tv Worldwide Exchange CNBC February 26, 2014 4:00am-6:01am EST
hello you're watching "worldwide exchange." i'm russ west gate. >> i'm julia chatterley. >> u.s. releases a scathing report from credit suisse. positive earnings reports out of europe, a hike in production off of strong profits and inbev hosts a recovery in mexico. mt. gox receives a subpoena from new york and japan announces they're also investigating the matter.
the bull's eye on target as the retailer has its earnings report since it suffered a security breach during the massive holiday season. u.s. senate panel investigating tax evasion has accused credit suisse of using cloak and dagger tactics that belong in a spy novel. it alleges c.s. bankers made 150 trips to the u.s. between 2002 and 2000208 orchestrate a large scale tax evasion scheme. some of the things credit suisse is accused of operating remote controlled lifts, and bankers accused of filing false visa applications pretending they were tourists and advising clients how to dodge u.s. tax
laws. the senate hearing kicks off late today, shares trading at the bottom, just down just over 3% in trading today. the firm came out to say it considers its insurance policies for wealthy u.s. citizens to be tax compliant. credit suisse has been preparing for investigations into its products known as insurance wrapper wrappers. the long arm of the u.s. treasury, by the way good morning, everybody. you didn't say good morning. >> good morning, sorry, good morning. >> good evening if you're watching in sipping apore as well. good e-mails coming out of credit suisse or conversations out of the investigation? >> it's a little bit embarrassing.
we were waiting for the juicy details. interesting, there is going to be a comparison with ubs, they settled several years ago $780 million they settled for and credit suisse settled with the sec and did say to us the latest earnings they're just waiting now for the department of justice in the u.s. to state their claim and how much they expect them to shell out at this stage. >> it will sort of be interesting. edmund shing is from bcs financial group. >> good morning, ross. >> nice to see you, you're looking very chipper. how much more stuff coming down the pipe? this is a whole series of things. >> if there's one thing i can say, thank god i don't work at one of the big banks anymore. i used to. i don't anymore and i fear for them. it's been an unending stream of bad news from the regulators. regulators have cart blanch to get tough and when you look at the bank's results on top of
that it's having an impact. on the one hand they have to pull back their balance sheets and be compliant, tidying up their activities, they can't stop paying their bankers otherwise they disappear to the rivals down the road. >> they haven't started the foreign exchange investigation yet. >> remember the german regulator that's bigger than the libel scandal. perhaps more expensive as well. >> that's what it normally means. >> credit suisse raised provisions again for this. >> ain't going anywhere. thanks. we'll come back to you in a second and talk about earnings. airbus announced a hike in aircraft production and posted a 21% rise in full-year operating results, see it a first on cnbc
interview. 1.3 about euros in 2013 dipped 1%, a slew of uk earnings, itv will pay a special dividend of 161 million pounds off to a sharp rise in 2013 revenues. the british broadcaster was boosted by a lift from money coming in nonadvertising channels. travis perkins appears to be reaping benefits from an upturn in uk house building. the company posted a 6.3% rise in its full year revenue. speaking first to cnbc earlier the ceo of the uk's largest builder merchant says he sees room for further growth. >> even though we are number one of building materials in the uk we have a lot of head room to grow. we have 17 businesses within the group, each a minimum of 25% head room to grow in their particular channel or segment.
>> edmund, you like the house bills in. >> i'm a big fan of house bills because we're at the best point of the cycle for them. think about it. house processes are going up in london and the southeast, help to buy, the government's throwing petrol on the games and getting the house market to be as buoyant as possible, of course this is not pre-election engineering, i would never suggest that, however, house builders are in the best possible place and mortgage rates come down to a post-crisis level. >> there's a lot more fuel left in this particular fire? >> i think there's a bit more. i don't see how london and southeast are going to see house prices flattening out just yet. >> can i draw you to another sector? >> try me. >> the turn in the bear trend for the miners here. >> i love miners. nearly two years now they've been right because they did
spend too much money. c capex way ahead of where it should be. prices collapsed and prices have stabilized for things like copper, iron ore. more importantly they rediscovered capex disciplines. >> for the rest of the market for the wider market to get interested in miners, i think at the end of the day it's going to boost them is it's got to be better sentiment around china, doesn't there? >> absolutely. china is the key driver. >> everyone's getting nervous because the u.n. has been fixed below for the second wednesday in a row. >> i would be careful because the government does what the government wants in china. remember this is not a democratic government. they have a long-term strategic economic plan in place. we will see a moderate acceleration of growth. i don't think we'll see it 7% or below growth. i think it's more like to be
7 1/2 plus, which would be good news for miners. >> talk to us more broadly about european equities. the large cap making moves, volatility well contained. bullish signals? >> i would say so. little note of caution there, because i must admit when everyone gets bull ush i get nervous. when the retail investor is confronted with the scenario where bank interest rates are abysmal and getting more abysmal by the day, bonds look dreadful as well, where are you putting your money? in equities and property, those are the only two asset collapses that seem to offer any sort of hope for the retail investor but that makes me nervous. when everyone's piling in, i think i should be getting out rather than getting in. it's too early to play that end game. >> talk to me about tech stocks, valuations what, do you think about that? >> tech stocks are bizarre. it's like how can i put this? like a barbell scenario.
you like facebook, linked in, or some astronomical valuation which i cannot possibly with the best intentions cannot justify. i don't know how you get there. on the other hand you have things like apple on eight or nine times post cash earnings, super, super cheap, still generating phenomenal amounts of cash flow and in particular i would focus on semiconductors. they are in another place people love to hate but going up fast. >> controversy from edmund. we like it. >> good to see you as always. >> bcs financial group. >> good. sounds good when you say it. also on the agenda stateside, target is set to report fourth quarter earnings before the opening bell. investors are looking for any update on the breach that saw over 100 million customers' data stolen, how much is their bottom line and what kind of shadow weather woes have cast over its fourth quarter.
u.s. secretary of state john kerry says the crisis in the ukraine doesn't need to lead to conflict between the kremlin and europe. william hague urged all parties to cooperate. >> this is not a zero sum game. it is not a west versus east, it should not be. it is not russia or the united states or other choices. this is about people of ukraine and ukrainians making their choice about their future. >> meanwhile russia's foreign minister said that aid to ukraine should only be provided to "legitimate ukrainian authorities." we're joined by jim from moscow. it may not be a zero sum game as far as kerry is concerned but it is as far as vladimir putin's concerned, isn't it? he's been incredibly silent over the last two weeks. what's going on with him here?
>> reporter: that's right. what happens next will obviously be very much dependent on what vladimir putin does next, and so far we simply haven't heard from the guy. he had a meeting yesterday with his top security council but no information came out of that and i think that this is really what's driving the uncertainty about what russia does next, because putin, after all, must be reeling from the loss of face, if nothing else, from this revolution in ukraine especially given the timing of it, right at the height of putin's olympic glory, and we still don't know what he's planning. perhaps he's waiting to see what the makeup is of the new government in kiev, before he plays his hand. in any case, julia, the overall sense we're getting from experts we're talking to here in moscow is that putin would only use
intervention or even encourage a split in ukraine as a last resort meaning if one of two things happens, if the ethnic russians in ukraine are seriously threatened in some way, or if russia's economic interests and influence are cut off, those would be, we are told, the two red lines that might trigger something more dramatic but for now it's been pretty much as you said with sergey lavrov muted, cautious and pretty calm. back to you. >> thank you, jim. crucial potential flash points there. thank you. just over an hour and 1 minutes into the trading day in europe, down again. advancers outpaced 7:3 the dow jones 600 and the bottom of the session. u.s. stocks mildly off for the dow. the s&p hit an intraday high, fresh intraday record high before finishing off 0.1%.
the ftse is currently up 0.1%. freshry yields came down, treasury market rose, yields on ten-year, 2.7%, and 2.74% was the yield. we did have weaker consumer confidence, the number came at 78.1, we thought it would tick up to 80. that weighed rather than focusing on house prices in the u.s. that were stronger than expected, the best increase in u.s. home prices since 2005. elsewhere italian yields still falling below 3.6% on the ten-year yields if 3.57% on the currency, the dollar under pressure today, around 137.50 yet on euro/dollar, still sort of there. not far away from where we were january 2nd.
aussie contained and the pound 1.67, we have second gdp coming out in around 15 minutes or so. let's recap asia. >> thank you, ross. china markets managed to reverse early loss rebounding a bit after yesterday's sell-off. the yuan hit a is en-month low. over in japan the nikkei 225 pulled back from four-week highs ending down 0.5%, hurt by weak u.s. data. in australia, finished about flat so gold miners were offset by oil producers. some individual stocks we are watching the hong kong exchange posted an 11% rise in 2013 profits and a 21% jump in revenue.
it was a big year for ipo at 169 billion hong kong dollars were raised representing an 8% rise from the year before. shares ended lower by 0.2% today. sinopec's shares soared over 4% on hopes the company may soon announce next steps in its reform plans. last week the oil giant said it will sell up to 30% of its retail oil business to private investors. we've been getting tesla euphoria here in asia. warren buffett backed chinese carmaker byd spiked 10% to its daily upper limit in the mainland and up almost 10% in hong kong. this is thanks to tesla 30% search and beijing's plan to build 1,000 quick charging poles for electric cars this year. japan's panasonic jumped over 5% today to a three-week high. this on investment plans to build a u.s. car battery plant with tesla.
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if you live in beijing, stay indoors. that's the message from the world health organization. air pollution levels have been soaring hazardous levels of smog have been recorded since last thursday. recent readings show harmful pollutants 18 times the level recommended by the w.h.o. the organization is calling on china's government to improve air quality long-term. might do something short term as well. china's corporate debt load has hit $12 trillion and climbing, and analysts say higher boring costs could lead to more merger restructurings to stave off defaults. and carlisle group appears to be closing in on tyco's south korean security business says the firm is in exclusive talks
to buy adt caps, the business valued at enclose's to $2 billion. several of carlisle's peers also handed in bids. whilst that's going on private equity investors are sitting on huge piles of cash but are they going to put it to work when and where? major players have been speaking to cnbc and revealing their views on europe. >> i think the worst is behind europe. when the eurozone crisis occurred there were three concerns, one, will the euro go out of business now that it's clear it's not. second, will there be major bank failures, clear that's not going to happen and three will the ecb have to bail out italy and spain and that didn't have to happen. i think the wrors orse is behin europe. >> i'm positive. today it's about 60% investors are considering investing in europe and it is the place in
private equity to invest at this time. >> david and guy hands speaking to anneta at the conference in berlin and joins us for more. annette? >> reporter: thank you very much. europe is very much big back on the agenda compared to the last years i've been covering that where europe was really not the place to be but for this the valuation of the industry and where to find investment opportunities i'm joined by robert koch, head of absolute return at the welcome trust. thank you very much for joining us here. my first question would actually be what are you hearing from your fellow private equity peers? is it really hard to find investment opportunities right now? >> yes, i would say it is. the industry is in root health, distribution is huge in the last two or three years. it's a sort of indicator when things are that good that you should be careful i guess.
we're getting a bit concerned. we think it's getting close to the top, the debt market is very strong and it's a bit of a negative indicator i guess. >> are you in a better position as your only i have to say targeting a real return of 4.5%, which seems pretty low for the private equity industry? >> yes, that's for overall for the private equity because of the liquidity we expect to get a slightly higher return at 4.5% and we over the years managed to outperform the public markets by a very consistent margin every single year in fact so that's worked for us. i guess overall we don't have to invest in private equity and we at the moment are probably ratcheting it down a little bit. there's not that much else we find interesting in the world, perhaps a little bit of mining opportunities or emerging
markets, private equity, slightly less attractive but still there's not that many obvious opportunities in the world at the moment. >> reporter: aren't you put off by the recent developments we're seeing in a lot of emerging markets i.e. political instability? >> why where there's disaster there's opportunity i guess. i know that makes me sauound a little bit callous at the moment. we're looking at turkey and brazil, some of the place have been hit -- we're investing in indonesia, some of the places hit by negative economics, not so much political turmoil although that's true for turkey we find good investing and valuation. for countries that have generally decent macro trends over the longer term, so buying opportunity for a long-term investor. >> reporter: staying a little bit with turkey, it's not so
much the forex aspect you're looking at when making investment decisions, right, is it more retail driven or what are you looking at especially? >> reporter: in turkey it's valuations, just attractive prices for assets which we think are going to carry on through the couple elections that are coming up there and we think there's opportunity created from that. forex is a negative so we expect the lira, the current deficit is an issue in turkey and we expect the currency to remain weak so we have to consider that when making investment proposals, we have to assume a little bit of, not a currency strengthening anyway, probably weakening if anything and brazil is a problem for currency from that point of view and equally as a sterling uk investor we find the dollar quite cheap so we find u.s. assets quite interesting at the moment. what goes around comes around i guess. >> reporter: thank you very much
for joining us. julia, that is from here. we'll be back in an hour with another interview. for now pack over to you. >> thank you, great to chat to you. the bitcoin exchange mt. gox received a subpoena from prosecutors in new york, asked the company to preserve certain documents. ceo mark capellas issued a statement saying the business is at a turning point. japanese authorities are looking into the matter but don't have jurisdiction after the mt. gox website went down. still to come, the british economy returns to focus as investors await the second meeting of the country answer fourth quarter gdp.
today. positive earnings reports out of europe, a hike in production after strong profits and inbev toasts a recovery in brazil and mexico. mt. gox reportedly received a subpoena from new york and japan is investigating the matter. the bull's eye is on target today as the retailer releases its first earnings report since it suffered a massive data breach during the holiday shopping season. we've had some comments out from the bank of england, risks over the past year a big contributor to the uk recovery, but there is no guarantee that uk productivity will approach u.s. levels. we also heard from mr. myles speaking this morning as well. this as we wait for the latest gdp data to come out.
we'll get the breakcounsdown. we've had the flash of where the contributions have come in the recovery we've seen. remember, a sharp upgrade in the bank of england's forecast for growth from below 3% to well over 3% as well. that boosted sterling up to the best levels in three and a half years at the moment. we have gdp and it has the forecast 0.7% quarter on quarter, up 0.7% as well. unchanged from the first estimate. the full year for 2013 though has been revised a little bit high to 2.7%, the last estimate was 2.8% so they're saying growth in 2013 was a smidge weaker than we might have thought, 2.7% from 2.8% as well. some of the breakdown industrial output up 0.5% quarter on
quarter, services output up 0.8%, construction up 0.2%. household spending up 0.4% in the quarter, government spending up 0.3. so that gives us a break. it was fairly broad spared between manufacturing services and industrial output, construction vislightly weaker. robert wood joins us with his thoughts. nice to see you. what do you make of that breakdown? >> well this breakdown sounds i think a little bit better than might have been expected, household consumption a little bit weaker and you talked about the split between manufacturing and services which we kind of knew before but again it's a bit more of a confirmation that manufacturing continues to grow. i guess the key question is what stock building and trade did as well. certainly consumption not the main driver, may be a positive. >> because everybody said that is a recovery based purely on
consumption and houses, recovery in the housing market that boosted confidence. is that unfair? >> no, i don't think so. i think mainly what this recovery has been a return of confidence, a fall in households uncertainty about unemployment, about the future and about their ability to get credit and specifically mortgage credit which we saw in the figures yesterday from the british bankers association showing mortgage approvals rising rapidry. i it's been consumption driving it and saving falling. we've seen consumption strong the past four to six quarters. what we need now is business investment to start coming through. >> how much more can we expect savings to fall, how much more consumption taking the money out of savings and not coming from increased earnings? >> the savings rate is 5% so there's quite a lot of room still for households to save less and spend more. it's not necessarily what we
would want them to do with a saving rate at 5% but with interest rates low, confidence returning and credit more easily available it's certainly possible for them to do that. >> robert stay there. we need more comments from you. the bank of england should be in no rush to raise interest rates according to spencer dales, speaking in a bbc radio interview. he accepted rates will have to go up at some point but when they do the rise would be gradual and cautious. stay tuned. later on cnbc we'll speak exclusively to monetary policy committee member ben broadbent. find out his thoughts on the prospects of a rate rise at 12:30 cet. robert still with us. people i talked to into the markets robert they actually believe the bank of england has to raise rates far sooner even than the market is pricing. you have a 30% probability we actually see a rate hike in the fourth quarter this year. but the risk is that consumers
buy into that, too, isn't it? >> yes, i think for me our call is for a rate hike in q4. that's starting to be priced in of course into markets and that will feed through into mortgage rates over probably the next few months. banks are still cutting their spreads so that mortgage rates aren't rising just yet but of course no one really knows how consumers are going to react to this. personally i think with debt relative to household income hang fallen quite rapidly over the past few years the households could cope with an interest rate hike certainly i don't think it will cause a calamity and i think we talked a bit a few minutes ago about saving. i think we do need to slow down the rate at which savings are being eroded so i think a rate hike in the next three, four, five quarters is sensible. >> one way to achieve that is to see some real wage growth, something that broadbent expects to see this year. do you agree with that, too?
>> we definitely need real wage growth if the economy is going to continue growing. i don't think that solves the saving problem necessarily. when real wages are growing faster it means you can spend that real wage growth and cut your savings as well when interest rates are very low. i'm not sure it solves the saving problem but for growth we need continued real wage increases or a return to them. >> when do you think rates are going up, robert? what's your call? >> my central call is q1, 2015 but i see a significant chance, a 30% chance they rise in q4, 2014. >> what will drive that? what will be the key? because what happens if you got a stronger pound at the moment, i don't see a massive tick up in inflation. >> that's right. for me the key drivers are the tightening wage market. we've seen unemployment come down rapidly over the past few
months and firms are reporting across a range of surveys high and rising recruitment difficulties and pressures in finding the right people. i think that continuing through this year we're also seeing vacancies rising fast, another indication there aren't that many staff out there to fill the jobs. i think that return of growth, another two or three quarters of growth, the tightening labor market, more pressure on wages will give the bank of england the confidence they need to say well we need to keep interest rates low but probably not 0.5% so we can deal with the 25-point basis rise and we need to start sooner rather than later. by the end of this year that will come through. >> the bank of england taken a lot of shtick over their guidance policy. the crucial question are they in the right place or managed to get ahead of the curve as far as policy is concerned? >> they've done the right thing, bidding guidance and returning to inflation target. they use a lot of words in this new inflation report but i don't think it amounts to anything. just we're going to target
inflation. i think that's the right thing to do. the economy clearly outperformed expectations and most people's expectations over the past six months. so a rate hike is needed sooner than they previously thought and think they've moved quickly to admit that. of course there's a credibility loss from chopping and changing policies quickly but the worse credibility loss would have been twng a guidance policy in longer needed. >> robert, good to see you. thanks. robert wood joining us from berenberg. the ftse is down 0.4. there it is, look. >> yes. >> very different, very little difference from spain right now,
italians loving that, very little though in terms of moves as far as the ten-year bond yields. treasuries sitting around the 2.70 level, muted activity i'd call it, and eyes on italy continue. >> the dollar has been a little bit weaker today, dollar/yen showing on the session is up 10 2.29 and sterling trickling around the 1.67 mark. did tick slightly above that number. facebook and samsung main newsmakers at the worldwide dmomp dmomp conference in barcelona. the south korean tech giant launched its latest smartphone. >> reporter: there's been no shortage of new products unveiled, excitement and deal making here at this year's mobile world congress.
samsung hogged the lime light with the galaxy s5 and a new smartwatch and a health and fitness band. sony set up its site with a launch of a tablet it claims to be the thinnest and lightest in the world. nokia has taken aim with the emerging markets with the launch of the know yo x a sophisticated smartphone priced at just 89 euros. mozilla did one better on the pricing launch launched a phone priced at just $25. mark zuckerberg gave his first public comments about the massive $16 billion acquisition of what's app. >> i think it's worth more than $19 billion by itself. there are very few services that reach 1 billion people in the world, all incredibly valuable >> that raised questions about the impacts on revenues and voice message text services from the major operators. >> acquisition shows it is right
to pursue a strategy of a pan european network which is ip and integrated. >> reporter: here's something for the older members of our male anchoring team a phone designed for the elderly, it is hearing aid compatible. the only problem you can only store four numbers. >> i think it's very unkind of him. shame on you. >> interesting programming this morning. we know it wasn't you. >> it clearly was not me, absolutely, was it? look at me and tell me it wasn't me? >> absolutely not. sparkling beauty. >> you could say it with some meaning, that would be helpful. >> say it like i mean it, exactly. >> tom was also speaking exclusively with the ceo aof telenor. >> it's not that dimension that is at the core of 2013.
on the contrary the growth dimension for the telenor group is strong compared to peers in the industry primarily because we have the position in asia that we have, almost 50% of what we're doi ining is in asian gro markets. 2012 was a very, very strong growth year and we didn't quite manage to maintain that momentum into 2013 but the underlying development of demand is still very strong, so i'm very positive also that we can maintain the growth profile for the group in 2014. >> the demand is strong but there are the risks obviously that come with investing in the emerging markets and we've seen the volatility over the last few months, particularly with the currencies. how much of a concern has that been to telenor? >> there are plenty of risk factors on the telecom industry in general. those are risks that we have to
face. those are risks that we have to handle. those are risks that we have to solve, and i think over the years that the telenor group have been reasonably good at both addressing and resolving risks that has surfaced that has given concerns, but that also have given solutions. and i think that ability will have to be something that we have to rely upon in the future as well. >> do you expect to see more mergers and acquisitions in the european space, 200 or so operat operators? it's a very fragmented market. >> it's a fragmented market with fragmented regulatory base and europe has the ambition of creating one digital europe. however, to get to that, eu and the membership countries in eu need to debate how to create that harmonized base for creating one single digital market for europe. the one digital market is a good
idea but the parameter tops get there on the regulatory front needs to be addressed and discussed and these kinds of discussions is on the way and i hope that with this outgoing commission entering a new commission can get at very sufficient measures that can take europe into also better incentives for investments in the telecom sector similar to those seen in the united states over the last three to four years which have been a good success. >> panasonic and tesla in final talks to establish a joint battery plant in the u.s. mickey from the uk has the story live. >> pan son sick inviting japanese materials makers to sign on with total investment expected to reach around $1 billion. the plan is to introduce small lightweight ion lithium batteries by 2017 used for the
vehicles as well as other automakers like toyota and also marketed as power storage dwi devices for homes in hopes of lowering the price. tesla is aiming to slash the hefty price tag of its cars which currently start at around $70,000. panasonic has undergone a sweeping restructuring process to come out of the red but sales continue to be sluggish and the new battery plant isn't expected to turn a profit for at least a few years but the news was received faurvvorably. the panasonic shares bucked the trend at the tokyo stock market up 7%, becoming the second most traded stock in terms of value. that's all from the uk business report. >> let's look at what's on the agenda tomorrow, qantas
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now if you live in bay shipping, stay indoors. that's the message from the world health organization as air pollution levels soar. hazardous levels of smog have been recorded since last thursday. recent readings show harmful pollutants at 18 times the level that's been recommended by the world health organization. it's calling on china's government to improve air quality long-term. every time i look at that -- doesn't make me feel great. meanwhile hong kong presented its 2014-'15 budget amidst slowing growth in china as well as economic uncertainty in the u.s. emily has the story. >> reporter: hong kong's financial secretary gave his budget speech for 2014-2015 and
started by recapping the economic situation for the year that was. in 2013 hong kong's economy grew 2.9%, just a touch lower than what many economists were looking for of 3%. looking at the year ahead the hong kong government is forecasting growth between 3% and 4%, going on to say china's robust economy is the driving force and will underpin hong kong's economic growth. now as far as relief measures were concerned it was very well flagged he would be scaling down some of it so the package this year is smaller standing at $20 billion hong kong dollars. it will include a cut in salaries tax, profits tax as well as rate waivers. there was no room for any major tax hikes he says but the financial secretary is looking at ways of widening the tax base. we also of course keep an eye on what's happening in the property sector. he's well flagged there is a risk of a property bubble in hong kong because of the low
interest rate and abundant liquidity in the market. the economic fundamentals he says are out of line and the measures to cool the property market will remain in place. as far as total government expenditure for the coming year they're planning for $411 billion and that will mean a surplus 9.1 billion hong kong dollars but those figures usually tend to be on the conservative side. this is emily tan reporting from hong kong, back to you. >> joining us is the taxation committee chairwoman at cpa australia in greater china, loretta we're hearing the number of issues that the government there has to deal with, property market, overheating, a huge wealth gap and maintaining the stability of the violence there in light of weakening in china. do you think they got the balance right here? >> i think at the moment it's important for the government to have a balance in terms of reducing the one-off
measurements. we're always looking for more long-term sustainable financial management of the government. so at this moment i think it is on the right track. >> how important is the tax rate reduction for smes taken it to 13.5%. i noticed in a recent survey, you said 49% of companies looking to relocate outside of hong kong to china or singapore. this is a crucial issue, isn't it? >> yes, if you look at our economy, 90% of our business is smes and they really need support because they have been negative impacted by the high property price, competitions and hike of running costs so giving them a break is very important. so our recommendation is really to give them more support, not just in terms of loans and finances, but also in terms of
tax breaks. >> you talk about for your sentiment survey which i did back in december, you talk about there's a lack of confidence in hong kong's future. what's the biggest reason for that? where is that coming from? >> i think basically if you look at their fundamentals, the hopping kong population is getting, the aging population is getting pretty serious and it is projected by 2040 we may have 30% of the population over 65 years old so we expect as a result the economy growth will be an impact so that's why we believe it is important to look at our tax system in the long run, how should we improve our tax system. >> how would you improve it? >> i think the most important
thing is we have a narrow tax base, a very small amount of taxpayers paying the majority of the tax and with the asian population there's a possibility our tax will dwindle. secondly, we rely too much on property related revenue and if there is as you have mentioned a bubble burst in terms of the market it would negatively impact us. thirdly because we rely too much on external factors, so there is a need for to us look at our tax system to see how we can widen our tax base in order to have a more stable revenue. >> loretta, good to see you. thanks for joining us. let's get the institutional view right now, we caught up with guy hands exclusively at the super return international and spoke also to the chairman
about the recent m&a deals and asked him to share his view on valuations. >> it depends what area of the market you're in. the area we're in the market with deals that substantially have a large quantity of assets in them are substantially below valuations from 2007 and have a quite long way to go. >> reporter: we're seeing a lot of rotation in recent months. is there anything you would like to tell us when it comes to your portfolio? are you planning any floatations this year? >> we did two floatations last year which were very successful, one in the uk and one in germany and for this year i think we're probably going to be concentrating on getting the businesses ready for exit sometime in three or four years' time. >> you don't really think the window might be closing for floatations that the equity rally might come to an end pretty soon? >> it might do but i think our belief is that you focus on the businesses first, get the businesses as strong as you possibly can. and then the market is what the
market is at the time you want to exit. >> so financing costs might clearly are on the rise with the feds tapering. do you think that financing costs for private equity deals might go up. >> i think in the u.s. you are going to see some increases. costs got very, very low in the u.s., they did a massive monetary inflation. it hasn't translated through to price inflation, and it probably won't in the short term. but that will mean that they are going to try and control that. in europe, we haven't had the same level of monetary inflation. the economy still here is weaker. i think it's highly unlikely that you're going to see an increase in interest rates in europe and affect leverage ra o ratios over the next two or three years. i think europe will play defense
and the u.s. will be worried about where its economy is going. >> it's interesting that you are saying that as a lot of people are thinking that the united states are steaming ahead, whereas europe is sort of stagnating. >> i would say the way europe has approached it is more long-term sustainable. the u.s. problems are in the future but they're major problems. the european problems are much more observable. if you like, europe has an upside down iceberg with most of its problems on the surface and the u.s. is an iceberg. >> we're just getting some flashes across the wires about egypt, apparently reappointing the petroleum minister and the planning minister and interior minist minister and no mention of a potential future president. we'll keep you abreast of any further developments. >> we're updated every day for
events going on as far as egypt is concerned. futures are suggesting we might get a dip down at the beginning. still to come on the show dreamworks failed to give a turbo charge. the animated movie about a racing snail, i did see this one, serving up a poor box office performance weighing on dreamworks' numbers. we're going to get all the details coming up in a few moments' time. i liked the snail with the turbo under his lid. [ male announcer ] meet jill. she thought she'd feel better after seeing her doctor. and she might have if not for kari, the identity thief who stole jill's social security number to open credit cards, destroying jill's credit and her dream of retirement.
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welcome ba "worldwide exchange." i'm julia chatterley. >> and i'm ross westgate. >> the u.s. releases a scathing report against credit suisse accusing the bank of using elicit taxes to help american citizens dodge taxes. the ceo faces a senate hearing later today. good earnings reports out of europe. airbus plans a hike in production after strong profits and inbev toasts a recovery in brazil and mexico. bitcoin exchange mt. gox reportedly receives a subpoena from u.s. prosecutors in new york. japan announces they're investigating the matter. the bull's eye is on target
today as the retailer releases its first earnings report since it suffered a massive data breach during the holiday shopping season. if you're just tuning in thanks for joining us here on the show. let me give you a look at how the markets are faring ahead of the u.s. open later on. right now showing you the futures as far as the dow is concerned, higher by around 56 points so a strong open taking back the chopiness we saw in yesterday's trading session nasdaq futures similar story indicating higher by around 17 points and for the s&p 500 sitting on the cusp of that 1850 level, indicating higher by around 7 points in total. mixed session for the european
markets, asia flipped as far as the trading session was concerned, higher for the chinese markets, continue to watch the yuan currency weakness. european markets 0.4% lower, very little reaction sfaras far the uk dwrgdp reports. >> maybe they like mr. renzi what he said. >> they continue to like him. >> yields keep falling down below 3.6 on italian yields at the moment, the most since early 2006. let's continue the corporate theme. number of equities couple of equities looking at in europe. credit suisse stock down 2.48% a u.s. senate panel is investigating tax evasion, accused the firm of using cloak and dagger tactics that belong in a spy novel. the report alleges credit suisse bankers made 150 trips to
america between 2002 and 2008 specifically to orchestrate a large scale tax evasion scheme. shares in swiss life have been up 4.5% because they had stronger than expected figures. the firm also came out to say it considers its insurance policies for wealthy u.s. citizens to be tax compliant. in other earnings news airbus is near the top of the stock 600 after the biggest aerospace group announced a hike in aircraft production and posted a 21% rise in fully operating profit. airbus down 0.25%. inbev up 1.17%, toasting a recovery in emerging markets. the firm says the brazilian and mexican beer markets would return to growth this year because of the world cup and stronger economies. in america you want to call it the soccer world cup. tell me another football world
cup. okay. association of football world cup. super bowl is not a world cup. we're just having a conversation with the producer. ten-year treasury yield, weakening consumer confidence weighing more on investors than the house prices figure which was stronger than expected so equities off a little bit, treasury yields down as well. ten-year gil have gone up, gdp a slight nudge down than what happened in 2013 but slightly broader based growth in the economy that we might have thought and on the currency markets, 1.6688, boosted it up to 167 a short while ago. elsewhere dollar/yen 102.33, euro/dollar 1.3740.
>> thank you, ross, no big moves for asian forces today with gains or losses within 1% and china markets managed to reverse early losses gaining just a mode modest 0.3% after yesterday's sell-off. while the u.n. fell for the second session hitting a seven-month low. this is hurt by weak u.s. data and australia closed about flat because gains in gold miners were offset by losses in iron ore producers. some individual stocks we're watching the hong kong exchange posted an 11% rise in 2013 net profit and 21% jump in revenue. big year for ipo, 169 billion hong kong dollars were raised representing an 88% rise on the year and hong kong exchange shares still down by 0.2%.
on the other hand sinopec's shares soared 4% on hopes it may soon announce the next steps for its reform plans. last week the oil giant said it will sell up to 30% of its retail oil business to private investors. we've got the tesla euphoria here in asia. warren buffett backed chinese carmaker byd spiked by 10% on the hong kong and the mainland this is thanks to the 30% surge and beijing's plan to build 1,000 quick charging poles for electric cars this year. japan's panasonic jumped over 5% to a three-week high on investment plans to build a u.s. car battery plant with tesla. so that's a look out of asian markets. back to you. >> thanks, great to chat to you. now europe's initial public offering market on track for its busiest start to the year since the financial crisis. is some of that optimism
misplaced we have seen private equity firms getting involved in the valuations in europe. listen to what two private equity bosses had to say about the frightening prospects in europe. >> i would say the way europe approached it is more long-term sustainable. the u.s. problems are in the future but they're major problems, the european problems are much more observable, europe has an upside down iceberg with most of its problems on the surface and the u.s. is an iceberg. >> i think the worst is behind europe. when the eurozone crisis occurred there were three concerns. one, will the euro go out of business? now it's clear that it's not. second will there be major bank failures and clear that's not going to happen and three will the ecb have to bail out certain countries, italy and spain and that didn't have to happen. i think the worst is behind europe right now. >> joining us now is alistair warren at goldman sachs. good morning. >> good morning. >> put this in perspective, what are we seeing in the european
ipo market including the proportion that we're seeing of private equity-backed ipos going on or listings potentially? >> it's interesting the question that you asked guy how sustainable is all of this and our view is we've got a very good run of broadly supportive markets for ipos for quite a sustainable period driven by obviously the support of macro back drop support of equity and financing markets and also just the flow of funds into equities and a lot of that coming from north america and i think that's going to be a structural trend which is going to support this market for some time. >> how much do those flows want to buy fresh paper as opposed to stocks? >> their primary focus is in and around new supply so all the deals that we brought last year we brought about 20 ipos, about 50% of the demand in aggregate came out of north american global based funds and you're seeing the same trends this year. >> how many of those we start to
talk about potential ipos make it and don't see private equity firms buying and preventing a float taking place? >> one of the big challenges for private equity it's much easier to realize exit, whether it be the ipo market or secondary market than to realize new investment opportunity and as a result of that, there are some businesses which can sustain high levels of leverage which i think probably won't make it to the ipo market even though that's the target because there will be buyouts from other private equity firms. the vast majority given the high valuations the public market is prepared to pay the vast majority will still make it. >> are we at risk of rebuilding an lbo bubble? >> i don't think so. if you look wealth has been passing new funds raised. the aggregate quantum of dry powder relative to the magnitude of the investment opportunity is in greater balance and so i think this is going to be two or
three good years for investing once the primary supply comes. >> we had some poor years for being able to realize any assets at all. i presume there's pent up stuff as far as pe is concerned. >> that's exactly right which is one of the reasons why you're seeing this very, very strong flow of new businesses coming to market. >> what about the buy side here, talking about a concentration of boy side activity, who is investing in these and why is that driving it? >> so there's three big themes working well inspect ipo market, playing the cyclical recovery particularly in the uk, we had countrywide last year and others, disruptive players, so we've had big multiple traded up massively and this important theme which is sustainable long-term investment, companies like merlin and the reason that those are so attractive to these big global funds is that they're businesses that can generate
superior returns over a long term and with the concentration of the buy side it's limited to very concentrated group of buyers largely north american. they want to invest for that long-term and looking for that investment. >> are wealth funds out of this? >> no, they play but the magnitude of capital they need to put to work, the pals at which they can respond, some of them are more set up to do that than the gics but most of them are more playing in private situations than public situations unless the public situations are large. >> thanks for joining us. the latest ipo news financial data provided to markets looking to float on the new york stock exchange with a valuation of over $5 billion according to the uk's "financial times." the company was started in a guard. shed in a suburb of northern london has 3,000 staff and revenues of $860 million in 2012. >> you got a view on that?
>> i think it will be a successful float when it comes to market, forget the pub. >> you haven't got a mandate yet? >> i'm not prepared to comment. >> we're just looking for disclosure on that. bitcoin mt. gox received a subpoena from u.s. prosecutors in new york reportedly. it asked the company to preserve certain documents. the ceo issued a statement saying the business is at a turning point, sparking rise about a possible bankruptcy filing. japanese authorities are also looking into the matter but say they don't have jurisdiction after the mt. gox website went down. a group of 18 brokerage firms agreed to stop taking part in an analyst survey programs that the new york attorney general eric snyderman claims gave some investors unfair advantage. last month schneiderman
announced a settlement with blackrock. the firm agreed to stop survey analysts getting information about companies before analysts disseminate more broadly to customers. jpmorgan's chief compliant officer reportedly quit the bank after just a year in the job. the "wall street journal" says cindy armein is expected to take a position at the payment processor first data. jpmorgan appointed an interim replacement and now looking for someone permanent. on tuesday the bank announced it was cutting 8,000 jobs as well as lowering full year profit outlook hurt by weakness in trading and mortgage business. jpmorgan stock not doing anything in frankfurt according to that. target in the spotlight. >> it is in the cross-hairs. >> can it overcome its recent issues? we're getting a preview right after the break. in my world, wall isn't a street...
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headlines today credit suisse is accused of using cloak and dagger tactics in a large scale tax evasion scheme. regulators turn their sights on bitcoin after the currency exchange goes offline leaving investors unable to access their funds. a hit or miss for target as it's set to report first earnings since the massive
customer data breach. we've gone private equity crazy here on "worldwide ex-change." annette at the super return conference in berlin. europe winning the valuation war between the u.s. and themselves right now i think as far as the conversations you've been having. >> reporter: yes that's very much true. europe is really back in favor with a lot of private equity players. also a lot of them are saying that europe is still undervalued, whereas others are saying it's fairly valued. i think it's really a question of who you ask, who is interested in what kind of area, and also industry, and i met up with john of alliance capital partners. michael, you're choosing private equity funds for alliance
capital partners. what is the main interest or what are you looking after or at? >> look at what we do is obviously macro is one consideration but for us the minute thing we look at is micro, so choosing the right managers, having said this we're looking into europe and different parts of europe at the moment, it's our home market. to your point previously we're not abandoning europe at all. it's an interesting place to be we think. there's a lot of dislocation which is normally good for generating nice returns. that's it basically and then if you're interested in northern europe from our perspective seems to be a little bit overbought at the moment which is due to the fact that a lot of capital has been raised in these markets and the inflow has to pick up now which is an interesting thing to see and we're very much looking into southern europe, too, where is
consolidation in our markets and where we think we might uncover some inefficiencies which hopefully lead into good returns in the end. >> are you also looking at emerging markets? we are discussing that quite often here on the channel, whether emerging markets are right now an opportunity or whether it's too risky to put the money in. >> in a way we have the luxury and the difficulty to taking a very long-term view. in a perfect world we would know what's happening in a specific region five years from now which we obviously don't but we try to be a consistent investor. we have an asian office six, seven years already so we're very much a player in emerging markets. we like them. there's obviously more inefficiency in some of the markets. it's not only the gdp growth which sometimes is priced into the markets already, so we're very much a player there. asia is our main priority, we're looking into south america at
the moment, we very much are interested, it will be a smaller part for us than our investments and developed markets, by virtue of the fact the markets are still smaller about you definitely interesting. >> reporter: one last question on the privilege periphery in europe. you are favoring southern europe to northern europe. is that right? >> i wouldn't say favoring in a way because northern european markets tend to be the larger ones and in particular the uk market is always a liquid market which is still interesting to us, but if we try to find something special, probably southern europe is the place to look at at the moment. >> reporter: thank you very much, michael. so julia, you see southern europe might be the place to be, something we wouldn't have heard like a year ago, isn't it the case. with that, back to you >> thanks, annette. super interesting, yes, all systems go. let's give you a look at what's on today's agenda in the you state. january new home sales are out
at 10:00 a.m. eastern, the forecast more than 3% to an annual rate of 401,000. then poston fed president eric rosen gren speaks about the economy coming up at noon and among today's earnings reports, we'll hear from lowe's, dollar tree, sodastream, tgx the parent of tj max, abercrombie, barnes & noble and jcpenney. >> if that's not enough also an the agenda target reports fourth quarter earnings before the open and what investors will be looking for is any update on the breach that saw over 100 million customers' data stolen. how much will the canadian expansion weigh on the bottom line and what kind of shadow the weather has cast over its fourth quarter results. we'll get the analyst's view on that in just over 30 minutes' time. still to come will the crisis in ukraine create further tension between the kremlin and europe? stay tuned.
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yesterday. the dow jones up 60 points the nasdaq caught up 18, they were off 0.2 and 0.1% respectively. u.s. secretary of state john kerry says the crisis doesn't need to lead to conflict. speaking with foreign secretary william hague he urged all parties to cooperate. >> this is not a zero sum game. it is at you know west versus east, it should not be. it is not russia or the united states or other choices. this is about the people of ukraine and ukrainians making their choice about their future. >> we were going to head out to michelle caruso-cabrera in kiev. the elite police force involved in the violence over the weekend has been disbanded so i think michelle will give us more clarity on that. right now that's what we're
hearing. no idea what will happen to them once their roles have been removed i guess. there's also reports we're hearing they may be able to form a government this afternoon so obviously they put back the deadline yesterday to thursday. >> key is of course a government that russia actually also recognizes as well and can hold things together to get them to elections and also can do things to raise the money. remember they had to deal with russia for the short term funding, that's clearly on hold at the moment and need to get in line as well. >> as far as putin is concerned in russia it's not a zero sum game and he's been silent. we will get to, actually we're hearing she's good now. michelle, we were just talking though about reports that the elite police group involved in the violence over the weekend has been disbanded. is that what you're hearing,
too? >> yes, the interior minister posted that announcement on his facebook page and many believe this is the group of police that were associated with the deaths of dozens of protesters in the bloodshed we saw last week. that's one of the big headlines out of here. that's going to obviously try to serve as a balm of some sort to the people here, but certainly there's still a lot of mourning. you can hear behind me another orthodox mass going on in the square though there are a few people here. the other thing to note the currency is getting weaker and weaker. it's now at 10. just last week it was at eight to the dollar, now at ten to the dollar and we have confirming for the if, time from an executive from the central bank they abandoned the peg they struggled to keep that they had for years and struggled to keep in the last month as they started to burn more than $2 billion worth of reserves and we've seen it steadily rising.
what wasn't clear earlier in the week, have they abandoned it because there's so much chaos going on and shifts going on in the central bank or was this a policy decision? it sounds like it's a policy decision. one, they've been running short on reseshz, they know if they'll do a deal with the imf they need to do it anyways, exporters want it as well. it was getting too tough to do. looks like they're trying to do it progressively. back to you. >> thanks michelle. great to chat to you as always. >> more from michelle throughout the day from kiev. dreamworks failed to get a turbo charge, the animated movie about a racing snail serving up a poor box office performance, that weight on dreamworks numbers. >> we'll get the details after the break. in the new new york, we don't back down. we only know one direction: up so we're up early. up late. thinking up game-changing ideas, like this:
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. welcome to "worldwide exchange." the u.s. receives a scathing report against credit suisse accusing the bank of using elicit tactics to help american citizens dodge tactics. ceo brady dugan faces a senate hearing today. airbus plans a hike in production after strong profits. troubled bitcoin exchange mt. gox reportedly receives a
subpoena from u.s. prosecutors in new york. they're investigating the matter. and the bull's eye on target today, the retailer in the cross-hairs as it releases its first earnings report since it suffered a massive data breach during this holiday shopping season. >> if you're just joining in, tuning in, thanks for joining us here, let me give you a look at how the markets are faring ahead of the u.s. open, far more positive sentiment as far as futures are concerned. we've got the dow futures indicating higher around 65 points. remember that market ending the session down around 0.1% yesterday. the nasdaq indicating higher by 19 points and the s&p 500 just breaking above the 1850 level as far as futures are concerned, high around 8 points so far. the european markets different
tone here ending in the red here as you can see we've got the ftse 100 lower by 0. %. general markets relatively unchanged, gaining back over the session. the french market down by 0. %. the ftse bucking the trend higher by just over 10%. >> that's where we stand with asset prices. what investors do as we hit the middle of the week a recap of some of the thoughts we've already had today on cnbc. >> you can combine that stability in terms of the legal system and the nature of the currency with the opportunities to have a strong foot and stable markets like north america and europe and also have companies that have global outreach to developing world, we believe that's a reasonably attractive place for investors of all types to flock to. >> if as we go through the year
people start to worry about the political outlook here in the uk, what might happen at next year's election, what happens with the scottish referendum. these are uncertainty points, not necessarily genuine risks but markets will fret about them. sterling debt may keep come down and higher food prices with he could start to see some upward pressure. >> i think the underlying trend is really very difficult to upset provided we continue to see considerable demand for chinese goods from the u.s. and the rest of the world. there really is going to be ongoing demand for the chinese yuan. while a credit crisis in china is a risk i don't think investors see that just yet. >> joining us from new york is daniel morris, managing director and global investment tia kreff asset management. goed to see you. thanks for joining us. where do you think we're at, at the moment? i look at the u.s. data
yesterday, we had strong increase in house price sales and yet investors seemed to concentrate more on the dip in consumer confidence. what does that tell us? >> well i am not so worried about the consumer levels. it's still at a fairly high level, it was a small drop. we know the economic growth isn't as strong as people would like but unemployment rate is improving, wages should be going up. that seems to be okay. i think the other important point about house price increases is we actually do want the race of increase to moderate. we've kind of gone through a good recovery at this point, we want slow appreciation, slightly better than inflation, so that the mentality that we had prior to the crisis when people looked at housing as an investment opportunity as opposed to someplace to live that that changes and so i think the moderate increase in house prices is also healthy. >> how do you match up the underlying, we have to take the weather related noise out.
how do you match up the underlying trend in growth with earnings guidance and earnings estimates? >> well just added to the uncertainty we already had for the first half of the year, frankly, initially we still had to deal with tapering, try to anticipate what the effects were going to be on the economy, on the markets, so that suggested there was going to be more volatility, people really didn't know how this would play out and we add on top of that the effect of the weather, so it really is just more uncertainty, if that's exactly what we needed or not, so it's really hard to tell. fundamentally we think the underlying drivers for the economy are fine. we think this is a temporary trans transitory thing. unemployment is fine. corporate profits are fairly solid so we don't think there will be a big problem and once we get into the spring hopefully growth will accelerate. >> what about the forward estimates? >> very good point. if you look at how earnings results went for the fourth quarter, year on year growth was quite solid on the revenue and earnings front but where there
was a bit of disappointment was in the forward guidance especially since people started the year relatively optimistic about growth for the economy, you would have thought companies guidance would have reflected that and that hasn't happened. that's where we have uncertainty because i think honestly the macro economic context, so that suggests a flattish slightly volatile market for the first half of the year until we get through tapering and get more clarity and hopefully in the second half we'll see that acceleration. >> interesting you also believe that the equity outlook for the u.s. is better than it is in europe right now based on similar metrics for earnings. what does that say about europe then at this stage? you're taking a contrarian view there. >> well, you know, you might want to look at europe as a valuation opportunity but if you look at the multiple between the u.s. and europe they're not that different. no big advantage in terms of valuation for europe over the u.s. you come back to earnings growth and revenue growth and with the european earnings season always with caveats wauls it's based on a smaller sample you don't have
the same frequency of reporting but you've had negative earnings growth for a lot of sectors, negative revenue growth for a lot of sectors, that's fundamentally very challenging to see substantial price appreciation when you have that type of an environment. hopefully that will improve. >> great to hear your thoughts, daniel morris from tiaa-cref's asset management. >> thanks for getting up early, appreciate it. still to come, the closing keynote address at the world congress. >> the keenly awaited speech right after the break. [ male announcer ] whether it takes 200,000 parts, ♪ 800,000 hours of supercomputing time, 3 million lines of code, 40,000 sets of eyes, or a million sleepless nights. whether it's building the world's most advanced satellite, the space station, or the next leap in unmanned systems. at boeing, one thing never changes.
welcome back to the show. facebook and samsung have been in the main newsmakers so far at this year's mobile world dmong barcelona. the social network ceo defended his what's app acquisition and attention turns to data and cloud computing ahead of ib ibm ceo's keynote address. jon forte is live, what should we look out for? >> reporter: this should be big data day here in barcelona. we've had cisco ceo john chambers, joe tuche from emc making appearances today talking
about how some of their technology back behind the scenes in the cloud, in the data center comes to bear on mobile i would expect to get into much of the same. software taking a crucial role. listen to what four square's head of business development had to say about that. >> i think software will be critical, users on smartphones are looking at services to work really, really well and that's why the carriers and manufacturers want to talk to the software manufacturers and make sure their services work really well and the fact that mark zuckerberg and others are committed to come out here and have these conversations is exactly why. >> reporter: facebook appears to be stealing the spotlight, there's plenty of opportunity for enterprise players behind the scenes. remember ibm very big into analytics, big data, we'll see what ginni roamtty has to say about how that plays in the
mobile context. the general manager of citrix's cloud business says there's opportunity for carriers to use technology to make more money. take a listen. >> big data, analyzing mining that and figuring out how to monetize that is really top of the agenda for most telcos these days and the mobile network operators. >> reporter: that's crucial for carriers in emerging markets who have gotten a lot of attention from mark zuckerberg and others as well, where a lot of the big numbers of people are but they don't spend that much overall on data plan so the question of how to figure out exactly what they need, exactly what they're doing, that's going to be key to translating that usage into profits. guys, back to you. >> jon, good stuff. thanks very much. plenty more to come from jon and the world mobile congress in barcelona throughout the day on cnbc. u.s. regulators are focusing on bank's mortgage practices and
whether they're getting an edge on other investors. morgan has more for us at cnbc hq in the states. good morning. >> good morning, ross. lots of banking news today. group of 18 brokerage firms agreed to stop taking part in analyst survey programs, citigroup, goldman sachs, deutsche bank and barclays are the firms included. last month snyderman announced a settlement with blackrock, it was allegedly helping it get information about companies before analysts disseminated more broadly to other customers. morgan stanley reached a $275 million settlement with the sec, that's over its role as a sponsor and underwriter of subprime mortgage-backed securities, lost money soon after they were issued in 007. that settlement is part of the sc's broader probe of wall street's mortgage practices in the run up to the financial
crisis. under the deal morgan stanley won't admit any wrong doing. checking shares in europe, we're down about 1% so moving forward bank of america is facing new probes in its mortgage practices as well and its forex business. b of a says it's cooperates with authorities in north america, europe and asia investigating a number of parties in the forex markets for their conduct over many, many years. the company says the u.s. attorney's office is examining the quality of mortgages it passed along to government-backed lenders fannie mae and freddie mac. bank of america is raising its legal reserves by $1 billion. checking shares of bank of america we're down 0.71% to 11.90. now jpmorgan's chief compliance officer reportedly quit the bank after just about a year on the job. the "wall street journal" says cindy armein is expected to take a position at payment processor first data.
jpmorgan appointed an interim replacement and looking for someone permanent. on tuesday the bank announced it was cutting 8,000 jobs and it lowered its 2014 profit outlook hurt by weakness in its trading and its mortgage business. ross, back to you. >> good stuff. have a good there stateside thank you. u.s. senate panel investigating tax evasion, accused credit suisse of using cloak and dagger tactics that belong in a spy novel. the report alleges that bankers made 150 trips to the u.s. between 2002 and 2008 to orchestrate a large scale tax evasion scheme. some of the things credit suisse is accused of, operating secret remote controlled lifts, giving clients bank statements hidden in "sports illustrated" magazines and bankers accused of filing false visa applications pretending they were tourists and advising clients how to dodge u.s. tax laws. the senate hearing kicks off
later today. >> i wonder which editions of "sports illustrated" they were. >> they weren't t"the financial times." >> if banks could actually file all their statements with a "sports illustrated" what a much better way to do it. might take longer to read your bank statements as a result. >> some investors might have a few issues. >> i think it's a good idea. >> shares of swiss life are up this morning on the back of stronger than expected results but the firm also felt it had to come out and say that it considers its insurance policies for wealthy u.s. citizens to be tax compliant. chief executive says the firm is not in contact with authorities over the matter, they have preparing for investigations into its products known as insurance wrappers which basically allow individuals to place assets into their policies to lower their tax rate. clearly they're feeling a little bit of, you know, a little bit of close heat. >> they're investigating the u.s. authorities 14 different
ones, there's an obvious distinction between those who say we're not being investigated. there is a parallel drawn between ubs. >> undoubtedly. >> settled around five or six years ago and credit suisse made provisions but we haven't had some of the more details. >> what are they doing with the remote controlled lift, what's that for then? >> one of the lifts they had that would take food up in big country houses? >> for transporting documents? maybe that's what it was for. okay. keep your eyes on that story. stories of public shouting matches and a tense working atmosphere has got everyone talking about the world's biggest bond manager, pimco, the firm's co-founder bill gross shot down rumors he demands total silence in office and told cnbc he once let a conga line on the trading floor. >> i instituted about three years ago at 8:00 in the morning
a time where a professional or other employees could play their own rock songs for four or five minutes within the trading room and actually i instituted a conga line, the first time it was done several years ago around the trading room to let employees know that it was okay to scream and shout and let it all hang out. i thought that was very unfair. >> maybe that's why mohammed left. he couldn't face any more conga. >> the synonymous of being warm and fuzzy. we should do a few congas at cnbc. head to cnbc.com for more. ross didn't comment on that. let me give you headlines. credit suisse is accused of using cloak and dagger tactics in an alleged large scale tax evasion scheme. regulators turn their sights on bitcoin after the currency's main exchange goes offline leaving investors unable to
access. and hit or miss for target as it sets to report first earnings since the massive customer data breach. in the new new york, we don't back down. we only know one direction: up so we're up early. up late. thinking up game-changing ideas, like this: dozens of tax free zones across new york state. move here. expand here. or start a new business here... and pay no taxes for 10 years. with new jobs, new opportunities and a new tax free plan. there's only one way for your business to go. up. find out if your business can qualify at start-upny.com
welcome back to "worldwide exchange." let's look at how the u.s. futures are faring ahead of the session this morning, far more positive sentiment as far as futures are indicating, the markets have around 59 points as far as the dow futures are concerned, the nasdaq higher by around 17 points, the futures and the s&p 500 higher by around 6 points, trading around the 1850 level. let's look at some of the earnings news we're also watching here. dreamworks animations fourth quarter profits crept along at a snail's pace thanks to the disappointing box office for the most recent film "turbo."
julia boorstin has more. >> dreamworks quartert results fell short of wall street expectations sending shares lower in afterhours trading. revenue fell to $204 million and net income swung to a profit on lower costs offsetting the revenue decline. 20% earnings per share fell 12 cents short of estimates. the disappointing results of home takentertainment sales for "turbo." the franchise is valuable and the series is set to become one of the most popular kid series ever. the good news for dreamworks animation it is successfully diversifying away from movies. ceo jeffrey katzenburg calling 201 a "transformational year."
since the quarter ended, katzenberg announced more moves to diversify, a new publishing division and theme park attraction based on the popular shrek franchise announced monday. back over to you. target set to report fourth quarter earnings, strategic resource insight group, burt, we saw target reduce their estimates for sales and eps $1.20, $1.30 back in january. >> we expect target to come in at the low range of the estimates. philip clarke reported problems at tesco with brand baggage, target has steamer trunks of baggage with shoppers between credit card breaches and poor problems in terms of store service. target will have a tough quarter this quarter, tough year this year and next year as well. >> you said it. what about guidance as far as the first quarter is concerned,
any expectation that we'll get a better sense of how much the data breaches could cost them? >> the data breaches will cost target well over $1 billion and ultimately by the time it's over could cause target in litigation liabilities, multiple billions of dollars, the prior breaches for other retailers have topped out between 700 million to 1 billion u.s. target will set a new record because the breach lasted so long and consumers were uninformed for at least 19 days and some cases for a month and a half to two months. >> burt, it's ross. you say you've been a long time investor in this company, followed the company since the 1970s. what needs to happen to the management? >> ross, the management's rudderless. they made so many mistakes,
outsourced their dot-combusiness to amazon for 11 years until recently, that's a broken business. target and canada, cornell university i'm on the entrepreneurship board, differentiated it between hudson bay and zoeller's, a deep discount, target did not discount deeply enough in canada, did not supply stores well enough and target outsourced distribution in the u.s. as well as for groceries both for super target and target stores so ross, you, julia, your entire team could sleep your entire staff in the empty meters of shelving in targets on saturday and sundays when they do 60% of the business it's been run so poorly. >> yes. i might need somewhere to sleep. >> i'm not feeling that. i'm really not feeling that. >> you don't like the company. good to see you, burt. burt flickinger joins us from
good morning and welcome to "squawk box." retailers report that earnings central today krug target's first results since that december data breach. the feds want information from troubled bitcoin exchange mt. gox which i realized rimes with "squawk box" and pimco's bill gross calls tuesday's "wall street journal" article overblown. we know, though, where there's smoke there's the go to be a little fire it seems. it's tuesday, february 25th, 2014. "squawk box" begins right now.
>> good morning everybody. welcome to "squawk box" here on cnbc. i'm becky quick along with joe kernen and andrew ross sorkin. kevin o'leary will be our guest host today and ceo of first data frank bisignano and 8:00 a.m. paul ryan will be our special guest and a big morning for data and erarnings. economists expect about 401,000 homes were sold in the month down about 3% from december and more names from the retail sector are checking into earnings central in the next hour we'll hear from target and hopefully be getting more details on the data breach back in december. many analysts say the company could eliminate its $4 billion share buyback plan. 8:30 eastern hearing from abercrombie & fitch and see how the weather impacted its latest sales quarter from last quarter, we know this has been a big issue for a lot of the
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