welcome to "worldwide exchange." china tells president barack obama not to make an issue out of the yen. >> meanwhile. >> and in the state, the autopsy is complete, the cause of death determined, a startling new report out about how lehman brothers hit its woes as the walls came tumbling down. >> hello. welcome to today's program. we just got news out of the iea. they see 2010 oil demand resuming trend growth. they've slightly revised up the growth on oil demand on china, as well. we have seen nymex up to 89.22. matt, we were talking in a meeting. you've been down at nymex all week. and the traders, of course, have been surprised by the strength. why are they surprised about this? >> well, i would say it two ways. one, they're surprised only because the underpinnings of the economy don't feel as strong as they might think. but as traders, they use their heads and they say, well, you know, we can for technical reasons push the thing higher and they're willing to do that trade. but in their hearts, they don't necessarily believe that the underlying fundamentals are as strok as the price might suggest. >> that's going to be one of our talking points, matt. you're going to be a one-day hit, so let's make the most of it. we have other news out, as well, in greece. december unemployment, 10.2%, down from the 10.6% in november. the fourth quarter gdp, unchanged versus the flash estimate, 2.5 plus -- sorry, minus 0.8% unchanged. that 2.5% is weaker. as far as european stocks are concerned, the ftse 100, we closed just above 5600 on monday. here we are friday morning and we're still at the 5600 level. but it's been better in asia. 5% gains, christine? >> indeed. but it's looking a little mixed. there was a surge in inflation data we saw yesterday. lots of concerns about where market levels are right now. take a look, for instance, the nikkei 225, one of the few markets that did fairly well today. the yen weakening. we had the boj meeting next week. lots of talk about further easing. that is weighing or helping the yen weaken further, helping out the exporters. the hang seng closing pretty much flat, but to the downside. lots of concerns once again of policy tightening and that is weighing on the shanghai market. elsewhere, we're seeing south korea trading to the upside, 0.4% higher. the bombay sensex down a little bit and the aussie market is also pretty much flat. the cnbc ftse 300 global index, this is how it's tacking up after that mixed session that we saw coming out of asia. up marginally, 4,543. matt, did ross call you a one day hit? i would like to call you a wonder day wonder. >> it all works. just call me. at 4:04 in the morning, i'm that much closer to my weekend. we can all share that around the world. we all love our friday. taking a look at the futures market here as our meltup continues, or will it not? you can see a little bit of red there on your screen today. at this moment, we look to be softer at the open. >> meltup, i like that phrase. joining us for the next hour, managing director at nomura international, paul. asian stocks up five weeks in a row. this is sort of a meltup, a stealth rally, whatever you want to call it. how much further can it go? >> well, first of all, i thought you were going to be with the gentleman before. we look at several things on friday afternoon. one, sovereign credit default swaps are rallying like crazy. they've come down tremendously in the last week or so. number two, investment grade and high yield credits in the u.s. are rallying like crazy. some of them are getting to year lows. the rally is amazing. number three, emerging market credit default swaps on the corporates and rallying like crazy. some of these are reaching all-time lows in terms of hiring. that ted spread just hit 10 basis points yesterday. so the world is aware with liquidity. the u.s. housing market is far from being affixed. liquidity is abundant. and the problem with face in hong kong is a good problem, but everyone wants to get their hands on r&b assets. so we have a world of liquidity in the west and a world where china is trying to deal with people who want to get their hands on r&b assets too much too quick and china is tightening. >> okay. so the western liquidity is come out in the east. does that mean tock markets are going to go higher or are you concerned about it? >> right now, the western markets continue to be afire. this makes no sense to be short here. in asia, we have northeast asia and southeast asia. northeast asia is paralyzed by china's tightening, given the tremendous boom in the property market. other property markets in the west and china is booming. southeast asia markets are what we've been talking about for many weeks to be focused on. these are underleveraged, arguably underowned. so we've been distinguishing between northeast asia which can be stalled for a while and southeast asia where rallies can continue. paul, there seems to be an urgency. do you somehow detect an urgency to tighten monetary policy soon? the longer you wait, lots of people are going to push capital into china, like you said. >> absolutely. i think that i was in shanghai last week. the feedback to that trip is something that is very concerned about the speed and the acceleration than the property market. my speed keeps on being the undervalued nature of the currency is creating a situation where the central bank is playing whack-a-mole. two years ago, they tried to walk down equity prices. now they're trying to walk down property prices. all that liquidity is going to do is keep on seeking returns in r&b assets as long as the currency is closed and the currency is pegged to the dollar. and so all we're looking at now is where does this liquidity go next? it could go back into stocks. >> paul, does it make sense that president obama is calling for china to depeg? >> absolutely. our view snat best thing china can do for its own purposes is to depeg the currency, to widen the ban, to allow it to appreciate. the longer it caisse waits to do that, the longer the liquidity is bobbled up inside and the more likely it is that china will end up with a serious asset inflation problem in a multi asset class. and so i very much agree. that's the way out. the way out is for china to revalue the currency. i can't see it any other way. >> paul, we want you to continue to stay with us for the entire hour. matt. >> all right. guys, thanks very much. let's track some of the stories we are following around the globe at this hour. a court appointed examination has issues his findings on the demise of lehman procedures. it's a 2,200 page report and says the company had used accounting gimmicks and had been insolvent for weeks before filing for september in 2008. it says the former ceo certified the moves but say he wasn't aware of the specifics. the report says they're largely not liable for the firm's collapse. however, lehman could pursue claims against fuld and the former auditor ernst & young for negligence. president sarkozy will try to reach a compromise on financial reform. there is a fear it could impact london-based funds. car plants could cause a transatlantic risk. the spokesman for the european official is overseeing the proposal has said that they are in line with broader g20 plans to try and increase transparency in the financial sector. >> now, we've been talking about this, ross. the u.s. should not politic size the yuan. the governor of the peoples bank of china was responding to earlier comments by president obama to move beijing to what is call a more market or yepted exchange rate. the pboc has tried to reassure markets. the central bank said it was tough to deal with cooling lending while sustaining economic growth. >> stay tuned to "worldwide exchange." plenty more to delve into. find out how the exchange markets are fairing today. this is not more benefits at greater cost to your company insurance. this is not how does it fit in my company's budget insurance. this is help protect and care for your employees at no cost to your company insurance. with aflac, your employees pay only for the coverage they want or need. and, the cost to you - nothing at all. if all you know about us is... aflac! ...then you don't know quack. to find out why more businesses provide aflac, visit getquack.com okay. it's just gone 40 minutes past 9:00 in london. that is a typical gray scene. still, though, it didn't stop nicole from coming here on a holiday, although she was working most of the time. as far as the bund markets are concerned, bund just edging lower according to the large loss of italian supply. the 10-year bund is up 0.02%. so 10-year notoriety now yielding 3773%. so by and large, actually, we keep worrying, matt, about all the bond auctions. but they still keep giving them away, don't they? the next set of auctions. >> they're lined up out the door, aren't they? >> yeah. >> until they aren't, and that's what -- that's what it's like to be in the bread-baking business. you have to always make the bread, but people need to buy it. and when they don't, you get mold sfwloop let's talk about our trio of economic data today before i get too much into the flour today. retail sales coming out at 8:30 eastern time in new york. total sales are forecast to decline about 0.3%. but if you back up autos, they will inch up about 0.1%. just before 10:00, 9:55, we will get the march consumer sentiment report from the university of michigan. analysts expect a preliminary reading of 73.8, up a smidgen from the final february. five minutes later at the top of the hour, 0 o'clock, we get business inventories, seen up 0.1%. treasury secretary timothy geithner takes part in the discussion at the ex-im bank in washington. and apple is starting to take preorder for u.s. customers only today. the new device will go on sale april 3rd in the states and in nine other countries later next month. the ipad. >> that looks like a really cool device, matt. really cool. as for the forex markets, retail sales are really in focus, keeping the dollar in focus. but right now, yen seems to be in focus. yen is looking pretty weak because of speculation that the boj, when they kneed meet next week, will further ease monetary policy. euro, stronger against the dollar, 1.3724. sterling, a little stronger against the dollar. 1.5110. and euro/sterling, 0.9079. ross, back to you. >> yeah. and sterling is up against the dollar despite a report today or a note from munich credit suggesting that britain is at serious risk of a bond market and sterling debacle and faces more whoas that is than greece. talk about the dollar and the yen. just get your views on this uni credit report and whether you agree with it as far as sterling is concerned. it's another in a sequence of warnings and concerns and each of the credit ratings agencies have voiced their concerns that the uk runs the risk of dropping its a aa rating. there's every reason to be concerned. we're running a huge deficit. >> so is everybody else, though, isn't it, and currencies are a relative gain. >> they are. and it is a relative gain, but what you have to look at is what the plans are of the deficit. they're going to reduce it by half by 2014, but they're going to do nothing for the time being and run a high deficit on a continued basis. that worries people and it's a question, really, of if people are worried, wa do they do? they sell sterling. at the moment, sterling is the currency to barb. if you get good news, all you do is take profit on what you sell. nobody is buying into sterling at the moment. unless that turns around. obviously, sterling will continue to trickle lower. >> you know, hi, david. if you take a look at the excitement leading up a week ago to the jobs data and then we've survived this week, but the big picture, i guess, over the past five days is kind of a stalemate, a push. do you expect to see momentum picking up again in terms of the dollars as we start a new week with more data, or do you see some givebacks? >> well, certainly, retail sales data is hugely important as far as i can see. anything above zero, 0.1% growth on the overall picture, i think would be seen as very positive for the u.s. dollar. against derlg, you know, u.s. dollar has got every reason to strengthen. sterling has a say, it's the currency most people want to sell at the moment. against through, we've seen the most trading pattern over the last six weeks, a euro/dollar rate that opens and closes at pretty much 1.36%, 1737%, trades 1.35/1.38 and doesn't break outside of that range. so until we see some moves on that, we continue with a pattern that's uninspiring, but very easy to trade for speculators, obviously. >> david, paul schulte here. in the case of the u.s. and uk, both countries have issued about $300 billion worth of debt offer the last 12 months. but in the case of the u.s. federal reserve, they've pushed about 20% of it whereas the bank of fwlnd has purchased almost 100% of it. how important is it for the need for the bank of england to move away from the debt? is that a significant part of the argument here? >> i think it's on a sentiment basis apart from anything else. the bank of england has virtually used up its whole current supply. i think that's a nervous factor making the markets nervous. at a time when other economies, you know, u.s. and other economies are looking to scale back on the level of stimulus that they pushed into the markets. so i think it's just another piece of the jigsaw that says, be wary of sterling and we're hearing comments ahead of pimco talking about uk debt being a danger. at the moment where the market players are nervous about it, then i think you have to assume that sterling will remain weak for the time being and there's a very strong chance that the u.s. starts to show signs of emerging from all this stimulus, that the dollar will have room to expand and strengthen. >> okay. david, thanks for that, david johnson from halo financial limited. paul is sticking around. european stock markets, pretty flat, really. 35620 where it's been for most of the week. xetra dax about 0.25% higher. stephane is in paris, patricia is in frankfurt and claudia is going to join us, as well. but first, anna is joining me in the studio with london. what is happening? >> they've been giving us an update on performance, ross, today, talking about the business and saying that they expect their transatlantic alliance to be approved this year. they are housing this press conference. it is in conjunction with the union that represents the cabin crew that have been threatening strike action voted in favor of strike action. that's been something that's been hanging over the business for some time now, many months, in fact. they are holding this press conference jointly. so we'll get some kind of resolution either way. the stock is up by 278% on the back of that. barclay's is in focus today, as well. bob diamond is talking about the press speculation that there has been recently that they're going to do a deal in the u.s. to buy a retail bank. they say that it's all speculation, but they do say that they're looking to build on their u.s. platform. so not a blanket denial, i'd say there. liberty, the operator of the iconic store in london, they are talking about looking at a takeover approach. >> it's the one that looks like the mansion, doesn't it? >> it does? >> yes. anna, thank you very much, indeed, for that. what with about italian markets, claudia is with us from cnbc in milan. >> yes, ross, thank you. the markets here are dominated by the story out from an oil group. this is after it did announce that it will show a production growth of 2.5% per year between now and 2013. that is lower than what was previously expected. their prior plan was for growth of 375% yearly. it seems to be getting hit on this bit of news. it is showing robust growth versus its peers in terms of these expectations. it's not clear where the stock is suffering so much. 4.37 billion is the number announced yesterday down from 2009. it's also because they had to set aside 250 million euros for a problem. the negative aspect of the growth is expected to be any. cost savings will help by 20% in that full four years, up to 2013. so the numbers overall are pretty good and we will hear more from the company later on today in a conference call. so that is it from milan. eni down, worst performer. ross, back to you. >> claudia, thank you. patricia is in frankfurt. we had wholesale numbers out this morning, patricia, and it was better than expected, i.e., weaker. >> at least you can't imagine any rate hikes out here. let me quickly focus you on the markets. volumes are very low. so if the market is nervous, we have main gainers to be found today in the car sector as well as the financials. let me quickly focus you on volkswagen, up about 4% yesterday. also stellar performance. today, the financial times deutsche talks about their strategy in china for the electric cars. they're expecting to release those in about three years' time. they say it's a booming market, it's a market where they're very well established and it is a market that is subsidized by the chinese government. and that helped volkswagen to continue. we had an upgrade for its price target for more of the brokers today. so you can't do anything wrong to buy into deutsche mark shares. on the downside today, s.a.p., farther census, no real view involving fresenius. presenius, trading down 0.5%. volumes are low on this friday. >> thanks for that, patricia. french president nicolas sarkozy is talking to gordon brown today about regulation. stephane is in paris. i wonder how much investors are looking at this trip. >> nicholas sarkozy will try to reach a agreement with gordon brown. nicholas sarkozy has the support of angela merkel, and the support of the greek prime minister. nicholas sarkozy is in favor of tighter deaf revocatiderevocati tightening. bnp paribas is up 0.6%. at the other end of the board, the cac 40 is the biggest decliner after recommendings from credit suisse. credit suisse is in love with its forecast for the next two years, but saying that the largest retailer in france will have to adjust its prices to remain competitive and that is likely to have an impact on the margin of 1.8% right now. that's the story in paris. over to christine now in singapore. >> thank you very much for that, stephane. coming up next on "worldwide exchange," the governor of the central bank says it's proving difficult to find the middle ground between growth and inflag. should we be worried that they'll get it wrong? stay tuned foor more here on "worldwide exchange." welcome to "worldwide exchange." here in asia, china tells president obama not to make a political issue out of the yuan. >> and here in europe, the british prime minister prepares to meet in lobbed aiming to hammer out an agreement on hedge funds. >> a startling new report in the u.s. about lehman brothers and how they hit the truth as the walls were tumbling down. >> you're watching cnbc's "worldwide exchange." christine tan, matt nesto and myself, ross westgate. the ftse cnbc global 300 is up a little further today. the rally has continued for the s&p and in asia. here in europe, pretty much where we started the week, also. the ftse 100, 5621. we closed just above 5600 on monday, christine. >> as for today's performance, a little bit mixed. lots of concerns about policy change in china. the nikkei 225 closed to the up side, 0.8% higher. the hang seng is just about flat. the boj is going to further ease monetary policy next week when we meet. the shanghai composite is down 1.25%. take a look at the south korean market. the kospi finishing to the upside. bombay and sensex trading sideways and the aussie market is a little bit to the upside there. matt, not a lot of direction for the week. but retail u.s. sales data is going to be key for us on monday. >> yeah. you know, if the jobs report is the big daddy of economic data, then i think retail sales is the big mama. let's take a look here at 4:30 eastern time and how our futures are looking at this hour. you can see kind of a mixed picture here today. we've got the hand brake on, if you will, until we get through that economic data. we had a big surge into the finish yesterday, so some softness at the oep open would not be unexpected. joining us now, daragh maher, deputy head of global fx strategy at credit agricole cib and paul shutty, he's the md at nomura international. daragh, let me ask you about retail sales. i just called it the big mama. i think the expectations for a jobs recovery and meaningful job growth are still out there a bit. but retail sales will be muddy for the month of february here because of the weather. what's the big take away? >> to be honest with you, you're right, it has been one of the big focuses. and principally, it points to the global equity of the story. the u.s. for so long has been the consumer of last reports. we've had weird numbers out of the uk and europe and on the exports side, people say that may have been due to the weather. a lot of what we're going to get over the next couple of months, ynk we're going to draw lasting conclusions from it. sadly, although as you described it, it's perhaps the big mama of u.s. data, i think it's going to pass without a wimper today. >> and that's collectively, including the university of michigan sentiment coming out. >> yeah. i think what we should get, if expectations are right is soft retail sales on the u.s. it's dampened by weak auto sales and the core will be flat on the month maybe. so, you know, in markets, we'll be less struggling, which one do you trade into the choice. i think that will leave us pretty much listless. >> daragh, my old wonderful colleague -- we used to work together -- the fourth quarter number kams out from the federal reserve last night. the number for private sector credit was a contraction of 450, 450 billion u.s. so do you guys have a sense of when you think that private sector credit can actually begin to at least top contracting? these numbers are huge. >> yeah. i mean, it's very disappointing. you know, it's something we're seeing echoed in the number of economies. the uk one struggling to get credit moving here. and that's where you have a lot of political involvement in the banking sector here, as well. and in europe, the credit cycle is quite weak. i don't know that there's any quick solution to it. at banks, perhaps, when the yield curve begins to flatten, we'll by necessity be forced out into the lending opportunities. and so it curves our flattening. so i don't think it's anything quick. i think realistically, it's going to be second and third quarter. but as you say, a very disappointing number overnight. >> and daragh, we had the finance minister in japan talking about undesirable levels. we have the boj meeting next week. the yen is pretty weak ahead of that. what are the chances of the central bank takes extraordinary measures? >> there has to be a chance. the way they're arguing it is they have deflation and we're trying to find the roots of that. so pumping more money might be a solution. but i think we have to recognize there's a political dimension to this. you have to be, in a way, show yourself, be willing to try and deliver remedy. the mos in japan clear that they want that to be the case. so it's a risk. what it means for markets is you're going into that meeting wondering what's going to happen. of course, the balance is that there might do something and deliver yen weakness. i think it's natural that we'll get some yen selling in the run up to that meeting. >> while we're getting yen selling, daragh, getting the euro up against the high against the dollar. we just hit 1.37, 38. what's our concern going to be? if we're talking about potential chinese valuation, that puts pressure on the dollar, obviously. but at the same time, does that mean we're over debt problems in the euro zone, as well, for a while? >> yeah, i think so. at the beginning of next week, we should get more assessment of how greece is doing. i think in general, the expectation is to be reasonably positive and rhetoric being delivers next week through greece. if you look at the improvement we've seen in cds spreads, it to my mind suggests euro/dollar should be substantially higher than 1.37/38 to where it's pushing now. i think it's quite possible for that to happen in the middle of next week. what do you think, daragh, about the whole breakdown of the senate financial reform? i mean, we went through the worst financial regulatory environment or financial disaster in our lifetimes. and then 18 months afterwards, we can't get it done. i mean, what message does that send to the world? >> well, i think there's an acknowledgement that a large part of this crisis has its roots in a regulatory failure. so, you know, there is clearly a consensus that something needs to be done. the problem we have is what is that something? and i think, obviously, there has been resistance to the proposals before by obama. but i think the bigger picture is we are going to get regulatory change. and i supposed at the moment, the focus, the energy is principally focused on getting the cyclical recovery. when that is strong enough, perhaps we can readdress the regulatory back drop. but you're not going to get kind of a sustained economic recovery unless markets are more confident that we're not going to be put in this position any time soon. >> daragh, you have a good weekend. >> likewise. >> daragh maher, credit agricole. paul schulte will continue to stay with us for another 20 minutes or so. coming up next on "worldwide exchange," we're talking about china. is the economy's red hot property bubble going to burst? wall hear what the most efficient tools to cut equity prices is. here is a quick look at how the chinese yuan is trading. welcome back to "worldwide exchange" on this friday. in england, you're looking at 31 degrees. that's the temperature, i can tell you, it's pretty humid for a friday. let's cross live to tokyo. a bit cooler there, i suspect. let's check in on the tradinging day with makiko. >> hi there, christine. i'm still having a coat on. nikkei 225 reached its highest level since late january. speculation over the bank of japan taking further monetary easing steps fueled that. the nikkei has reported that discussions next week will likely focus on doubling the supply of its fund operation. it currently provides loans at the lowest interest rates at 0.1%. with the yen staying relatively stable against the dollar, exporters gained. cannon reached a year-to-date high while honda motor rose for the sixth straight day. shares were boosted by a nikkei report that says sales were strong for its new hybrid sports car. meanwhile, during a parliamentary session, the government was looking into ways to reduce corporate tax. he recognized japan's corporate tax was higher compared to global standards and said, quote, it is reasonable to head towards the rate cut. that's all from the nikkei business report.back to you, christine. >> thank you very much for that. you have a good weekend. looking at surging property prices in china, it's causing concerns about more policy tightening. let's get the latest on the ground for maura fogarty who is there on the ground at the national people's congress. . maura. >> reporter: hey, christine. it's a chilly evening here in beijing, but a lot of talk about the red hot property sector and what the government is going to do to cool that down. media reports say that the government wants to reign in asset prices. they want to prevent a spike in asset prices while still keeping monetary policy accommodative towards economic growth. now, what they're rerlg to is a spike we've seen in property prices as well as the stock market price here. premier wen jiabao outlined steps he's going to take. number one, they're looking at providing more low costs in housing. number two, they're going to reimpose a sales tax for property that occur in less than thee years and increasing the minimum down payment you have to take for buying a second home. there is a lot of talk on how they're going handle that. we spoke to a ceo today who said that the best way to cool down the property sector is by curving lending. have a listen. >> the most effective tool of curbing the public price is to lend less. you know, for the banks to release less money for the government to release less money. and that is the most important. when you have a lot of liquidity in the system and they have nowhere else to go, it all flows into properties. >> that's zhang xin speaking to us earlier on cnbc. so in terms of property, they're concerned about that, but not overly concerned. i want to bring in the inflation angle, as well. much has been maid about the regulatory picture this china. within china itself, we've had a stream of officials going into overdrive, explaining that they are not worried about the inflation picture. they're willing to allow inflation to creep up a little bit because they want to make sure that china's economic recovery is on track because they're still concerned about the global economic recovery and the external environment. christine, back to you. >> march a, great stuff, as always. see you later. for more on china, let get some analysis right now. joining us is shen mingao. also our guest host this hour is paul schulte. do you think china is going to have a tough time trying to strike the right balance as it tries to cool lending and sustained growth? can they get it right? >> well i think, you know, the government wants to stabilize growth. so it's needed to pil pull back the credit bids from last year's extremely high growth rate. but on the other hand, it worries about the downside, the risks, for example, the external recovery is not firm and so the government wants to make sure the economy is stabilizing over the worries about inflation and the property sector bubble is -- >> at the same time, they can't wait too long, can they? the longer you wait, expectations for renminbi are growing. they have to do something been you know, doing something on a monetary front to get it out of the way. >> sure. i think some kind of tightening is needed. but given the complicated environment, on one hand, the worry over inflation so the tightening going on, the policy mix in china is encouraging them to do so partly because the estimate attracts even more. >> one of the things, when i was in shanghai visiting for three days last week, when central banks are trying to target inflation, cpi or target unemployment, we know what it is. it's a 5% unemployment, 3% inflation, this government is targeting asset prices. how do we know that the government is finished when we don't know how they're doing it? that's the question. >> i think that the government is really targeting growth and, of course, they'll want to make sure that the growth step won't cause overooed heating, overpass or property price bubble. so it's true, that will be dealt with. >> a lot of talk we're hearing in the markets today, we're hearing china could tighten before the weekend. is that something you're hearing? is that a possibility you're hearing at this stage? >> i think the heightening is one possibility. but my general view is that in the first half of the year, policymakers will stick to quantitative measures. project control or even some other quantitative measures, they will wait for that to pick up before they figure out the hikes of policy rates and some kind of, you know, stronger currency or currency appreciation against the dollar. >> ming, how does one depolitical size the yuan/dollar ongoing dialogue? >> well, to me, there is some mismanaged match between china and the u.s. i think the u.s. is pledging a midterm election so that they are urgently in need of some kind of progress in the currency side. but in china, i think the government worries more about the downside risks. there are still uncertainties on that. so the chinese government wants to make a gradual approach and appreciate its currency. so i think there are some political tensions between china and the u.s. but eventually, i think the chinese currency will have to depeg to the dollar sometime this year and i think the u.s. will continue. >> thank you so much for being with us. you have a good weekend. our guest host, paul schulte, will be still with us. this friday, it is a mixed picture across the board. three-week low on worries of the central bank. we've been talking about this reserve bank ratios. the hang seng dipping as a result in the red. we had shares of air china soaring today, highest levels in over two years on a fund-raising plan. over in south korea, the picture is pretty much flat. kospi is in and out of positive territory. lg display, the company rose after it said it expected higher panel produces in the second quarter and remained positive on demand there. but losses in airlines ended by reduction in capital for creditors. shares in cbh resources surged 28% today after belgium metals group narastar raised its takeover offer by 44%. that's what's happening in asia. let's take a specific look at the indian markets. ee eesh ya faridi joins us live with the india business report. >> the good thing, of course, is that it's holding on to the 5100 mark. so 5135 thereabouts. at 70,100 plus for the index.. the mid and the small cap indices, doing a lot by way of movement. remember to follow on public office closes today, just news coming in that it has gotten fully subscribed. so that counter is in focus. it's closing up almost about 1% or 2%. and some pharma is in focus 37 now, there are fears almost to the tune of about .3 billion u.s. dollar. that counter is in focus. with that, back to you. >> ayesha, thanks for that. you have a good weekend. let's get a final thought now from our guest host, paul schulte. he is financial director of nomura international. paul, where would you be putting your money in these markets? >> the u.s. is pushing out the pain by keeping liquidity extremely loose. china is imposing pain right now by tightening liquidity. right now, i sort of want to be in a place like the u.s. where there's u.s. financials. but right now, i want to be in countries where they're willing to take the pain to allow a secular dynamic. that's got a multi year dynamic to run like china. so bottom line, indonesian financials, malaysian financials, mae bank, bca kay bank. in the nonfinancials, we continue, you know, continue to love the foods name and we love stocks that we still think are reasonable like will march and noble. but right now for traders, i think the rally in the west and the u.s. in particular continues, in particular, the financials. but we have the u.s. not taking the pain and china taking the pain. >> paul, i just find that there's a huge disconnect between abundant liquidity and rile discerning investment. and i would report to the citigroup and aig recently in the financial rally today. those are not the kind of companies that you want to see leading a comeback. >> i couldn't agree with you more. some investors are wishing for more in the coming years. but liquidity dominates markets and i think for the time being, we have to go where the liquidity is. and i think the liquidity is not in china right now. china is too concerned about asset prices, but i totally agree with your point. >> what about corporate earnings, are you keeping a close eye on that? is that keeping you optimistic? what do you buy on earnings front? >> absolutely. on corporate earnings, we cover -- we are looking at a 1200 stock. about 380 stocks have reported so far this year for 2009. the one country which is blowing everything out of the water in terms of expectations is indonesia. second is thailand. so again, just in terms of expectations, indonesia and thailand just racing past expectations. on the opposite poll, we're very concerned about korea. only about one in four companies that have reported have reported earnings that have beat consensus. and so korea lags the entire region in terms of spengtations, so we're concerned about korea for the point of view of earnings. >> paul, why is indonesia racing past expectations? what's going on there? >> good question. you know, our main point about why we've loved indonesia, when i talked to you in december, we thought indonesia was one of the best markets. people don't understand that indonesia's leverage is one of the lowest in the world. indonesia's levels are almost single digits. we're talking about nine times leverage for the banking system in indonesia and about 40 for france, for instance, or 45 times for germany. so we're looking at a market that can really begin to move, which, you know, has powerful implications for the currency. and this is a country that's, you know, china's new best friend as china seeks out alternative sources for palm oil and for coal. and so on all these bases, the leverage and the natural resource, the magical combination for real asset price movements. >> okay. paul, good to have you on today. have a great weekend. still to come on the program, euro zone industrial production data is released right after this. stay tuned to find out if a loose monetary policy in a weakening euro has helped increase productivity. we'll find out. in the united states, the cause of death has been determined. new reports say how lehman brothers hit its woes as the company collapsed. >> and here in europe, the french president and the british prime minister meet in london aiming to hammer out an agreement on hedge fund regulation. >> and here in asia, the chinese president tells u.s. president barack obama not to make a political issue out of the yuan. >> welcome. nice to have you here on "worldwide exchange." 5:00 a.m. on wall street. let's take a peek at how the markets are shaping up as we head into our global collective weekend. you can see fair value right now would show you a little bit of a softer open here today. not surprising with that big push that we had to the finish in the final hour of trading on thursday, ross. >> yeah. they say, matt, that it's sometimes better to travel on arrival. this week, we haven't traveled very much for european stock markets. we closed on monday. we are a little firmer. quarter percent higher, banks, industrials, financial services are firmer at the moment. and banks i think are benefiting from what looks like a breakdown of bank regulation talks in congress. and we'll get more on that in a few moments. christine, what about asia today? >> asia was looking mixed today. it was weaker because we had the boj meeting coming up next week. lots of talk there about policy easing and that is helping the yen weaken. right now, the dollar is weakening just a little bit ahead of that. 90.31 is where with dollar/yen is at. euro is higher against the dollar. debt concerns in the euro zone seem to be taking a back seat right now. euro/sterling, 0.9081. we are watching retail sales closely and how that is going to weigh on the dollar. >> just got a bit of data out of the euro zone. january industrial output up 1.7% month on month. that is stronger than the expected 0.7%. industrial output up 1.7% year on year. again, that is stronger than expected, minus 179%. so the month on month rise, the biggest since records began in january 990. december industrial output rise to 0.6%. it was previously minus 1.7%. a surprising figure, actually. as i say, a big revision up. james bevan is with us, chief investment officer at ccla management. what do you make of that, james? >> i'm becoming progressively less interested in the short-term data series on industrial production, much more focused on what i think will happen to corporate earnings. we have seen considerable cost cutting, particularly in the united states. and i think that we're way off the pace in terms of the earnings upgrades and positive surprises here. i'm relatively optimistic about the big picture now. >> that would suggest that you fully approve of the valuation stock markets, the s&p hitting, what, a 17-month high? you think that would be fully justified? >> every chance the s&p 500 gets to about 1220, 1225 points by the middle of this year based on a falling wind of decent corporate results. >> i like it that you're talking earnings. still, i feel like they've been back benched, james. do you feel that the expectations have been ramped up too far too fast? >> no, i don't. i think that there is room for considerable upside for earnings numbers. i think most importantly, the debt nations are going to have to have low interest rates for very long periods and we're going to see weaker currencies against key trading partners. i think the big destination is the u.s. and the uk in parts of europe. wall actually, now, the falling wind from numbers. >> is that from top line for demand pick up? is that because they have bigger demand margins? we're concerned about the weakness of demand. >> absolutely. this is about really very compressed cost bases and high lefls level marginal improvements in sales. and i, therefore, do not look for strong macro growth. but i do think, actually, that even with macro growth, there is no room for positive surprise. >> where? >> let me just hold out to show why i think this is the case. poichting fingers is unhelpful until people understand the substance behind it. we know that the only way to really sort of fiscal imbalances is through stronger growth. so i think we will see policy initiatives, the world is trying to constraight spending coupled with the premise that we will have very low money rates and i think that is a cocktail for positive surprise growth overall. >> james, with oil above $80 a barrel, are you worried about high commodity prices and how that might hurt earnings in the future? >> commodity prices are interesting. when everyone thinks about the prospects for the major oil companies, there has been considerable enthusiasm for the price being above $70 a barrel. because of that level, companies can meet both capital expenditure and is dividend payments and have surplus over. i would be much more worried if commodity prices came back. because the plank of growth support that is in a sense consistent with those commodity prices can be under much more pressure. >> james, stick around with us for the rest of the show. uni credit thinks britain is at a serious risk of bond market and sterling debacle and faces more tragic woes than greece. he is convinced the next couple will be pupilbled by investors. s says britain's tax structure will make it hard to raise taxes quickly enough. he is warning that sterling will fall further over the coming months. sterling is actually up, though. and london and new york, a tie for first place according to a report published by the city of london corporation. the data was taken in the second half of next year. we saw london barely holding on to its top place after losing a significant number of points. hong kong, singapore, tokyo, shanghai and beijing all coming up fast on the rails, matt. >> thanks, ross. you know, after a year long investigation, a court appointed examiner has issued his report and on the demise of lehman brothers, that 2,200 page document says the company used accounting gimmicks and had been insolvent for weeks before they actually filed for bankruptcy. that was back in september of '08. it says the former ceo dick fuld certified the accounting moves, but fuld's attorney says his client was unaware of the specifics. they say they're largely not liable for the firm's collapse. lehman, however, is liquidating assets for creditors. they could pursue claims against fuld and other executives. former auditor ernst & young have come out with a statement. they have also come out with a statement of their own absolving themselves. cnbc confirmed a report that janet yellen has been dominated to be the vice chairman of the federal reserve. she will replace donald kohn, retiring from that position in june. yellen is considered one of the most dovish fed officials. she has led the san francisco fed since '04. she has chaired the white house economic advisers and was on the board of governors during the clinton administration. janet yellen. >> matt, the u.s. should not politic size the yuan, says the peoples bank of china. he was responding to earlier comments by u.s. president barack obama who urged beijing to move to what he called a more market-oriented exchange rate. but rising dmed domestic inflation could force china's hand in letting the currency rise. the pboc tried to reassure china that february's rise in cpi was part of balancing the markets. elsewhere in japan, the yen has lost ground as the japanese prime minister said he prefers the currency to be weaker. the fnl finance minister said excessive yen strength could be undesirab undesirable. there is speculation that the bank of japan will ease monetary policy further at next week's meeting. the central bank is considering expanding its $ 10 billion emergency funding facility. still to come on "worldwide exchange," we mentioned president obama's likely pick for janet yellen to be the number two at the fed. we'll delve into this situation. do you think it's a good choice? e-mail us. yes, cnbc.com. on cnbc.com today, avoid stocks and bonds and go for economic assets. roman scott, managing director at calaman did he r capital tells cnbc. he is in the bearish camp and does not believe up the ward momentum in stocks is sustainable. if you have to choose between goldman sachs and city group, which bank would you buy? strategists give their targets for both of them. and in europe, german finance minister wolfgang sherval calls for more coordination between euro zone members. they must take an active part in each poep poll's stakes. all that and more at cnbc.com. welcome back to "worldwide exchange." let's take a quick look at the gold price to see where it's heading. a lot of focus, of course, on the retail sales data and what it's going to show. spot gold, $1,117.15 an ounce. oil seems to be steady. lots of use that energy demand would continue to grow despite efforts to tighten policy. ed 80.86 a barrel, ross. >> yeah. ahead of the oouts open a little later, european stock markets, got marginal gains with what happens this morning. stephane is in paris, patricia is in frankfurt and anna is with me here in london. as you were, 5600 we hit on monday, we're only, what, 20 points positive that at the moment? >> yeah. we're up by 0.4% right now. m&a chatter seems to be doing the rounds. the talk in the markets, according to reuters, they're quoting traders as say that b sky b is trading higher on the back of talks that it could be taken private. its leading shareholder, if you like, newscorp, that is unconfirmed but that will fill you in on why the stock might be moving higher at the moment. bob diamond has been reacting to this talk in the papers over the last couple of days that they could be about to do a big deal over in the u.s. to buy a retail bank. he says it's all speculation. but he also goes on to say they're looking to build on their u.s. platform. british airways in focus, too. the press conference is going the take place in around 45 minutes' time. we are expecting a press conference between british airways and the united union. this is a company that has been struggling to fend off the threat of strikes since before christmas. so we'll wait to see if we have any resolution there. patricia, what is happening in frankfurt? >> well, we are very short of our interday session highs. again, volume is not that great. however, the momentum seems to be keeping with the market in a positive sense. that is very good. it is a big big stop in the markets. we have deutsche barge, for example, commerzbank, volkswagen all in positive territory, giving us a nice push to the upside. slightly to the downside. we'll have to see what the american markets, of course, will make of our friday gains so far. but all in all, the momentum for march has been very, very good indeed and we are aiming big time for the level of 6,000. now in terms of individual stories, we continue to watch the development of volkswagen, plus the debate is continuing between our economic minister and the bank out here in germany because our economy minister still attaches them to do too little to give loans to the medium first companies. that's frankfurt. over to paris now. >> and in paris, the situation has improved. all the banks and financial institutions are trading higher as the french president nicolas sarkozy is trying to negotiate with gordon brown. an agreement on the financial locations, nicholas sarkozy says financial institutions should be more regulated in europe. in a long interview today, nicholas sarkozy said he's not in favor of a weak euro and that he is calling for a new monetary system. for the time being, we've got all the banks trading higher. dexia, societe generale and credit agricole, they are the three top gainers on the cac 40. still on the downside, credit swiss lowered its rating from neutral to underperform for carrefour. credit suisse says carrefour will have to lower its prices in order to face competition. that's likely to have a negative impact on its margin and that's the reason why the rating agency cheese toes downgrade carrefour. over to christine now in singapore. >> thank you very much for that, stephane. some of the other markets we're looking at here in asia, t japan's nikkei 225 is one of the few markets that traded to the upside. lots of talk about further easing by the bank of japan next week. shares of toyota is climbing on news of aggressive discounts. we've seen sales surging nearly 15% in early march compared to a year ago. but the rest of china, a bit of a tight range. the shanghai composite, for instance, fell more than 1%. a three-week low there. the hang seng dipping into the red. with banking shares being sold up, shares of air china in hong kong is soaring today, the highest level on over two years on a fund-raising plan. in south korea, the kospi was in and out of positive territory. we had the australian markets pretty much flat to manage a fifth week of gains. on that note, let me wrap it up and send it back to matt. >> all right. very good. wow. still to come, the debate about an appreciation of the yuan is heating up. a senior chinese central banker has warned the u.s. not to make a political issue out of, well, the most political issue of the currency markets. after the break, we head to the national policy committee meeting. this is not more benefits at greater cost to your company insurance. this is not how does it fit in my company's budget insurance. this is help protect and care for your employees at no cost to your company insurance. with aflac, your employees pay only for the coverage they want or need. and, the cost to you - nothing at all. if all you know about us is... aflac! ...then you don't know quack. to find out why more businesses provide aflac, visit getquack.com folks, welcome back to the wild and wonderful "worldwide exchange." it is dark in times square, but we are up and it's bright and early and ready to go as are my colleagues around the globe for this unique financial broadcast. let's take a look at how the u.s. markets are shaping up at this wee hour of the morning. it looks like, well, we want to find out how things are going to go. but we can see a little bit of a bid coming into the dow here today. that number has improved since basically a flat trade that we saw earlier in the session. if you take a look at what we did in the final hour, that has a lot to do with it. but of course, those retail sales data coming out at 8:30 eastern time is going to be a big trio of economic reports coming out today. not only the february retail sales out at 8:30. just give you the forecast there. consensus is for 0.3% decline. you back out the auto industry and you get a 0.1% gain. at 9:55 a.m., we get the first reading on march consumer sentiment from our friends at the university of michigan. look for 73.8, a tiny bit higher from the final february reading. and then at 10:00 a.m., we get january business inventories. they are seen rising about 0.1%. also, treasury secretary tim geithner takes part in a discussion at the u.s. export/import bank's annual conference in washington at noon. and if you can't wait to get your hands on an ipad, apple will take preorders from u.s. customers today. and today only. unless they change their minds. the new device goes on sale in the u.s. april 3rd. and in nine other countries later in april. christine. >> what a cool device, matt. china has responded to u.s. president barack obama's rare comments on the chinese yuan. the u.s. should not politicize the chinese currency. maura fogarty joins us live on the ground from beijing. maura, what can you tell us? >> reporter: hey, christine. officials here at the national people's congress have gone into overdrive, respond to go president obama's remarks about making the yuan a more market-oriented currency. now, it's very rare, first of all, for a u.s. president to make such a direct comment about the yuan and the renminbi. but officials are taking it, you know, with any slack. they're responding in full force. you mentioned the response indicating that the vice governor said the u.s. should not politicalsize the conversation. but in essence, that is a political hot topic. we'll discussing that with our guest right here, william mccahill, and he joins me live here in beijing. phil, thanks for joining me on "worldwide exchange." let's talk about the renminbi. this is a political topic. >> and he's getting a political response. here he is speak to go delegates to the national people's congress, the high point of the chinese political year, and the last thing he can do is appear to be caving to the americans. so he has to give as briskly a response as the chinese pretty reported president obama saying. >> do you think the chinese will conduct any kind of one off revaluation? we think that the chinese governor that they will depeg from the u.s. dollar. will they do a one off? >> i think they will lead let it rite rise by a few percentage points, but not until they see exports coming back strongly. the numbers they plushed yesterday suggested a huge return in exports. on a month to month basis, in fact, they declined. and so what they crave above all is stability for their exporters. and i think they'll wait to see another month or so of numbers before they're prepared to move. in any event, the chinese moved the currency only when it suits their own interest and what they think is right for their own economy. not because any foreign leader says they should. >> and, of course, the u.s. says the same thing, as well. >> absolutely. >> one topic i'm noticing this year is the sense that they need to rebalance the economy. there seems to be extra momentum towards doing that. do you get the same? >> i think you're absolutely right there. they have been since hu jintao came into office, which is seven years ago now, they've been moving gradually to rebalance, improving health care, building out the social security net, but this year, if you listened to wen jiabao's state of the union speech, maybe the most frequently used word in the whole speech was rebalancing. they've already begun moving away from an exported economy. what worries them now is this fix the asset issue. there is a larger class that is pulling the economy in that way and the government is trying to create policies that accelerate that. it remains to be seen how much money goes where their mouths are and whether it's lip service. but i think they're generally moving in that direction. and it's a bit the hallmark of their administration and this rebalancing and sustainable development and harmonious society, as they would say. >> so that's the legacy. >> they're moving into their legacy term. on the policy side, these guys have another 2 1/2 years to run. and like politics anywhere -- it's about rebalancing, it's been about closing the gap between rich and post, coast sxinterland and so on. and i think it is gathering some momentum. >> reporter: bill, thanks so much for joining us today on "worldwide exchange." william mccahill joining us live from beijing. christine, back to you. >> actually, i'll take it, maura. thank you so much for that and ouou apologies for the blip necessary that interview. the s&p 500 has finally closed above the 1150 level. how much of a critical, psychological and technical milestone is that? we'll talk about it and talk about stock markets continuing to move higher. more discussion and debate, coming up. welcome back to "worldwide exchange." in the u.s., the cause of death has been determined, a startling new report out on lehman brother's demise saying it hid its woes as the company collapsed. and in europe, the british prime minister and french president are preparing to meet to hammer out regulations. and in china, the finance minister tells president barack obama not to make a political issue out of the regulation of the chinese yuan. >> all right. not a giant, enormous gap higher at the open, but the fact of the matter is that we are seeing a little bit of momentum and some hesitancy, ross, at the same time, with the big economic data we call this the big mama on the economic reports. jobs being number one, but retail sales a close silver medallist. >> and ahead of that, we are up here, matt. we're up at the high sessions of the day. 0.7% higher for the xetra dax. 0.4% higher on the ftse 100. if we close at 5640, that would be a new 18-month high. what's happening on the currency markets, christine? >> we are seeing the dollar/yen rate in focus. we have the yen easing because we have the boj easing next week. a lot of speculation there. further easing could be expected. but the dollar is pulling back just a little bit, 990.25. euro/dollar, 1.3782. sterling is stronger against the dollar. euro/sterling, 0.9087. things could change as we wait for that big update as you call it, matt, retail sales. >> big mama, we love her. james, let me ask you a quick question. we've talked a lot about this lehman brothers's story. i don't know. maybe it's just me. i'm kind of weird. but this just all seems sort of like after the fact, old news, it's a 2200-page investigation all to say, wow, they hid some things and things were a mess and they collapsed and now we've got statements out from dick fuld, we've got statements out from ernst & young. and everybody says, i didn't know, nobody knows anything and life goes on. have we learned anything out of this whole thing? >> well, what we have to do is get to the truth. but it's clear that we still don't understand until all the policymakers say this is what we did, this is why we did this and this is why it would never be allowed to happen again. it is clear the companies that come to the table misleading shareholders, then came over. and i think this is really important. >> let's power up this conversation. we bring in the michael gurka from empower. he's a global strategist. we're talking beman here in this probe that has come out. does this change your thoughts on anything? well, not really. as a former lehman employee, i can tell you that there is and was so much speculation. as far as pointing arrows and fingers and trying to solve the problems for the markets are almost indifferent. it's a shame people are in this scenario right now. what i got off the floor over the last 52 weeks, it wasn't necessary. let's look at it this way. the ripple effect of this information should not move markets like it would have one year ago. >> michael, let's talk retail sales and retailers. it's maybe priced in to the market already. i mean, again, it all depends on your interpretation, whether it's the weekly jobless data, the monthly jobless data, the retail sales. if you think it looks good or worse, you're trading higher, you're skeptical. you wait for an opportunity to buy in. where do you fall in that debate? >> well, actually, i look at the number being projected and i think about the snow effect and looking at how it is expected to be lower, not just from last month, but i think actually what you're doing is you're seeing a classic head fake here where the market has put in this number already. i believe it's already been factored in. and i think if we disapointed, it's not going to move too much on the equity side. i think the bonds would not take it as well as the equities would if it came off. but for the same reason, i think there could be an upside surprise on this number. we're poised to do this number maybe be a spark for the marketplace because it's not as bas bad as expected. >> does the market need much more? we keep grinding higher here. james has said he takes earnings despite a weaker consumer or moderately weak consumer outlook, earnings keep going up. >> i think right now, at least, technically speaking for starters, that the market has taken out most resist yantance levels. i've been looking at two-year charts now for quite some time because it factors in some massive highs and lows over the last two years. we are through these 50% levels and on our way to the 61.8. a big one for me as an example is 1144 in the s&p. and if we could settle above that on the week, that's another breakout. would he have towing the line now for the last 48 hours. i think the nasdaq looks really strong here and i think the markets will not grind higher, as we've seen, but i think we are setting ourselves up like we see so often in the commodity markets, which is a spike and then a follow through. i think even though the volume has been low in some regards, we are technically hitting breakout levels here and i think the dynamic of at least my focus right now is how the fundamentals are playing into the market. and we have a positive side. i don't want to be a raging pull he bull here, but this market coming out of taiwan, spilling into some of these areas around the globe, i think the markets look good as we turn westerly on a daily basis. >> i would like to talk to make a little bit about the difference between the macro and the micro. my view is that the microdata is going to be even better because the level of cost cutting proves to be so extreme, we don't need a great deal of the heat turning out on the macro level to generate strong progress. >> absolutely. and i think one of the places that you can look to, and it's very unconventional, but you know, some of these etfs that we had seen so much, let's go back to the lehman days, which was like shb, short the s&p. not the leverage, but just short positions that you're starting to see on some of these bigger indexes. you're starting to see those type of movements dissipate and also i'm just seeing that the short interest is starting to also weigh in. and i think what i've noticed on the microside is that what we start toppling again, maybe an inkling of a better jobs scenario, i don't want to go anywhere that's bullish on the housing front, but still, the torn in the back of anything, manufacturing, housing, and, of course, jobs, i think one by one, we're getting better surprises in those areas. and that could be building, also. i don't think that you're going to see the euphoria in the marketplace like we used to, at least in the past decade where we started to get through these levels where worries are behind us. and i think a great example of that today is going to be confidence. confidence is so vital from the way the market has recovered from these levels. and the michigan number, again, even with the 70 level is still in the right market. the reason why that looks so good is we have been getting these handoffs from the emerging markets recently and now we're starting to see that the emerging market economies may look better than some that we've seen here in europe. >> mike, christine here. speaking of emerging economies and speaking of, will that hurt confidence? >> i think right now, at least, you know, most global forecasts have shown that, you know, the world's engine has been fueled by import and exportses, of course, by china, but it has still linked to other markets, specifically taiwan. and i think that is a great reason to start looking at these economies that are somewhat technology basised. of course, the way it looks here in the u.s. is how the nasdaq is doing. but in regards to that, i think right now, at least, the way china has started to push back a little bit of the rhetoric on the yuan and how the dollar has reacted recently in the last 24 hours wng, i think china is going to do a lot better than most, but just as one caveat here, i have noticed at least on a technical perspective, i think the nikkei has the most upside for the balance of the year here. and it's been chugging through more on a fundamental view. i think right now, that is one of the reasons why the market has been doing so well, is that in these economies where we thought we would need more stagnant growth, i think japan is doing better. >> meekal, a small shift in money rates is a tight factor. >> what is really indicative is that for so long, the yen was a part of the carry trade and how that spilled into so many other areas. because when you borrowed off that money, it was put to work somewhere else and it wasn't necessarily in the equity world or m&a. we started to see a lot of that being used in the fixed income market. right now, at least, we are coming out of a period over the last 24 months where you started to see the dollar carry trade stick its head above water and peek back down. but where would that put to use and how would that of course affect the market or the global economy. i think those rates, as long as they stay steady will be on the fueling issue. >> we are going to continue our conversation here on our final home stretch into the weekend, if you will, at least for "worldwide exchange." but still to come, london is no longer the world's leading financial center, according to a new survey. find out which cities were the big win withers after the break. welcome to cnbc's "worldwide exchange." these are some of the top stories we are watching from around the world at this hour. gm vice chairman bob lutz says the automaker is going to keep making big suvs because buyers want them. but a larger number of those will be hybrids in the future. lutz is retiring in may. he thinks gm is going to be profitable next year as it's more focused on strong design and less reliant on strong measures to boost sales. toyota sales won't help gm all that much, saying there's very little crossover between people who buy domestic and foreign vehicles. sales at the industrial markets improved and corporate spending are pushing margins to record highs. national semi is seeing increased demand for its anna lol log chips. but some analysts are concerned about a possible build up in inventory. as companies order too much, which could hurt sales down the road. the stock was up 2% in after hours. and is still strong in front further trade here today. also of note, pfizer says two late stage breast cancer drugs have failed. sutent is currently approved to treat kidney cancer. pfizer has stopped an experiment on a lung cancer drug because tests show it's not likely to be effective. shares of pfizer in frankfurt trade are down just about 0.25%. matt, i'm fascinated by those lutz comments. i always thought if you were buying a car, you would go, this is the sort of car i want, this is the price bracket. lutz seems to be saying, in the states, first your question is do i buy an american car or foreign car. >> yeah. i disagree with that. i would just say with all due respect, he's a senior official, great industry experience, but i think maybe he's thinking of a different era. i mean, there are still -- in middle america, there are still people that will not touch an import, particularly the pickup truck buyer. >> okay. >> but you know, the knee san or the toyota pickups have been great inroads there. >> i just thought it was a strange thing to say. some of the other stuff is happening here today. british prime minister gordon brown and nicolas sarkozy will today try ask reach a compromise of financial reform. this is something that timothy geithner was talking about earlier this week. the uk is wary of proposals to tighten hedge funds and private equity groups fearing it could impact the london based funds. and talking about uk and the u.s., london and new york have tied for first place in financial centers according to their latest reports. the data, well, this was taken the second half of last year. we saw london barely holding on to its top place. perhaps the most notable about this thing over there is the cities that are gay inning and come up on the rails. shanghai and beijing are moving up fast. we'll just have to keep watching them, christine. >> we're going to take on the world, asia. i can feel it in my bones. here in asia, toyota is not really taking on the u.s. sales are surging 50% in the first eight days of march versus a year ago after the automaker launched aggressive discounts to win over consumers. according to edmunds.com, toyota's early market share had jumped to a 16.8%. safety regulators are weighing whether or not they should open the manufacturers instructions. >> james, we had a treasury auction this week that has gone fairly well. we keep waiting for one to fail and they don't. at the same time, we have a credit report warning about british debt. pimco suggests investors haven't got their heads around the amount of sovereign debt that is going to be issued and a warning about that. where do you place the credit debt issues versus your views on company earnings, which you know are quite bullish? >> i'm much more bullish on equities. but i don't think there's a real need to be that bearish on bonds. my reasoning is very much the banks had a carry trade opportunity. we know and expect rates will remain really low. they can buy government bonds. they get a big, fat margin. there isn't a lot of personal sector or corporate sector demand for borrowing. i think the real demand in the bond market comes when the personal sector and the demand finance rises. the banks say we're not going to lend to the government any more. the government bond markets are in real trouble. >> how long before that happens? >> i think probably the first quarter or second quarter of this year. >> so at the moment, they're happy to do that. >> well, and at the moment, this is part of a substantial big picture shift in the structure in the banks. >> james, good to see you. thank you so much for joining us, james bevan, chief investment officer at ccla investment management. "squawk box" is coming up in just a few moments. we've got just over ten minutes. let's find out what is coming up today. joe is with us once again. joe. >> i'm not ready, ross. can you come back to me? no, i'm ready. just kidding. what would you do if i did that? do you have something to do? could you ad-lib? could you dance on your feet? >> you're always ready. >> you're right. >> you could. >> go. you are the professional forecaster, joe. you could handle it. you're right. that's what all the e-mailers say, you're so professional. anyway, today we're exploring the comeback of the american consumer. we go to the front lines of spending and shopping with the executives of collective brands and hotel giant marriott, which is always interesting. they go all the way from high-end down to less high end and it always gives us a good idea. plus, we're going to get this scene from the mall with bill toddman with toddman centers. we'll get the government's retail sales report at 8:30 a.m. eastern. and you know meredith whitney, we're going to meet the woman what some are calling the meredith whitney of europe. she advises some of the biggest players around the globe and she's making a rare appearance with us at 8:00 a.m. eastern time. all that, plus new york real estate mogul bill ruden is continuing the ruden/lefrak feud. he'll be our guest host. "squawk box" starts back at the top of the hour. back to you. >> joe, thank you so much. up next, we will not go to bars without or without ross's keys. all right. our final breathing moments of this hour of "worldwide exchange" go to michael gurka. an updated resume item has been duly noted here. michael, i want to talk to you about this in terms of asset allocation. a lot has been made about the small and midcap performance here today. what does that say about risk appetite, what does that say about this durability of this rally that has been going on now for sex weeks? >> i think it shows a successful navigation of global headwind. much like america's cup, we've been tacking very well into these head winds in the last few months. you're seeing how the markets have done so well, expecting bad things to come in. when volume tarts specking up, we said more inflows into upside. now we start looking for the bigger gains, which will be the small and the midcaps. >> all right, michael, thank you very much. always good to see you, global asset strategist at neuromarcus. folks, we take a quick look at the futures. 21 points higher, with fir value, about 2 bop. a little bit of a tailwind, i would say. >> willing willing in europe. christine tan here in asia. thanks for warpg "worldwide exchange." good morning. a familiar fed head, san francisco federal reserve boss janet yellen is said to be the president's pick of the new vice chair of the central bank. lehman brothers, who, what,