i'm christine tan. lg electronics q3 profits jump 50% as the worl's number three mobile phonemaker saw strong demand for its production. >> i'm ross westgate. here in europe, deutsche bank fell despite estimates. >> and i'm brian shactman here in the states a new report slams a treasury's handling of the t.a.r.p. just as the government takes steps to end parts of the program. legal low. you're watching cnbc's "worldwide exchange." global equities, the ftse cnbc global 300 at the moment just up three points. european stock markets an hour into the trading day. the ftse 100 rebounded. currently up about 0.3% at the moment. but it's neither here nor there. the big focus will be bank of england minutes due out in a half an hour. sterling has rallied and hit a one-month high against the greenback. currently at 1.6485. maybe a bit of short covering. elsewhere, dollar/yen, in the range where we have been for this week between 90 and 91. euro/dollar, 1.4956. and a similar story for euro/sterling, as well. >> hey, ross, a lot of uncertainty after the weak economic numbers coming out from the u.s. overnight. chinese data is expected out tomorrow. a lot of uncertainty. we'll wait and see as far as investor hes are concerned. the nikkei 225 ending up pretty much flat. the hang seng down 0.3%. the shanghai market down 0.5%. and the aussie market down 0.1%. so we are seeing some falls, but the falls are not as dramatic as one would have expected. let's check to see if the dollar un230e8dz. right now, dollar is weaker and oil is weaker. so the correlation is not as intact. and brent is pulling back, as well, $77.09 a barrel. we are waiting for a weekly u.s. inventory report. a dow jones forecast calls for oil to rise by 1.3 million barrels. gasoline and distillants are expected to drop by 800,000 barrels. brian, good to see you. >> and good to see you, too, christine. we are down in the states where we are down just about 0.5% across the board. earnings were strong for the most part, but the housing starts seemed to put a drag on the market and it never really bounced back on top of that. against fair value today, we're in a situation where we're positive in the nasdaq and negative in the other two, but it's close to being in the flat line. the nasdaq probably stronger because of yahoo! which had a pretty good earnings record. they beat estimates. a lot of it was cost cutting b but still, carol bartz is tightening her grip on the company and trying to poise it for a comeback. your u.s. 10-year bund, 3.26%. your u.s. 10-year note, 3.34%. interesting how that yield continues to drop. you would imagine on a day where we sold off, that yield will go down. ross. >> mervyn king warned by the historical creative hazard created by banks. he suggested banks should have a more speculative event off from the utility aspects of deposit taking. it's hard to see how the existence of institutions that are too important to fail is consistent with they're being in the private sector. encouraging banks to take risks that result in large dividend and remuneration payouts when things go well and lows for taxpayers when they don't distorts the losses and management of risks. >> and his climbs from comments we continue to see from paul volcker. minutes from this month's bank of england meeting will be posted today. it will give us a big clue as to whether we halt quantitative easing. >> and we have a situation where the t.a.r.p. is in full focus even as a lot of people with the t.a.r.p. are talking about before they change any of their policies. in his latest report, barofsky questions the effectiveness of increasing lending or preventing foreclosures, he says the public does not trust the t.a.r.p. because banks are not required to say how they used the money. christine. >> on a global basis, operating profit came in at $732 million, up from $489 million a year ago. the world's number three mobile phonemaker says it enjoyed strong sales of its flat panel tvs, as well. as for q4, the company has forecast a modest rise in revenue and lower margins as recovery in the won, higher marketing costs and brides competition start to weigh on the bottom line. shares of lg ended 1% higher today in soeul. joining us now for market strategy, we have our panelist, franz winzel, senior investment strategy and simon grose-hodge, investment strategist, lgt bank in singapore. gentlemen, thank you very much for being with us. simon, let me start with you first. markets, you've seen some profit taking going on, a little breather going on. what do we need to see for these markets to have the conviction to move higher from here? >> it's getting increasingly more difficult to surprise the market and to seichate the market. we've had a good rally. take the u.s. some 80% of companies have had an upside surprise to their earnings. merely beating the markets isn't enough any more. they want to see a big gain over the estimates and more importantly, it has to come from the revenue side, not the cost cutting side. that's the period that will be sustainable. if some of the earnings are coming from the cost cutting side, from these sorts of levels in the market after a good rally, we need to see better profit margins, better sales numbers which means that the u.s. consumer is coming back. what if we get a better economic number coming from china tomorrow? >> people started talking at about 7%, 7.5%. now the markets are talking around 8%. we're going to need a number to be around 8.5% to be a surprise to give the markets a boost from these sorts of levels. that's certainly not impossible from the chinese who have the ability to pull out a good number when they want one. >> franz, what do you think, do you think we can continue to benefit markets here beyond christmas from the stimulus in the system? >> well, we basically would great on the information that was just given, which was that equities can continue. but the drivers will definitely change, say, in the next couple of quarters. my colleague just mentioned that the revenue base is going to become more important and i think we saw them with the earnings season which is just on the screen and all these companies are disappoint on the revenue side. they get punished on the spot and that for us is a very important element going forward. we think of the rally which has pushed markets higher throughout this year will peter out and that the quality stocks, individual quality stocks will basically take over the lead and the die vergence between the chunk and the quality stocks will come to an end and the quality stocks will start to catch up. >> you say that actually the stocks are cheap despite the rally that we've seen. what measure are you using for that? >> well, there are various measures. you can make the case for equities. simply on a forward pe basis, we think next year's earnings should top 25% earnings growth. on that basis, we're talking about 12 to 14 tops multiple. that from our perspective looks fairly attractive. if we would put the bond yield into the equation, that makes equities even more appealing. we think that equities still remain cheap. >> simon, let's talk about the banks for a minute here. there is a lot of moaning out there about how to approach it. is that how we protect from too big to fail? is that how we protect from another meltdown we had a year ago? >> well, yes. as a lot of people always point back to the demise of glass-steagall as causing the financial crisis, then it makes sense. the issue is going to be that people will only want to pick the cherries, they're only want to buy the best part of the banking systems and you can't leave the banks with only the parts that nobody wants because then that's unfair to those shareholders that still remain. so it's much easier to talk about the concept of what you want to do, hiding off certain industries and splitting the bank back up. but it's much more difficult in terms of which parts you're going to sell off, and what price you're going to charge to the new investors. >> you know, franz, is it a situation where banks need to become more like utilities again? >> deaf the natalie in the longer run and again, i have to insist on the longer run. what would basically hinder banks later on and encourage banks to fail. so basically, the regulation would have to be a dominant one and that sounds like a dimension of utility like. >> and franz, i wonder how much suspicious there is about banks this morning. what is the view about european banks, have we still got suspicions about them, or not? >> even though we would call it a neutral weights as of today, there is a lot of loan provisioning going on which is going to hinder any strong and robust and underlying earnings progress in that sense. on top, with basically think that the toxic assets haven't been revealed totally. in the u.s., yes. but here in europe, we think there is still negative news to come, even though the central bank, the ecb, helped the banking system to be bailed out, but still, we think that there is more negative news or suspicion, as you mentioned, rightly so to come and that will mean this kind of back and forth. today's numbers as of deutsche bank is not a big surprise, but the -- and the fact that it sold off slightly today is as well no surprise. it's much more a buy the rumor and sell the news environment as of today. >> franz, thanks for that. simon gross hoej, thank you, as well. we were just talking about deutsche bank. it surprised the mark with third quarter earnings preview today. the banking giant says it expects a net profit of $1.2 billion profits. that is double what analysts have forecast. we believe it's been boosted by tax credit. shares in deutsche bank, though, trading down. franz describes it as buy on the rumor, sell on the facts. we're looking for more detail on that side of things, as well. strong earnings caused seb to they say they won't need to tap the swedish bank scheme. the bank added that the growth of nonperforming loans in the baltic is now slowing. we'll be talking to the ceo of seb exclusively on tomorrow's "worldwide exchange" at 10:20 cet. >> well, a government appointed task force crafted to deal with jal could need $3.3 billion to boost the airline. the nikkei says the airline will tap public and private funds for the fresh capital, but the state is expected to shoulder a significant portion, which could lead to it becoming jal's top shareholder. the request was made during a meeting with the finance minist minister. indian i.t. firm tech mahindra has fallen 44%. the bottom line was hit by costs related to its purchase of satyam. revenue fell 2% to $248 billion. but the company says business is improving and expects its debt cost to fall stashlgly. tech mahindra shares trading in mumbai right now, this is how it's fairing. we'll be talking to the vice chairman to talk about the earnings. up 0.5%, 946 rupee. of course, i mentioned that the vice chairman will be hehe on "worldwide exchange," tech mahindra, to talk about earnings, brian. >> thanks, christine. the white house will make it easier for banks to access money from the t.a.r.p. in this program. the sba says small banks and businesses create between 60% and 80% of new jobs here in the united states. yahoo!'s third quarter profits tripled, beating forecasts as online spending showed signs of life. the company also, as i mentioned at the top of the show, benefited from months of cost cutting and restructuring, including the sale of alibabadaba.com. the cfo says the web search deal with microsoft is on track to close early in 2010. take a look at how things are trading with yahoo!. yahoo! japan and alibaba, the only one to the down side is alibaba.com. techcheck.cnbc.c techcheck.cnbc.com, we don't get to see him often, but take a look at his blog. the bank of flnd minutes are coming up in around 12 minutes. and the head of opec 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information kit with dvd. call the number on your screen or visit tempurpedic.com. tempur-pedic. the most highly recommended bed in america. global equities, a little soggy today. becky is going to update us with what's going on in london. >> we are entirely flat at this stage. amongst the movers, wolseley is posting impressive gains. higher by about 2.5%, in fact. there was an upgried by bank of america merrill lynch increasing that rating to a buy center underperform. speaking of analysts, pesco also stronger this morning up by about 2.2%. know maura increased their price target on that stock to 526 p. cadbury also out with figures this morning. definitely worth a look, as well. cadbury has increased their sales target for 2009 says business is looking pretty strong. they have a vested interest in saying these things. kraft has made an approach for cadbury and now they have until the 9th of november to come up with a fresh bid or walk away. and the shares may be a little bit higher today. patricia, how is it looking in germany? >> we are down about 0.2%. and the volumes at the moment, of course it is financials and deutsche bank now down about 3.2%. what they said in terms of the numbers looks good at the first brush, but the market did expect them to look good. the deutsche bank, we have to see, they're on an acquisition trail. above deutsche bank for a sell and ad and emeril, they want about 75% of oppenheim for about 1 billion euros and whether they have to go for a capital increase in their acquisition strategy. so that is weighing on the shares. outperformers this morning, amongst the utilities, for example, e.on up about 1.2%. deutsche corp. up about 1.5%. one to mention is adidas at the moment does suffer a little bit because of the sales indications coming through from puma and ppr. and i'm sure stephane has more on that issue, as well. we're going to you. >> ppr, but also the carmakers are dragging the french market lower this morning after peugeot citron posted a 1.7% decline for the third quarter. it's a limited decline compared to the previous quarters, but the company still doesn't give a guidance for the full year. it's facing a negative impact for exchange rates from the last quarter. and the stock is down nearly 6% driving the whole sector lower. ppr, as patricia mentioned, trading lower after the company missed expectations in terms of sales for the third quarter. and down 7.6%, all the businesses includes the luxury businesses had a weak performance under the third quarter. bank of america says that ppr is not out of the woods yet and lowered its price target for the stock, which is now almost 4% lower. and also in the red, smi posted better than expected revenue for the third quarter, had a stronger than expected outlook for the end of the year, but the company still had a loss in the third quarter, $201 million. that was the seventh straight consecutive loss for the chipmaker. the stock is off 3.5%. that's the story in paris this morning. now over to adam in hong kong. >> thank you very much, stephane. we saw moderate declines in the asian trading session here, tracking the losses that we saw on wall street the previous day. the shanghai composite falling about 0.5% there. it had been in the green briefly during the trading session. in terms of sector focus, we saw declines in the oil-related plays as oil prices cass indicated lower, hitting that $80 a barrel briefly yesterday. so all those stocks were bid lower. also, watching the telcos in reaction to the earnings that came up after the bell yesterday which i talked about on "worldwide exchange," all of the missing forecasts, particularly telecoms, those stocks closed lower. it continues to be a big day from corporate earnings. china construction, datang power and jiangxi copper. datang power saw fairly hefty gains today because its main rival reported yesterday after the bell and saw its profits from a year ago a record loss because power demand has been on the increase and so has the chinese economy. so overall, it was a weaker day in asia. on that note, it's back to you, brian, in the u.s. >> thank you, adam. here in the states, earnings once again dominate the discussion on wall street. we hear from dow component boeing before the opening bell. we also hear from continental airlines, eli lilly, morgan stanley, wells fargo, a lot of big names. after the close, we get numbers from ameriprise financial, amgen, ebay and nouvelus. the fell releases its latest beige book report at 2:00 p.m. new york time. at 4:30 p.m. new york time, boston fed president eric rosen gren will give remarks it's called after the fall, re-evaluating supervisory, regulatory and monetary policy. that's down the street from where my folks live. that is your global stock watch. coming up on "worldwide exchange," tech mahindra takes a beating. can the indian i.t. services company recover from the backlash? we'll speak with the company's vice chairman. >> plus we'll get bank of england minutes coming out in just under three memberships. i'm county counties. in asia, carmakers are going electric as the tokyo motor show this year, because strong yen is putting a bit of a damper on sentiment. >> i'm ross westgate. in europe, minutes out from the bank of england show 9 to 0 to keep quantitative easing where it was in october. and i'm brian shactman. in the united states, the government takes steps to end parts of the t.a.r.p. program. >> just had minutes out from the bank of england. the bank of england policymakers voted unanimously this month to leave the size of asset purchase program unchanged at 1.75 billion pounds. all policymakers voted to hold interest rates steady, as well. there were differences a a them on the balance of rifx to the medium term outlook of inflation, noting that november's new growth inflation forecast would allow a fuller discussion. all committee members agreed, though, that recent developments were not significantly competitive revising the target level of asset purchases that had been agreed in the august meeting. remember, they raised the amount of quantitative easing by 50 billion pounds to 175 in august, although moisture vin king and other policymakers had argued for a 1775 billion increase at that point. they say inflation is likely to rise in the short-term for the medium term outlook is fairly anchored. high share prices, lower short-term rates are likely to boost future output, as well. they say overall, the evidence suggests that the asset prices had been substantial and of the type planned. sterling is just back to its early levels against the dollar. it's up to a fresh one-month high, 1.6511 on those minutes. peter dixon is with us. peter, from that little bit that i've read there suggests that maybe we won't get expansion? >> i have to say, to be honest, i think the evidence is very mixed on what the mpc members have had over the course of the past week. last week, comments were taken to suggest perhaps qe wouldn't be expanded. over the weekend, we had adam paulson saying he would be in favor of expanding it. quite honestly, i don't think we know at this stage and i'm not convinced that the minutes have shed any light on that. >> they've referred us once again to the next quarterly inflation report, really. is that the point, with that they themselves are going to sit on their hands until they have a better grip of where we're at? >> absolutely. we do believe it will be broadly in line with that which is presented in august. and it really comes down to the question of whether you believe that further qe is necessary. and that comes down to the individual members of the meeting. >> do you believe it's necessary, peter? >> no, i don't. i think if you believe it's the stock asset purchases which count, and bearing in mind asset purchases are about 12.5% of gdp, there isn't any need to expand the facility right now. they can afford to sit and wait. >> peter, we'll come back to you shortly. right now, european stock markets, a little bit mixed today. we're down 0.3% on the ftse 100. xetra dax down 0.5% as well as the cac 40. autos, industrial goods and services and banks are down at the moment. >> christine. >> trade was very much thin across the board. the kospi ending down 0.7%. the shanghai market down 0.5%. and the aussie market down 0.1%. so falls across the region. brian. >> thank you, christine. we had a negative day about 0.5% across the board. a little bit more in the nasdaq. today weaver down about 275 points in the dow. the nasdaq had been positive. we had a few data points which we might get into hopefully in a bit here. >> let's get back to peter dixon. for more on the global economy, peter dixon is still with us. peter, a lot of people are waiting to see what the chinese data out tomorrow will say about the chinese economy. are we going to get further evidence? >> i think we'll get evidence that the economy overall is doing reasonably well. but i think that's a different question as to weather china is helping to support the global recovery. but i think it's fair to say that china itself is a leveraged play on the rest of the world. if the u.s. does well, china does well. and my guess is that we'll see reasonably strong demand out of china, but the figures for imports, for example, which are what really matters from a global perspective will remain relatively weak. >> peter, it's brian here. we had housing starts weaker than expected. actually, they weren't bad, they just weren't as strong as people had hoped. and in terms of the equity market, it got people skittish. and i wonder if they're being too sensitive to the numbers or if maybe the comeback in housing is going to be slower than we thought. >> a bit of both, i think. the numbers weren't terrible. but i think the markets had had a very good run over the course of the previous days and they're perhaps looking for an excuse to sell off and those housing numbers provided that. as you pointed out, i suspect that the overhang in the housing market, which will take some time to clear, will keep housing activity relatively depressed in 2010, although it will continue to expand from the currently extremely low levels. >> we get the beige book today and the fed continues to come by. then you have the flip side with -- strictly with the government trying to roll back some elements of the t.a.r.p. here. is it okay for them to be sort of working a different direction at this moment? >> perhaps it's a bit too early i think to unravel the whole policy agenda which was put in place 12 months ago. as you rightly point out, the fed is on hold probably for a considerable period of time. although there does appear to be a bit of decent as to just how long the fed should remain on hold. with regard to rolling back the t.a.r.p., then, i think there is going to come a point at which it has to be rolled back, primarily because it's a huge amount of debt which the u.s. treasury will have to carry. as i said, maybe it's too early, but what's a month or two? as long as the economy starts to recover, then i think increasingly markets will be looking for governments to start tightening policy a little bit. >> peter, we appreciate it. we'll talk to you soon, peter dixon, senior economist with commerzbank. ross. >> just a little bit of news we've had out this morning, basic infrastructure partners, a joint venture between ge, owner of this channel, and credit suisse has won the right to -- it was subject to competition commission ruling. they came out and said effectively that they give their approval subject to wider consultation to that. of course, it was the competition commission that said that they needed to sell, the baa needs to sell gatwick airport. so they've conditionally approved that. they continue to see three airport london airport owners. that means stanford still might have to be sold and they say that global infrastructure partners could bid for one of the schoolish airports which they said needs to be sold by baa. so it looks like ge and credit suisse will be part-owners of gatwick, subject to anything major happening, which i don't think we can foresee at the moment. chris then. >> ross, let's look at earnings. indian i.t. firm tech mahindra has fallen to $437 million. revenue fell 2% to $248 billion. but the company says business is improving and expects its debt cost to fall substantially. tech mahindra shares, this is how it's trading right now. up just a touch at 9943.7. joining us now, vineet nayar. if you put aside satyam, how do you think you did for the second quarter? what are some of the key issues you face? >> i think we did fairly well, given the economic environment. having said that, i would say that economic environment, at least the sentiment has improved in the last six to eight months and we are seeing renewed activity or at least the beginning of activity in all the -- with all the technology groups we deal with. how did we do this quarter? it continues to be at about 25%, 36%, which i think given the circumstances is satisfactory. growth quarter on quarter was 4%. that doesn't quite capture this activities, how activities happen in various parts of the world. our biggest client went down in terms of revenue. but we saw increased activity outside the non-british telecom business, which is now more than 50%. our revenues went up by 8%. in asia, our revenues went up by 12%. so that kind of gives you the picture of what is happening and so far as we are concerned globally and this may be possibly reflective of economic activities in other areas, also. >> so a lot of uncertainty surrounding satyam, which you own a 43% stake. what can you tell us about satyam's financial conditions? >> christine, satyam is a mixed bag. on one hand, they have an excellent client list. they have excellent delivery capability. on the other hand, their business model was hugely flawed. there was a lot of unnecessary expenditure. they were not the kind of controls we are used to in business. so we have to work at two or rather three levels. one is a level of where we are trying to confront the issue relating to the fraud with the previous owner and to which we are saying has now been exercised and we have brought in values of those outstanding. the second aspect which we are fighting is retaining the clients and trying to woo back the clients which left us in the aftermath of the scandal having become public. and third is to reaching the entire business model so that we can bring this, both in terms of value and in terms of functioning to tech mahindra and any other top indian company. and i believe we will be able to do it. will it happen tomorrow? will it happen in the next few months? no, it won't happen. it will take about a year before we can re stastart taking it on path of recovery and i think in a year or two, it should work as well as any other top tier company in i.t. in india or out of indian. >> vineet, quickly, we've had a lot of strong tech earnings here in the states. we know at&t is a pretty big customer of yours. spefkly as it relates to the u.s., how do you see demand in terms of this region? brian, we see a lot of positive moment, a lot of the inquiries coming in. sentiment has improved and frankly, insofar as the u.s. is concerned, we are very, very optimistic. europe, dmrnd, we are a bit colored by b.t., which has come down a bit. but in germany, we are seeing increased engagement, at least in terms of the new changes they want to bring about. >> we will have to leave it there. thank you very much for talking to us today and sparing the time to be with us here on "worldwide exchange." vineet nayar, tech mahindra. carmakers kicked off the tokyo motor show with just two small foreign automakers attending. that's a rare low turnout for what has traditionally been considered one of the major five auto shows. >> reporter: i'm here at the tokyo motor show and inside the electric car called the leak made by nissan. it's a very subdued show this year because there's no bmw, no gm, because of the pinch the industry is in. the japanese automakers have a double whammy. i caught up with carlos escone, head of nissan. >> because of this certainty and volatili volatility, we have to prepare ourselves to compete at 95 yen to the dollar, 85 yen to the dollar. but the fact that you're preparing yourself to compete at these levels, it's not good for employment in japan. what you are doing is you are shifting jobs and shifting tasks and you are shifting activities to more competitive areas like china, like mexico, like thailand where you don't have these problems. that's what it means for japan and frankly, it's bad news. it's not just the currency. all of the executives i spoke to today said they're worried about what's going to happen in 2010 with all of the state agents pulled out of the market. there has been about $100 billion spent in the industry to keep it anote. we've been talking about the new technology, the electric battery technology and, of course, the pluggin hybrids, as well. i talked to the chairman of a company that makes lithium batteries. i says over the next few years, the price of this new technology is going to come significantly down. we'll be talking more about this when our continued coverage of the tokyo motor show continues on thursday. back to you. >> that was a report from the tokyo motor show. let's cross live to singapore with ayesha faridi. >> quite a lackluster day for trade. currently, the nifty is looking very, very quiet. down just about 10 odd points. currency is latching on to that 5,100 mark and has been hovering around in a ban of about 5080 to about 5110. quiet dport sensex, as well. we were just talking about tech mahindra. a couple of mixed reactions coming in from brokerages. while you was credit suisse and morgan stanley who have maintained their underperform rating or underweight waiting on tech mahindra, they have indeed upped their stock rating. most domestic brokerages on the other hand are very hopeful in terms of the positive and recovery growth for tech mahindra may project. tech mahindra currently in trade holding up by about 1 odd percent. meantime, we heard from carlos ghosn and here are the exclusive comments they gave about maybe ending relations with one counterpart and building on with another partner. we don't know names yet, but those are the exclusive comments they are getting. meanti meantime, we are seeing sectors outperformling now. autos are taking a bit of a breather. with that, it's back to you. >> ayesha, thank you very much for that. ayesha faridi, live from mumbai. ross. deutsche bank surprised the market today. it expects net profits of $2.1 billion and that's double what analysts had originally forecast. the schedule release for the figures is october the 29th. undoubtedly, the numbers will be boosted by tax credits. shares, though, trading lower. they didn't detail anything about loan loss provisions, so the market wants to see the detail of that before he gives it a thumbs up. elsewhere, shares of peugeot citron are down. the drop came despite a 10% increase in the number of vehicles sold. foreign exchange effects weighed on the figures, as well. bien. ross, the s.e.c. will meet today to shed light on so-called dark pools. these are venues that have raised concerns that stock pricing may not be transparent and only a privileged few benefit from it. the s.e.c. could require the dark pools indicate where trades are coming from or restrict the overall volume in a particular stock that can be hidden from the public. there are more than 40 u.s. dark pools which account for an estimated 10% to 15% of all trading volume. sun microsystems cutting 3,000 jobs over the next year or about 10% of its global workforce. the company blaming european regulators for holding up a $7 billion takeover by oracle. the deal is delayed, sun has lost ground to rivals such as ibm and hewlett packard. the european commission which is concern about harm to the debate has until mid january to approve the deal. in frankfurt, sun, microand oracle are trading. it's a mixed picture. oracle, basically flat. sun micro, slightly to the down side. coming up on "worldwide exchange," the head of opec basically saying that $80 a barrel can't be sustained for economic growth. ahead on the program, we'll take a look at the press expects as we fast approach that exact level. >> and of course, how much of that oil move is caused by the weaker dollar? we'll discuss that. sterling just hit a fresh one-month high against the dollar. xxxxxxxxxxxxx on the currency markets, the big mover in the laugh half hour has been the pound. sterling/dollar, a fresh one-month high, 1.6536. all members voted to keep the interest rates at where it was. sterling certainly reacted. elsewhere, dollar/yen, just bounced off its lows first thing this morning. we're still between 90 and 91 and euro/dollar is where we have been all week, right in the middle of the 1.49 range 37 nick hastings is now joining us. just over a week ago, the pound was on its knees, since then, it's rallied sharply. >> it tends to go all over the place. and i don't think necessarily this rally is going to last that long. we saw australia come out and hike interest rates. but then yesterday we had a sharp reminder here that not everybody is in such a buoyant move. now today, the bank of england has suggested there could be more quantitative easing next month, then do that. so it's seen as good news. the strength of the uk economy, it could last. >> what we're doing with qe swings things around. once we get the signal that rates are going to change in the u.s., how much is that driving things? >> that is a driver. i know it's somewhere down the road here. >> nevertheless? >> and well it depends. as far as the dollar is concerned, that could be bad news. if people start seeing the recovery here as a reason to actually start getting out of the safe havens, very much what we've been seeing over the last few months, the dollar will suffer and continues to suffer. so, you know, the dollar is still very much in a -- >> lose, loose. >> the kiwi is the driver. >> absolutely. you have to be careful about how you judge it. and this thing shifts from time to time. >> when i think about the dollar, it seems that the pass et of improvement is going to change. do you think that stance will shift at any point soon? >> not yet. i think we'll continue to see the dollar decline. the dollar's weakness and what it's costing them. but for the moment, the u.s. knot going to be in the mood to do anything about it because it's to their benefit to have a weaker dollar. so, for example, we are seeing at the time at the moment the euro having trouble breaking or making a sustained break against the dollar. that doesn't mean it's going to happen. we're just waiting for a bit of momentum to build up and it will happen and the euro will probably end up at 1.60 against the dollar and time. so i think, yes, this is something that's going to happen, but let's face it, the data, let's take a look at the soft u.s. housing data. that was a pretty nasty decline. again, there is little reason here to feel that the fed is going start exiting a strategy at this stage and that the u.s. administration is going to suggest anything except that a strong dollar is good for the u.s. economy. they can't say anything else. >> nick, it's christine. do you think this is going to strike an extent of the yuan? >> it certainly could. also it will be interesting to see how it has an impact on other things, such as the australian dollar and the u.s. dollar in the sense that we can, if we get strong gdps out of china get a really good injection here of risk appetite globally. this will help global equities or sentiment in equity markets even if the third quarter results aren't that hot necessarily. and that is another reason why people will be moving out of the safe haven dollar into currencies elsewhere. we'll have this sort of, again, this relaxation that we've seen in recent weeks. we've seen a bit of a reversal here, but i think that it's not going to last very long. >> nick, good to see you, as always. thank you very much for that. >> banks of england governor mervyn king says we might be a bit delusional. stay tuned and find out what the strategy is. >> we'll have more on paul volcker's attempt to reinstate some semester blangs of i'm brian shactman in the u.s. a new report slams the treasury's handling of the t.a.r.p. just as the government takes steps to end that program. and i'm ross westgate in europe. deutsche bank despite earnings review double the market estimates. >> and i'm christine tan. in asia, lg electronics falls 3% despite seeing strong demand for its product. >> welcome to "worldwide exchange" on this wednesday. it's a situation in the states where we had a bit of a sell-off. earnings were pretty solid, actually, in terms of the host of reports that we saw yesterday. but that housing start number, it was better than the previous month and not quite as strong as many had expected. we had a bit of a sell-off, only about 0.5%, but negative across the board. as for today, let's take a look at the numbers, especially if you're just joining us. we're negative across the board, although the s&p 500 is basically 0.1 point from being flat. the nasdaq had been flat. yahoo!'s earnings were much better than expected, although it was on cost cutting. we have boeing, eli lilly, morgan stanley, ebay in earnings today, a lot of big names to process, especially before the opening he bell. take a look at your treasury market. especially your bund yield, ticking in at 3728%. your u.s. 10-year note is at 3.36%. ross, how are things fairing in europe? >> we've been a little bit mixed this morning. european bourses now two hours into the trading session. we've been down, we've been up a quarter of a percent, we've been down 0.5%. that shows you the range. we're now we're sort of in the range. the ftse 100 down 0.1%. on the currency markets, the big mover has been sterling. the fomc released minutes of their meeting of two weeks ago. sterling rallied on their news. they sort of referred us, really, to the quarterly growth and inflation report which comes out in november for any news on that. but nevertheless, sterling is taking the view there won't be any more. elsewhere, dollar/yen is flat, still between 90 and 91. euro/dollar, exactly where we've been at this time of the day, christine. >> hey, ross. here in asia kra, profit taking. the name of the game here in asia, weak economic data from the u.s. weighed on sentiment. trade was thin because we're expecting a slew of thin economic data. that kept trade relatively light. the kospi down 0.3%. the hang seng and hong kong down 0.3%. the shanghai market down 0.4% and the aussie market down just a touch, 0.2%. ross. >> it's a dilution to think tougher regulation will prevent future financial crisis. that's the message from the bank of england governor. he also called for a fundamental rethink of how the sector is structured, suggesting banks should have -- should hive off speculative ventures from the utility aspects of deposit taking. >> you can't see how the existence of institutions that are too important to fail is consistent with their being in the private sector. encouraging banks to take risks that result in large dividend and remuneration pay yaus when things go well and losses for taxpayers when they don't distorts the allocation of resources and mgz of risk. >> and those comments from mr. king effectively ek toe again what we've heard from paul volcker, the former federal reserve chairman. so do they have a point? joining us is kip jukes, chief economist and head of strategy for the rest of the program. kip, whether mr. king and mr. volcker keep banging this drum but regulators say that's not the answer, what are we to make of it? >> firstly, the big fall banks are very big relative to the side of the economy and relative to the size of the purse to bail them out. secondly, they have a lot of capital which can then be used as ammunition for trading positions making the trading potentially very large. before big bang in the uk, the banking sector, the speculative parts of it were partnerships where you were betting your own money and by necessitity, a, very careful and b, quite small. there is some sense to it. >> and they were the pretty clear, because the regulators say, down worry, we can regulate them to make sure they don't get into big trouble at all. mervyn king said, if the banks stick together this way, you would not prison another crisis. >> if you put the conditions back in place where you have ludicrously low interest rates for a long period of time, you will find people borrow ex sex money and do things with it to create asset bubbles and somewhere on the other side of the world someone is doing this batesed on low interest rates right now. >> so there is a bubble being created right now somewhere else. >> because a bubble is exactly what we need to help get us out of the last mess. >> kit, it's brian shactman here in the united states. chairman bernanke talked about global balances, what's going on in brazil, the 2% investment in foreign equities. what are your thoughts on this? explain to our audience why they're doing it and what's actually going on. >> well, you have i guess limited choices for how to cope with the fact that the u.s. has very low interest rates, it's creating a lot of liquidity which is pushing money into other markets. you can either be like china, peg your exchange rate and amass huge amounts of reserves and try to deal with that. you can be like brazil and say, well, i don't want to do that, but i don't want my currency to go up forever, so i'm going to put a tax on. or you can be like australia and say, well, i need to deal with the domestic policy constraints. i'm going to rate interest rates and let the rates go. or finally be like canada and say, i'm not going to raise interest rates. i hope that doesn't mean domestic asset markets go too high. those are the choices and they all have positives and negatives. they're all a function of u.s. monetary policy and the biggest economy in the world pushing money out into these other markets. what it does is the more people that choose the chinese route, for example, and to to accumulate reserves which is recycled back into asset markets. they buy the dollars to stop their currency appreciating, buy assets, sent up asset prices from the government bond market and into the equity market. that is what created the last asset bubble. that is what really helped create the housing bubble. right now, from a u.s. or even from a g-7 pefr speculative, some asset gains give us wealth contains which means that the rise in our rates are less rapid than would otherwise by the case, so we welcome it. but they have to make a choice. >> kit, this is christine here. speaking of choice, do you think brazil is making the right choice by imposing the tax? >> you know, it's very hard to be sure what the right choice is to do. there's part of me sa says, look, if you were a japanese investor in the brazilian stock market this year, you've made a 140% gain? 2% tax? that going to stop you? is that going to have much effect? my fear is that this doesn't stop flows, but it increases volatility 0.some people get out. so it's a token. it tells me something wider about people are beginning to try to find a solution to the weak dollar, so we can't take this for granted. and it will increase volatility. but their alternative was, what, to cut interest rates? that wouldn't be useful. so they're not in a perfect world where you can say, this is the right choice, that's the wrong one, necessarily. >> kit, we appreciate the insight. we want to talk a little bit more on tess issues and some other things. you're going to stick around for the rest of the hour so we don't have to do it right now. kit, head of strategy with the ecu group. coming up next, we're going to talk about oil. nymex slightly down today, but continues to trade right near 80 bucks a barrel. what does it mean? we'll have a conversation on that specific subject. welcome back to "worldwide exchange." nymex light sweet crude off a bit today, but continues to trade pretty close to $80 a barrel, more than a buck and a half off after slipping about a percent. but still, very close to that level. now, speaking to cnbc, the oil and money conference in london, the secretary general of opec, mr. abdullah el badri explains what he thinks is driving the oil price right now. >> i'm asking this question, why do we have plenty of oil in the market? we have floating storage of 125 million barrels. we have the stocks 1.7 million barrel above five-day average. so there is a lot of oil in the market and i don't want -- i don't know why wefz this high oil price. the oil reason for this is the equity market and the value ragz of the u.s. dollar. >> let's talk more about oil. caroline baines, with the economist intelligence unit and still with us, kit jukes, head of strategy with the ecu group. caroline, there are a lot of people talking about where demand destruction could kick in again here. we had 147 before. i talked to the folks at mf global who said 80 to 100 could be sustained. if we get to that level, will it be sustainable in the economy? >> it's very difficult to know what prices equal the equilibrium price for oil. certainly at the moment, there's very little fundamental news that should drive the price higher. there's more than ample supply of oil around at the moment and demand is still weak. it seems to be totally linked to the weakness in the u.s. dollar. and the other reason i think for the oil price rise is partly just the huge amount of liquidity around at the moment with interest rates very low and investment professionals looking for somewhere to put the money where they can get you a return. >> so caroline, this is christine. with the amount of liquidity in the market, could that mean that we see qe pulling back a little bit there? we could see the oil price come back down? >> probably it's more interest rates, the fact that interest rates are so low, it's leading to money going into equity markets as well as commodities. i wouldn't say that any drawback in quantitative easing will necessarily lead to a sell-off in commodity prices. >> we're back to where does liquidity come up? what do you think generally of the view that oil at 100 which seems to be opec's view? >> is oil a good or an asset? if we can push oil prices, we can push the value higher. queer printing more money, but we're not finding more oil as fast as we're creating money. we have everything in place, but we're driving oil prices to the moon frankly. short-term, there's a lot of stuff around and if you want to buy something, we'll sell you as much as you want at this price. but low interest rates, economic reality, says to me, yeah, fine, we may correct back to 90, but in five years' time, we're higher. >> i wouldn't disagree, certainly. from our perspective, looking at very much from a macroeconomic sector, the demand for the picture is healthy and there's no upward pressure on prices. but as i said, asset prices and investor sentiment, technical market factors show there's call options around 80. we expect the price to go higher, as well. but there isn't any reason it should be higher at this time. >> caroline, if we get a strong gdp data, demand is pretty strong, domestic demand is pretty strong, how much of a demand could that mean to prices in the short-term? >> if chinese growth is strong, then that could be a positive for the price and it could be another factor pushing it higher. but looking at china's consumption of oil, it's less than 10% of the whole market and the u.s. is nearly a third. so while china is the marginal growth in the market, you only need a slowdown in u.s. growth or more conservation coming in in the u.s. and that will lead to quite a dramatically lower demand in the world market. >> caroline, we appreciate the insight. this is a topic we could audible talk a lot more about, but we're out of time. caroline bain, senior economist. and kit will be with us for the remainder of the hour from the ecu group. top stories to talk about right now, neal barofsky said the bailout helped to rescue the economy, but also damaged the government's credibility. he says the public distrusts the t.a.r.p. because banks aren't required to say how they used the money. barofsky's report comes as the obama administration plans to wind down parts of the t.a.r.p. including the $218 billion capital purchase program which injected cash into the banks and i'm pretty sure barofsky will be on u.s. "squawk box" later today. president obama will announce new initiatives today aimed at lending monies to small businesses. the government will increase caps on small business administration loans. the sba says small businesses create up to 60% of jobs here in the united states. check out cnbc's money and politics blog by mr. larry kudlow. you can find all of his muzings at cnbc.com. still to come on this show, cadbury surprised investors with better than expected q sales. will it be more pressure on u.s. rival kraft to come up with a sweet takeover offer? business is changing all the time. there is an unabated pace of continuous communication 24 hours a day. technology drives communication. allows people to collaborate giving them stimuli to think in different ways. having a foundation of innovation is the way that you differentiate yourself from the competition. it's the lifeblood of growth. making businesses richer, stronger, more resilient. nyse euronext powering the exchanging world. we're going to bring you up to speed with what's happening on the global equity markets right now. becky is in london. >> the ftse 100 is down about 27 points now, about 0.5%. the last time we spoke about a half hour ago, we were looking at completely flat markets in the uk. in the past few months, it doesn't look quite so desperate. wolseley is continuing to be very strong this morning. it's upgraded to buy from underperform. plenty of strength there. a price target increase from nomura on tesco is pushing shares of tesco higher, as well. there's plenty of up side on that. cadbury is trying to prepare themselves for further approach from kraft. patricia, how is it going in germany? >> it interday markets are down. volumes have picked up a little bit, ever since we started that downward momentum. it is the safe haven stocks such as e.on, utilities, deutsche telekom outperforming at the moment. perhaps wolseley giving it a little bit of a boost to metro as well as tesco. so at the moment, tesco up about 0.5%. on the downside, deutsche bank is coming through with third quarter numbers. it looks fairly good, especially on the net level. however, a lot of people are afraid that this is mainly due to techs benefit that deutsche bank got for the third quarter and no real mentioning yet about write-downs or further possible capital increases because they're trying to, of course, take part of abn assets as well as openen hyme out here in germany. tech stocks down about 1%. that's frankfurt. over to stephane and his car stock. >> absolutely. and it's just getting worse on the car sector in france this morning pageo citron posted a decline in revenue for the third quarter. it's better than the decline we had in the second quarter. it's face ago negative impact from currency in the third quarter and credit suisse is pointing up this morning. the stock is now more than 5% lower. renault is up more than 3% and it will report its sales figures next thursday. also trading lower, ppr, the luxury and retail company which posted for the third quarter a 7.6% decline in sales. that was below expectations. none of the businesses had an improvement in the third quarter. the ceo blames the economic environment but also needs the very high comparison basis from the last year the stock is up nearly 5% and in the tech sector, still smi is trading lower after another loss, the seventh consecutive one in the third quarter. adam now from singapore for a quick view on the asian markets. hong kong, i'm sorry. >> hi, is that stephane. thank you very much for that. let's kick off with the region today. the shanghai composite weaved in and out of negative territory for most of the day. dragged down the hang seng and the hshare index with it. and the winning sectors we saw yesterday turned out to be the losing ones today. earnings reaction from the big telcos, all the big expectations, the tech country's largest operator, that company missing by a quite a margin. meanwhile, it's continued to be a big day for corporate earnings. we're still waiting on these numbers. china's biggest copper producer has numbers today. getting numbers out from china state construction and datang power. jiangxi came out yesterday with numbers that swung to a gain of over $3 million u.s. dollars. on that note, it's back to the u.s. with brian. good morning, brian. >> yeah. we get those gdp numbers tomorrow. thank you very much, adam. here in the states, earnings will once again dominate the landscape when it comes to wall street, at least. doe component boeing reports before the opening bell, as to continental airlines, eli lilly, morgan stay lb, a whole bunch of names. as for the fed, it releases its latest page book report at 2:00 p.m. new york time. always insightful and often moves markets. at 4:30 p.m. new york time, boston fed pretty eric rosengren will give comments titled after the fall, re-evaluating supervisory, regulatory and monetary policy. that's a long time. walmart is kicking off a stwo-day meeting at its headquarters in arkansas. investors are looking for more details on the retail giant's traffic and sales trends to allow spending and international growth. cnbc will be all over that meeting. and that is your second and final installment of the global stock watch. >> the u.s. market's rally came to a halt yesterday after the housing data was released. is it a temporary blip? we'll discuss that after the break. it is 30 minutes past the hour. here are the top business stories from all around the world. we'll start here in the u.s. where there's a new report slamming the treasury's handling of the t.a.r.p., this as the government takes steps to end parts of the program. i'm ross westgate. in europe, deutsche bank despite third quarter earnings. >> here in asia, technology shares weighing heavily on markets. all eyes now on chinese gdp data due out tomorrow. >> and you can bet a lot of people all across the world really want to know what that number is. the whisper is that it's going to be stronger than expected. we always question some of the reliance of the validity of some of those numbers, but even still, here in the states, that gdp number here in china will be very, very important. i can tell you, if you're just joining us here in the states, against fair value, we've weakened in the last little bit. on last check, that minus 42 is only about minus 10 or minus 15. it's gotten weaker. we were positive for a brief spell today in the trade and the nasdaq. that slipped negative. and the s&p is negative, as well. i just talked about the slew of earnings yesterday on the docket. a lot of the earnings stories were very positive led by caterpillar, yet the haasing number didn't grow quite as much as anticipated and that seemed to drag on the market for a portion of the day. we'll see what happens. your ten-year note is at 3.35% at this hour, so we've lost one basis point since our last check. ross, have you seen some weakening in the bourses? >> yeah, a little bit, brian. i'll get to that in a second. we just had numbers out of fiat. we are seeing the weakening as you see down about 1% lower for the smi, 0.5% for the ftse 100 and 0.75% for the xetra dax and cac 40. we had this number out, 308, we were looking for 260. sharp declines expected in the overall venues. they have confirmed the 2009 profit target. the net debt will be below 5 billion. the feared auto trading profit, 155 million. that's down from 190 million. they say that the truck and construction operations will face low demand all year. the stock is being helped out by the figures at the moment. as far as currency markets are concerned, a big move today is sterling. that's after the bank of england said no one talked about or voted to try and raise kwaubt tafb easing levels last month. 165.83. dollar/yen, 90.85. euro/dollar, 1.49 at the moment, christine. >> hey, ross. profb taking is the name of the game. a lot of investors are waiting to see what china expectations will be. we'll have to wait and see what will happen. this is how the picture is looking here in asia. technologies being one of the hardest hit. nikkei 225 down pretty much flat. the hang seng down 0.3%. the shanghai market down 0.5% and the aussie market off 0.2%. this is how the oil picture is looking, coming under pressure after the bigger than expected rise u.s. inventories. all eyes now on the eia report later on today. right now, nymex light sweet crude is down 82 cents, $78.27 a barrel. and brent is off 66 cents, $76.58 a barrel. brian. >> thank you, christine. let's talk market strategy, bril bring in bill smeads, coe and cio of smaeen capital management. kit jukes is still with us, chief economist and head ott strategy at ecu. i'll start with you, bill. thanks for getting up early for us. yesterday, earnings for the most part were strong and yet we sold off. so put it into perspective for our viewers in terms of how you view the rally right now. >> well, obviously, it's been a big increase off the lows of last march. and we're actually pretty positive. we think that these higher oil prices, of course, could be a wrench that you could throw into the system. but from a historical perspective, we think that the oil bounce is a bounce off of a bubble that broke the $11 to $147 was a huge bubble with the biggest price increases coming the last two years. then you go down and you bounce now to $80 a barrel. so i would agree with some comments made earlier in the show that if you go a lot higher on oil, you could really interrupt the recovery in the united states. but we're very positive. we think that kind of the missing story, the story that's not being told, is that the big u.s. companies with international exposure that are unrelated to the bric trade or unrelated to oil, unrelated to commodities, like the drug companies or the ebays of the world that have markets of 3 billion people to sell to are going to make an economic recovery selling to ten times as many customers as they did say in 1982 coming off the last terrible recession. we think there's a lot of opportunity left to go and we think that people are forgetting that when interest rates are low that you should get better multiples on those companies. >> yeah. and of course the dollar weakening helps those international names. kit, you have a take on the s&p, so give us some insight into where you think we're trending. >> i don't think you can go up in a straight line forever without corrections. simplistically, we get up to about 10, 15, had to get up to 1,000 and 1,100. the earnings numbers are good, the economic recovery won't be strong forever, but it's enough. and low interest rates are enough to hold it together. my sense is that still a lot of people are looking at this and haven't got on board. a huge number of asset managers have done well this year out of the corporate debt market rally and are sitting there thinking, now that yields are low and spreads are low, what do i allocate to it? when can i sell bonds and buy ekts? that money drip feeds in, i think we can push a fair bit further and we'll continuously need to see corrections on the way up. but you know, i'm pretty positive. as long as interest rates stay here and the economic environment doesn't get worse, i think the natural trajectory is a bit volatile, frequent correction, but you know, we will make higher eyes. >> bill, as it goes longer, do you think there is a pain trade here? >> are you speaking to me? >> yeah. >> what do you mean by a -- or, a pair trade? >> no, a pain trade. sorry, bill, i meant a pain trade, people who haven't quite bought in and they keep seeing things grind higher. >> oh, we see that. i've been in the investment business for 29 years and i've managed money for the last 17 and interacting with these people that are trapped out on the market right no, the people that sold out in the last six months of the decline, they're incredibly slow to get back in here. one way i look at it is i watch cnbc regularly and i see how little time is spent talking about which stocks to buy and how much is spent talking about economics. but the reality is that the focus is away from equities and the focus is on the economy and politics, health care debate here in the united states. and so that is a pretty anecdotal sign that there's a long way left to go. until the ipos are running the street, until the public is pouring massive amounts of money into large cap u.s. equity funds, this game is probably going to go on for a while longer. >> and bill, this is christine. and speaking of the fact that we know we don't ask enough about individual stocks, what do you have in your portfolio that we should be looking at? >> well, i said the same thing on your show on july 8th. we really like the large drug companies. ims health came out with a report that showed that in between 2008 and 2013, that annually the growth in emerging market countries, purchases of prescription pharmaceuticals wag was going to grow $ 110 billion. since roche bought again neck ten and pfizer is completing their purchase of wyatt, we've got from about 14 major drug companies to 11 and so all of this good business is going to come to a smaller pool of companies. at the same time, we have aging populations. so you have a bunch of people that will live a long time with chronic illnesses and -- yeah? >> i'm sorry to interrupt, bill, we have a quick amount of time. tell me, how does health care reform impact those drug plays? >> it's caused their price earnings ratios to be at the low end the last 20 or 25 years. so you get to buy that future success around the world at depressed prices because of the current politics in the united states. and we really like that. >> bill, we want you to continue staying with us. bill, cio and ceo of smead capital. and kit, you will continue to stay with us, as well. he's the chief economist and head ott strategy at ecu group. let's head over to tokyo and check in with asko kondo. kondo-san. >> thank you, christine. some shares lost grouped on profit taking after the previous day's one-month closing high while shippers gained on hopes that china will report strong gdp data tomorrow. toshiba gained 4% setting the day's highs as investors took hurt on sandisk. japan airlines advanced 6.8% on year-to-date record volume. the nikkei and other local papers reported that the ailing airliners may receive about 300 billion yen in public funds. current president of tokyo financial exchange and a former vice finance minister is appointed as the next president of japan post holdings. saito will succeed the previous minister who played a strong role in the current financial administration plan. but the government has rejected this legacy. the president must represent a reassertion of governmental controls over the services. back to you, christine. >> brian. >> still to come on "worldwide exchange," why look's profits tripled beating forecasts. was it just another story of cost cutting? we'll update you on that right away. welcome back to "worldwide exchange." it is 45 minutes past the hour. let's get a few top stories starting here in the states where the s.e.c. will meet today to consider ways to shed light on so-called dark pools. these anonymous venues are used to match large trades, but they've raised concerns that stock pricing may not be transparent and only a privileged few benefit from them. the s.e.c. could indicate dark pools to indicate where the volume is located in a particular stock that could by hiding from the public. there are more than 40 dark pools which estimated for 10% to 15% of all trading volume. jim immelt says he's totally okay with keeping control of nbc universal. immelt made the comment at the web2 conference in san francisco on tuesday night. he wouldn't comment on the nbcu issue. from his point, he says the top u.s. cable company is looking for all opportunities to add content, but wouldn't comment on any specific deals. as you might well know, ge is the parent company of cnbc. comca comcast, they both traded to the down side in tuesday's trade. use should showed some life in the quarter. the company benefited from months of cost cutting and restructuring and that includes selling part of its stake in china's ali bab come. says the web search deal that yahoo! signed with microsoft is set to close early in 2010. take a look at yahoo! yahoo! japan and alibaba. the only one to the down side, alibaba.com. we've talked about the dollar the impact is having on china, australia and brazil. and they're all in some ways sort of -- you know, brazil and china buying u.s. reserves. what's the end game here? where does it end up? particularly, say, when china decides to revalue interest rate changes? >> i think if we step back and look at the economics, there is a shift away from the g-7, but to newcomers. what they're seeing at the moment is a result of an exchange rate shift, that they're in danger over developing domestic asset bubbles that they can't control. the ones who control those best will be the biggest winners in terms of global economic importance. if they blow it, they're going to have asset bubbles and they're not going to be able to deflate them gently. as interest rates go up in the u.s., global monetary policy gets tightened, that will be when they're found out. the chinese will start to appreciate their currency again in due course perhaps sooner rather than later because i think this is dangerous for them. and that will be next big change that happens. >> kit, good to see you. thanks so much for joining us. okay. we are just under 12 minutes away from "squawk box." carl is here to tell us what's coming up today. hey, carl. >> hey, ross. a lot of financials out this morning. wells fargo and morgan stanley among the heavy hitters that will be hitting during squawk. we'll get reaction from dick bove and results from eli lilly and boeing. our guest host, former coke chairman and ceo negative ill isdale will be with us. he's a gm board member. we'll head north of the border. scott cohen making sense of the dorm, the lonnie now being close to par with the greenback. we'll take a look at currencies on a day when that dollar stock trade appeared to be reversing for a little bit as we face another big day of earnings, ross. we'll start it all in about ten minutes worth of time. >> everybody from the north of board ser heading your way, right? >> yes. not necessarily canada or the bank of australia. coming up next, we'll taking a loesser look at the day on wall street. let us bring back in bill smead to talk about the trading day ahead. we have a slew of names today, boeing, lily, wells fargo, morgan stanley, ebay, which ones are you following most closely and will it move us to the upside or to the down side? >> well, i don't know about to the up side or to the down side, but we really like ebay quite a bit. i think people are watching. we think people underestimate the power of pay pam over the course of the next five to ten years as the proliferation of use of the internet to buy and sell goods by all peoples in all countries available. we think it's quite impressive. so we're looking at that and anxious to see how they're doing, but the reality is for a long-term investor like us, we think that they're basically on the right track and we just need to be patient. am aga amgen is a company we own. there is a lot of disappointment that they didn't get quick approval on one of their new drugs. anyway, they didn't get approval and asked for more information, so the stock was down sharply the last couple of days. again, we think longer term that drug is going to get approval and there is a lot of upside to that stock. also, you mentioned comcast earlier in the news. we find it interesting when somebody as knowledgeable about the cable and media business as the folks at comcast go in and try to buy some what we consider to be very undervalued assets by seeking out nbc universal, he gets criticized whereas if he were running a hedge fund or a mutual fund, people would say, oh, he's a value investor. but since he's running a company, people criticize him. so we're very interested in that transaction. >> bill, beige book out today. what do you expect? and will it move markets? >> you know, i'd like to tie that to a thought we had earlier in the half hour. if the u.s. economy recovers and kind of beats the pimco new normal benchmark, right, if we have a solid, prolonged three or four-year economic recovery in the united states, we think that is the thing that could turn those dollar circumstances around and put the federal reserve in position to bring interest rates up to a normalized level. we think that bonds are way too popular. $20 for every dollar going into bond funds since the bull market in the u.s. started. so we think that those all play together, that you're going to slowly get additional information. >> i'm sorry, we have to go. we're up against the clock. i hate to interrupt you. we do appreciate the insight, bill smead. that's it for today's show. on behalf of my two lovely colleagues, see you tomorrow. hi, may i help you? yes, we're looking to save on car insurance, even if that means we have to shop all day, right, honey? 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>> they all did well.