk by less than expected. gross domestic product contracting .2% after dropping .6 in the first three months. the country has been in recession for eight consecutive quarters. the longest period of contraction on record. but it was a better than expected figure as i say. so european equities firmer. the ftse 100 is flat. u.s. futures inconclusive at the
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moment. not suggesting much either way. the dow is 6 point business ls value. joining us from the phone now from memphis, craig dismute. good to speak to you. we're sitting around these record levels at the moment. how much of a sort of a sweet spot are we in, bearing in mind we have enough strong data to say the economy is improving but enough weak data to suggest we won't upset the apple cart. >> no, good morning, ross. thank you for having us on. i think it is a great assessment of where we are now. we call it the perfect storm for -- we have been here for quite a while, we have good earnings, we have good data coming in. but you also -- it is not good enough to slow down what the fed is doing you look at the indicators they're looking at, for example, the unemployment rate, the total productivity,
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things of that nature, more macro scale, it is not good enough to slow down what they're doing, so we really have a perfect storm for stocks and have seen that with multiple expansion over the past several months. >> does it continue? what happens if the fed does taper in september? >> you know, i think a lot of the taper is built in right now. i argue that probably 90% of chance of them papering in september is built in. if they do actually taper, you'll see a small impact. i think a bigger issue will be how fast do they taper and when will the purchases actually end. there is some belief in the market they will continue to buy bonds, the amount goes up and down, they'll continue to buy bonds for a protracted period. if it is faster and they cut off purchases at 7% unemployment rate, we're only .4 from there today, then i think you could see some weakness in stocks, could see bond prices sell off a little bit further and yields a little higher from here.
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>> yeah, presumably the bigger risk is how high yields can go. is there a risk they shoot above 3% towards 4? >> i don't think so. i think that -- i argue that the correct place for yields today is between 250 and 3, that's a broad range. but i think what that says is you don't -- i don't have the expectation we'll go above 3. the reason for that is because i don't think the growth is sustainable enough with rates above 3%, so i think if we do -- even if we get to 3, you'll see the fed come in and try to talk yields back down to 250, that's where they would see them for a while. just to see how the economy digests that and see if we continue if this accelerating pace. >> yeah. interesting. craig, good to speak to you. thanks for that. calling from memphis. a little earlier we told you about the first lab grown burger. scientists grew it from cow stem cells before adding a dash of
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beet juice, a sprinkling of saffron and bread crumbs to bind the mixture. would you eat it. randy says he's not eating the franken burger. susie tweeted she feels her gag reflex engagement thinking about eating that synthetic burger. we have a guest on earlier who said he would eat the burger, only $350,000 or something. and made for about 3,000 strips of synthetically grown meat in a test tube from stem cells. right. that's just about it for today's edition of "worldwide exchange." big day for tomorrow, the quarterly inflation report out of the uk. coming up now on cnbc, "squawk box," the countdown to the opening of markets state side. plenty to get through as ever. keep it here on cnbc. for now, from "worldwide exchange," good-bye. we hope you have a profitable day. [ male announcer ] i've seen incredible things.
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good morning. today's top story, it is becoming a cool thing for a billionaire to do, buy a newspaper. jeff bezos getting in on the game with "the washington post." we'll talk about it. sony rejecting a proposal from activist shareholder dan loeb. and global news cutting its key interest rate. "squawk box" begins right now. -- ross sorkin and scott
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wapner in for joe kernen. welcome, scott. good to have you here today. a number of interesting stories to talk about today. let's get a quick check on the markets. the u.s. equity futures that the hour, they're barely budged. look and see what happened there. yesterday, we saw some new records. nasdaq at a 13-year high. and the russell 2000 at another all time high. interesting news, the vix, volatile dropped off the planet. at around 11. and so we'll continue to see what happens. we're in august, and some of these numbers will tell you just that. today's economic calendar is light. we have two reports to watch. international trade at 8:30 eastern time. and then at 10:00, the labor department announces job openings and labor turnover survey known as jolt. as for earnings, we have adm and liberty media. they're the names that are reporting quarterly results before the bell. this afternoon, you have disney in focus. we're not through the earnings season yet. here is the big news. amazon founder


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