tv Worldwide Exchange CNBC September 25, 2013 4:00am-6:01am EDT
says the u.s. could have less than $50 billion on hand. the u.s. has been bumping up against the $16.7 trillion borrowing limit since may, but has employed emergency measures to avoid on default. president obama has said he will not negotiate with congress over raising the debt ceiling. meanwhile, on today's show, $29 billion tech giant is being made. we'll discuss the supplied
purchases electron in half an hour's time. and can france's 2014 budget bring in jobs while cutting to deficit? we'll preview the big announcement live in paris. samsung's galaxy hits the shelves today. can they take a bite out of apple's shares? we'll be in seoul at 10:45 cet. and a cnbc exclusive, we will talk to the deputy ceo of pereus bank. tune in at 111:20 cet. would you hit the highway with a passengers seat with no driver? i did. we'll take a look at how drufrless cars can be the way of the future. it's an stroit extraordinary experience. >> that sounds scary. >> it's weird. we'll talk about it.
i'm looking forward to seeing that one and seeing how that is. >> okay. let's get a check on markets. in asia, li swish want is standing by in singapore. sixuan, the weather here is nice. it's cooler than in singapore where you are. >> well, it's raining today, actually. it's been raining all throughout the month because it's the monsoon season. but i'm glad that you're enjoying london. the shanghai composite fell with profit taking ending down 0.4%. the hang seng index in hong kong ended higher by 0.1%. in japan, the nikkei 225 lost 0.8% amid fiscal worries. but australia's asx 200
outperformed its asian peers after the rbi said the banking system is in shape. ten poe shares ended marginally higher, about 0.4% after russia and france will both offer help with the fukushima power plant. tokyo electron is up over 13%. south korean chipmakers under pressure on concerns of price raises on the back of the potential merger of the world's number one and number three chipmakers. sdhynix tumbled 2.5% today. for the same reason, samsung electronics slipped 0.7%. on that note, back to ross. >> thank you, sixuan, for that.
you have to come over, as well. on the stoxx 600, 8 to 3 decliners out-pating advancers. certainly 0.5% lower for the ftse, as is the xetra dax, cac 40 and ftse mib. a number of individual stocks that we're looking at today. thyssenkrupp is up around 4% as they have acquired a 5% stake in thyssenkrupp. the swedish government is trying to sell its remaining shares in nordea as it continues its exposure to risky assets. it's down around 2%. and bmps has sdlad roadway structuring plan seen as key to knocking over its funding.
the bank said the postponement was due to complete formidable aspects. the fed will be pleased about the 2.6% yield that we god got immediately in the aftermath of the fed decision. although they're not trying to get equities going, they were concerned about market rates. and italian yields are lower, as well. german bund yields are lower across the board right now. euro/dollar is below 1.35%. dollar/yen back below 99. sterling/dollar just trying to hold on to that 1.60 level, as well. dee. >> meanwhile, the 2014 french budget bill is being presented at the weekly cabinet meeting which started in paris just minutes ago. the government is making a push towards tax stabilization in
order to stimulate growth. stephane pedrazzi is live in paris. stephane, over to you. >> yes, good morning. this year, the asx will be $20 million euros. but the difference is it will come from spending cuts instead of tax increases. in 2013, two-third came from tax increases. the next budget will be 80% from spending cuts. the prime minister claims that it will be the first time in france in 56 years that the government will actually cut spending. in terms of taxes, companies will benefit from a tax credit in order to lower the cost of labor in france. and in the meantime, workers and consumers will face more taxes.
the cost of pension and social insurance is going to increase next year. will it be enough to meet the new deficit target? you know recently the french government raised its deficit target to 4.5 of gdp this year on 3.6% gdp for the next year. two weeks ago, i asked the finance minister how on confident he was in his ability to meet these new targets. >> okay. stephane, thanks for that. we were expecting a little bit of sound there, but we didn't get it. we'll watch you a little later. you're going to have more on this in the next half hour. thanks, stephane. italy's prime minister has put forward a budget that promotes growth and draws investment from abroad. however, the government must pledge too polish property taxes and prevent a sales tax hike.
he warned without changes to the monetary union, all the efforts to turn around its economy may, quote, prove useless. >> meanwhile, greece's economic contraction may be slowing. a joint forecast of international troika lenders sees the economy slowing by around 4% this year. and, again, back up for those stories, we're joined by sylvia putin. thanks so much, indeed, for joining us. >> good morning. >> is there any doubt we're going to need another package for greece? and how problematic might that be? >> certainly, there are a couple of issues that need to be discussed in greece. but i would say that a number of -- need to be aligned at the european level for that to happen. clearly, if you look at what is happening at the political level, the first important step is to get a government in germany. we have the elections, there is a coalition talk which is
starting. that will be the first ingredient to proceed on greece. there are some issues related to funding gap and to a debt gap, as well, which we think is going to be faced sequentially looking at the debt first and then the tax cut at some point towards the second half of next year. but -- >> are they going to get reductions in their interest rate? greece is now saying we can get to a stage where if we took away all interest payments, we would be okay on. that's what greek politicians are going to say we need that support behind us. >> our view is that the involvement is a way too for greece. it's a way as it happened in the past. ultimately, we believe there is some upside in terms of how the
market is looking at this stage. >> do you think that some of these delays in the structural reforms in greece and we had italy anticipates latest economic forecast looking quite grim. do you think that they have the ability to derail the economic recovery we are seeing in the eurozone? >> well, i think the italian situation is a little bit more complicated than the greek one where you have some form of commitment and external civilian which is ebb forcing a program. but in italy, unfortunately, the fact that there is a very fluid political environment at the moment is policy on short-term. we saw the discussion about the budget which nowadays is based on what is going to happen with the v.a.t. or not. but you don't see the long-term plan. so the answer is yes, that is going to have a toll on growth.
but having said that, the way we look at this uncertainty and the performance towards the rest of the region and somewhat a periphery country, we think that knitly there are some elements that could lead the economy to a weaker recovery talk into next year. >> well, i think that the margin has, clearly. and the way you express that nowadays is, for example, looking at how the realignment
has worked out. now, there is, i think, a story -- a case to be made, which is one where if you take off the layer of political uncertainty, it's still an economy which has got much more i would say stable fundamentals where you don't have the leveraging cycle there. so if you are a household, you don't know what it's going to be for the next 12 months. you're in precautionary savings mode, which has been the biggest problem for the italian economy so far. still coming up on "worldwide exchange," we are an exclusive interview with the deputy ceo of greece's second largest bank by assets. what does anthimos tho on
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jpmorgan has resumed discussions with the government regarding a mortgage settlement. the settlement would cover to pay $3 billion to end the legal issues, but the justice department argues the fines should be higher. a jpmorgan stock in frankfurt down 1 is.5%. u.s. prosecutors kicked off the so-called hustle civil case against bank of america on tuesday claiming the bank's countrywide unit misled fannie
mae and freddie mac about the quality of the loans they happen buying before the u.s. housing crisis. the case centers on countrywide's fast track program for prime mortgages nicknamed hustle for the acronym hssl which stood for high speed swim lane. the government allegeses the promise of quality loans was a joke saying countrywide ignored several red flags. cherman chancellor angela merkel's party has its sights on democrats after a tie-up with the green party. negotiation eggs are likely to be slow. you were sdwruft alluding to we have to go through these negotiations. the thing is, angela merkel currently won this election. how protracted do you think it's going to be and what are the implications for the way the policy is implemented within the
eurozone? >> that's definitely a big question for europe at this stage. we need to be cognizant 069 fact that the win of angela merkel has been overwhelming. it's unlikely she would give meaningful -- to the democrats as it would change the way she's led so far on european matters. but i don't think we will see much changing. >> yeah. do you think we will see -- this is good for david cameron. angela merkel does agree with david cameron that we need to make the market worry better. do you think that we will see
moves that will achieve some growth measures by finally concentrating on opening markets up? that was a long foreloren hope that i've had for a long time. >> i think if you look at the priorities for europe, we have a banking union to push forward and the window of negotiations with other countryies next year you have the french local elections. so i think the europeans will focus on its priority and the market story will be developed alongside much bigger things here. >> okay. silvio, thanks for that. the government meanwhile is continuing to sell off mines. they're reportedly set to shed
two mines in australia. as far as the stock is concerned today -- >> let's take a look at those spp spot gold, 1,320. quite range bound. and another story in the commodities space, brazil's vale believes iron ore prices will remain between $120 and $130 in the fourth quarter of the year. the miner plans to raise iron ore production capacity to 284 million tons by 2018 up from $306 million this year. >> john, thanks pgs so much, indeed, for joining us. what do you make of the gold miners at the moment? >> our view is that at least $300, $400 an houns is the
premium on gold versus an insurance vehicle. we believe the current crisis peaked and therefore, it should. going up from 500 tons to 2,500 tons from the peak. we've dropped by investors out of the u.s. so gold will have to rely on its old trusted drivers which in the context of slow growth international environment we can't rely on that up above $1,300. >> it's about right for the moment. we started the bull market at $300 an ounce. we hadn't been through $1,000 an ounce by the time the credit crisis broke. our view is that 1300 is about
right for now. but going into 2014, we expect further etf sales and we'll be looking at something like 1250 next year. >> is there a disconnect between the price of gold? china expected to surpass india in terms of its consumption for gold. the so-called big mamas in china who know the gold price better than anyone. they're bidding it up. are they going to have some kind of effect and is that going to somehow converge? >> i think what has happened is that the big institution for individuals were buying gold into etfs for the current crisis. i would say the more conservative and cautious middle eastern buyers wait for the gold price to come down. they're very, very priced into it. so the support for gold, some spice of selling $700 tons of etfs this year, you're quite right. at that level, there's a bit of a takeup for those who have been
patient enough to see it and wait for it to come back. that could provide some support. we don't think it's going to be meet yumm support into 2014. >> it relies very much on the angelo platinum. so the platinum is key there. we had gold stocks unsold in february this year. we put the rest of our sales in april. we upgraded some in june, but only to neutral. >> shifting away from gold, we've seen the data improve a little bit. i'm skeptical of how long the recovery is going to last. but what's your opinion? and are they going to catch up with that recovery before we see another downturn?
>> we do believe in a modest continuing economic global recovery. so on our demand profile, we're assuming better metal demand. the problem is that we're priced for inventory and we haven't had the production cuts we used to get in bygone cycles. if you go back ten years, we had lots of small cap miners. the big guys absorbed them. they had bigger balance sheets, lower cost of capital, they've been able to ride this out. it's primarily cuts to future project in 2016 and '17. in copper, we see a surplus until 2017. we see an aluminum surplus in 2017. >> is that mostly due to china? >> it is due to what has happened in china between 2006 and now. but we're still expecting china to improve. >> very briefly, out of all the big diversified miners, why is rio tinto your favorite? >> we believe they have space for further effort sales.
some of the peers have been quick with asset sales. rio has the scope of selling still. also, they still have the option -- they are the ones who can bring on the big iron ore accessories. they still have the option to say, hang on a minute, let's make sure we don't put too much into the market. we believe they will rethink that and that's a big plus for them. >> thank you so much for joining us today. now, talking about gold, gold bars worth $2 million disappeared on a flight between paris and -- when i say disappeared, do they mean they were there when the plane took off and then when they landed they weren't there? >> i was just wondering that. and can you not check all the passengers? >> did the pilot not notice the change in weight? >> and let's not forget how heavy 73 kilograms of gold is. >> the way you pack a that in the plane is a big thing for the pilot. >> it's thought to have been stolen just before takeoff. okay. thank you very much. just before takeoff from the air
france budget plane. the airline's owner says it couldn't have been stolen mid flight. they're investigating the possibility that air france or airport staff was involved. there's always an inside job involved, not that i know. who was the owner? >> is there something you want to tell us, ross? were you on any flights recently? >> i didn't sleep well last night. for tourists who cannot switch off, take note, australia's sunshine coast will soon become the world's first destination to set up phone free zones. >> that will work. >> they're introducing a smartphone code of conduct and designating unplugged zones. that's right. no liking, no tweeting, no sharing, no pinning, following, friending or unfriending. there you go, ross, no one can unfriend you while they're on a bench.
>> i'd have to be a friend first to be unfriended. >> you know where you need that, perhaps on the chinese beaches which are so packed you can't even move and you get a lot of people on their phones. can you actually do that? would that hold? >> can you just ban people from using phones in a public space? >> you can do it in a cinema, right? they just cut off your space. >> you know, it's a little dick to dictorial for my taste. just make them illegal. we want to hear from you. would you welcome more phone free zones? tweet @cnbcwex, direct to me @rosswestgate or -- >> @deecnbc. still to come on the show, france is revealing its 2014 budget, but can the country reduce the deficit without major
investors expect to form a $29 million powerhouse. and more pressure for the french government as business sentiment unexpectedly falls in september ahead of the key 2014 budget amid calls to shift the tax burden away from the corporate sector. >> we have comments out from the bank of england's financial policy committee. they've got an eye on the housing market, as well. the house onning recovery has gained momentum and is broadening, but activity to val
shares are below historic averages and they haven't changed any recommendations. the spc at the moment is effectively saying don't worry about the uk housing market. it is okay. that is the message from the people that have the tools to effective. >> the ten-year treasury up a little bit from when we checked in yesterday. 2764%. we see that rally in bond prices continue after that nontaper decision last week from the federal reserve. >> this is key. the fed saying yields -- those yields are lower than they were post the fed. one of the things they were worried about was the market rates going up, right? >> it was all how it was going break loose if it hit 3%. and so it did, tale. >> that's one thing they would be pleased about to see yields
lower post what they did last week. and as far as currency markets are concerned, dollar/yen, 98.43. euro/dollar, 1.3488. the sociologist government in france is expected to shift the tax burden from businesses to households as it grapples towards its government debt. stephane has more for us in paris. that would be refreshing if they top the tax hikes. >> we had a lot of communication on this budget. but not everything seems to be accurate. weeks ago, the finance ministers say that we will have a fiscal pose in france and 24 hours, the finance minister said we would
have to wait until 2015 for the real fiscal prose. the prime minister says it will be the first time in 56 years in france that the spending will decrease. is that true or not? >> they will decrease in relative terms. a trend in expenditures is $20 billion per year. in that case, they will decrease from this trend by 15 billion in absolute terms. in on 2014, expenditures will be marginally higher than in 2013. >> the government announced a fiscal pose for 2013. do you think it's going be the case given that, for instance, the v.a.t. will increase at the
beginning of january? >> it's a complicated itch. revenue will krets by only 3 billion euro. it's not that much. but if you look at what's happening on companies and our vote, it's a different story. for households, the v.a.t. will change. so for household ones and that is what is important, the fiscal pressure will increase. in 2014 due to this. >> the tax burden will ease a
little bit for companies. >> it will because it's a situation where we have to keep in mind that the business in europe, in france, as to improve through investment. we have to improve companies situations from 2008. the bulk of adjustment has been bared by companies. so suggests a way to improve the situation to add them to invest and to add the recovery in france. so that the government will meet its new targets. >> do you think the government will meet this new target? >> it depends on the growth rate. maybe it's a little high dew due to the fact that during the first quarter, we will have the tax that will increase. and that will have a strong
impact. the beginning of the euro will be on the pro growth base and probably the 0.9% will be hard to achieve. >> thank you very much, phillip, for all these comments. it will be presented this afternoon at 3:00 french time. ross. >> thank you for that. stephane, we just got news from peugeot citron. they're pledging to keep all french production sites operating for three years. this is according to the union. what do you make of that news? >> well, first of all, they are going to close one of the factory close to paris. perhaps after this facility being shut down they will keep their facilities open. the latest story in peugeot, they might have a partnership with a chinese carmaker. it depends on the other partner of peugeot, which is general
motors. so we need to look at this careful. but obviously, they want some support from the government, they will have to promise, for instance, that it will keep all their product sites in france. >> fair enough. good stuff. thank you. >> a new tech titan is born and investors are cheering. applied material is set to buy tokyo electron in an all-stock deal. nozomu has this story live from tokyo. >> share in tokyo went limit up in the mortgage session and ended the day 13% higher on the news. the integration of two of the world's biggest names in chip making development will mark the first corporate marriage between firms in the technology sector. the two firms with roughly $29 billion will merge under a holding company incorporated in the netherlands. tokyo electron shares will end up -- tokyo electron
shareholders will end up owning 32% of the new firm while applied materials investors will own 68%. tokyo electron president hagashi will serve as chairman, and applied materials representative gary dickerson as ceo. as semi conductors become smaller and more energy efficient, the decision to make them is becoming more difficult and costly to develop. the merger seeks to create economies of scale as profit margins in the business have been squeezed by rising development costs. the move may prompt more consumers to consolidate. back to you. keeping in asia, sort of in asia, ali babah may be heading to the big apple.
they are eyeing a new york lifting. at issue was weather to allow alibaba's manager more control over its board since the hong kong bores does not allow dual share structures. it could value the firm at $120 million. as you can see, the indonesia rupiah is up 4.21% in the last 30 days. traders expect that will only boost dollar demand in the market. now, let's give you a look at what's on the agenda in asia tomorrow. taiwan's central bank will make its policy decision. we'll get industrial output figures.
and the bank of korea will speak at its joint session in seoul. earnings are due from gindal by-e metals in aus trail why and new world developments in hong kong. still to come on the show, samsung has released its smartphone today, but it's bound to get investors buzzing. >> are you surprised? >> no. we'll talk about this, but people want to wear a watch on their wrist. >> not a watch like that. >> no. clearly. we'll be in seoul with the latest. [ tires screech ]
gear up. samsung starts selling its new watches and tablets online today. the smart watch has a built in camera and speaker to allow hands free calling and interacts with the note 3. despite a big launch, the devices have struggled to raise similar hype to the latest apple iphone 5s. samsung shares slipped in trade as it announced a new curve display smartphones for october on. let's get more from seoul. sherry is with us. hi, sherry. >> hi, ross. it's time for samsung to test tout demand out there for
wearable devices now. and not the first time for samsung, either. it will introduce watch phones in the past, but not so successful, obviously. samsung was pretty cautious in terms of the events. forecasting how the galaxy gear will do. but the market seems a little more excited, at least this time with its competitors like apple making similar moves, too. by next month, the number is going up to some 140 countries. now, there were some questions or doubts that i personally had about this smartphone, smart watch, excuse me, called galaxy gear. it's $299 and it's pretty pricey and it's only interactive with -- >> okay. very sorry, but we have a very
bad mike line interruption there. so apologies about that. i don't like cutting her off in her prime. >> i know. and she was raising some really good points, the concerns that we have with this watch. but why don't we ask the experts. siran is joining us live from singapore. now, we, ross and i, as well, as you just heard from sherry have concerns about this watch. maybe it doesn't look great, maybe people don't want to watch a watch. but didn't we have similar skepticism about tablets when they came out? is this watch going to be a game changer? >> it's an interesting analogy with tablets. when tablets came out, everyone had the question, do we really need it? how are we ever going to use it? and the same question. but it's an interesting device. but once you are past the earlier -- and if it's going to
be used an a implement device along with a smartphone, would a samsung watch at $299, does it make sense or is it too steep or is it, like, going to have some niche users? on so i think just like in the case of tablets, it has to find its place in the market rather than just a niche. >> it seems like a lot of folks are more interested in the announcements coming in october, despite the fact they just put out two new products. that is, of course, the curved smartphone. are you excited about this? do you think this is going to transform the industry in the way that apple did with its touch screen? it wasn't new, you about it led a new era, a new generation of smartphones. >> so with the curved smartphone, it's just a curved smartphone for now. it's not a flexible display.
you can fold it, stretch it, resize it. so this one gives you another dimension to your phone where you can have a quick peek. so look t latest message you have on your phone. if you ask me if it's going to be that skter, when the first was launched in 2007. >> going back to that watch, a quote from samsung's mobile communication ahead of samsung's mobile communications business, he says he believes the watch is going to become a new fashion icon around the world. ross, i know how you feel about that. but is that the point? is this technology going to be so cool that people are going to want to wear this huge watch on their wrist? >> so far what we've seen it doesn't look like it's going to
be a fashion icon. it doesn't carry the assetics that you would want to have if you're watching a luxury watch or something else. it's still too bulky to be, you know, called a fashion icon watch. so i think it still has very limited usage in that way. >> and i think unless it becomes a fashion item, people aren't going to want to wear it. >> you think so? >> i think if you're going to put something on your wrist, i think it needs to be fashionable. i think it needs to be designer. one of the cool things about the iphone was it looked great, right? it was a cool piece of design. >> what about fablets, then. those don't look cool. >> but you're not strapping those to your body in place of a piece of jewelry. >> for fablets, there are people who do not care for such a large screen. they don't want to put it to the face if they have to make a
cellular call. so i absolutely agree. it has to look a lot more sleeker to be a fashion icon. it doesn't look like the features they want to put notice the smart watch that if it's going to be possible anytime soon. >> thank you so much for that. and also your fashion recommendations. now, ross, i was saying the watch sort of looks like that old calculator watch. it doesn't look cool, but it was cool. >> is that a casio? >> yeah, a casio. who knows. we'll see. we're not really -- okay. earlier, we also told you that the sunshine coast will soon become the world's first destination to set up phone free zones. we've been asking viewers would be welcome more phone free zones? >> nathaniel said governments should be b able to use the technology, but mothers and
fathers should be able to shut off children's data for family time. do you agree? tweet us @cnbcwex or direct to me @rosswestgate or @deecnbc. you can suggest people don't use it, but don't go around fining people or whatever. meanwhile, at cnbc, we have a new program called "the edge." this week, the program is looking at driverless cars. and while the technology exists, consumers still need to be convinced. finding only 49% of people would be comfortable using a driverless car. >> only? >> only. half of everybody. while others found over 70% of respondents did not trust an automated vehicle. therefore, i decided to take bmw's driverless car for a test drive on germany's autobahn. bnw's driving academy. the car, a highly automated
prototype that basically drives itself and more importantly goes out of germany's famous autobahn. it's got 12 sensors, lasers, ultra sonics, a host of cameras all of which provide 360 degrees constant surveillance. add to this, this prototype uses a gps system to pinpoint the car's location within sent meters. by relaying information to and from stations all over germany. the 12 sensors on the car feeding all that information through each with a microprocessor, this is where it all goes for this box of tricks. plenty of wiring here. two computers. the fist one takes all the information from the microprocessor and feeds it through to the artificial intelligence of the second computer which controls the car in realtime. just as well, it's a prototype, though. there's no room for the golf clubs. here is the thing, michael. why are you developing this?
i'm not sure that if i went down to showroom that the fact that a car was highly automated or nearly driverless would be the difference in me wanting to buy it the. >> the computer is continuously observing anything that's happening and can react much quicker on a car that's in front braking than a person would be able to. it would be increasing on efficiency. it has much, much more information about how it's using its gas. >> do you want to try it? >> exactly. let's see what it's like in the real world. >> perfect. we're going to set the button. there we go. and it's taking over. i take my hands off. it's already decided to change lanes. it is a absolutely surreal experience. no country in the world has legally sanctioned the use of
100% driverless cars on public roads by anyone at any time. and another area that needs to be worked out is guaranteeing the technology can never fail. what is clear is that the technology we need to go driverless is with us right now. and if the laws change from 2020 and beyond, this could become our reality. but until all that happens -- >> i just want to sit back and let the car drive. and i don't have to do anything. a very surreal experience, but it works. don't forget, "the edge" premiers on cnbc tonight at 23:30 cet tonight and repeats throughout the next couple of weeks. "worldwide exchange" continues after this.
this is "worldwide exchange." the u.s. budget is over-shadowing a major m&a deal in the tech sector. >> and a bid to block today's vote by lawmakers that would avert a u.s. government shutdown that is now just five days away. >> and it's share of tokyo electron that surged 13% they form a $29 billion powerhouse. will it get approval from
anti-trust watchdogs? >> and more pressure from the french government as business sentiment unexpectedly falls in december amid the call toes shift the tax burden away from the corporate sector. >> announcer: you're watching "worldwide exchange," bringing you business news from around the globe. and a very good morning to you. if you've just joined us stateside, welcome to the start of your global trading day. yesterday, of course, the dow was down 66 points. the s&p down around 4 points and today futures are right now below fair value. the dow is currently 27 points below fair value. the nasdaq at the moment is about 3 points below fair value. the s&p about a point or so below fair value. we'll be looking ahead to durable goods and new home sales. the ftse global 300 is down not by much, just one point. european equities have been down between 2.25 and a half a
percent. and we are at the levels of the session so far, just up a tenth for the ftse. a bit more for the xetra dax and the cac 40. the ftse mib down 0.25%. ten-year treasury yields, 2.64% is the yield. the fed will be pleased about that. that is lower than where we got to the fed statement last week. gilt yields are down, italian bond yields are down. bund yields are steady at 1.85%. on the currency markets, euro/dollar has moved lower. dollar/yen is just below 98.50. and sterling is up against the pound, the aussie and the euro on the session, as well. that's where we stand right now as far as european trade is concerned. >> well, ross, let's check in on my home turf. markets in asia, li sixuan is
standing by in singapore. over to you. >> thank you for that, deidre. most asian markets reverse gains. the shanghai composite saw profit taking ending down 0.4%. in japan, the nikkei 225 lost 0.75% on the weaker dollar and u.s. fiscal worries. but australia's asx 200 outperformed its asian peers after they said the banking system is in strong shape. shares piekd over on 13% for tokyo electron to create a $29 billion giant. the south korean chipmaker is under pressure on concerns of price rises on the back of that potential merger of the world's number one and number three chipmakers. sk hynix tumbled 2.4%. sam sum electronics slipped 0.6%
as it launched its latest galaxy gear today. shanghai companies continued to track higher ahead of the launch of the free trade zone this sunday. wai gaoqiao shares soared 10%. it's basically been surging limit up every single session. >> thank you, sixuan. now, politicians being able to talk, that's not unusual. but senator ted cruz is still holding thoughts on the senate floor. the tea party republican began a marathon attack on president obama's health care law tuesday afternoon. he's trying to block a senate vote on a house bill that funds the u.s. government that strips money from obama care. fellow republicans are expected to line up with party leaders to pass the funding bill without the provision to avoid a government shutdown last week. cruz's performance may look like a filibuster, but it's not because under rules he must
yield the floor by noon eastern for a procedural vote on the spending bill. at the same time, treasury secretary jack lew says the u.s. could have less than $50 billion of cash on hand when the government hits the ceiling in october. joining us for the last -- for the rest of the show today, frederick nebran. good to see you. >> thank you. >> how much of a risk is not necessarily the budget, but the debt ceiling discussions for investors? >> i think it's a concern. and it's going to be an ongoing concern given the political statements that we're getting out of both parties that they don't seem to be willing to reach some type of agreement that we've seen in the past. so when we saw this in 2011, they went in and had discussions. they don't really seem to be having today. and they went in under the premise that they were going to try to cut costs. i don't think there is any
debate at this point going on and given how short of a time we have going up into this and, of course, with the lower cash position on the federal government, it is a source of concern. >> the history of this has always been at the end of the day, a couple of deals together. something gets done, they extend the government and things get rolled on. that is the market and that seems to me what investors believe will happen again. so are we take full -- >> i think to some extent we are taking -- we have one data point here that we're trying to make a decision on the back of. and you can argue that the u.s. always comes to some type of agreement. but if you're looking at the starting points today compared to what they were back in 2011, they are diametric opposites. so i think that the risk in terms of some type of event -- >> because of the valuation, you mean? >> no, no, just in terms of the decision between the two parties. it's that you have one set that essentially wants to discuss obama care and one who -- and, of course, the democrats saying,
no, we are not even going to do that under any circumstance. so there is, so far apart in terms of the negotiate b decisions compared to what they were back in 2011. so i think there is a bit of a difference this time around. now in terms of the likelihood, in terms of markets, ultimately, i think if there's any type of events like that that tend to be dollar positive and treasury positive more than anything else because of the risk off event. >> are the republicans going to let it get that far? voters are going to blame the republicans, we think, for if we hit that ceiling. do you think that they're going to tie it to obama care? they're going to blink first this time. >> it's interesting. if you look at the polls, there's different polls from cnbc in terms of looking at the different polls of the republican voters and depending on which poll you look at, it looks rather different, right? so you can clearly see that the republican base doesn't necessarily want there to be a government shut crown. so to some extent, you can see the republicans at least
moderate some of the more hawkis positions as they stand at the moment. but by the way, i think this is a -- a risk that we have to deal with not just now, but also into the future unless we get a structural solution into the debt ceiling. >> and look, interesting today as we're seeing appreciatory yields lower today. you talked about it's positive for dollar and treasury. actually, they're lower than we were post the fed statement. the ten-year is yielding about 2.64%. i guess the fed will be pleased about that. are you measuring right now the post relationship between yield and equities and the relative valuations? >> they're good questions. what we can see is what we call the risk on/risk off type of environment we saw through the crisising and going up until may. from an asset allocation perspective, we think that's debt. it's no longer if you want to go risk off, you buy treasuries.
as you -- risk off event essentially is sell everything event is a deleveraging event. and as long as we're going through, i guess, still what looks like a global deleveraging, that is really the hits that -- >> the u.s. companies are releveraging. you see the m&a, right? >> having said that, i mean, if you look at wa tends to drive gdp growth is credit impulse. it's a combination between growth and the second derivative of credit impulse. and the u.s. credit impulse is significantly negative. actually, one of the most negative around the world. and you can see that partially due to the fact that mortgage payments have gone up and so forth and you can see that hitting home. but so in ago vat terms, the credit impulse is more of a pull. >> stick around, frederick.
with us for the rest of the show. let's give you a look at what's on today's agenda in the united states. august durable goods are out at 8:30 a.m. eastern. demand for big ticket items is forecast to drop by 0.5%. at 10:00 a.m., we get august new home sales, expected to rise by more than 6%. a pair of notable earnings reports today, autozone, bath, bet & beyond. ross. >> we just had a zero coupon bond auction from italy. the yield has fallen from 1.87% in august and is the lowest since may. we have seen yields rising a little bit on auction for them. we got the amount they wanted, as well. >> there you go. still to come on the show, france reveals its 2014 budget, but can the government reduce the country's deficit without major tax hikes? stephane is live from paris right after the break. ♪
the car, a highly automated prototype that basically drives itself and more importantly, goes out on germany's famous autobahn. it has 12 sensors, lasers, ultra sonics, a host of cameras, all of which provide 360th degrees surveillance. this provide toe type uses a differential system to pinpoint the car's location within isn't meters by relaying information to and from base stations all over germany. the 12 sensors on the car feeding all that information through each with a microprocessor, this is where it all goes, this box of tricks. plenty of wiring. the first entirety takes the information and feeds it through to the artificial intelligence of the second computer which controls the car in realtime. just as well, it's a prototype. there's no room for the golf
clubs. here is the thing, michael. why are you developing this? i'm not sure that if i went down to showroom that the fact that a car was highly automated or nearly driverless would be the difference between me wanting the buy it. >> the continue is continuously observing everything that's happening and can react much quicker on a car that's in front braking than a person would be able to. it would be able to increase efficiency. when a car is highly automated, it has much more information about how it's using its gas. >> are you ready to try it? >> exactly. let's see what it's like in the real world. >> press the button. there we go. and it's taking over. i take my hands off. it's already decided to change lanes.
it is a slightly surreal experience. no country in the world has legally sanctioned the use of 100% driverless cars on public roads by anyone at any time. and another area that needs to be worked out is guaranteeing the technology can never fail. that is clear is all the technology we need to go driverless is with us right now. if the laws change, in 2020 this could become our reality. but until that happens -- i'm just going to sit back and let the car drive. and i don't have to do anything. a very surreal experience. it pulls over and let's other cars in. anyway, it's premiering cnbc tonight at 23:30 cet. and make sure you head to
the edge.cnbc.com to find out more about the innovations that could change industry, science and commerce as we know it. we would love for you to join the conversation on twitter. #cnbctheedge. >> i've seen a number of new stories saying google -- i think they've had cars driving over 400,000 miles in california and they're planning to launch a taxi service in las vegas on the back of this. >> i don't want to get in a texasy that has no driver. some taxi drivers might be some better than others. >> it depends on who drives. >> i agree with that. >> and given most drivers, i'm not sure whether i trust people -- >> it will scare the drivers if you have it in a place like vegas, right? all those late night taxi drives. let's move on and recap the headlines. global markets wait as u.s. lawmakers continue to debate a bill to help avert a government shutdown. >> the french government
releases its 2014 budget amid pressure to shift the tax burden away from corporate. >> and investors cheer tokyo electron and applied materials new $29 billion tech tie-up. and coming up on "worldwide exchange," we have the deputy ceo of greece's second largest bank by assets. what does anthimos thomopulos think of the company's recovery? stay tuned and we'll tell you. building animatronics is all about getting things to work together. the timing,
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. greece's critters have been putting pressure on to tighten regulations. anthoniou joins us from pireaus. thanks so much indeed for joining us. let's talk about where pireaus is today before we get into some of those other issues. you've got a 29% market share in terms of loans and deposits in greece. a lot of people think didn't piraeus was going to survive. >> probably right. a year ago, we were through a round of consolidation where we ended up with some banks, some small, some large the.
this is helping us shore up our capital base, improve profitability. at this point in time, i think we are looking at the bank with destruction potential given the ceiling that we will crystallize after the six banks. >> how much more derisking, though, do you have to do? and how concerned are you that, you know, greece is potentially facing another restructuring and that you're not going to be impacting? you have to take a huge write-down on greek government ded debt in 2012. >> the greek banks are no longer warehouse any sovereign risk of any size. so i don't think this is likely. great banks are from many serious risk.
the greek debt is by and large held in the official sector. so the private sector is insulated, it's out. so i don't think that we're going to have a second risk reaction. but even if one were to con plate -- >> nonperforming loans, where are we on that? >> look, the situation remains, to be honest, ugly. we still see month after month, quarter after quarter, new formation. but the silver lining is that greece seems to be fading away. we are in the fourth quarter of declining rates. to me, that looks like a trend. it is consistent with the country covering around about
that time. it's pretty difficult. >> now, at the end of this year, we're set to see an expirey ban on foreclosure, but there's some talk that may not happen as large banks. wa do you want to see happen? >> look, what i would like to see is a way that we remove some moral hazard from the market. there is no doubt the country has gone in massive income losses and devastating unemployment. so we banks have to be sensible on how we deal with the troubled situations. and, obviously, in the market with very, very bit in terms of the collateral. people do not get the chance to gain the system. take advantage and fair
advantage. therefore, there should be some way for grid banks to -- those defaulters. for those bona fide cases of distress. what we would like to see, we would like to see some moderation. we would like to totally see a program to face out the bank over team and we, as banks, we need to commit that we have to be responsible on how we deal with the distress situations. >> just a quick questions in terms of funding. we've been seeing deposits out of greece flowing, going down and down and down. do you think there's any chance of that type of trend subsiding?
and also, within that, where do you think those deposits are ultimately going to come from? do you think it's domestic, that they're going to see a stop in terms of outflows from the cup or is this getting external parties coming in? >> the realities are that at the end of 2016, the country went to a massive capital flight which peaked around that time, which was probably the peak of uncertain volatility. since then, that continues until recently. the risks of eminent nominations are not there. the increasing sense of stabilization and people feel more comfortable to repatriate their money and take money out
back into the banking system. and that has been supportive on not just -- but the system. obviously, there is a substantial part of -- that resides about. and we greek banks need to do our best to try and attract this money back to the country. we need policy and supportive measures to repatriate this money. we do need every euro that we can get ahold of. so a set of reasonable pricing from greek banks whom a set of incentives with the best part of that greek euros. >> good to see you. thank you indeed for joining us. france is set to reveal its
2014 budget today with the socialist government expected to shift the tax burden from businesses to households@80s grapples with its deficit. hollande's government will rely on spending cuts rather than tax hikes to reduce public debt next year. stephane is live in paris. we're going to get out to him live once again. over to you. >> the french people will have to make big experts in 2014 to reduce the public deficit, but compared to the euro before, it will be mainly used on spending cuts than on tax increases. it's going to be the first time in 54 years. it's true that corporates on households will not have the same treatment for the companies in france.
the tax will increase from the first of january. will it be enough to reduce the deficit in france and to meet the new targets from the government? a few weeks ago, two weeks ago have asked the finance minister how confident he was in his ability to meet these new targets. >> i am absolutely confident. we're at 4.1, we're at 4.8 the year before. that's 5.3 the week before. we have been given two years by the commission. so next year we'll be at 3.6%. that was exactly the base which we are now committed to respect. >> and all the details for the 2014 budget this afternoon at 3:00 central european time at
this is ross westgate. >> and 50i78 deeb ra. >> this is "worldwide exchange." a tea party republican senator speaks for hours in a bid to block today's vote by laemakers to move along a better that would avert a government shutdown now just five days away. >> and investors expect to perform a $29 billion powerhouse. is it going to get approval from anti-trust watchdogs? and more pressure as about it business sentiment falls ahead in september amid calls to shift the tax burden away from the corporate sector. and you may have just tuned into cnbc in the last ten minutes or so. if you have, a very good morning to you. we've had a bit of a turn around in futures from half an hour ago. they're now indicating a move
positive start after the s&p yesterday was down from four points. this is where we stand right now. it's currently 2.5 points above fair value. the dow was down 66 points yesterday. it is currently 40 points above fair value. we have durable goods and new home sales, as well. european equities have been softer during the morning, but they've turned around, as well. the ftse now up 0.25%. as was the xetra dax which is flat and the cac 40 is fairly flat, as well. so something of a turn around that's been going on. not big gains. >> senator ted cruz is still holding force on the sflooet senate floor. he began a marathon attack on president obama's health care law tuesday afternoon. he is trying to block a bill. but senators are expected to line up with party leaders to pass a spending bill without the provision to avoid a government
shutdown next week. cruz's performance may look like a filibuster, but it's not. under senate rules, he must yield the floor. joining us is tony fratto managing director and frederick is still with us, as well. tony, let's start with you. how is this affecting confidence? and particularly in the markets and how do you think this is all going to play out on? republicans are going to blink, it's going happen like clockwork as we've seen in the past. >> yeah. the continuing resolution, i think they clearly will have to blink and it's mapped out. i think the markets probably -- they don't like to see this. no one likes to see this. in skrrl, they turn away rather than look over my shoulder at the building behind me, what they're doing back there. because that does disturb them rightly. but i think we're going to get through this on a continuing resolution. i think there isn't too much
work up about that. the debt ceiling is where we're going to run into some more trouble, i'm afraid. >> absolutely. do you think investors have become more complacent recently? they're slightly higher in bond yields. they're below that 60% ten-year benchmark. how do you think this is going to play out even in the post term? >> yeah, i do. i've been spending a lot of time talking to investors over the past five or six months or so. and they feel like they've seen this story before, that we come up to the brink and, you know, all of us get worked up talking about it and talking about the consequences of it and we see, you know, jack lew talking about, you know, yesterday that they're going to not have as much money as they thought. and so the breach could come sooner. and so market participants have seen this before. what worries me this time is
that the formula for getting a solution has gotten to be tougher and tougher. if it's going to take a trillion dollars of spending cuts for a year's worth of the debt ceiling, that becomes harder to do, you know, with each successive year. and the president, you know, is really calling congress's bluff on this law by saying he's not going to negotiate, that this slaw a construct of congress. it's something that they've created and they need to deal with it. it becomes difficult to see what is the end game on debt ceiling. you can only see an end game that ends with one side or the other blinking. .it's hard to predict what that's going to be. at the end of day, because congress has to act, it will be congress who blinks, but they won't blink until government has maybe taken a take or two of not paying .bills. >> frederick's view on whether the market has been too complacent in a moment. but i just wonder first, tony,
whether allen greenspan is right. he says america is being pulled apart politically in ways unrivals since the after mag of the 1929 crash, that the political system is broken. >> he was there for the 1929 crash, right? so he knows it better. there is absolutely no question. we see this whenever you see economic upheaval like this. we're seeing europe and other places, real economic upheaval and strains. you see it reflected in politics, in the political discourse and the decisions that politicians make that are in a lot of ways reflective of the concerns of -- you know, their citizens who have gone through -- in the case of the united states, still relatively high levels of up employment, low economic growth, low or flat wage growth. actually, in real terms, you know, negative average wage growth. so that tends to result in more
polarized political situations. and what we have to hope is that we don't take radical policy decisions in this period as the country is healing politically as well as economically. >> so fredry, the question is, are investors too complacent? >> i think they are. i mean, at the end of the day, i think people -- looking at this, i've seen this movie, i know how it ends, right? but i don't think you know how it ends. i stress the fact that we haven't even begun negotiations in terms of formal negotiations. we're in 2011, they were ongoing for months. also on top of that, who's actually the credit nlt leader in terms of within congress for the republican party? is boehner looking at the minority leader in the senate, except for challenges, et sell is set ra, so you don't really have the same type of leadership within the republican party and
that means that given the diametric opposites on the starting points of the two parties in terms of the supposed negotiations that have been started, i do think that the likelihood of this ending smoothly is rather slim. >> all right. we'll get tony's views on that, as well. meanwhile, amazon, as far as the latest in the tablet wars, the company is turning up the heat on apple's ipad. cnbc got a first look. jon fortt has been taking a look, as well. hi, jon. >> hey, ross. yeah, i was just up in seattle a couple of days ago. sat down with jeff besthos to take a look at these new kindle fires. the entry level fire, the hd, is now $139. a break through low price point. they've got two new models called the hdx at 7 inches and 8.9 inches. those would be $229 and $379.
the interesting new feature here is called may day. take a listen to jeff besoths himself talking about it. >> you can press this button and a tech support adviser will appear on your screen and copilot you through anything you might want to do. they can draw on your screen, show you you how to do things and so it's really a -- we're trying to make it easier for people to stay in control of their technology instead of the technology being in control of the person. >> tried it out and it's quite interesting, a little box pops up on the screen. tech support can hear you. you can see them. they can circle things on your screen. now, the low end tablets that don't have this feature are available for today's preorder shipping on october the 2nd and the other two models are shipping a couple of weeks to a month later. clearly, an assault on the ipad, which continues to have the lead in the tablet market. we'll see if this time that low
price point allows amazon to gain even more share. apple, even though the ipad mini starts at 379 and has lower resolution, still managed to sell more units than amazon or bezos. >> jon, great to see you. thanks for that. i know it's a weird time for you. but thanks for joining us. >> rifs trying to work that out being in north america. >> on the west coast, yeah. speaking about tablets, samsung starts selling its new smart watch and tablet. in stores worldwide today. online theaters begin shipping. the smart watch has a built in speaker and blue tooth to allow for hands free calling. and samsung shares, they slipped in trade today as it announced a new curved display smartphone for october. as you can see, finishing down
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welcome back. these are your headlines. global markets wait nervously as u.s. lawmakers continue to abate a bill to avert a government shut youp. the french government releases its 2014 budget amid pressures to shift the tax burden away from companies. and electron and applied materials new $29 billion tech tie-up. >> and jpmorgan wants to try and close the book on a growing number of legal woes against the bank. seema moody is in the states running us through the details. morning, seema. >> good morning, ross. jpmorgan is reportedly in talks on a global settlement with negotiations into its u.s. practices. negotiations have resumed after
federal prosecutors in california delayed plans to file a lawsuit on tuesday. the settlement would reportedly cover probes of jpmorgan's mortgage business as well as operations it inherited from other banks during the financial crisis. reports say jpmorgan has offered to pay $3 billion to end the legal issues but the justice department argues the fine should be higher. in europe, jpmorgan shares were down slightly the last time i checked. meanwhile, cnbc has learned lawyers for sac capital and u.s. prosecutors met last week for the first time since the hedge fund was indicted on insider trading charges to discuss a possible settlement. talks are reportedly at an early stage and any deal could be weeks or months away. sources say the government wants sac to pay a fine of at least $1 billion and perhaps double that. sac would like a lower number, which would also count towards the $616 million it paid the s.e.c. to resolve civil charges earlier this year.
ross, dee, back to you. >> all right, seema, thanks. alibaba may be heading to the new capital. they're eyeing a new york listing after giving up talks on hong kong companies. the ipo is expected to be one of the largest tech offerings in recent years, and can value the firm at $70 billion. >> democrats and republicans are clashing over a bill to avoid a government shutdown next week. >> that may just be the tip of the iceberg as a battle over the u.s. debt ceiling looms just over the horizon. we discuss what it means for markets, coming up next.
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if you're just stuning in this morning, the markets have turned around and are now in positive territory. >> treasury secretary jack lew says the u.s. could have less than $50 billion in cash on hand when the country hits the debt ceiling in mid october. that is less than previously thought because tax receipts were lower than expected this summer. the u.s. has been bumping up against the 16.7 trillion dollars borrowing limit since may, but has employed emergency measures to avoid default. president obama has said he will not negotiate with congress over raising the debt ceiling. >> so, you know, when is that really going to start weighing on investors? still with us, tony fratto. just to come back to the point
frederick made earlier, what concerns him -- and he says markets are underpricing the risk is the lack of congressional leadership. is that a fair point? >> yeah. well, i think it is fair. i think wa we've seen through the patterns of negotiations is basically, you know, congress begging the president or asking the president to engage with them on their debates on budgeting and to solve their differences for them. you know, especially on the debt ceiling, but also on continuing resolutions. now it's a -- now for years that we haven't passed a total budget to budget for the government. we're not passing appropriations bills and sending them to the president. that had happened from time to time in the past. now it has become a regular feature of physical budgeting here in the united states where we can only do it at these crisis points. and so it makes for a very difficult situation, a complete
lack of predictability about the economic, you know, fiscal role of the federal government in the economy. so it becomes, you know, difficult for people who are doing macro planning and estimating where markets ought to be. so it's difficult, it's a problem, and it's hard to see where the resolutions are, unless congress -- the house and the senate, senate led by harry reid and democrats, house led by speaker boehner and republicans to force them to come to the table with each other and work out budgets. >> tony, i want to point out an op-ed with the in the "wall street journal." what he's saying is that this debate needs to happen, even though he himself isn't going to stop. he isn't going to throw everything off course just to get what republicans want in obama care. but he says there needs to be a debate here. how damaging is this for the image of the republican party? is there any way they can get
around it, though? >> the debate on obama care or on budgeting, deidre? >> on obama care. >> yeah. look, the problem with obama care is twofold. one is that it has never, ever enjoyed popular support in the united states. you can go back to when the president first proposed it, all the way through the debate, and now, you know, three years later since the bill was passed and still, you cannot find 50% of americans who supported obama care. so that is a messaging problem, it's a rhetorical problem for the administration in all of these battles. so republicans are standing on fairly strong ground in the rhetorical debate, and especially for their own constituencies back home. the problem is that there are pieces of obama care that americans really do like. and so were they to actually succeed in repealing it, it could be damaging. and if they hold out on, you know, defunding and at least the things like a government shutdown, republicans will
undoubtedly be blamed for it because they're forcing takz here in washington on those issues. the shutdowns would not happen otherwise. and so republicans will get blamed for it. so that is -- it's highly risky for the republican brand nationally, but for a lot of the members who are fighting this fight, they're going to have -- their constituents back on the home are happy with them. >> tony, thank you so much for joining us. frederick, we have u.s. durable goods and new home sales out today. what is the right strategy for a global investor? >> yes. the way we look at this is at this point, we believe treasuries have moved too far. ten-year treasuries, 2.1%. you can clearly see we're in the mode of the fixed income relatively well. it's interesting to see what happens following treasury sell-offs in the past and on that directionlty, basically, it means that where we're adding to
risk at the moment is in emerging market debt, predominantly in hard currency, some in local currency. also adding a bit in high yield and in oil, which tends to do relatively well on the back of a weak dollar following the events in the past. overall, though, i would say that asset allocation is focused on -- but in oerchls what's happening in china, what's happening in the eurozone and any sdes, i would argue in oems of abe-nomics, it's likely to push down risk appetite in the near term. to offset all of that fixed income, we have a sizable equity position. >> good to see you. thank you for joining us today. that's just about it for today's edition of "worldwide exchange." "squawk box" is coming up next.
but otherwise -- >> thank you for watching. >> we'll do it again tomorrow. [ woman ] if you have the audacity to believe your financial advisor should focus on your long-term goals, not their short-term agenda. [ woman ] if you have the nerve to believe that cookie cutters should be for cookies, not your investment strategy. if you believe in the sheer brilliance of a simple explanation. [ male announcer ] join the nearly 7 million investors who think like you do: face time and think time make a difference. join us. [ male announcer ] at edward jones, it's how we make sense of invng.
jpmorgan may settle with state and federal agencies over the sale of troubled mortgage securities to investors in the run up to the financial crisis. and amazon launching a new version of the fire kindle. jeff bezos says it won't make money, but that's okay. we have a conversation with the tech leader. it's wednesday, september 25th, 2013, and "squawk box" begins right now.
good morning, everybody. i'm becky quick along with joe kernen and andrew ross sorkin on cnbc. it is just after 6:00 a.m. on the east coast. texas senator ted cruz and a few of his colleagues are still talking. cruz took to the floor just after 2:41 p.m. yesterday, vowing to speak in opposition to obama care until he was to longer able to stand. the overnight talk athon included occasional remarks by other gop conservatives. but republican leaders opposed this time consuming effort, fearing the house will not have enough time to respond to eventual action. a senate test vote is scheduled for this afternoon. among our newsmaker owes this topic this morning, we have former pennsylvania governor ed rendell, judd gregg, tennessee republican rob