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tv   Worldwide Exchange  CNBC  May 23, 2014 4:00am-6:01am EDT

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misguided. >> not diplomatic, not political. ukraine's leading presidential candidate tells cnbc exclusively if elected he will engage with russia but won't focus on crimea or closer ties to europe. the country's military bans 155 people from leaving the country. marking the 19thth coup in just 82 years. and spain's credit rating is raised to bbb. structural reforms are paying off for the country. >> the upgrade to the growth forecast for the coming years that we see are a reflection of some of the fruits being harvested of the structural reforms, labor markets reform that has been enacted.
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you're watching "worldwide exchange," bringing you business news from around the globe. warm welcome to today's edition of "worldwide exchange." plenty to get through. we start off with perhaps europe's most important economic indicator. it's come in 10.4 in may, below the consensus number which was 110.9. current conditions index, 114.8. the consensus forecast was 114.5. the german expectations index, 106.2 in may. the consensus forecast, 106.6. the april number was 111.2. we have dipped down from that. a lull they're talking about seeing in the german economy in may, no revisions to the april indices. euro's been weaker ahead of this number and indeed it is ticking down again. down to 136.36 is where we stand
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at the moment. we are at fresh 2 1/2-month lows on euro/dollar on this lull. joining us is christian schultz, senior economist at beringburg bank. your reaction to this? the pmis yesterday paint maybe a slightly different picture. >> both indices show the german economy is growing at a fairly rapid pace but it's not accelerating further. i think that's what the ifo reflects as well. there are plenty of risks, usually quite fickle german investors and businesses tend to reflect quite strongly. ukraine being the biggest one and also the disappointment of the q1 gdp figures. there's plenty to worry about. bottom line is, germany is growing fast, based mainly on domestic demand, expeorts not -
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>> the pmi was stronger than we might have thought. if you look at it from a world rebalancing review, we'd like domestic demand to pick up for everybody. >> this is the new german growth trend, driven by domestic command, consumption, business investment, construction investment. that's good news for the rebalancing within the eurozone. they will buy more spanish, italian, even frank goods if these companies are competitive. that's good news. >> where is germany going to stand on the ecb actions on june? is the fact that we don't have major inflation in germany, are they thinking we could do with extra stimulus even though their economy is relatively okay compared to the rest of the zone? >> there will always be public opposition to central bank easing in germany because interest rates are low, germans are sabers and they don't like the low interest rates.
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there will be opposition. the very low inflation rates, the weak growth figures for the first quarter, that disappointment has come together to even ease the opposition of the bundesbank, even their our position is crumbling towards more action. we've heard him talk about additional action. what they are doing is damage limitation, trying to avoid qe but give in maybe on negative deposit rates and another rate cut. >> christian, stay there. a lot to get through. we'll get your views, of course, on what the impact of ukraine and eastern europe has been as well as in the european economy. before we get out to st. petersburg and kiev, barclays has been fined 26 million pounds for failing surrounding the london gold fixing. a former barclays trader has been banned and fined for inappropriate conduct. daniel james plunkett exploited weaknesses in barclays systems and controls to seek influence
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at that day's 3:00 p.m. gold fixing, thereby, profited at a customer's expense. the fca fined plunkett 95,600 pounds and banned him from forming any function related to any regulated activity. this is concerning by the way. this affected figures from 2014 to 2030. ukraine's prime minister claimed there's evidence that moscow is involved in violence in the eastern part of the country. pro-russian forces and ukrainian government soldiers violently clashed on thursday. mortar fire and explosions were heard in an eastern city.
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this comes ahead of presidential election where poroshenko is expected to win. >> we're 200 kilometers south of kiev at one of the final rallies, billionaire petro poroshenko. he's selling the message of a united ukraine, underlying the need for further european integration. he says that's the only way forward for this country. at the same time, he says he can reignite the relationship with russia in just three month's time. the clock is tick. the question is can he sell this message to those in the east and south of ukraine? even if he can, will they be able and allowed to vote? those votes could be crucial in determining whether or not he can win this election outright on sunday. i asked him will he get enough
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votes to do that? >> most probably 55% of ukrainian people think i can win the election. this is much more important. >> we've seen further violence, intim dag in the eastern regions in the last 24 hours. there's a real risk that people will be too afraid to vote. what's that going to mean for the legitimacy of the election results even if you win? >> this is just two regions among 25 left after aggression in crimea. we are, as a state, undertook enormous efforts. many people are risking their lives. you can imagine one of my member of the election commission, local election commission was taken as a hostage. one of them would attempt to kill him. people are risking their own lives to deliver the rights for the people to vote for the next president.
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this is extremely important because now less than one-third of the total polling station can have a risk to be closed. 69% still working. we do our best to defend the working rights of the people. i'm not sure what will be the result. i'm absolutely sure the level of the responsibility of the people are so high that we can have the medium level. i doubt it would be below 60%. for sure it would be about 50%. so we don't have any -- >> in russia's eyes, too, will it be legitimate? >> okay. unfortunately, russia is absolutely unpredictable. nobody can predict that russia
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can make aggression in crimea. even at such a high price by sanctions, by the depression in the economy, by devaluation of currency, by real strong problem in the future. even in that situation, russia can go and make an aggression in crimea. we tried to do our best to stop russia to make destabilization of so-called special type of war using this terrorist russian group, soldiers of fortune who have only one purpose, destabilize the situation on the east of ukraine. >> julia joins us now in kiev after that interview. julia, mr. poroshenko expected as far as the polls are concerned to get into the second rounded with a lead if indeed there is a runoff. who would be with him? are we going to get a man even without crimea who represents the eastern part of the country,
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tipco? >> well, it's interesting, ross. there's a lot of talk about who he'll bring into his government if indeed he takes over. one of the crucial questions, all these candidates are selling the message of unity right now. i'm not sure how selling a closer tie with europe for this country actually brings those in the east together. i'm not just talking about the pro-russian separatists right now. the message i have from being here, there's people in the east quite frankly who are terrified about the prospect of closer ties in the eu and what it means. they only understand the soviet way of living. i'm not sure how the two ideas, the idea of unity and a move towards closer ties with europe actually sits. right now, the message seems to be getting across. they believe he's a guy that can carry them forward. he said that he's pro-european. he wrote compromise also on crimea. what we do know about his history, he's a self-made
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billionaire. we're still talking about an oligarch, this blend of high wealth and politics. that makes people cautious here. he's also zigzagged across the political spectrum. he was part of the ruling coalition that was kremlin backed that was then thrown out. you have to be careful that you don't look like an opportunist here rather than a vote for change. he said he gets that. he'll continue to promote his message. he has one more day to continue to convince voters before the blackout begins. we head 48 hours before the election. plenty more of that interview coming up. for you, i'll hand back to you. >> julia, thank you very much. more to come from kiev a little bit later. now, events in ukraine very much dominating discussions at
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the st. petersburg investors forum. jeff has been speaking there and he's also been speaking to president of the committee on eastern european economic affairs. interesting comments coming out of there. lord mantelson. jeff will be hosting the keynote address with vladimir putin, from 12:30 cet, 12:30 cet. no one will want to miss that. i can absolutely assure you. also the chairman of the china investment corporation has outlined his views on the ecb's strategy. we'll get more on that when we come back. and we'll have the latest from the st. petersburg international economic forum with jeffrey as well. see you in a few moments. ♪
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what is this place? where are we? this is where we bring together reliably fast internet and the best in entertainment. we call it the x1 entertainment operating system. it looks like the future! we must have encountered a temporal vortex. further analytics are necessary. beam us up. ♪ that's my phone. hey. [ female announcer ] the x1 entertainment operating system. only from xfinity. tv and internet together like never before. let's get out to the st. petersburg economic international forum. jeffrey is there. jeffrey, it's interesting to see the comments from lord
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mandelson. >> as you know, ross, he's said an awful lot while he's been here. in fact, he had a piece in the "financial times" i believe where he made a number of points about the state of the economy. of course there are some here who don't want to hear the message. i think it comes in good spirit. he's been a long-term visitor to this part of the world. i think he's had long and extensive relations in russia with senior people. so i think people are listening, because when your enemies criticize you, obviously you disregard that. when your friends are critical of you, then i think you do take note of that. so the comments in some quarters are not well received. broadly, i think people understand the message he's trying to put across.
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i'd like to roll that conversation into the conversation with my next guest. again, you're someone who has had extensive experience of operating in this part of the world. your comments come from a position of understanding and, perhaps, emniti. do you think we could see this crisis ratchet down. >> i have not seen a clear view of deescalation. a lot will depend on the election next sunday. chancellor merkel has made a clear statement, whether or not we'll see economic sanctions is dependent on russia's reaction to the presidential elections on sunday.
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>> this is so-called red line effectively that the chancellor has drawn here. but it would seem that given the moves from the kremlin, the apparent support from president putin for the electoral process and promises to pull troops back, that he is keen at this point to de-escalate. >> if -- yes, but you know, it is obviously pretty much dependent that we prove that troops are being pulled back. i don't doubt that but it is very hard to assess it from the outside, being a businessman. i keep my fingers crossed. that we will see the de-escalation process and at least looking at it from the german perspective, everybody, i dare say, everybody still hopes that we will not see economic sanctions. >> not many germans here really.
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not many germans who want to be publicly seen to be here nor americans at this stage. what happened to the so-called policy of engagement? the americans and many europeans have just pulled back, it seems, and are unwilling to continue dialogue. >> well, i mean, what you have to bear in mind is this. the st. petersburg international economic forum so far has not been that popular in germany. so comparing 2014 to 2012 and it is necessary compare to 2012 because chancellor merkel was here last year, i guess if i'm not mistaken from the top of my head, in 201 we had two german -- i regret that a lot. because this gets growing importance and hopefully we'll see more german top guys participating in the years to come. >> so as far as the committee on eastern european economic
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relations is concerned, what damage do you think has been done already, not even talking about another round of sanctions but already to the interdependence of this economy with other parts of the cis and western europe and the world. >> well, you see russian growth slowing down. germany has a trade volume with russia or had a trade volume with russia of about 80 billion euros. was already decreasing or has already started to decrease in 2013. and that development continues. so here you can see that these climate of uncertainty, which has emerged, bears negative impact on trade volumes and economic undertakings. >> it's been a pleasure speaking with you. thanks so much for joining us. >> thank you. just to point out, i am hosting a panel with president
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vladimir putin. that coming up in just a few hours here in st. petersburg. i'll send it back to you for now, though, ross. >> i'd call that an unmissable event, jeff. thanks for that. we are an hour and 20 minutes into the trading day here in europe. we're very much 50/50 between decliners and eded ed ed ed e. we are just down 14 points. we had an ipo this morning, one that suggests maybe we've peaked in demand for ipo saga. listing this morning at 185, right at the bottom of the range. they had a range of 185 up to 215. it has ticked up slightly to 8
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186. 88. we saw the ephone number. the hang sang fairly flat. treasury yields, stronger housing data yesterday. stronger home sales rebounding in april. treasury yields take time. currently at 2.54%. we were 2.55% with yield in the overnight session as well. the dollar helped buy higher u.s. yields. dollar/yen up to 101.73, away from the 3 1/2 month low we hit on wednesday of 180. sterling is weaker, back down from the 169 level we hit yesterday. euro/dollar, fresh 2 1/2 month lows or three-month lows for
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euro/dollar, 1.3633. the ecb would very much like to see the euro getting a little bit weaker and is expected to act at its june meeting as well to target deflation. mario draghi has hinted that it could drop the deposit rate to zero. he also worries about the strength of the euro. >> translator: i can understand the ecb's position. quantitative easing policies adopted by the federal reserve have resulted in some capital flowing back to the united states. this has an effect on europe, especially since economic recovery in the region is at an early stage. outflow of capital from the european markets at this point will definitely work against its recovery. under these circumstances,
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stimulus measures taken by the ecb will somehow moderate this phenomenon and growth and recovery of the eurozone economies will contribute to the wider growth and recovery of the global economy. i think the ecb's position is reasonable. we will take that into cross when we look at market opportunities in europe. on the whole it may be good news for us. >> chris schultz is still with us from behrenburg bank. do you think they will boost lending to the private sector? >> that's the big question. the question is also, what shape would that take, that initiative? would it be a targeted ltro. would they buy abs and what is abs, is that just car loans? there's lots of technical questions that the ecb will have to answer. if there is going to be something, it may be fairly
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small. >> i think this is evidence as well. i think there is evidence that funding has worked. we also get with the ecb, banks have repaid funds as well. their balance sheet has contracted fairly sharply. the problem with europe is, surely, he talked about the break down of the transmissionmakers. it is finding ways to get banks to lend to smaller businesses. >> draghi rightly says a lot is not monetary policy. it's the capitalization of banks is their confidence to lend to the real economy. >> if he could come out with an fls, there is a role for monetary policy to play, right? if it worked in the uk, it could work in the eurozone. >> the uk is one country with a certain set of financial markets. the eurozone has 18 countries with different setups. a lending scheme which works one for one may not work for the
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next one. >> very briefly, have you seen the lows in spreads for peripheral countries? we hit them three weeks ago. since then, they've widened out again. >> i don't think we have. i think we're watching the ratings agencies. in 201 their interest rates spiked. when they regained investment grade, a lot of investors or some at least might be tempted to go back and that could lower interest rates in the periphery still. >> good to see you today. still to come on the show, the thai army has frozen the border for politicians and activists. we'll be in bangkok. honestly, the off-season isn't really off for me. i've got a lot to do. that's why i got my surface. it's great for watching game film and drawing up plays.
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it's got onenote, so i can stay on top of my to-do list, which has been absolutely absurd since the big game. with skype, it's just really easy to stay in touch with the kids i work with. alright, russell you are good to go! alright, fellas. alright, russ. back to work!
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you're watching "worldwide exchange." bringing you business news from around the globe. headlines from around the globe. the saber rattling over ukraine ramps up. moscow will be forced to respond if nato steps up its presence nearby the border. >> not diplomatic, not
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political. >> ukraine's leading presidential candidate tells cnbc exclusively that if elected, he'll engage with russia but he won't compromise on the crimea or closer ties to europe. britain's financial regulator has fined barclays 26 million pounds over failings related to gold prices. a former employee at the bank has been fined and banned from trading. and stocks in thailand slump as the country's military bans 155 people from leaving the country. procedure the power marking thailand's 19th coup in just 82 years. we're an hour and a half into the trading day in europe. equities fairly flood, ftse 100 down 0.2%. saga this morning, ipo'd at the
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bottom of the range. maybe it suggests that the demand for ipos is cooling somewhat. the ftse mib is up 1%. business climate index coming in weaker than expected. 110.4. it was 111.2 in april. they are talking about a lull in the german economy and they've also come out and said any more cuts by the ecb will not provide any further impetus for the german economy. not that the german economy is doing badly. it's doing fairly well as evidenced as well by the pmis we got yesterday. bond markets, 2.55% is where we stand. yields backing up on the basis of strong housing numbers. u.s. stocks up 4 out of the last 5 sessions. that number dragging euro/dollar down to a fresh three-month low this morning, 1.3630 is where
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we've been, around that mark is where we stand at the moment. we're going lower still, 1.3627. that is something that will please the ecb. russia and china have agreed to a $25 billion prepayment as part of the gas deal signed earlier this week. that's according to gazprom. the contract is worth a total of more than $400 billion. we'll go over to kiev in a moment with julia chatterley. let's go to jeff, who's at the st. petersburg economic forum. the deal with the gas is, what the terms are, how much investment russia needs to put in before the gas gets exported and the price. >> absolutely. well, the price we can't really talk about at this point because we don't have too many details in that area. but we do know about the
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significant investment that needs to take place on both the russian and the chinese side to actually provide the infrastructure to get this gas to china. interesting talking to anybody in this infrastructure space at the moment about projects that they are rolling out, we caught up with vladimir yakunin from russian railways who incidentally is also on the u.s. sanctions list here. he's continually trying to raise capital to extend the railway infrastructure in the far east that would be critical to a project like this. i asked him while he was on set with me about the sanctions and the impact for him. >> i don't see any reason but the reason which is exposed, at least in mass media, that i am sanctioned because i am either in the mind of some people.
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and the friend of some particular person who appeared to be the president of the russian federation. not diplomatic, not political. it seems like an indication. >> vladimir yakunin who is on that sanctions list. the whole topic is about a theme, a pivot east, does it exist? this gas deal prompted people to think about russia's engagement with the east, not only china, of course, but india. i'm pleased to have with me the president dez ig gnsignate of t fed rate industry. i want to take the opportunity to congratulate you on the election you just had and ask you what difference now do you think mr. mody's win is going to
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make on india's economy? >> i believe, and this is all based on history, what he's done in the past and his campaign, that it's going to make a big difference. i believe the people of india are really expecting a lot from him. and this is very evident from the majority, his own party had. just by way of information. the last time any single party had a majority was in 1984. ever since we've had coalition governments where there have been 20, 25 parties involved, getting through policies have been a nightmare. he won't have that problem. now, this is an opportunity for him, of course, and for the country. you know, i firmly believe that we are going to get away from the india is ever arriving to india has arrived a lot sooner than one would expect. >> you are here at the st. petersburg forum. you are looking at the
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relationship between india and russia. do you believe the pivot east now exists and that relations between india and russia will strengthen? not that they're bad but will strengthen from here, leading to better business connections? >> from india and russia's perspective, right now there's not much happening between the two countries. i believe there's a lot of opportunities for the two countries. we've had some meetings with the ministers over here and our ambassador over here. there is a lot of interest but what is needed is india needs to know what ran russia and russia needs to know what ran india. there's where it's lacking. but the opportunities are there. >> people draw comparisons between russia and india all the time. this is a deal that's been announced on the verge of this meeting starting that sees gas supply to china.
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would india like to be in a position where it was signing a similar deal with russia? >> good question. let's see what the new government decides to do. the new government will come in with a new philosophy and i believe that there will be a lot of change in thinking. >> so in terms of where you see the strongest opportunity for you to make quick connections in the business world, what is it that india supplies that russia needs at this stage? >> india supplies a lot of high-tech equipment, which i don't think russia's aware of today. russia remembers our independence day when russia and india were very close. they were supplying equipment to us. all that has changed quite a bit now. india today really manufactures high-tech equipment. they don't have that exposure. one of my meetings yesterday, one of the russian gentlemen said, you know, it's really sad to see how you all have progressed and now you're turning around and offering us
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technology which we used to do to you 40, 50 years ago. so there is realization but it's not widespread. the larger companies know but it's the small and medium sector that don't know. the small and medium sector i believe of both countries is the backbone of the industry. so that's one of the reasons why we are here. >> that's globalization for you. let me finish by coming back to mr. mody and this landslide victory that he's enjoyed here. from the business community's perspective, what could he do very quickly for you to improve business conditions? >> when the same government was in power ten years ago, they initiated all the infrastructure. they built a quad lateral, connecting all four corners of india. unfortunately that got a back seat over the last five, six years for various reasons.
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now, i think mr. mody, first of all, it's very important, which team he picks. because the team he picks is going to say how many of the doors are there? he's not going to do everything. we are already keen to find out who the team is going to be. now, there are a lot of projects that spend on infrastructure. we go by a five-year plan, started in 2012 to 2017. it was $1 trillion on infrastructure itself. many of the projects have been held up because of land acquisition or because of environment clearances, delays. one other relevant point is it's almost 50% funded by the private sector. so the private sector has got stuck on this. if these things get sorted out, which if he should somewhat replicate a single window where before the project is awarded all these clearance update, then the bidding would be right.
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people wouldn't unnecessary inflate for possible delays. >> yes. >> there will be savings for the country. that would kick start the economy. >> okay. we'll wait and watch. i know expectations very high here. thank you so much for being our guest here. >> thank you so much. i enjoyed it. >> let me send it back to you, ross, in london for now. i'll be doing a big panel with mr. putin in just a few hours time. >> i heard that. i heard you were doing that. good stuff. unmissable. >> you heard? you heard? >> i heard that was happening. >> good. the marketing is working? >> yes, it is, it's permeating globally. good stuff, jeff. thank you for that. we turn our attention to thailand. bangkok is under lockdown. the military has taken control of the country. troops are patrolling the streets an restrictions have been imposed on public gatherings. sri jegarajah is in thailand's
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capital and joins us for more. sri, just two days ago, you were saying how little sign there was of the military. what has changed and what happens now? >> well, what's clear is that the military seemed to be tightening their grip now and what we heard earlier on today was that they issued this list of more than 150 political leaders on either side of the political divide, including the ousted former prime minister li yingluck shinawatra. there have been an opening door for political leaders from all persuasions, including prime minister yingluck who have been told to report to the army. they've summoned them. it's unclear whether they're going to detain them or what their fate will be. a lot of uncertainty on that score. the other regressive factor is
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that many here were thinking that army chief pryor would appoint some kind of neutral caretaker prime minister. that hasn't happened. he's appointed himself. that's another backward step. this is all being viewed, very negatively by the international community straight after the coup declaration. secretary of state john kerry said there was absolutely no justification for this coup and the pentagon were reviewing relationships with bangkok, especially in the military sphere of influence. early on today, we were talking to the u.s. ambassador here in thailand, christy kenny. i asked her whether sanctions against bangkok would be the next step. this is what she had to say. >> i'm not going to rule anything in or out. it depends on how things go today and again how this washington review proceeds. >> all right.
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there are a number of variables here. the best case scenario is that the army will roll out something approaching a road map. what we saw in september 2006, the time of the last coup, they were in power for about one year and then there was fresh election. now, if the process is the same this time round, we could see some moves towards constitutional reform, referendum and then fresh elections. but from what i understand, the military could be in power for as long as one year, fresh elections could take place in late 2015. that late. so that's just one view of the markets, of course. the economy, the tourism sector is going to take a hit here.
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brand thailand has taken a big hit because of martial law and because of the coup. this is important because the tourist in the city represents 10% of the economy. earlier on today, we caught up with moody's and thomas berne. he flushed out the credit imp implications of the recent developments. >> what we're seeing is a sharp effect on the real economy. we think the effect could be between 2 percentage points and 3 percentage points of gdp. in other words, if thailand didn't have this heightened political unrest, the economy would have grown 4% to 5%. now we're looking at something between 1% and 2%. >> ross, let me just wrap things up by saying there's something of an uneasy sense of stability in the thai capital. and the threat of violence and political unrest from the pro-government redshirts, let's
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not forget, they have an armed faction still really hangs in the air here, if not in bangkok, then possibly in their strongholds in the northeast and the northern provinces of the country. that's going to keep this country and the people here in bangkok, certainly on edge. ross, back to you now. >> sri, thanks very much for that. joining us with his thoughts, mark thompson, director of the southeast asia research center at city of university of hong kong. mark, good evening to you. for the military, the coup seems to be the easy bit. the hard part as sri was suggesting is actually getting us back to on elections and having elections that people will respect. how do we go from here to there? >> it's very unclear. the opposition to the thaksin government, including protesters on the streets of bangkok in the
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last six months have resisted taking part in elections. sort of the ironically named democrat party boycotted those elections knowing they would lose as they've lost every election basically over the past 20 years. the question is, how can things change enough so that the opposition forces and the assumption is, this is something i think is important to say, the assumption is that the military favors the opposition. the leader of the army is known as a staunch royalist, known as quite hostile to thaksin shinawatra. the former prime minister has been exiled. even though he had reasonably decent relations with his sister, yingluck shinawatra, when she was prime minister, people are now beginning to think this is something that went on for a couple years. the assumption is the military is looking for creating a set of
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conditions in which the pro-thaksin parties can no longer win elections. what that involves, what kind of constitutional changes would need to be made so that this very popular party backing thaksin can be somehow defeated is unclear. and the last coup of 2006 and actually an unofficial coup in 2008 both failed in this regard. they both resulted in elections that were won by the pro-thaksin party. that remains a puzzle. it's one reason why a lot of people are unsure what kind of plans the military may have. >> this was sort of a puzzlement. it looks from the outside that any return to democracy would return power back to the same group, the same thaksin group. the question is, how investors are going to react to this? the experience has been the coups have been a regular feature of thailand's history and it's had exceptional growth. do you think that rate of growth
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will suffer in comparison to the likes of indonesia, the philippines and malaysia? >> i think it's clear it already has. you heard in your previous comments that there has been a slow growth. you can see a decline in thailand's growth since the overthrow of thaksin. some of that anyway is related to this political unrest that's involved the anti-thaksin forces trying to defeat these elected governments. so i think that investors are beginning to realize that even though coups have been part of the landscape of thai politics for decades, that the character of these coups has changed. in the past, the military could chase away civilian politicians. the politicians would then regroup sometimes in the pro-military parties and then things would -- the deck would be shuffled anew. in this case, we have a powerful, political figure in
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thaksin shinawatra. so i think things have changed. you have a deadlock that has been taken to a new level and a more dangerous level because now the military is threatening to use force. and this could result in the nightmare scenario for many thais and foreigners, of course, would be a civil war. the real worry is it's not just another coup that will result in a new government soon enough but it could be a worsening cycle that could ultimately result in something very bad. >> mark, thank you very much indeed for that. have a good weekend. mark thompson from the city university of hong kong. we're just hearing from the russian energy minister that the gas price in the russia/china deal is around or close to the $350 per thousand cubic meter price. now, to give you some comparison, the deal with the eu average price is $380. so it is certainly lower than that. of course, it still doesn't mean
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an awful lot without clarity on more of the details of exactly what is in that program. there's a suspicion that russia rushed out a deal to show the west that it could have someone else to buy their gas but those terms might have been quite disadvantageous. the presidential elections in ukraine, we'll be back in kiev to hear from the front-runner who says he's been fighting for the country his whole life.
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within the last hour, the deputy defense minister says moscow will pull back 100% of its forces deployed to regions near the ukraine border within a few days. this is after the ukrainian prime minister called for an emergency session of the u.n. security council claiming there's evidence moscow is involved in violence in the country's eastern region. pro-russian forces and ukrainian government soldiers violently clashed thursday. mortar fire and explosions were heard in an eastern city.
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this all comes, of course, ahead of elections at the weekend. julia is in kiev. she's been on the campaign trail with the man who's tipped at the moment to potentially be the next presidential candidate. julia, how is he proposing to deal with the tensions in the east of the country? >> interesting question, ross. actually he's very firm on this point. he calls the process terrorists, in fact. he's taking a far harder line. when i spoke to him after his rally, he was saying how can he negotiate with these people? he's not going to negotiate with people who are using guns in the morning, drop them down and come to the negotiating tail. we have to be really firm in how we deal with this. it is interesting to get the noises we're getting from russia and suggesting they're going to pull their troops away when just yesterday morning the ukrainian authorities here were saying they were rebuffing armed militants trying to cross the boreder from russia into ukraine
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yesterday. so very much mixed message as far as the east side of this country is concerned. we are having a longer conversation between myself and poroshenko, the man right now that's polling just shy of 50% of the votes. he's an oligarch in this country. we can't escape that fact. he is self-made. you had a confectionary business that he owns in particular. but, again, we're talking about a mix of politics here and serious wealth in the country that's raising concerns that nothing is going to change despite his pro-european, pro-reform message that he's trying to send here. i said to him, look, if you track his past, the zigzagging between different political parties, some pro-russia, some pro-europe, of course, you could suggest perhaps he's an opportunist and not necessarily a voice for change in this country. just listen to what he had to say. >> all the time. all my life. i'm fighting for the future of
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ukraine. now i understand is the right time and the right place. at that time it was completely crazy. even, look, even two days bef s yanukovych flew from the country, i couldn't believe it could happen. it was a high risk for the lives of everybody who participated in this very severe fighting under the bullets. i understand it's impossible to live in the totalitarian country. and it is very important to be together with your people. and you simply should stay on the side where there's a god. i'm sure that we will stop the war in a very short period of time. we will find out a way how to establish the dialogue with russia. absolutely sure that we don't have a compromise on two questions, very important
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question, crimean security. >> what he won't sell is his tv station. he says it's essential for the propaganda war here. we'll be talking about that later in the show. stick around. >> we will look forward to that. still to come in the show, we'll be in russia as the energy minister confirms the gas price for the country's big deal with china. we'll get the latest from st. petersburg with full reaction. the second hour of "worldwide exchange" coming right up. [ female announcer ] there's a gap out there.
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you're watching "worldwide exchange." i'm ross westgate. the headlines from around the world. mixed messages out of russia. the country's leading general saying moscow will be forced to respond if nato steps up its presence near russia's border. the deputy defense minister claims troops are going to be withdrawing within days. meanwhile, russia's leading businessman play it cool over the effect of western sanctions. the chairman of russian railways telling this channel the measures are misguided. >> not diplomatic, not political. it seems like an indication.
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hp's cost cutting efforts continue under meg whitman as the company gets set to shed up to an additional 16,000 jobs. and stocks in thailand slump as the country's military bans 155 people from leaving. the seizure of power, marking thailand's 19th coup in just 82 years. presidential elections get under way in ukraine this weekend. at the same time, many leading business representatives have chosen to stay away from this year's st. petersburg economic international forum. we'll get to there with jeff in a moment. first, we get over to kiev with julia who's been speaking to the leading candidate. julia? >> thanks so much, ross.
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yes, petro poroshenko, the leading candidate right now taking a runaway victory so far as the polls suggesting right now. he's getting just shy of 50% of the votes. the question is whether or not he can actually win it this sunday. are the polls right now correct or will we have to go to a runoff in two or three weeks time? he's an oligarch in this country. he's one of the richest men here. the other thing about him is that he's selling this pro-european message. he's been far less aggressive towards russia, one of the crucial questions is whether or not he'll be able to solve the tensions in that relationship, too. he says i can improve the situation in around three months time. very much the clock ticking there. but to go back to what we've seen from him as an oligarch, he was one of the only -- in fact, the only oligarch down here on the square behind me protesting during the protest a couple months ago. that made him unique an a unique
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voice in this country for change. the question is, can we believe him? and what do the other oligarchs think? what we've seen in the last week, there's a couple coming out against the separatists. this is a sign whether the other oligarchs in this country are lining up behind him? >> a symbol off the so-called ukrainian economic nationalism. people understand how important it is to be in one country together, how dangerous is the situation in the east, because, again, i tried to explain to you, that the main action of this people is just to stop the factors, to destroy the economic potential. they're like crazy. people understand how dangerous is that. that's why we welcome the initiative to declare so-called strike. and to send hundreds of thousands, maybe millions of the people on the street with only one demand. please. people with weapons, take out of the streets.
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we hate this idea. we do not support you. you are not representative of slovyansk and donetsk. you are representatives of fortune. if it is one single voice, this is nothing. if it is a voice of millions, this is impossible to ignore. >> how do you address the concern, though, giving the actions, what he's doing, people will be concerned this is how power is being built in this country in the past few years and actually nothing really is going to change? >> i was one of the leader of the opposition. and we organized the people fighting against corruption, fighting against killing the people, fighting against violation of the main democratic rights of the people. and we win. this is not my victory.
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this is a victory of the millions of ukrainian people. nobody believes that we will win and this is very important. and unfortunately, they are not making the decision for the very last time. i think this is a good symbol. they understand that this is not -- i'll be together with you or not. then i understand how dangerous to not be together with the ukrainian people. that must be dangerous for them. >> the other presidential candidates that i've spoken to have all raised this concern that we're not moving away from a country that could potentially be led by oligarchs. this combination of oligarch high wealth and political power in this country. but he said that's not going to be a problem and his message is right now, pro-european and we can change the country from the bottom down, which is what the protest movement here was all about. one more day in campaigning before the blackout begins. the question is will this man
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win outright or are the polls misleading us as far as the future leader of this country? ross, back to you. >> julia, for you, thank you. that's the latest from kiev. i have julia fordham in the studio. what is interesting to me right now is what is happening to those who represent the eastern part of the country. are they going to get enough to maybe get into a runoff with poroshenko? >> the numbers look very unlikely. remember, the two front-runners are poroshenko, who is in the low 30s so far and tymoshenko, the former prime minister of the orange revolutionary figure. really, it is a race between the two of them. if it goes to a runoff, that's what's likely. poroshenko's appeal is interesting because he has got experience on both sides of the
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fence politically and also bridging eastern and western ukraine, which is why the fact that he leads, even if it's still within the margin of error within all four regions, i think is significant. >> tina, stay there. plenty mover more to come from you. you're with us for the rest of the program today. events in ukraine very much in focus in st. petersburg. we had this -- finally got a gas deal signed between russia and china as well in the last 24 hours. we've heard from the russian energy minister that the price of that is close to 350,000 cubic meters. jeffrey is there. before we get on to the other things that you've been discussing, what might the reaction be to that price? clearly the eu average is around 380. >> yes, so it would appear on the face of it to be lower than they sell the gas to person europe for. but i don't think there will be too many surprises.
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obviously this is just the first bit of information and no doubt there will be various coders in that contract meaning there are linkages to the underlying oil price. there will be some flexibility as well, one imagines, around the spot price of oil. but it is worth noting that i think china has consistently sought to buy its gas at what lower prices than western europe pays. that has some implications, clearly, for pricing for western europe. but possibly also for supply. but let's not get too carried away, ross and lose sight of the fact that none of this gas is going to start pumping for many years yet. quite a lot of infrastructure needs to be put in place before then. it's an interesting number but i wouldn't get hung up on it for the time being. it confirms something that we
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already suspected. what i want to talk about more is the roll of the sanctions in this part of the world, what impact they've had on many companies. and a lot of companies anecdotally talk in the abstract about how it might make it harder for them to raise capital. but vladimir yakunin has been one of those listed by the obama government. and he is the head of russian railways. i caught up with him and asked him how he felt about the sanctions that were being imposed on him. >> i don't see any reason, but the reason which is exposed, at least in mass media, that i am sanctioned because i am either in the mine the of some people and the friend of some particular person who appeared to be the president of russian federation. not diplomatic, not political. it seems like an indication.
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>> he used that lovely phrase, it's like a quarrel in the kitchen, what's going on at the moment. i don't know about you, ross, but i've had some relatively heated ones in my team. i know what he means. he wants to downplay, in fact, the larger impact of this crisis going forward. let me send it back to you from here in st. petersburg for your global market report. >> thanks, jeff, very much indeed, for that. we have seen the impact of ukraine indeed. in the ifo business climate index this morning. more on that in just a second. this is where we stand after being up four of the last five sessions, stocks helped yesterday by the fact that existing home sales rebounded. we are trading this morning some 17 points above fair val yaw for the dow. it was up ten points yesterday. the s&p was up 4 points. just 0.2%. this morning we're called higher by nearly 2 points and the nasdaq yesterday was up some 0.6%. small caps did pretty well as
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well. the russell 2000 up as well. the nasdaq higher by around about 6 points. european equities have been fairly mixed. a little bit of red, a little bit of green. the ftse 100 down 0.2%. we've had an ipo from saga, indications that maybe demand for ipos are waning a little bit. it priced at the bottom of the range at 1.85. the xetra dax, the cac current, up 0.25% at the moment. ifo business climate index came in weaker than expected, 110.4 for may. it was 111.2 in april. the institute saying there's been a lull in the economy in may. they say the drop we have seen can't be attributed in some part to events in the ukraine. but they say the auto sector has incredible expectations about the strength of that particular market. the ftse mib this morning in italy, up 0.4%.
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rewind, show you where we stand with u.s. treasuries. they did get a bounce up in the yield on yesterday's sell-off. yields still around similar levels, just near 2.55%. the yield remember, just over a week or so ago, we were down at six-month lows with yield 2.47%. on the currency markets, that ephone number, helping the euro come down to fresh three-month lows. we're on them at the moment at 1.3620. great expectations that in the june meeting the ecb will act not only with cuts but maybe will come out with a lending scheme, similar scheme to the bank of england's lfs to help small businesses get access. dollar/yen, rebounding. the dollar is stronger across the board, up to 101.80. that's where we stanned ahead of the u.s. open. still to come, hp earnings are
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been overshadowed by its plans to cut up to 16,000 jobs. is this the move that will help meg whitman finally turn the company around? [ female announcer ] there's a gap out there. that's keeping you from the healthcare you deserve. at humana, we believe if healthcare changes, if it becomes simpler... if frustration and paperwork decrease... if grandparents get to live at home instead of in a home... the gap begins to close. so let's simplify things. let's close the gap between people and care. ♪
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you're watching "worldwide exchange." here are the headlines if you've just joined us. all eyes on russia ahead of the
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ukrainian elections. the deputy defense minister says border troops will be withdrawn within days. hewlett-packard's second quarter rise in profits overshadowed by news the company may cut up to 16,000 more jobs. and thailand's 19th coup in just 82 years sends the country's stock market tumbling. we're getting more details out on russia's deal with china to supply it with gas. we heard that total and lukoil to explore for tight oil in russia. we'll explain what tight oil means. what effect has this on on the u.s./china relationship and
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china's relationship with the eu. still with me, tina fordham, chief political analyst at citi. the russian energy came out and said close to $350,000 per cubic meter. the average eu price is 380. but if we believe other details of this deal, russia has to foot the bill for $55 billion of investment to find the gas, build the pipe lynn infrastructure. do you think russia has rushed into signing a deal on bad terms to sort of as a political point, show the west, see, we don't need you as a customer? >> the commercial considerations aside, russia needs this deal and the timing couldn't be better. >> that's my point. >> coming up ahead of sanctions and of course the st. petersburg forum this week. it really underscores putin's message that he doesn't need the west. >> that's not true, is it? >> in practical terms, probably not. but, again, from a pr perspective, this is an important development.
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>> we had someone come out says he sees a looming nightmare for the russian economy. at some point you degrade all the other manufacturing options in your country as well. how damaging do you think this political crisis is for the long term economic benefit of russia? >> i think it's a bit hasty to say that it's damaging for the long term. although russia looks headed for recession at this point. it does have reserves to last for some time. economic diversification would require reform and reform at a broad based level is not something that putin has really been pursuing for the last several years. >> do you see tensions between the west and russia escalating from here or post ukrainian election actually things calming down? >> i think it's more of a chill than continued escalation.
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i have said for some time i thought the ukraine developments were really a game changer with relations between russia and the west. i think it's different from 2008 and the war with georgia where six months later hillary clinton turned up with a reset button. i think we're in for more of a strained period. >> tina, thank you for that. i just found out that tight oil is another word for shale oil. i didn't know tight oil was another way of describing shale oil. that's the deal between total and lukoil. tina fordham, thank you very much. jeff will be hosting the keynote address with the russian president vladimir putin at the st. petersburg international economic forum. it starts at 12:30 cet, 11:30 london time. we'll be taping that here on european programming. there's plenty more, as well, of course, on our live blog which will be harnessing all the comments on russia and what's coming next for ukraine.
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that's all next on still to come, why software giants are looking for their silver lining in the cloud. our first installment of tech drivers coming up after the break. cars are driven by people. they're why we innovate. they're who we protect. they're why we make life less complicated. it's about people. we are volvo of sweden.
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on the back of earnings from some of the world's largest software giants, enterprise has their sights on the cloud. in the first of our tech driver series, carolyn roth finds out why. >> reporter: it's been a lean, mean website startup. the prevalence of cloud apps is unmistakable. it's no longer small and medium sized companies aiming for the clouds. adoption from large enterprise businesses are soaring with the scaleability, up gradability and capex flexibility enticing those with ambitions for more agile enterprise. >> in 010 you saw companies wearily eyeing this entire notion of you mean we can't own this infrastructure? our employees will never touch it? we can't let our data go out of these four walls. that's frightening, that's scary.
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>> reporter: organizations from best buy to phillips and ford have all migrated parts of their business to cloud alternatives, often with the added goals of cutting costs. it's a trend that is backed up by data. and gartner's annual worldwide software index, they have a 33% year-on-year growth. it seems the writing is on the wall for conventional software vendors. microsoft's pivot to devices to services saw the company's q3 cloud revenue double. it gets flag growth in its 3:c licensing business. the reality of this new model doesn't necessarily mean clear skies for the service providers themselves. independent cloud vendors from rack space and workday to sales force have all taken hits as traditional developers pour in. >> we've seen this in other growth cycles.
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i think it is such profound growth, there's a lot of pain that investors have been going through. it's a buckle the seat belt time for cloud companies in this market. >> even so, the competition couldn't be more welcome for enterprise itself, hoping every cloud has its silver lining. all right. carolyn roth with our new edition of tech driver. some of the other stories after the close. in u.s. session, hewlett-packard second quarter profits rose 18%, in line with forecasts. revenue did fall for the 11th straight quarter, down 1%, shy of estimates. they were overshadowed by the company's announcement it may cut up to 16,000 more jobs. this is part of ceo's meg whitman's ongoing restructuring which would bring the total during her tenure to 50,000. the cuts will be spread across
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different countries and businesses. hp down 1% in after-hours state side. it's currently off 3.3% in frankfurt. cnbc's david faber has an exclusive interview with meg whitman. that's on "squawk on the street" at 9:00 a.m. eastern a little bit later. gap's first quarter profit was down 22% but that still beat forecasts. the results hurt by weak foreign currencies. the retailer had to step up discounts earlier in the quarter to try and bring in customers when the severe u.s. winter weather affected sales. same-store sales were down around 1%. gap is also affirming its full-year outlook and says it's focused on continued expansion of outside america. shares up 1% after hours. coming up, 1.7% in frankfurt. as for the agenda today in the united states, we've got new home sales out at 10:00 a.m. eastern. sales have forecast to have risen to an annual rate of
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418,000, coming on the back of strong existing home sales yesterday. one earnings report of note, the retailer foot locker. after the gain, slim gains we saw for u.s. equities yesterday, we've been up four out of the last five sessions. futures suggest we will continue the trend today. the s&p 500 currently up by 2. t jowl ewingia has been going underground to get the story. >> you wouldn't know it just by looking. i'm at the entrance of an underground tv station located in a soviet nuclear bunker.
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this is "worldwide exchange." here's a recap of the headlines from around the globe. mixed messages out of returnia. the country's leading general says moscow will be forced to respond if nato steps up its presence near russia's border. the deputy defense minister claims troops will be withdrawn within days. russia's leading businessmen meanwhile play it cool over the effect of sanctions on their businesses. the chairman of russian railways told this channel the measures are misguided. >> not diplomatic. not political. it seems like, you know, an
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indication. >> hp's cost cutting continues under meg whitman. they get ready to shed an additional 16,000 jobs. and thailand's military bans 155 people from leaving the country, the seizure of power, marking thailand's 19th coup in just 82 years. you're watching "worldwide exchange," bringing you business news from around the globe. a very good morning to you. we have seen u.s. stocks close up four out of the last five sessions. futures this morning suggest that trend will continue. the dow currently higher by 17 points after being up 10 points yesterday, just 0.1%. the s&p 500 is up just under 2 points. it was up 4 points during
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thursday's session. and the nasdaq is higher by around 7.5 points. the bigger performers came from small caps, the russell 200 up 0.9%. housing stocks were the biggest gainers. here we are 2 1/2 hours into the european session. and we're flat to mixed. the too thecy 100 down 0.25%. the cac current up 0.1%. the big focus for data has been the ifo business climate index, perhaps the most important climate indicator. it was 111.2 in april. it is now 110.4. the automotive sector is feeling good about its prospects in particular. they're forecasting gdp growth in the second quarter around 3%. hewlett-packard's second
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quarter profits up 18%, in line with forecasts. the focus was on the revenue which fell for the 11th straight quarter, down 1%. hp's results were released earlier than scheduled and ahead of thursday's closing bell, they were also overshadowed by the company's announcement it may cut up to 16,000 more jobs. this all part of meg whitman's ongoing restructuring. that brings her total to 50,000. the cuts will be spread around different countries and businesses. hp stock down 1% after hours. in frankfurt trade, it's off 3.3. reminder that david faber has an exclusive interview with meg whitman on "squawk on the street" today at 9:00 eastern. what do we make of hp? joining us on the phone is senior vice president at imperial. thanks for joining us, there was a sense the feeling that hp
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stabilized. does the news today suggest that's not quite the case. >> if you look on the revenue side, it was just below expectations. the company did call out weaker-than-expected results. there's strength on the pc side where the company did see refresh related to windows xp. overall, i think the company continues to execute against a backdrop against a tough spending environment. if you look at the other enterprise players that struggled, ibm, cisco, emc. they have been given flat revenues market, which is low growth challenge. >> you mention the pc group, the strongest performing segment, sales up 7%. the one problem with that is, of course this is the group with the lowest margins. as you say, related to microsoft as well. is that likely to decline in the
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coming quarters? >> yes. i think once again, i think the best the company can do is eventually maintain share in its end markets, either low growth or secularly challenged. if you look at the overall pc market, again, on the server side, revenues is actually flat. ahead of it, the sale of the business lenovlenovo. we expect increased competition coming back from lenovo and the white box vendor which will likely drive margins lower. >> there are more news on job cuts, 16,000 on top of the 11,000 jobs they said would go previously. >> the head count reduction of 11,000 to 16,000 people, the company indicated growth savings of $1 billion by 2016.
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the primary concern among the investor community is if this is a canary in the coal mine where the company is unaible to grow earnings without continuing to issue cuts. that remains to be seen. i think that's a primary issue. >> good to speak to you, ashok kumar from imperial capital. thanks for talking to us. moscow will pull back 100% of its forces that have deployed to the regions near its ukraine border. the comments come after ukraine's interim prime minister called forage emergency session of the united nations security council. he's been claiming that there is evidence that moscow has been involved in the country's east.
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just two days to go before the presidential election. that outcome will be closely watched by both the white house and the kremlin. as the information between russia and ukraine reaches its peak, cnbc's julie chatterley has been paying a visit to one independent online broadcaster in a sleepy residential area of the capital, kiev. >> we're in the headquarters of espresso tv inside a soviet era nuclear bunker. it's an apartment owned and a channel financed by a former tv star here who turned into a member of parliament in order to get parliamentary immunity from any government interference here. the channel began on the first day of the euro midon protests. i spoke to the main anchor here. i asked him about the importance of social media and channels like this in driving the revolution forward.
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>> translator: i would say that facebook and twitter have helped but the main number of ukrainians stilt watch tv. we can see this, for example, in the russian propaganda. it's not just journalism, it's propaganda. people are watching tv and believe what putin, russia and kremlin are telling them. this is a big problem. people in the ukraine, russia, the post-soviet countries are not ready to fully accept social media. >> reporter: the station began with just 30 journalists working here. in just six months, they've now got 111 people here. they broadcast 24 hours a day but it's only online. the journalists here tell me they see themselves as the flag bearers for the pro-democracy, pro-european movement that's now hitting this country. >> right. julia joins us live as well. how much information do you think they're getting in the eastern part of the country about the elections? i also wonder what the turnout
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there is going to be like. >> well, that's the crucial question, ross. very little from this side -- pardon me, sorry. from this side we know they've got russian tv there. the question is what kind of tv and what kind of perception are they giving to this site. the reason i wanted to investigate this, the leading candidate in this election has his own tv station. he said he won't sell that off, even if he wins this election because he needs to continue it and offset the propaganda war. i'm joined by the ceo of the kiev post, jacob perzynski. when we talk about a propaganda war, what does this mean to you, particularly in the east? >> what russia is doing is inundating the people with false messages, false information about what is happening in kiev, what is happening in the support of the west. the point is not so much to
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convince them to russia's troops but confuse them, render them completely senseless and apathetic. and so when they do actually hear what is happening, when they get an honest view of what is happening in kiev, they don't believe it. >> i've seen reports where they say the government is fascist and i saw one report where the people are eating each other in the mydon. that is what people are getting, the perception of what is going on here and what european means is being totally confused. >> absolutely. they have no idea what is actually going on. here we go back to the darkest moments of the cold war when people in the eastern block were being told that on the streets of western germany people are eating each other. a common thread so to speak. yes, they are absolutely unable to make a rational decision. >> let's bring it back to the leading presidential candidate. he owns his own tv station. to me i find that worrying.
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should he continue to over that tv station after the election no matter how important it is, perhaps wbs that the message is spread? >> this is not something new in ukraine. previously we had a security head who had a tv station. this is worrying, combining politics and this kind of media reach is not a good thing. that said, his tv station did do quite a good job reporting the mydon revolution. and fighting the propaganda war is something important. is it the best of bad choices. >> petro poroshenko is talking about closer ties to europe. if that idea frightens people in the east, based on what you just said, is actually the tv station essential in spread something kind of truth? how do we get that message across to the people in the east of this country? >> first of all, it's important to reach out and have a broad kind of communication where people can go there, talk to them.
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european people have been fed this kind of information for years. they are used to this. >> we know right now, actually half of the polling stations right now in the east have been overtaken by separatists. we're talking around 5% of the population, we think that quite frankly will not be able to vote in this election. for now, back to you. >> i guess there are those elements who would like to say because people couldn't attend to the polls, therefore, the credibility of these elections has been marred that may well be the end. that's the latest from the ukraine capital, kiev. we'll take a short break. still to come on "worldwide exchange," why americans may be forking over a lot more cash for their memorial day weekend backyard barbecue. say it ain't so.
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[ female announcer ] there's a gap out there. that's keeping you from the healthcare you deserve. at humana, we believe if healthcare changes, if it becomes simpler... if frustration and paperwork decrease... if grandparents get to live at home instead of in a home... the gap begins to close. so let's simplify things. let's close the gap between people and care. ♪ i'm spending too much time hiring and not enough time in my kitchen. [ female announcer ] need to hire fast? go to and post your job to over 30 of the web's leading job boards with a single click; then simply select the best candidates from one easy to review list. you put up one post and the next day you have all these candidates. makes my job a lot easier. [ female announcer ] over 100,000 businesses have already used zip recruiter and now you can use zip recruiter for free at a special site for tv viewers;
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go to
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at a special site for tv viewers; when folks think about wthey think salmon and energy. but the energy bp produces up here creates something else as well: jobs all over america. engineering and innovation jobs. advanced safety systems & technology. shipping and manufacturing. across the united states, bp supports more than a quarter million jobs. when we set up operation in one part of the country, people in other parts go to work. that's not a coincidence. it's one more part of our commitment to america. you're watching "worldwide exchange." recap of the headlines. all eyes on russia ahead of the ukrainian elections. the deputy defense minister says border troops will be gone
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within days. and hewlett-packard may cut up to 16,000 more jobs. and thailand's 18th coup in just over 82 years. it is memorial day weekend and the unofficial start to the summer in the united states. many americans taking advantage of the long weekend by firing up the backyard barbecue. but there's a warning. rising food prices could be fairly hard to stomach this year. what on earth is going on? seema mmody. >> memorial day celebrations may come with a heftier price tag.
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meat prices rose 5.2%, led by a more than 7% spike in beef, the biggest jump in any category. the american restaurant association says retail beef prices were up 11% in april, year over year to a record high. in the northeast, the usda says prices for boneless ribeye steaks, one of the most popular cuts are ranging between $8 to $12 a pound. the biggest reason for the increase, u.s. cad cattle herds at the lowest inventory. texas is in a drought while california is also suffering from a record drought of its own. it takes 18 months for a calf to be market ready, making it difficult to increase supply. it's not just beef. pork prices are also rising, especially for bacon due to strong demand. a deadly virus has also hurt production as the industry as lost between 7 million and 8 million animals over the past
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year. the usda predicts a 2.3% drop in pork production this year. it's not all bad. consumers may be substituting for chicken for beef and pork. poultry hasn't seen as big a price increase as other meats which could benefit several producers. overall, ross, the usda is forecast forecasting a 2.5 to 3.5 increase in retail costs this year. which is about average. inflation may be strong for meat, eggs and dairy. if you're a vegetarian you're in luck. vegetable prices have been trending lower for the past three months on that note, ross, i have to ask, are you a carnivore or herbivore? >> i like a vegetable skewer as much as the next man. but you do need a proper bit of protein. >> i hear you. you're a meat eater. >> happy to confess to that. it is also a long weekend in the uk this weekend. there will be plenty of
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barbecues coming out as well. >> will you be firing up the grill? >> yes. >> people like to do it regardless of the weather. we're very good at wet grilling, i can put it like that. >> hold the umbrella over the grill. sure, there's ways to make it work. >> yes. and the smoke gets everywhere. it's all part of it. i hope you have a good weekend. >> thank you. you, too. >> good luck with your barbecuing as well. futures suggest the performance will continue today. we get a look ahead to the final session of the week, coming up.
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over the last two days, jeff and steve have been talking to some of the most influential and
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powerful biz men at the st. petersburg international economic forum. they a they ask what effect the sanctions have been having. >> sanctions amplify tension, amplify problems but not -- i do believe russia should not be engaged. we should not impose sanctions on companies nor individuals. >> for the time being, there has been no impact whatsoever, except the gdp in russia is now this year probably going to be flat. >> now it's becoming kind of a grown-up adult with its own interest. it's kind of like for the other grown-ups.
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it's a bit hard to accept this is an equal now. >> of course, i could significantly impact on russia's financial system. it could be a consequence for the whole economy. >> i was disappointed when i read in some article as the number one enemy of the united states of america. it is foolish. some of the thoughts on sanctions from the st. petersburg forum, don't forget, jeff will be hosting cnbc's jeff cutmore, hosting the keynote address with the russian president vladimir putin and that is starting today at 12:30 cet. in other words, about an hour
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and a half from now. don't miss out on that. you can also get the latest as well with our live blog, harnessing comments on russia. that's all on meanwhile, bangkok is under lockdown as the military has taken control of thailand. troops are patrolling the streets and restrictions have been imposed on public gatherings. soldiers briefly detained politicians from both sides as the army chief declared he was seizing the powers of the prime minister. it closed down less than 1%, about 0.6% lower. in corporate news, general motors recalled around 16 million vehicles worldwide and more could be coming. barclays analyst brian johnson
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says the automaker might issue further recalls through midsummer. he met with senior management and says gm is using new methods to find potential defects. gm's stock up 0.4% in frankfurt, down 18% for the year on that quote. and break out your 3-d glasses. "the wall street journal" suggests google is developing a 7 inch tablet that can capture 3-d images. the company will start building 4,000 prototypes next month. the device apparently has two back cameras, infrared depth sensors and internet software which helps it capture 3-d pictures. tango is a platform for android product designed to track the full motion of the 3-d device as you hold it.
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google stock flat today. uber is seeking $500 million in new funding. "the wall street journal" says that could value the startup at more than $12 billion. it would put it close to hertz which has a near $13 billion market cap. the investors might include black rock as well as general electric. uber last raised around, around $260 million, last august. u.s. futures this morning suggesting will tick higher at the start of u.s. trade today. currently some 22 points above fair val yaw for the dow which remember that has been up four out of the last five sessions. the s&p is high by 2.5 points and the nasdaq is called higher round about five points. that's it this week for "worldwide exchange." "squawk box" coming up next, with the countdown to the opening markets. vladimir putin as well, coming
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up 12:30 cet.
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good morning and welcome to "squawk box." there could be a summer pork panic as we head into memorial day weekend. joe's not here. i think he's looking for bacon or something. it's friday, may 23rd, 2014. "squawk box" begins right now ♪ in the summertime when the weather is hot ♪ that's right. 2014. welcome to "squawk box" right
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here on cnbc. i'm becky quick along with andrew ross sorkin and brian sullivan in for joe today. we've been watching the stock market and so far it's been looking to extend its rally into the long weekend. take a look at the u.s. equity futures this morning. green arrows. these are modest advancers. s&p futures up by just over 2 points and the nasdaq up by just over 5. the dow, s&p and nasdaq have closed higher in four out of the last five sessions. small caps outpacing the broader market yesterday. it's been disastrous for the russell 2000 lately. it fell into correction territory last week. since then it has retraced and is now less than 8% from its peak, believe it or not. meantime, volatility falling to the lowest level in more than a year. this suggests a lack of fear in the market. among the reasons for the vix trading at low levels, near record stock prices and low rates. it is a quiet day on the data front today ahead of the holiday weekend. we will be


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