tv Worldwide Exchange CNBC November 27, 2013 4:00am-6:01am EST
from leadership. united states and japan decide china's self-declared air defense zone and fly right through it without telling beijing. nhp's turn around efforts bearing fruits shares after hours as the company beats sales amid enterprise business. a warm welcome to today's show. advancers outpace decliners on the dow jones 600 by a ratio of 6 to 3, 3 to 2, in other words. we had a very, very flat close for u.s. equity markets last night. the nasdaq closing above 4,000. so the ftse at the moment, this morning, is just up 14 points. the xetra dax is up 13 points. but we're back at this all-time
high, level above 9,3 let you know. cac 40 is up 0.11% and the ftse mib up 0.5%. a number of individual stocks worth looking at this morning. let's kick off with accor. stock down 3% at the moment. the company essentially coming out and saying, look, we're going to split ourselves into two bess. one that's going to be running hotels and the other one we will keep holding lease holds on that, as well. so hotel services and hotel owner, essentially. the first big move really by the new appointed ceo sebastian basan who brought in the previous chief executive back. we'll get more on this with the analyst around 15 minutes time. vivendi is up 2.5% at the moment, approving plans to spin off its french telecom business. the focus on just a handful of media assets. it's named the french industrial
as the eventual chairman of the group. and the best performs, aker solutions, up 12.54%. because holding firm aker purchased another 6% stake in the all as far ass firm. it has around 34% in aker after buying 16.44 million shares. i'll show you where we stand with asian markets today. is shanghai outperformance up 0.8%. hang seng up 0.5%. undeterred by the fact that american japanese planes are flying over this area in the east china sea. and the nikkei moving away from monday, a six-month high president 15,449 just down 0.4%. on the currency markets, the euro, let's get a one-month high against the dollar. at the moment, just below
1.3591. dollar/yen, moving further away from that 99. 101.69 at the moment. aussie is weaker again, now down to 0.911. and the pound is back over at 1.62 against the dollar. we've got the second print of gdp for the third quarter coming out in the uk in around about 27 minutes' time. on the bond markets, treasury yields higher. we did get down to 2.69%, the lowest yield on the ten year. last night when we closed, bund yields just below 1.79%. really the focus in germany is the fact that after weeks of talks it now appears both parties have reached an agreement. the biggest parties have reached an agreement to form a grand coalition. chancellor angela merkel's conservative and the democrats will now vote on whether to sign off on the deal. annette is joining us from frankfurt with the details. is there any debate about
whether the spd will want to sign off on this? >> well, actually, there is a lot of rumor that the social democrat party members are not really happy with such a thing as a grand coalition. there is still a risk that they might say no and that would be it. but i really think that this is not a likely scenario because the party leaders of the social democrats are really campaigning all over the country in order to convince party members to say yes to the grand coalition. because they now have something to show off, at least. looking at the minimum wage agreement of 80 to 50 to be introduced from 2015 onward, that is actually really something towards the social democrats insisted on. at the other side we have something which is net positive for the christian democrats. this is no tax hikes with a
grand coalition. so there is something in for everybody among politicians in berlin. so what is not to like about it? what is not on to like about it is that we'll most likely see probably a stalling of reforms and that is crucial. looking at the draft coalition contact from yesterday, there's not a lot of news coming out of it in terms of energy, law, revamping which we urgently need in germany. a lot of companies are complaining about too high energy prices and this might even be a reason that they are investing somewhere else and not inside germany. and we of course need a lot of reforms in other areas like infrastructure investment in germany. so -- but if you look at eurozone politics, everything remains totally like we had it before, ross. so not a lot of change when it comes to austerity, banking union. it's still angela merkel all
over the place. >> all right, annette. thanks for now. we'll join you a little later. nick, good to see you. you heard annette say the negative aspect, is it enough to put off investors or not? >> i don't think so. the reforms in germany is not the issue. the reforms need to be done more in the southern part of europe where you have higher unemployment rates. germany has always been a ghost driver. the rest of europe might like the fact that the reforms are slowed because it gives them a chance to potentially grow further. >> in europe, what it does is reinforce a difference of opinion between germany and france and italy. they don't want the european commission to decide on winding up banking should be a separate institution on that. they've moved away from allowing to directly recapitalize banks.
this creates division. we don't know how to quite close it up, do we? >> no. there's always been this tension between the two parties. we still have to wait to see what happened with the omt court case and whether or not that's allowed. so germany continues to have to fund the rest of europe and the german taxpayers are not -- >> in fact, a story that will potentially become a headwind in 2014? >> i think it will. i think we're starting to see the rifts in the ecb in terms of last month's vote on the rate cut. the bank -- bundes bank came out very quickly saying that they weren't for it. so now there's always this talk of going negative rates. and you'll sigh that risk
continue. the risk is widening rather than weakening at this point. >> nick, we want to talk strategy and what it means at the moment for that. there is a news conference on the country's coalition kicking off at 12:00 cet. britain's program is up and running again, but just how fast is the wheels turning? we'll get the details, the breakdown. that's in 20 minutes. paying the price of the past, u.s. banks may have to spend up to $100 billion to resolve cases over their role in the financial crisis. we'll discuss how it could affect lenders. plus, greece is relegated to the emerging markets index, but is this a setback or a potential win? we'll discuss that with the chairman of the greek stock exchanges at 10:45 cet. and there's a change in fortunes at hewlett packard. fourth quarter results beat
expectations. we'll head back stateside to discuss what it means at 11:50. meanwhile, the u.s. and japan are testing china's resolve over its self-declared air defense zone. a pair of b-52 bombers flew over the sea without informing bay jipg. the u.s. has urged tokyo to show restraint, but continues to share japanese criticism of china. >> this undermines security and constitutes an attempt to change the status quo in east china sea. this only serves to increase tensions in the region. >> after japan's cabinet guaranteed their safety. the reversal of the u.s. underperformance versus europe continued. it's taken back 4% since the
last week in october. so what's going to happen now? nick, we saw the institutional flows coming into europe. have they made the right bet or not? >> i think they've probably got a bit ahead of themselves. if you look at that chart, you'll see those periods of european outperformance. basically began as you started to worry about the fiscal cliff at the end of 2012 and at the government shutdown up until october. then once both cases were sorted, that's when the european started to underperform again. so it was more of a -- perversely, a safety trade rather than -- >> but not predicated on the fact that we had a cyclical -- we had some kind of rebound, the marginal rates were changing in terms of growth in europe. >> yes, spain has finally come out of recession and it's coming from a low base. but if you look at earnings, they haven't changed too
dramatically over the course of the year. the gdp divisions have been a touch higher. but i think the chance that that will -- >> the view is that u.s. companies have done extremely well with margins and that is only going to get the three things that benefit them which is low cost tax rates, low cost of borrowing, among others, is at a peak. whereas in europe they can still improve their margins. >> europe has been basically driven by what's going on in emerging markets and the growth that's been there. so china has helped the autos, luxuries, beverages, food and beverage, as well. but with the strengthening of the euro versus not the only dollar, but versus the emerging market currencies, the rand, the rupee, that has had a negative effect on the earnings growth
for a lot of these companies. and that probably will continue, especially if the u.s. tapers and these emerging market currencies are put under more pressure. >> what service place is the place to be? >> i think utilities have been one for a number of years. they've been cleaning up the balance sheets. this coalition issue has now been sorted. they've been underperformers for years. they have a 6% or 7% dividend yield and they're becoming a much more efficient company. >> is the market going to warm -- i thought the market had moved on from wanting dividend yield, hadn't it? >> it has for now. it's looking for growth. if the growth doesn't show, which i don't think it will again next year, then 6% dividend yield is not a bad place to be, especially if you still get some more issues. >> nick, always good to say you.
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the ecb must be more proactive in helping solve the financial crisis. this is the view of the former spanish prime minister. what sort of mood did you find him in, stephane? >> well, plenty of comments from the conversation i had with the spanish former prime minister. he admitted that probably reacted too late to the crisis and too late to take some measures that would have protected the spanish economy. but there are also plenty of critics, for instance, blaming angela merkel who wanted spain to request a bailout at the end of 20111. and also is blaming the european central bank for not having the right policy.
i caught up with him for an exclusive interview. he explains why it was important for spain not to request a bailout and why the euro became a straight jacket to europe in the context of crisis. >> it's a straight jacket because we couldn't devalue. not during the crisis in the 90s, spain was able to devalue. and it allowed us to gain in competitiveness automatically, export more and make imports more expensive. well, we can't do this now. the euro have some certain advantages. it is the strongest currency in the world at the moment. so for those who have savings, the euro is very important. but there is no doubt that when the crisis hit, it was straight jacket. but there is a common currency. you have to come with a common fiscal policy and a common treasury. a floating currency for all and a floating country with different economic policies. this is what is just beginning to be addressed. >> how would you qualify your
personal relationship with angela merkel? >> translator: my relationship with angela merkel was good. i must say that we always spoke to each other with respect and sinceri sincerity. she is much nicer in person than you would expect. at the g-20 meeting, we were facing huge turmoil with high risk premiums with italy and spain. she was trying, with all the world leaders, to provide an exit, to find an answer. all of this took place in the presence of the u.s. president who was affected by the situation. if the eurozone was to fail, again, it would have impacted the world's economy. china and all the world's powerful countries have their eyes on the eurozone. the solution was to ask for a bailout. in the end, we didn't request a bailout. angela merkel, although she
suggested it to me, was respectful when she approached and when i told her. >> the banks are about to exit the bailout program, but there are plenty of problems still like the youautomic regions or schedule. >> i think the spanish society has made a huge effort and huge sacrifices. if we want to exit the crisis, we need above all things more effort from the ecb. this is a crisis of liquidity from the very beginning and it is still continuing. liquidity, which in some cases led to a solvency crisis in the long-term and the liquidity crisis can only be resolved with liquidity. that is above all monetary policy. fiscal policy can help bring more confidence. reforms can prepare a country to grow. but without liquidity, the locomotive can't restart. the european central bank has always been reactive rather than proactive and it should now take
some new decisions and inject more liquidity. i'm convinced that it will eventually happen and this is which we'll be able to consolidate future recovery. >> and even before the book was released, the former economic minister took his distance with -- arguing that he didn't share the same view on the crisis and blaming him for not reacting early enough to protect the spanish economy. over to you, ross. >> stephane, thanks for that. how much is the art of detroit worth? that's a question being asked by a bunch of the city's critters who came to see the collection sold. the 60,000 piece, which holds some high auction pieces, now the bankruptcy judge is wanted to appoint a committee to speed up the process. so we want to know if the art
should be on the table at all when it comes to repaying public debt. does everything have a price? tell us what you'd like to protect. e-mail us, email@example.com, tweet @cnbcwex or direct to me @rosswestgate. in a bid to improve the performance of one of europe's biggest hoteliers, accor said he was splitting the company into a fee driven hotel franchisers, hotel services and a hotel owner and investor. the new strategy sees an end to any strategy through leases. the announcement comes ahead of a core investment day which has become in the last hour in paris. joining us for more is robert, partner at bdo. good to see you. >> thank you. >> in some respects, accor is
the last of a breed. why has it taken them so long to change? >> well, i suppose that they were the only company that was prepared to take leases on. and that made them very attractive to the investment community. with a lease, you'll receive a guaranteed rent payment, which is really what you're after. but i think that they recognize now that an asset like strategy is the way to go from the point of view that they can move more quickly, they can become more agile. and they can improve the returns to shareholders. >> it has meant the hotel business is really now about brand, isn't it? it's management and brand. >> very much so, apart from the independent base which is where you get owner and hotels. but it's really about brands now. >> well, how does that, then, how does this make accor the likes of ihp and other hotel groups? >> very similar in that they're
not going to pursue leases any more. they're really going to drive the franchise and management contract business. >> we talk about it's now brands business. can you run multiple sectors? cuff a boutique brand? cuff a luxury brand? cuff a mid travel business brand? is that what they all do? are they all competing in the different silos? >> yeah. i mean, if you look at the core, for example, that their management side has no less than 14 brands at the top rating. so it just demonstrates that the hotel market has become very segmented, really responding to the requirements of travelers nowadays. >> how do you succeed in that? loyalty schemes? >> yeah, very much loyalty schemes. but what you want to do is attract investors to build your hotels by demonstrating that you have a robust delivery platform for delivering businesses. >> how does it work? you've not gou the free holder. how do they decide which chain
comes in to run it and which label to stick on the front? >> it's very much a beauty parade these days. you ask the hotel chains to make a proposition to you in terms of their fee structures. therefore, it's negotiation at the end of the day. >> what is the health of the sector like globally? >> floeglobally, it's pretty go. it's quite remarkable that the hotel sector has held up very well. and, of course, the chains are looking very much like china and the southeast asian market for that pipeline development. >> east london is doing exceptionally well even a year after the olympics. >> it's doing incredibly well. it is a real phenomenon. london benefits from being both a leisure and a business destination. year-to-date, to october, london is performing at 82% occupancy.
and if you allow below occupancies in january and february, and on friday and sunday nights, london is full. >> yes, during the week people still want to invest, as well. thanks very much, indeed. we'll take a short break. we'll have more on the uk talking about london because we've got third quarter gdp, the second estimate coming out in just a few moments' time. just how strong is the recovery. >> britain? we'll get into it. [ male announcer ] eligible for medicare? that's a good thing,
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look for the experience and commitment to go the distance with you. call now to request your free decision guide. the headlines from around the globe, a grand coalition in sight for germany after months of intense negotiations. it's raised hopes europe can push on with reforms and formation of a banking union. silvio berlusconi faces a senate decision that could expel him from parliament. the u.s. and japan, despite china's self-declared defense
zone, fly jets and bombers right through it without telling beijing. and hp's turn around efforts, shares jump after hours as the company's earnings beat forecast on solid sales of its enterprise business. we're about to get a breakdown of britain's first quarter gdp, forecast to show a reading of 0.8% growth. unchanged from the prior for the year forecast to rise 1.5%. we have indeed those numbers coming out now. and essentially that is what it's telling us. third quarter gdp up unchanged from the first estimate. but we have the breakdown. first quarter production, which revised to plus 0.6% quarter on quarter from 0.5% and construction revised to plus 1.7% quarter on quarter, revised
down from 2.5% initial figure. household consumption up 0.8%. services unrevised at plus 0.7%. third quarter experts are down 2.4%. the trade deficit widening to 8.9 billion from 5.5 in the second quarter. september services up 0.2% month on month. up 0.2% on the year. so yeah, a fairly balanced sort of component as far as that is concerned. robert wood is chief uk economist at berenberg bank. rob, no change on the headline there. how resilient is this growth? how long lasting might it be? >> i think it will be pretty long lasting. we'll start on a decent recovery in the uk that should continue in the in many next year at,
around or above trend rates. what we're seeing in this first breakdown is a consumption driven aspect of this recovery. is consumption rising because interest rates are falling, mortgage rates are down significantly over the past 12 months. and also uncertainty, particularly about the eurozone has fallen sharply. so help with saving less, they're spending more and that's driving this recovery and the economy. i think that will continue. the bank of england said just yesterday how dovish it was. so interest rates should remain very low, supporting this recovery, and we should start to see business investment coming through next year, as well. so i think the outlook is bright. but it's fragile because it relies on household saving less and less and that could easily change. >> and that consumption is showing up in the trade deficit widening out, as well. >> exactly. i don't think any hopes of the trade deficit closing over the next year or two. i think any hopes of that are going to be disappointed. because what we're doing is tim ewe lating a domestic recovery
that means the uk is running faster than its trading partners, it's growing faster, which is going to be bad news for the trade deficit. >> will investors worry about that, then? >> well, i think the aspects of this that looks quite unappealing for the uk, it looks very much like what we saw before the crisis. it looks very much like loose monetary policy, increasing credit, increasing consumption. it's fine to start a recovery like this, but if we were in the same position in a year or two time, with house prices rising, savings continue to go fall, i would be a bit more worried. >> how long do you give it to see real investment led growth or a greater share of investment led growth? >> well, i think a lot of the conditions are there for corporate toes start spending more. the economy is growing now. the world economy is improving. demand is picking up. credit is easily available and
cheap. what they needed to see, i think, was uncertainty falling, which it has done over the past couple of quarters and they need to see another couple of quarters of growth, which we're starting to see now. so by the start of next year, i expect business investment to be picking up and real pay growth from consumers perspective rising, as well. >> when does this leave us ahead of the chancellor's statement being postponed because of the prime minister's trip in china next week? are the finances going to be slightly better than the opr? how about better will they be than the obr suggested? if they are, should he get some of that back? >> well, they will be better than the abr last suggested. what we're doing is a raising from history, essentially. the deterioration in the finances over the past year because the economy is now recovering much faster than the obr expected. they've gone from overestimating growth to underestimating it. we'll see some significant improvements to the borrowing
forecast when the chancellor presents his statement. should he give this away? i don't think he will. i think he'll be more scrooge than santa this christmas and bank most of these gains. after all, the uk is running a very, very large fiscal deficit. this is just the first few quarters of a discovery. i think it would be a mistake now to go and give away a lot of these early gains. >> yes. you've got to face an election in a year and a half. you never know. rob, thanks very much, indeed, for joining us. rob wood from berenberg bank. uk equities are slightly firmer, up 0.3% on the ftse. 0.2% to the xetra dax and the cac 40. ftse mib up 0.75%. ten-year treasury yields at the moment, 2.72%. they were down to 2.69%. gilt yields, 2.75%. on the currency markets, euro/dollar has been up at a one-month high around 1.36.
dollar/yen not far away from the six-month high we hit on that cross rate monday at 101.90 of 101.70. sterling muted after the second gdp. meanwhile, in italy, the senate will vote on silvio berlusco berlusconi's expulsion from parliament this evening. just as last night the current prime minister won a confidence vote on the 2014 budget. forcing berlusconi to break his party from the government after seven months in his left-right coalition. julia is in rome and joins us for more. they are going to have this vote tonight, julia, and they've done their best to fudge and delay. >> ross, i'm actually having trouble hearing you, but i'll tell you, yes, we are expecting a vote to happen at 7:00 p.m. tonight. and the expectation is that he will be expelled from parliament. if you add the votes against him, we're talking about
five-star move, the prime minister's democratic party, grillo, they have a majority to expel him. we are expecting the break away party, this is the party that remains with the coalition the new center right to support berlusconi. what you're seeing here are dividing lines still within this coalition. but what ultimately does this mean for mr. berlusconi? well, he has said that irrespective of whether he keeps his parliamentary seat or he doesn't, it's still going to be the bigger head of this party. and as beppe grillo has proved, he can be pretty potent in opposition and he has no intention of going quietly. if we look at the mouthpiece paper of the berlusconi family, the title here today is gli illusi, the deluded. so anybody that thinks he's going to go quiet, the houdini of politics, is going to long
around a bit longer. some of the questions being asked is if he does leave parliame parliament, could he now be arrested for some of the cases that are continuing against him? so that could affect his popularity. he's always managed to galvanize support for the people here in italy and i would assume he will continue to try and do that. that will term his force going forward. that is something we'll have to wait and see. but for now at least, a vote tonight to expel him from parliament at 7:00 p.m. and that's what we're waiting for. ross, back to you. >> julia, thank you. we'll be back in rome later in the program. and at least three people have been injured in china after a pipeline collapsed in the southwest. around 3 tons of gasoline were spilled. chinese police have detained nine people for last week's
deadly pipeline explosion in the northern part of the country. they're leaking from a pipeline exploded as workers try to clean up the spill which killed 55 people and injured scores more. political protests are wearing on thailand's central bank outlook contribute to go a surprise cut in interest rates. bank of thailand trimmed its rates. it cut the 2013 growth outlook to 3%. policymakers said the political situation raises the downside risk toes government, investment, as well as confidence. but also u.s. policy risks, weak export and low domestic spending. meanwhile, anti-government rallies continue to surround key public offices throughout thailand. it includes the office of special investigation. demonstrators have camped outside five ministries in
bangkok and reached office necessary 19 provinces. the prime minister has accused of corruption. the majority government has the right to continue ruling. elsewhere, the world's number two top steelmakers are teaming up to buy a steel plant in the u.s. for nearly $2 billion. makiko has the story from tokyo. >> hi, ross. yes, the plant opened three years ago equipped with cutting edge technology, but thyssenkrupp was unable to gain the buyers it needed and was searching for a buyer. the deal amounted to roughly $50 million, which will be split 50/50 for the two steelmakers. the japanese steelmaker have a steel factory in the u.s., but were face ago capacity shortage.
this deal would see their capacity nearly double to more than 4 million tons. it would carve out a 30% share of the u.s. market for highly durable steel sheets. japanese automakers are increasing production in the region, the newly acquired plant will help ensure a stable supply of high quality steel. >> thanks for that. as far as the agenda in asia tomorrow is concerned, anti-government protests continue in thailand. the prime minister will face a new confidence vote after two days of debate. and the fill pines in the wake of typhoon haiyan whole get third quarter gdp reading. and china's october industrial profit. still to come on today's show, we'll find out how much cash could potentially flow into greece's biggest banks as they move into the msdi emerging
their mission to become an economic powerhouse isn't without its complications. >> referee: whether it's the world's tallest building or the largest manmade port on earth, they're punching above its way. with dubai's bid to host the 2020 expo, helping to boost the dubai stock market index over 80% in fact last year alone. size does matter when it comes to football markeinancial marke. talk of a possible merger is gaining momentum. >> these are definitely a lot of value to the markets in the uae, certainly a lot of liquidity and debt on to the market and the country would be seen as one. >> rumors of the merger gained traction last month as reports surfaced that the abu dhabi
executive council hired jp morgan chase and friscol bank to report on the deal. they will reportedly be advised by citigroup. >> we think it's a synergy to merge the two platforms because of a lot of advantages for the stock exchanges themselves, have lower costs, need one platform rather than two platforms. so the stock exchange itself is a big advantage. for investors, it's less cumbersome, particularly international investors will try to have access to markets. >> but merging markets doesn't necessarily mean they're instrumentaling to become one. dubai has some stiff competition right on its doorstep. >> abu da buy's financial service has be designated a financial free zone. that puts it in direct competition with deic. but even as abu dhabi ups the
ante, the financial hub continues to have a positive impact on its oil rich neighbor. >> it's crucial to see the interaction between dubai and abu dhabi as being something that creates a dynamic for the country as a whole where you have an oil economy in the beginning that is being diversified, and the progresses of abu dhabi into diversification. and so in a country that has two or even three of everything, it's only a matter of time before they work it out. >> cnbc's hadley gamble. bank of cypress has pointed a 1.8 billion euro loss in the first half of the year. and rising loan divisions. the bank's new ceo john patrick hurricane says the focus is now in restoring consumer confidence through asset de teterror qualification.
ten countries meanwhile are being bumped down to the emerging index potentially drawing new pone into the country's private sector. the national bank of greece, bank of piraeus and alpha bank could inject over $500 million into greek corporations. joining us is the executive chairman of the athens exchange and ceo of the helenic group, socrates lazaridis. mr. lazaridis, why is this beneficial to be going down to the emerging markets index? was it because the greek portion of the developed index is so small people could ignore it? >> actually, there was a small number of companies representing
in the world due to the decrease of prices of the stocks. and now the number has been increased to 10 participants in the msci index. this has boosted along with increased interest for all the greek companies has boosted the participation of this companies and index. there is still the liquidity of the market. >> how much greater interest have you had finding out about the greek markets, is it clear that these firms would move into the emerging markets index? >> i know that from yesterday that was the day of reclassification. we have had them importantly increased trading tifd. 1 billion, slightly below 1 billion on the base trading
value. but i can say that it came over from growth in the first months of activity was -- is approaching the 2 billion interest, net influence in our market. >> you reckon you're going to get a big jump in the average daily trading volume on some of the company? >> correct, yes. year-to-date, we are learning with another daily trading and volume of millions, which is well above the previous year's figures. and in this final quota, we have a knowledge of 150 million units. >> all right. >> without counting -- >> mr. lazaridis, stay there.
i want to bring in martin yan from ing. i can see actually why it's going to benefit the -- those who have to mimic the emerging markets index to track a fund. will it also encourage stock pickers who don't care about tracking but now, because there are classes of emerging markets, does it bring in a new class of stock picker? >> i think there is going to be a lot of interest because markets are not too sensitive because of u.s. tapering or china's growth slowdown. they want a company that made has been a crisis compared to those going into the crisis. from the top down, there will be a lot of interest in greece. and, of course, the stock pickers will be part of that and they will look for companies in greece that fit that theme very well. >> relations and predicting
inflows around $520 million into greek shares center exchange traded funds. in itself, is that an opportunity that people, do you think, already are going to front run? >> yeah. i think that already has happened a bit in the last few quarters. so since summer greece has been protesting markets and i think people have been -- have really been anticipating the inclusion into the emerging markets index. >> what happens from now, do you think? >> well, some people claim that the next few weeks, months, might be a bit difficult for greece. because after the inclusion, there might be some selling to more technical reasons. but i think that it might be also different because there's going to be a lot of interest in greece. now, emerging market funds have struggled to find good investment ideas because there is so much pressure on many emerging market themes that worked well in the last ten years. so i think greece is a theme that deserves a lot of attention and there might be more buying
also in the short-term, i think. >> mr. lazaridis, have you had those discussions with people that have been -- got worried about emerging market investors because of their worries about tapering and they figure greece is a better hedge in emerging markets? >> yes, yes. my understanding, my discussions to have is that two competitive advantages that the greek market has in this is the stable currency, which is in europe, and the level of corporate governance following -- by following the european thunders. >> yeah. so to martin, okay, you say they've already had their crisis. there must be still some risks associated with greece. what are they? >> well, of course, there's political risk. there's the risk that the european union, the imf, will put new pressure on greece to do more reforms that might not be
possible to implement for political reasons. but don't forget that greece already has -- the market has corrected by -- at some point corrected by 90%. since then, it has more than doubled. but it's still 80% below the peak. at the same time, there has been a massive adjustment of the fiscal and current accounts. greece has now surplus. greece's 25% more competitive while other emerging markets have lost competitiveness in the last years. so in that greece is ahead of crisis and that's still risk. but compared to the oh emerging markets, it looks very attractive. >> martin, thanks very much for joining us. mr. lazaridis, thank you very much, as well. they say the early bird may get the worm, but it's the second mouth that gets the cheese. matt taylor reports.
>> for 100 years, it's been a dominant figure on the australian landscape. but in recent months, it's become the target of an aggressive bidding war. cheese and butter has found an unlikely suitor in canadian giant saputo. >> price has been a factor, clearly, and price needs to be the basis of any offer that the board is going to recommend. but i think with saputo that has been really strong is they put themselves in a position where the board has been able to determine on balance that their offer is superior. >> canada's saputo has broad backing for its $9 per share all cash offer as it try toes expand by acquiring companies around the world and hunts to take advantage of the lucrative emerging markets. >> so we've expanded into the
united states. we have a platform in argentina. and for the last ten or 12 years, we've been looking at australia as a strong platform, potentially to service the domestic market, but as well as to take advantage of the growing emerging markets around the world. so australia, i think, has a very defined and very, very experimented dairy industry. and we would like to be participants in the industry. >> saputo is not alone in its desire to get its hand on cheese. since september, the local producer has had to weigh up not one, but eight offers to buy the company. the bidding process began when rival australian darely outfit bega launched a cash offer. things quickly escalated when saputo first bid $7 per share. enter another australian rival, murray goulburn. but just a week later, saputo hit back.
murray goulburn upped its offer before saputo raised its bid and offered another incentive. will a higher offer be enough to win shareholders? the bidding war for cheese and butter has been unlike anything seen in m&a for a number of years. shares are up over 150% this year alone. despite the word backing saputo's office, the battle could be far from over. >> all right. cnbc's matt taylor. we'll take a short break. still to come, is there some light at the end of the tunnel for hp? it could be coming from an unlikely source. we'll bring you more after this.
this is "worldwide exchange." your headlines today, u.s. equities looked to extend gains into record territory. again, with a raft of economic data due before traders head out for thanksgiving. hp turn around, it may be bearing fruit. shares jump after hours as the california beat solid sales on the enterprise business. a grand coalition insight for germany, up to two months of pretty intense negotiations.
raising hopes for reform, maybe the information of a banking union. and the united states and japan defy china's self-declared air defense zone. they've flown b-52 bombers and commercial jets right through it without telling beijing. >> announcer: you're watching "worldwide exchange," bringing you business news from around the globe. and a warm welcome if you've just joined us in north america. stateside particularly. one day to go before thanksgiving. so hope if you're traveling today it's going to work out for you. we saw very slim close higher for the dow yesterday. but nevertheless, it was just another record close, up less than a point. in the.right now, futures are telling us we're around 38 points above fair value. the nasdaq at the moment is nearly 8 points above fair value. and the s&p 500 at the moment is around 3.5 points above fair
value. the nasdaq worth pointing out closing above 4,000 for the first time since 2000 last night. european equities have been firmer during the session. the ftse yesterday was down 58 points. currently up 1 1. 0.2% higher for the xetra dax on all-time highs at 9,3009. and the cac 40 is up 0.11%. more confidence in win ago confidence vote. he's the current prime minister. they're going to vote later today to see whether silvio berlusconi gets ejected from the senate. shanghai doing the best up 0.8%. undeterred by the fact that we have this unofficial no fly zone over the china seas and america and japan are doing their best to ignore. the hang seng is up 0.5%. australia is down 0.4%.
and the milk down 0.4%, moving away from the one-month highs we closed at on monday. bond rates at the moment, gilt yield higher this morning. we saw unrevised third quarter gdp with the breakdown, much of the recovery in the uk coming from consumers rather than investment-led growth. ten-year bund yields, 1.7%. on the currency markets, euro/dollar up to one-month highs this morning. currently on that level, dollar/yen, 101.75, not far away from the dollar/yen six-month high of 101.911 on monday, as well. sterling up against the greenback, 0.9113. it is cheaper folks for you to come and slit london, 1.62. in the united states, we've got weekly jobless claims at 8:30 eastern. forecast to raise by 7,000 to a total of 330,000.
at the same time, we get october durable goods. those are expected to drop 1.7%. at 9:45, it's november chicago pmi which is forecast to fall by nearly 6 points from last month. and at 9:55, we get the final reading on november consumer sentiment. at 10:00, it's october leading indicators. a lot of data to bring forward because of the thanksgiving holiday. hewlett packard's fourth quarter adjusted profit fell but beat forecasts by a penny. a big bright spot in the company's enterprise business, sales in that sector rose 2% on service and storage. last quarter, the ceo meg whitman was placed at the head of the unit. she says she's pleased, but there's still a lot of work to
do. at the same time, a u.s. judge has ordered hp and the ceo meg whitman who defend a shareholder class action suit which claims they knew statements about the company's acquisition. hp bought autonomy in 2011 for $11 billion but later took a massive write-down on those assets. the judge dismissed claims against five former executives of hp. the u.s. and japan are testing china's resolve over its self-declared no fly zone. b-a 52 bombers and commercial jets flew over the china sea. they continue to join japanese criticism of the chinese move. >> unilateral actions like those taken by china with their announcement of an east china sea identification zone undermine security and
constitute an attempt to change the status quo in the east china sea. this only serves to increase tensions in the region. >> at the same time, two airlines say they'll no longer co comply. after weeks of talks, germany's biggest parties have reached agreement to form a grand coalition. angela merkel's conservatives and the social democrats will now vote on whether to sign off on the deal. annette, there's interesting details in here because they're rolling back on some of the schroeder reforms, reducing the pension age. there are some questions about how happy members of the scp are there this and whether they'll get the complete sign off they need. what's going to happen? >> well, that's looking into a crystal ball. i can't really tell you what's going to happen. but the likelihood is quite high that they will sign up to that
because, actually, their party leader, the social democrats party leader has brought home quite a bit looking at the start of the talks. what they got was the minimum age and some easing of the pension reforms, i.e., the lower retirement age for those who have already worked 45 years. that is one of the big themes for the social democrats. in terms of timelines, perhaps interesting for our viewers is to set a scene here to say it will be mid-december, the weekend of december 14th and 15th when the results of the party referendum by the social democrats will come out and only afterwards will get to know know about who is going to head up which ministry because, of course, the deal can fall through if the social democrat party members say no, we don't want to have a grand coalition. but for now, the coalition
agreement says there won't be any tax hike. this is a net positive for the industry in the economy. and also we won't see a lot of changes when it comes to eurozone politics. with that, back to you. >> all right. thanks so much indeed for that, annette. joining us from think tank europe, nina, thanks for joining us. when you look at the coalition on europe, it reinforces what should be a stand off in france. the european commission should be another body, merkel is moving away from a deal that allows the esm to directly recapitalize. taxpayers should be shielded from failing banks and a rejection of all forms of debt mutualzation within the eurozone.
>> this agreement shows that the answer to that is no, we won't see that. there will continue to be german foot dragging on banking union. the draft agreement which we saw yesterday had very little detail on banking union which is a surprise because we know that has been a big topic of discussion between yesterday and angela merkel. there will have to be some kind of decision made on that. with the important banking union negotiations coming up, germany will have to make a decision and it could very much define how the eurozone ends up going. now, another interesting point, she's close in the lead up to the election is the idea of reform contracts. so that troubled eurozone countries will have to legally enforceable structural reform in return for aid for their
economies. >> how is that going down in paris and rome? >> well, probably not very well. this is also something that merkel floated at the recent urur european council meeting. it will be interesting to see what happens. but when it comes to germany, they have a lot of clout in the eurozone. so these reform contracts could definitely become the next big thing in the eurozone. >> what's interesting is how they've coming with the leader in europe and also what the reaction of the latin block is going to be. france and germany have always worked together. are we going to see an interesting change in the political dynamic where maybe france starts fighting more with spain and italy to sort of oppose germany or the northern block? >> well, of course, this is one of the big fears for germany and this is one of the reasons why
germany is so keen to ensure that the uk never leaves the eu. they are terrified that they would be outvoted by a southern protectionist block if that was the case. however, the meetings in berlin, i hear very often that france is a big worry in germany, it certainly is. >> it could be back in recession. >> absolutely. absolutely. >> france is definitely a worry for this, no doubt about that. >> you mentioned the uk. it's kind of interesting. how strong is britain negotiating position bearing in mind what you've just stated about how they feel about keeping the uk in the eu? >> well, i think it's important not to underestimate how important the uk is to germany and the eu. certainly number one germany is terrified, as i mentioned, of being outvoted by protectionist block if the uk were to leave. you know, the entire coalition
agreement has got, you know, references to how europe has become more competitive, open to trade, etcetera. so a more protectionist block dominating the eu would be counterproductive to that. also, it's the second biggest contributor to the uk budget. >> and i think germany's biggest trading partner, as well, period. i think total goods traded. nina, good to see you. thanks for joining us. angela merkel will be holding a news conference on that coalition about 50 minutes from now. european viewers will get to see the start of that speech. some of the other stories we're following today, cox communications is reportedly considering whether to jump into the bidding for time warner cable. cox is the third biggest u.s. cable provider, just ahead of charter, which was the first company to begin twc earlier
this year. last week, david faber reported that comcast was contemplate ago bid. cox and time warner cable stock -- time warner cable stock, first of all, up nearly 4% in frankfurt. several private equity firms are reportedly mulling a buyout of compuware. a deal could be reached by early january, although the situation is being described as fluid. compuware stock not showing us anything in frankfurt. meanwhile, silvio berlusconi is facing a senate decision that could finally expel him from
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of thanksgiving. and the german chancellor angela merkel agreed to terms for a coalition government with the social democrats. the italian senate is going to vote on silvio berlusconberl expulsion from parliament. it comes after last night, the current italian prime minister won a confidence vote on the 2014 is budget. forcing berlusconi to break his party from the government after seven months in the left-right coalition. joining us for more is jill. she's in rome. we now have a rump of the party vote onning with the government. wa do we wowhat do we think is happen tonight? it's been a long saga, this one. >> you're right, ross.
it has. wa we're expecting is this vote to go against him. the remaining party of the former party of berlusconi still with the coalition, they are expected to support berlusconi in this, but it won't be enough. so actually not seeing that vote expel him tonight will be the biggest surprise here. the question is what does that mean for the government right now? as you quite rightly said, berlusconi moved his party into opposition now. he said no matter what happens with this vote tonight, he will remain the figure head of this party. and you can expect, despite the weakening that we've seen of his positioning government at the time moment, he will continue to try throw a -- in the works as far as the workings of this coalition is concerned. but i think the key question here is what does this mean for berlusconi personally? because what we could see here in this vote, if he is evicted,
is he'll lose his parliamentary immunity. he has cases against him, in particular one paying for sex with a my yorn. could he be arrested for these? eels always managed he's always galvanize popular support. right now, my sense of being in rome is that the support for this coalition government and for in berlusconi is it's as divided as ever, ross. but we're waiting for that vote expected tonight. back to you. >> julia, thank you very much. that's the latest from rome. meanwhile, how much is detroit after? we know it's worth a lot in rome. how much is it worth in detroit? that's the question being asked by a bunch of city's critters keen to see the collection sold.
it includes some high profile works such as "the thinker." it's currently being valued by christies. detroit filed for bankruptcy in july with an estimated $18 billion of debt. but what we're asking today is should the art be on the table at all for critters when it comes to repaying debt? does everything have a price? tell us what you'd like protected. e-mail us, firstname.lastname@example.org. tweet @cnbcwex or direct to me @rosswestgate. still to come, the rise of bitcoin continues as the additional currency is now nearing $1,000 in value. we'll look at the latest including the influence in china. . plus, three people singing for a different coin. prince william, john bon jovi and taylor swift.
now for equity markets after very slim moves yesterday. both the s&p and the dow moving higher by less than a point. it's currently called 37 points above fair value. the s&p called higher by 3.5 points. closing above 4,000 the nasdaq for the first time since 2000. european equities are higher. the ftse yesterday was down by some 58 points. it's currently up -- not by that amount, but up by 0.25% along with the xetra dax. the cac 40 up 0.1%. the ftse mib up 1% benefiting by the fact that the government survived what was essentially a confidence vote on the 2014 budget. and on the bond markets, yields a little higher today. treasury yields 2.72%. yesterday we were yielding around 2.69% on the ten year, which was a one-week low for that yield. italian yields are lower on the back again of that confidence
vote. italy certainly outperforming at the moment during this european session. meanwhile, the continued interest in bitcoin shows no sign of abating. the price for one unit of the digital currently 1,000 stateside tuesday. but the record for the highest bitcoin is still in china. last week, china's deputy governor said while it would be impossible to recognize it as a financial instrument, people should be free to participate in the market. joining us with his thoughts, garrett coleman from the london school of economics. nice to see you again. thank you very much indeed for joining us. it's a rather extraordinary statement from china. on the one hand saying you should be free to use it and on the other hand you have a capital control. >> there's been wild speculation on why the chinese are taking this stance. perhaps the most incredible claim published by forbes is that the bitcoin is a threat to
the u.s. -- >> that did cross my mind, as well. i think it's a bit premature to think the bitcoin is going to knock off the dollar. >> is there some thought in that process, well, it won't do any harm if it does grow but you never know? >> the bitcoin is an early doctrine right now. i don't think the chinese see it as too much of a threat to their own financial regime. it's also to talk with a bitcoin minors about the chinese role in the bitcoin market. there is a concern might know among bitcoin which produces mining technology that the state might get involved with mining bitcoins themselves and try to take a large position in bitcoin. >> yeah. what's interesting is that china now has the world's second highest number of bitcoin notes according to bit notes and their main exchange is the world's highest volume bitcoin exchange. so they are driving it.
>> absolutely. there's tremendous demand in china as well as other places like cypress, iceland, argentina where there's been capital controls or economic dislocation. >> is there an argument that's worth saying, actually, china is so heavily involved, it's one thing that might guarantee the longevity of the bitcoin? >> it certainly helps bitcoin process to have such heavy interest from china. you know, it's too early to say what the future is going to hold for bitcoin in china. you can see the chinese trying to crush bitcoin like they did in 2009. at the same time, they may be reluctant to try to do that because it's decentralized. >> what's happening with merchants? i suppose the key thing is it's all very well -- are merchant egg gois going to use it or not? >> merchants are using it in china. a way for chinese to diversify out of one into another currency
and possibly move money off the shore. that's one of the paradoxes why chinese are allowing a loosening of the capital control through bitcoin. >> when do you think they might try and square that up? >> well, i think if bitcoin were to become i think much more mainstream and used more widely in china than it is currently, that might be a time where the chinese say, whoa, wait a minute, this at a odds with a very important part of our financial regulation which is bottling of capital in china. >> great to see you. thanks very much for joining us. now, we've been running a trader poll every week cnbc is asking to talk the trend. and this week we've been asking you would you buy bitcoin? head to traderpoll.cnbc.com. cast your vote. you can see the trend as you do that. you also have your stay on twitter using the #traderpoll. we'll take a short break. still to come, what's in store
hp's turn around efforts may be bearing fruit. shares jump after hour as the company beats forecastes and solid sales from its enterprise business. a grand coalition now in sight for germany after two months of intense negotiations. raising hopes can now move on with other crucial reforms, including the formation of a banking union. plus, the united states and japan defy china's self-declared air defense zone, flying b-52 bombers and commercial jets right through it without telling beijing. >> announcer: you're watching "worldwide exchange," bringing you business news from around the globe. a very good morning to you if you're joining us stateside. not long to go before thanksgiving day. if you've got travel plans, i hope they're going to work out all right. u.s. equities pretty unmoved
yesterday. the dow up 8el points, nevertheless at a fresh closing high. the indications are that today we're going to jump at the open. the s&p is some 3.5 points above fair value. the nas cladaq closed above 4,0 yesterday and the dow at the moment is some 35 points above fair value. european equity ves moved higher. the ftse yesterday down 58 points. currently up 0.12 percent. the cac 40 is up 0.1%. italy, up as well. the market outperforming there. the ftse mib up 1%. btp yields are down in italy. what are traders to do as we head towards thanksgiving and the start of the holiday season? here is a recap of some of the thoughts we've already had out. >> i have to say, i've rid
continue train from the 40s rather than the 9 tb. but even from where we are now, i see significant upside. .i think the main reason for that is that the company has very strong balance sheets and above it it remains geared for an improving uk economy. >> you think you've got to look at the stories. if it was classic, it was a failed 2000 stock and it's taken 15 years or 13 years to get itself sorted. but it's restructuring itself, but it's still looking quite attractively valued. that's what a lot of stocks on your board with that type of a potential. >> we have forecasts in japan and in europe.
>> and on the agenda in the united states, weekly jobless claims are out at 8:30 eastern. forecast to rise by 7,000, so a total of 330,000. at the same time, we also get october durable goods. they're expected to drop 1.7%. at 9:45, it's november chicago pmi forecast to fall by nearly six points from last month at 9:55. we get the time read on november consumer sentiment and five minutes later at 10:00, it's october leading indicators. a lot squeezed in today because of thanksgiving tomorrow. joining us with his thoughts, hank smith, chief investment officer at haverford investments. good to see you. we had the case-shiller index out and an unexpected fall in consumer confidence. where does that leave us? >> i think that's been the story for several years now, mixed data, below average growth. but i think the markets have
confidence that the economy is expanding and the risk of a recession is very, very small. balance sheets are strong. valuations are reasonable. why shouldn't we be bullish? that's the real question. i think the market is going to continue -- >> on what metric are you saying valuations are reasonable? quite a few people are questioning take the s&p 15 times forward earnings, whether that is a reasonable valuation. >> well, it's right around the historic valuation of about 15, 16 times earnings. and then, ross, when you factor in the low levels of inflation, you could actually make the case that the market should be selling closer to 18, 19 times earnings. so at the very least, it's reasonable. >> are those, though, that suggest we're in a -- we've been in a real sweet spot for companies because margins have been fantastic. due to three things that are going to go away.
they'd exceptionally low tax rates, low cost of borrowing and they've been able to squeeze the amount they pay mrr employtheir. those things are going to get worse now. >> right. i've been hearing the peak margin case now for three years. and corporations continue to increase productivity and perhaps this is the new normal, this very high level of productivity. and, in fact, if margins come down because corporations are hiring more, that means the economy is stronger. so i think that is good, too. >> yeah. and you also make the note this is the most hated bull market. is that an argument for the fact it's going higher? why is that, you know -- why is that an argument? >> well, i made the case on the fundamentals. now i'll make the case on sentiment. look, you have fear and greed.
we are nowhere near greed. in fact, i would argue there's still a ton of anxiety. not so much because of the fear of several years ago, but the fact that most investors have missed this bull market, they're waking up right now realizing they've missed 170% move off the bottom. they've been in cash. they've been in fixed income. it's earning them nothing. now they're wondering what do i do? and that is creating anxiety and that is good for a market. >> we'll be back with you in just a second. get a cup of coffee. a big couple of days for u.s. consumers after picking up a last minute thanksgiving turkey, attention turns to the price offerings of black friday or thanksgiving evening. but it's becoming an international affair. courtney reagan has this report. >> from china to russia to mexico. they may not celebrate thanksgiving, but more .more global consumers are coming ton what the day after means.
50% off cashmere sweaters thanks to the help of company border free. >> black friday and cyber monday are the two highest day of sales we see from all around the world. >> they work with many retailers including j. crew andny ma' nei marcus. once an order is placed, boarderfree steps in to help facilitate shipping. the retailer acknowledges black friday and cyber monday are very busy days everywhere. sachs says last year it saw a significant increase in international traffic and sales during its post thanksgiving event like black friday and cyber monday. the retailer expects the same occurrence this year. the high-end department store says significant sales are done in canada, australia, russia, the middle east and asia. why the international demand for
retail? >> it's a combination of the two. interestingly, the number three reason is people think i recently went to the united states. >> from cnbc, i'm courtney reagan. >> and it has even been exported to the uk. apple, as i understand it, are cutting the price of goods, some of their goods on friday, which means some of the stores in the uk are responding to that. so it is being exported here, as well. this, of course, as u.s. retailers wait for this annual rush. best buy wants to ensure everything goes as smooth as possible. the electronics chain has conducted its dress rehearsal. i tell didn't on tuesday of several stores including one we were just seeing in new york city. employees dressed as shoppers stream in. they try to wrestle coworkers with a barrage of questions from everything about price matching to where is the bathroom. >> black friday honestly is going to be the busiest day of your life and it's going to be so much fun. honestly, it is my favorite day in all of retail.
it is the day that makes the holidays for us. >> last year, best buy opened its doors at midnight on friday black. this year, they're opening at 6:00 p.m. on thanksgiving. hank, i -- look, i don't do -- clearly i don't do the thanksgiving lunch. honestly, is there anybody you know, after they've had lunch tomorrow, besides -- look at their watch, it's quarter to 6:00, let's go shopping? >> there's no one i know that has any desire on thanksgiving day or evening to go out and shop. particularly if you've been celebrating as vigorously as i do. >> yeah. okay. so i don't know who they think is going to turn up at 6:00 p.m. tomorrow. anyway, maybe we should -- if anybody is out for some weird reason tomorrow at 6:00 p.m. in a store shopping, please let us
know why and what you're buying. it's extraordinary. it's like going shopping because you say, hank, you like tjmaxx out of all of this. why? >> well, look, tj maxx is a year-round a great bargain, not just on black friday or cyber monday. so it's a stock for all seasons. it's a company that has executed so well. they've increased same-store sales, their entire history of 35 years with the exception of one year and that goes back even to the great recession they had year over year, same-store sales growth. and it's a company that rewards shareholders by increasing dividends and buying back stock on a consistent basis. so you really have it all, ross. top line growth, bottom line growth, share buybacks, dividend increases. there is nothing not to like about tj maxx. >> thank, good to see you. have a great thanksgiving day tomorrow. and if you get a little twitchy
near 6:00, you know what to do. >> thank you so much. >> exactly. no risk there. now, one of the big issues of course about thanksgiving is weather problems. heavy rain and wind from the carolinas up to the northeastern u.s., snow north near the great lakes. causing headaches for many people on the busiest travel day of the year. airlines are waving fees for passengers flying in and out of the northwest. philadelphia, new york and boston. high wind gusts could impact the annual macy's thanksgiving day parade, as well. organizers may decide to ground the balloons. the weather channel's jen carfagno joins us from atlanta. jen, how is it looking? >> all right, ross. everything you just said unfortunately may come true. the winds tomorrow, a big issue. the wind today, a huge issue. the rain is one thing. you see it here on the radar.
very wet on the roads. airplanes can fly on to a rainey runway. but the winds we're talking about today, gusting over 40 miles per hour. that can cause delays. watching for that to happen early this morning, even at places like laguardia, jfk. the rain issue is an issue for drivers. snow is another issue too, light snow from west virginia into western pennsylvania. lake-effect snow in behind that coming off of lake michigan, indiana. the snow may not be as heavy. the lake effect areas is where you need to watch for snowfall. some icy spots on i-81. the rain continues into new england. tapering off in new york city. but then the wind. the wind will be so much of a factor here. also, it's going to be a big factor for the macy's thanksgiving day parade. the winds may gust in excess of 30, 40 miles per hour. and that, ross, would have a big impact on the balloons, as you
mentioned. >> could be balloonless. let's hope not. jen, have a greet thanksgiving day. safe travels for everybody on that. a recap of the headlines, uk equities could trample further into u.s. equities. hp shares jumping after hours as the enterprise division help offset falling pc sales. and the german chancellor angela merkel has agreed to terms with a coalition government with the social democrats. still to come, s&p is weighing in on the growing tabs for banks to settle all their mortgage related issues and two more wall street firms may be getting swept up in u.s. probes. we'll get the details right after this. [ male announcer ] this store knows how to handle a saturday crowd.
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a whole host of u.s. banks are going under the microscope today in focus over hiring practices overseas, commodities trading and long running mortgage related issues. joining us from washington with the details, cnbc's hampton pearson. morning, hampson. >> how are you doing, ross? yeah, first of all, standard & poors says big u.s. banks may have to pay up to an additional $105 billion to resolve all those outstanding mortgage-related cases. but they should have enough
capital to help them absorb the losses. banks have faced a wave of lawsuits as regulators investigate their role in the bundling and sales of mortgage-backed securities before the financial crisis. a big increase in legal reserves weigh eed heavily on third quarr results. jpmorgan reported its first quarterly loss under jamgame di job after reporting its reser reserves. the s.e.c. and the justice department, meanwhile, are expanding their probe of banks highing practices in china to including morgan stanley and citi group. the investigation focuses on whether they hire relatives of well connected chinese officials in an effort to win new business. in august, jpmorgan disclosed it is the subject of civil and criminal probes over the hires it made in china. the s.e.c. has taken enforcement action against seven companies this year for paying bribes and
making improper payments overseas in violation of the u.s. foreign corrupt practices act. meanwhile, in europe today, shares of morgan stanley are down about 0.5% and citigroup has been up about 0.25% in trading so far today. finally, one more item concerning jpmorgan. reuters is reporting the bank tried and failed to satisfy the fed over its ownership of metals warehouses. long before that became a focal point in a debate over wall street's role in trading of physical commodities. reuters say letters show the fed was unwilling to accept jpmorgan's proposal last year to turn its metals business into a simple financial investment. the fed told the bank it had to comply with federal rules or sell the business. the fed pressured jpmorgan to reduce the amount of metal held by its traders, an issue that would aernged consumers this year. jpmorg
jpmorgan eventually decided to sell the entire business. quite a rund oundup in big bankl the way around. >> thanks for that. still to come, wall street is setting a low bar for hewlett packard. but the company did manage to exceed expectations. we'll break down those results, next. avo: the volkswagen "sign then drive" sales event is back. which means it's never been easier to get a new passat, awarded j.d. power's most appealing midsize car, two years in a row. and right now you can drive one home for practically just your signature. get zero due at signing, zero down, zero deposit, and zero first month's payment on any new 2014 volkswagen.
whitman to replace the head of the unit. whitman says she's pleased with the progress, but there's still a lot to do. on the phone from new york, abhey lamba. how much more work is there to do? >> yeah. there's plenty of work to do. if you look at the quarter's results, up theside came from pcs and both are very low margin businesses. that's what you saw, the revenue beat consensus was more than $ 1 billion. but eps up side was only a penny, which highlights the challenges that hp has, that it's low margin businesses that are being commoditized are the ones to the upside. some of the high margin businesses, like software, storage, they need to do a lot of work on those firms. >> hp has to face up to the challenges of a new world where i guess businesses, consumers,
rent software over the internet. how quickly can they adapt? >> yeah. this is -- this is not going to be an easy or quick transition. it's a multi year transition. and we'll have to see whether they can make that transition because if you look at hp's 80% of the business, which is pcs, printing, all of the services, 80% of this business is going to be less relevant. so it's the only 20% of the business that has to get it there, which kind of highlights a challenge it has. >> nevertheless, they did beat expectations, but expectations, i guess, were fairly low. is that the business they're in now about managing expectations? >> that's very fair. i think after can i say cisco and ibm, expectations for the entire technology sector were low and hp reported similar dynamics as the other two
companies. but they also navigated through the downturn fairly more effectively. so, yes, it is part of it is managing expectations. and the other part is trying to kind of figure out how to claim the comfortable parts of the business that they compete in. >> yeah. as far as the stock is concerned, therefore, have we seen the worst? it may not mean it's a buy, but have we seen the worst? >> yes. we have come through the period when there was question about whether hp would i be able to stabilize and move forward. lately execution has been good. they need to continue doing that. but secular challenges remayor and for that, they need to invest in r&d and new products and that's going to be a hard one for them. >> abhey, thanks for that. have a good thanksgiving. that's it for today's regular
will a winter storm derail plans for americans? it was a tough commute today. ready, set, shop. forget black friday. the neigh's retailers are rolling out the sales. and preparing to open the doors earlier than ever before. as for the markets, stocks trading in the narrow range ahead of the holiday. the dow and s&p had record highs and party time. the nasdaq closed above 4,000 for the first time in more than 13 years.
it's wednesday, november 27th, 2013. "squawk box" begins right now. >> you made it. good morning, everybody. welcome to "squawk box" here on cnbc. i'm becky quick along with joe kernen and andrew ross sorkin. he's here. he made it. >> wow. >> he was stuck on the gw bridge. he made it. i'm impressed. go like this with your hair. you did good. >> thank you. how are you? >> i'm amazed. >> let's see how it's done. >> this is how it's done. >> very nice. >> what about the hair? >> what do you want to do about the hair? >> did they close the bridge? >> they didn't close the bridge. these closed off two entrances to the bridge. >> look at this team of people.