Transcripts For CNBC Worldwide Exchange 20121121

Strikes on gaza and rocket attacks into israel continue. Youre watching worldwide exchange, bringing you Business News from around the globe. All right, were into hump day, the day before thanksgiving, of course, as well. On todays show, well have updates from athens and brussels as the eurozone ministers fail to ruse a deal for greece. Air strikes and rocket fire continue in the gaza strip in tel aviv, as Hillary Clinton urges both sides to diffuse violence. Well have the latest live from zree israeli. Well also take the pulse of the polish country. Analysts from warsaw 40 minutes from now. Well be in providence, rhode island, to preview travel ahead of the thanksgiving holiday with the head of operations at Peter Pan Bus Lines. But first, after nearly 12 hours of talks, eurozone finance ministers have failed in their quest to agree conditions that would have allowed the next chance of bailout cash going to greece. Whats next . Whats gone wrong . Well be joined by jules in athens in a few minutes. But lets start off with silvia in brussels. Theyve said greece has done everything they need to do. Whats the problem now . Yes, that is the big question. They say greece has done everything they need to do. Greece will get the money. Oops, not just yet, because we havent quite worked out the sustainability road, as it were. There was this disagreement last week between la guard of the imf, could they stretch a sustainability report for another two years, the famous 120 of gdp. Could that be the deadline, the stretch. The imf said no. The eurogroup said yes. Now theyre working around ways of getting to the 120 . Maybe without the extra two years or at least with putting Something Else in place. This Something Else could be either one or a combination of what im telling you now. Up to tenyear moratorium on Interest Rates. A lowering of Interest Rates on the existing debt repayments. A Public Sector involvement, ie cuts for the Public Sector, for some of all of their debt. A bond buyback program. This is the combination of things that seems to be lying on the table. And theyre working on various scenarios to which hopefully and eventually all parties can agree. It is not, or so we hear here on the grapevine, it is not only about the difference of opinion between the imf and the eurogroup as the scenarios are being played out. There are also differences of opinion within the eurogroup. Thats why everybody went back home to meet again here on monday to hopefully then conclude the talks. One of the other reasons why they might have broken off and not continued today was because they had to go back to berlin because of the second day of the budget debate going on in berlin and the finance minister cant be missing when the german chancellor is giving her keynote speech. That might have been another spin in the works. Yes. So well do it again next monday. We look forward to that. How are they reacting to it in greece . Reporter well, i think theres a lot of expectation built up about last night. Undoubtedly theres disappointment. First thing this morning, there was a lot of blaming perhaps of the government here. Ive had a couple of people say to me what more does greece need to do . I think theres a level of misunderstanding here about where the conflict actually is, and the Prime Minister issued a statement earlier to the europeans and to the imf saying that they need to fulfill their obligations. Need to talk to the people here and explain that actually perhaps this delay could be a more positive thing if ultimately it means that we solve this situation longer term rather than a shortterm fix. But, you know, the overall message from the press here is sit tight, and we look positively towards monday. Weve actually had the minister for development on Sky Television in the last few moments saying the same thing, that the government was prepared to get a delay overnight and that they do too look forward to monday. The full weight of expectation now on monday. As you can probably imagine, the opposition of making the most of the opportunity, theyve suggested that the government here has done favors and that actually theyve got insult in return. We have to watch the coalition very closely. I go back to where i started. I think the key message now is that the Prime Minister and the government here do have to talk to the people now and explain that this isnt necessarily about greece anymore. Just have to wait and see how it plays out. Thank you, julia. Well come back to you during the program. James, are they arguing about is wrong thing . I mean, whether we push another two years on the maturities or not, theyre still not going to get a sustainable target, are they . What we saw last night is evidence of a very fundamental split between the europeans and the imf. In many ways, its a rather cynical ploy, kicking the can down the road, arguing about how were going to finance greece the next two years and sidestepping the issue of what well do for two years after that. The imf quite rightfully is saying hold on, enough of this cynical buying time. Lets put in place something meaningful, something that puts greece on to a proper footing. There has to be depth. How do you dress it up. Absolutely. Thats been the imfs position. You cannot realistically expect the money to be paid thats been lent to them. So thats not a loan, thats a gift. Which is why arguing over whether you push the maturities back two years is a bit of irrelevant. Theres two things. Theres the financing and giving greece an extra two years to get its finances in order. But that of course costs money. So were arguing about how were going to finance that extra two years. But i mean thats one thing. But then the other option is how do we actually get the level of debt down and whats being suggested here is the most likely option is effectively giving greece another moratorium before it has to start paying back its mortgage. But theyre going to get the money, so are they . Can they give them the money without the eurozone and the imf agreeing . I think it would be very difficult. For the imf to pull out, which is a very severe risk here, because what theyre saying in private, this is not something we can negotiate over. Our memorandum and terms of agreement effectively is we can only lay money if you think were actually going to get it back. I think their hands are tied and thats the point she continues to make to the europeans. If the imf pulled out, it would leave an even bigger financing gap. Theres a slight irony here, the ones that disagree with imfs position most. I think there is an irony in that, this inn the sense that we wanted the imf in. Given a cloak of respectability. The compliance police, the experts in tying people to the fire and making sure they actually do as they promised, and now the europeans have been hoist by that. Where does that leave us . What is your best guess of what happens . Well, you have to say at the end of the day, the amounts of money were arguing about are relatively modest. 15 billion buys you two years. Surely given the contagion, youre not going to bulling it writing that check. So what were really arguing about is just who is going to actually end up footing that bill, cl is a relatively modest bill. The key point is the longer this drags on, the uncertainty continues to hurt the economy and continues to undermine markets. James nixon, thank you. Autonomys ceo says hes shocked by allegations of mismanagement. Theyve been forced to take a nearly 9 billion charge because of what it called serious improprieties. Lynch says the trouble arose after hp took over the company. Weve been talking about a massive elephant in the room that wasnt spotted. The reason it wasnt spotted is very simple, it wasnt there. It was done, in their own words, meticulously and great detail. And then they actually ran the company, including doing all of the books for the last four quarters. Hp shares down 12 yesterday, closing on a tenyear low right now. That is the euros closing price. Still to come later, hes now apologized to the investors for the poor call and says the end for hp is not even sight. Also, japan has posted its worst trade deficit in october for more than three decades. Exports dropped sharply amid territorial tensions between tokyo and beijing. It indicates the worlds third biggest economy is inching closer to recession. This means the country would have seen its fifth technical recession in 15 years. At the same time, japans Opposition Party promised a massive easing blitz meant to pull the economy out of its funk. Thats if the ldp returns to power on december 16th. He promised to compile a large extra budget. Hes also it rated calls to lift calls above the 1 target. Translator we should target inflation of 2 to 3 . I prefer 3 , but i will leave that up to the experts. I have never said the boj should directly buy bonds from the government. They should buy them from the market. His party is also considering the revision of the bank of japan law. Yesterday the bank of japan chief hit back saying it was unrealistic. Just the latest in japan. Lets get the Market Report kicked off by sixuan. Let me start off with japan. The nikkei rallied, shrugging off the trade data. Auto majors such as toyota and nissan gained over 2 . It was a choppy day of trade for china markets. The shanghai composite opened in the green and then dipped to a three and a half year low and rebounding to higher by over a percent. Property stocks, most were up around 2 in late trade. The beaten down liquor producers also recouped some of their losses on bargain hunting. Well get the hsbc flash pmi tomorrow. That will give us more clues about the state of chinas economy. Hong kong shares also ended higher today. The 3. 6 billion ipo of chinas insurer seems to be gaining momentum. Sources say the company have secured, several corner stone investors, including aig. Elsewhere, south korean shares were under pressure on concerns over europe. Steel makers andpbui led the losses. In australia, weakness in resources took the shine out of the asx 200. Steel on the move, now trading higher by about. 7 of a percent. The commodities trader recovered some of yesterdays losses on muddy waters allegations, ending higher by about 5 . More on that coming up in the show. Ross, back to you. Oh, sixuan, thanks for that. Catch you a little bit later. Here we are in europe. Pretty even stevens. Also terms of advances, almost matching each other equally. Slim games yesterday. The ftse up. 2 a percent. You can see the ftse 100 is there we go, absolutely flat. Dax up four points. The ibex is down. It is the trade day before thanksgiving. Volumes will probably drop off as well. Take a look at bond rates. Yields a little bit lower. We keep our eyes on the uk in the next 50 minutes. They didnt extend quantititive easing high on dollar versus the euro yen. Japanese exports down for the fifth month. We have been down to 1. 2748, so weakened by the no agreement on greece, but still above the level which we hit last week, which was the twomonth low. Thats where we stand right now. Still to come on todays program, top shop boss phillip green reported a small drop in the uk, but he seems hes at least one Happy Shopper still ready to splash the cake. This is in the shape of nicole scherzinger. Its like a magical maze of fashion and clothes. It always has the latest trends and fashions. Its quality, and its just super cool and it feels comfy. Frank, instead of scratching your way to retirement, get on etrade. Set up a real plan. Frank oh wow, you didnt win . I wanna show you something. Its my shocked face. [ gasps ] [ male announcer ] get a Retirement Plan that works. At etrade. We have another eu meeting thats fallen for greece, but its growth in trade that the country really needs, not just another handout. Greece, portugal, spain, and italy. Other countries are trying to step up to compete. Jeff is exploring that theme this week and he joins us today from warsaw. Jeffrey . Reporter yeah, ross, its interesting, isnt it . A very simplistic bit of analysis, but as the crisis kicked off in europe, a lot of people were saying hang on, germany is a beneficiary of the single currency. It exports aggressively into the rest of europe. Wouldnt it be good if some of that trade flow turned around and that would support many of the mediterranean economies . The problem is they just dont make necessarily what germans want to buy, which is why in a way weve come to poland to have a look at how poland is evolving and integrating, not only with germany, but the rest of the 27 nations. But to point to my piece today is that actually poland is doing quite well. Polish companies are doing quite well. Starting to sell into germany. And i went to look at one company in particular, solaris, lets take a look. Despite the eurozone crisis, solaris had a record year in 2011, assembling over 1,200 vehicles for the 26 European Countries it exports to. Closer to berlin than warsaw, solaris is germanys biggest foreign bus supplier with 10 market share. So whats the secret to cracking the German Market . Translator there is no secret. Just work, work, work, work. Reporter and of course, a willingness to be flexible and maintain quality. But even solaris expects sales to slow this year and is not idling while key markets contract. Translator we are looking for new possibilities, new products, new markets. The world belongs to the brave. Reporter theyve started selling to russia and theyre looking at markets like india. But theyve not given up on europe, which will remain its key engine for growth. The european story is more nuanced than the eurozone crisis growth headlines would suggest. In fact, solaris has picked up new business in finland and belgium and will do record sales in spain this year. Solaris management considers the company as much european as it is polish and believes the block is strongest staying together. So if the eurozone were a bus, say, none of the passengers should be forced to leave before the ultimate destination is reached. Just setting aside for a moment the issue of trade into germany, the polish economy is clipping along at about 2. 4 this year. Its expected to slow into next year. So what exactly is the Central Bank Going to do to offset some of that weakness in domestic demand. Im very pleased to have with me yang, on the committee, and also an academic economist. Thank you for joining us. The central bank has been criticized by some for not cutting sooner and more aggressively. And the key policy rate still sits at 4. 5 with growth coming down so rapidly, shouldnt the bank be moving more quickly. Well, of course, i can talk about myself and my own views, and i think that we are trying still to continue saying normal Monetary Policy, and when i look around in europe, especially western europe, i dont see many similar cases. That does not necessarily mean that we are wrong. Who are you more critical of, the bank of england with its qe policy, or the ecb, which has been r been resistant on moving more quickly . I would put more criticism on the bank of england or the fed. In any case, i would agree with what a german philosopher once wrote in 2009 that would resolve around policies that it is a kind of a robbery of the future by the present. We are trying to avoid that. To an extent, it is possible for a small open economy. All well and good academically, but what do you tell the unemployed polls who say shouldnt the central bank . According to the eu measures, unemployment here is in excess of 8 . According to domestic measures, its up in low double digits. Shouldnt the polish workers get another chance at a job . This has nothing to do with the chances for a job because first of all, its not a problem of having very strong pent up demand for loans for enterprises. Our enterprises are now in the process of slow downward adjustment, after the period of too much optimism. So no matter how far we would go in cutting down the Interest Rate, the enterprises wouldnt start investing anyway. This is my very strongly held view. Of course, we may have some relief. So they may gain some, which is not very much, as you can understand. And therefore, i think that in our slow way, cutting down Interest Rates by, say, 25 basis points may be this is my view cutting next months. You know, we would achieve to an extent what is possible, desirable and what can help. Maybe afterwards, if things started falling down from heaven, maybe we would consider it. But it does not seem to require such costly and dramatic measures. Thank you very much for giving us your time. One of the hawks from the Monetary Policy committee here in poland. Dont expect rates to come down very quickly any time soon. Seems to be the message. But, of course, he is just one of ten under belker and it does seem as though the rate has turned here in poland. We have the polish finance minister joining us in closing bell, so youll hear more about the state of the economy and what the government is doing before we wrap up our programming from warsaw. And then i and my producer will be climbing into the trusty cnbc satellite truck and making our way on to zagreb in croatia, where not only are we in search of more vowels, we are also hoping to find out just how strong that economy is doing in the face of this european weakness. So ross, back to you. We look forward to that. And i presume youll be driving the bus because i think we saw that in your report earlier. Doing very well with the reg impersonations. Reporter yes, thank you very much. Im starting to become quite attracted to buses and carriages. I think ill start jotting the numbers down in a small notebook. And if theres a man that can do that, its you. Thanks for that. We look forward to your contributions. Safe travels down there. Still to come, were going to be in tel aviv where fighting continues into its eighth days. More to come on worldwide exchange. I wanna go. Where will it send me. 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They voted 8 to 1 on maintaining qe. David miles did vote for an extension. They thought the case could be made for extra stimulus. Would be possible to expand out. It may prevent damage to the economy. Considerable scope for further qe to lower yields. More than five basis points away in two years. Idiosin karatic factors to add. Something that mervyn king talked about in that Inflation Report as well. They might have been looking for 90. Joining for his reaction is jeffrey dix. What do you make of those snaps that ive read out . Yeah, it was what i expected. I thought david miles, who has been the most dullish member, would probably vote for some more qe. Oing on the re i think on the rest of the committee there are two camps, those who think qe is still guilty and that it would have a role to play in stimulating demand, but theyre worried about inflation, so theyre not going to stimulate demands. And then theres the qe skeptics, and i think im in the latter camp. You may be able to effect a small cut in longterm Interest Rates. But the uncertainties and the headwinds and Everything Else is so great, whats the point in doing it . Because youre not going to get a boost to investment if you do some more qe. The other bit of data as well, the British Government growing more than expected in october. This is the last set of figures before the autumn statement. George osbournes twice yearly fiscal update. Positive surprise in september. 8. 6 billion pounds in october, thats up. Well above the average forecast of six billion and higher than even the most pessimistic estimate in a reuters poll. Where does that leaf with us this weak growth that were experiencing in the Fourth Quarter . Well, it takes us back two months. Last month we had a positive surprise and it looked as if they just might be coming back into line with last years outturn, but i guess these numbers blow that to one side. As you said, it was 6 billion last year. This year, 8. 6. That is a big miss. The obr is fwound say that borrowing is going to come in. Now theyre going to take the interest back from the bank of englands guilts purchases, which made the accounting a bit neater. Well, i dont think the chancellor should tighten fiscal policy. He did a year ago in response to a similar sort of pronouncement from the obr. He cut public spending in the out years of his forecast. Of course, he will extend his forecast for another year and he can do the same again, but its all cosmetic, isnt it . Cutting public spending in the year 2017. The economy doesnt need fiscal tightening, and although that taking back the money from the bank of england was a bit cosmetic, if he can use that to make the case for not tightening fiscal policy at this point, i would welcome that. Bear in mind that thats what they do in japan and the United States. Its dodgy in the sense that you can have it now, but then hes got to pay it back later. So its only a time shift in the public finances. Its not a permanent improvement. You talked about in your notes, mervyn king mentioned last night we could be facing another contraction in the Fourth Quarter. People talk about the triple dip. Inflation is going to be higher than we projected. What is the next poliicy move. What else could they do . Monetary policy is pushing on the screen. Qe has run to the limits of effectiveness. Youre not going to get any bang for your buck. If the economy is going into a triple dip, if its contracting gain, then the only rootout is fiscal policy, as the government said, were not going to get any help from our european trading partners in the near term. Wed still be struggling to get our exports into the euro area. Theres only fiscal policying and the chancellor has rather boxed himself in there. There is a way out, which is on Public Sector nfc and investment spending because that is not included in the fundamental remix, in the mandate. Theres the supplementary target, of course, on debt. He can fudge that, especially with the money hes getting back from the bank of england. So if he does if we are looking at a considerably weaker outturn and a poor Fourth Quarter, then i think the chancellor should do some investment spending. The contraction industry is crying out for it. Weve delayed any aviation review. Blocks that sort of obvious bit. Always good to speak with you. Thanks very much. Lets recap the headlines for you today on worldwide exchange. Germanys Angela Merkel says the greek financing hole can be filled as finance ministers failed to reach an agreement on just how to resolve the countrys sustainable debt problems. The fbi launches a probe into the alleged accounting issues in the Hewlitt Packard autonomy deal, while the former boss hits back at accusations in an interview with cnbc. The first we heard about it was a press release, and we utterly refute them. These are absolutely factually incorrect. Wed like to learn more about them. Im afraid the details havent been shared with us. And no cease fire. Hillary clinton joins egypt in an attempt to broker a deal while rocket attacks in israel continue. So this is where we stand. European stocks after slim gains yesterday have been fairly flat today. Ftse 100 is flat. The xetra dax up a tenth of a percent. The ibex down about a tenth. Bond yields pretty steady. The tenyear spanish yield, 5. 81 . Tenyear guilts unmoved by the mpc minutes. They are slightly higher. The public finances data wouldnt have helped. Euro dollar, 1. 2786, has dipped down. The twomonth low is 1. 2661. But it is weaker on the no deal for greece yet news. Dollar yen, the aussie dollar slightly weaker. Euro is also near sixmonth highs as well. We keep our eyes on that. Hillary clinton is continuing to talk with egyptian leaders in a bid to broker a deal between israel and hamas. They failed to broke aerocease fire agreement. Death tolls have now reached 130 palestinians and five israelis. Joining us with the latest once again, chapman bell reporting for nbc from tel aviv. Hi, chapman. Reporter good morning, ross. Well, yesterday afternoon, it seemed likely that we would see a cease fire into the evening, but as the evening began, it seemed not going to happen tonight. This was just unraveling as secretary of state Hillary Clinton arrived in israel. She met with Prime Minister netanyahu into the evening to try to come to terms with negotiations for a cease fire. Then again today, she met with the Palestinian Authority in the west bank and were told shes actually once again now meeting with netanyahu and other senior israeli officials, trying to broker some sort of peace deal. After this, she was planning to travel to egypt, which has been the center of negotiations, really. The u. N. Secretarygeneral is also in the region. So we seem to have the power players of the diplomatic world in the region, trying to come together with some terms to stop this violence. But violence continues, even though it seemed like were so close to a cease fire, the finer details are being worked out, the violence continues in gaza. Overnight, Israeli Defense forces attacked again about 100 targets in the gaza strip. Today, the militants within the gaza strip have launched about 30 rockets into israel, so the violence continues, even though we seem to be getting more and more people involved in making a cease fire come to a conclusion and end this violence as we begin this second week of this conflict. Ross . Thank you for that. Well talk to you a little bit later. Chapman bell from tel aviv. Officials from six world powers are meeting in brussels to plan for a possible new round of talks with iran to avert the threat of a military conflict. Also, japans trade deficit has widened, exacerbated by territorial tensions. Now we have the details from tokyo. Reporter hi, ross. Japans finance ministry reported a bigger than expected trade deficit of 6. 7 billion for october. Thats a record for the month and marked the fourth straight month of red ink in japans trade account. Exports fell 6. 5 on the year to 62. 8 billion for the fifth month in a row. Car exports fell 12 with shipments to china and europe down sharply. Auto exports to china fell 82 due to a widespread boycott of japanese products in china as a territorial role continues. The big drop marks the steepest decline in car exports to china since 2001. Thats when exports fell 88 following the Prime Ministers controversial visit to the shrine. Back to you, ross. Investors appear to give the Singapore Firm the benefit of the doubt today. The firm recovered after failing to back its allegations against the singapore trader. The Research Firm published a letter, scant on detail but criticizing for its huge debt pile. It also said the company will collapse. Olam has defended its business. Joining us for more, the general manager at funsupermart. Com. Thanks very much for joining us. People will say theres no smoke without fire. Whos got more reputations to lose here . I think olam has more reputation to lose. We dont know whats the basis, but it is possible that it might be insufficient, inaccurate. They have access to all the information. So if muddy waters is right, then something is going on at olam. In that case, they would have much more to lose. Whatever happens, does olam need to come out and therefore be much more transparent about his business . Yes, i think that it would be good for olam to be much more transparent and forthcoming in terms of disclosure since i believe they do have more to lose. Also, tomas has a 60 stake in olam. One wonders whether theyre going to apply some pressure. I think generally, they tend to be passive investors, but having said that, i think theyll keep an eye on Senior Management a lot more closely after this has been brought up so publicly. But to what extent i think we probably wont know because it will probably happen behind closed doors. At the moment, the muddy waters accusation seems to lack some substance to it. What investors going to do with this share until we get some clarity . I think well probably need a lot more clarification from muddy waters to back up their claims. Theyll give a benefit olam has come forth with some disclosure. Until we have more basis from muddy waters, we really dont know what exactly is the basis for the claims so far. Because its not the First Company thats had a lot of debt. Its not the First Company to run into a dip in the Business Cycle and not doing so well. That is not the same as what muddy waters is claiming, which is that theres a cohesion going on. I think we need to hear a lot more from what muddy waters has to say. I think youve put that very well. Thanks for that. Now, chinese banks have bought more than foreign currency than theyve sold. Also expects the u. N. Exchange rate to remain stable. At the same time, south koreas finance minister says its keeping a close eye on the recent volatility, saying it will take action to stabilize the rate if necessary. Elsewhere, Eric Schneiderman has filed a complaint accusing the bank of deceiving investors in residential bank securities, which later incured more than 11. 2 billion in losses. They reject it saying its inaccurate and an exaggerated number. Hostess brands is moving forward with a plan to go out of business. This after the company says lastminute talks with the striking baking union has failed. The two sides were pressed into mediation by a bankruptcy judge in an effort to save more than 18,000 jobs. The Court Hearing will resume today in new york at 11 00 a. M. Eastern. Hostess, which makes twinkies, wonder bread and drakes cakes will ask the judge to approve a plan to begin a piecemeal liquidation. News corps wants to extend its library. The wall street journal says the talks are preliminary and nothing is imminent. The move comes weeks after news corps failed in its bid to buy penguin, which eventually sold to random house. As far as the individual stocks are concerned, we dont have them for you. Right. Research in motion may be losing another big u. S. Customer. The National Transportation safety board may switch from blackberries to apples iphone. They have failed at inopportune times and the iphone would better link to the ipad. Last month, the immigration and Customs Bureau switched to the iphone. You can see that we do have that stock price up about 8 , though, in u. S. Markets yet. Still to come, i talk retail spending, online trends and Holiday Shopping with phillip green. Plus, a rather wellknown famous pop singing shopper. Quality and its comfortable. There you go. Whats better than that . Can i help you . I heard you guys can ship ground for less than the ups store. Thats right. Ive learned the only way to get a holiday deal is to camp out. You know weve been open all night. Is this a trick to get my spot . [ male announcer ] break from the holiday stress. Save on groupping at fedex office. After nearly 12 hours of talks, the ecb and imf officials failed in their request to agree conditions officials did agree to meet again next monday. Speaking after this mornings talks wrapped up, they insisted they are close to an agreement, its just Technical Details that apparently now need to be worked out. Angela merkel has also been speaking about this. And shes been saying germanys willing to take part in boosting the esfs capital by about ten billion as well. She said essentially the low Interest Rates and this expanded essf could fill the financing gap. The merkel comments being taken as being fairly supportive. So that just means that weve seen bund futures gain slightly, and weve also seen euro dollar perk up from its earlier lows as well. We got down to about 1. 2748 on the euro dollar. This is where its down with stocks. Pretty even really. Thanksgiving tomorrow. Volumes will be lighter today. Bond markets, bunds reversing some of the gains from earlier. Pretty mixed elsewhere. Guilts not doing so well on the borrowing figures that were 2. 6 billion pounds worse than forecast. This is Public Sector excludeing financials as well, and here we go with euro dollar at the moment. We were down to 1. 2740 a little bit earlier. The twomonth low we hit earlier, 1. 2661. Arcadia groups reported a drop in sales, but the firm, which is privately owned, still reported a rise in earnings thanks to improving margins. I caught up with phillip green and asked him how much money he thinks they have to spend at the moment. I dont think anybody has more than they had a year ago. As more and more internet sites open, theres more windows to shop in. Its a Competitive Landscape and i think it remains that for a period of time. Internet share growing. How much harder is it for a foot fall and traditional shoppers . Its tough to call. I mean, i dont know the answer to that. I think it continues to grow. I still think people want to go shopping, as you can see. I think people want to do both. You know, were very much into these new you know, were doing click and collect. Were not fully operational. But our earlier results are really fantastic. People coming into the store. So i think provided we can keep working away at all the different areas, i think people will still shop in stores. How much harder are you working with supply Chain Management . Its always been key. Do you have to get a greater turnover of new collections . I think what were doing is i mean, id like to pride ourselves on weve always had a very slick and good supply chain. I think we brought a lot more product back home, nearer home, europe, doing quite a bit in uk where we can. I think that weve got key dates where we want to be new, we want to be fresh. All of our businesses now have a weekly product. No new product introduced. People want to come back into store on paydays and find new merchandise or when they choose to be shopping, so weve got to be sharper. So were holding that inventory, returning quicker. Therefore less accidents. Always have too many of those. I think the fact that were keeping speed is really important. Youve talked about the international business. Youve opened 15 new stores there. What are your plans and projections for the year ahead in that business . I think we will be, hopefully over the next year or two, big investors in america. Were happy with how were going there. New york, other than just the recent storm, has been really, really good. Were probably comping nearer 20 year on year in new york. Chicago now, were sort of on our way. Vegas is slightly tougher. Tougher economy there. Were excited about l. A. Were now looking at other locations in the states. Were open with nordstrom where we opened the 14inch door and online. I think that could easily be 30, 40, 50 stores. So weve got a lot going on. We opened in australia, brazil, vancouver three weeks ago. Were going to open in south africa on thursday. This week. Youre keeping busy. Were nearly going to have a shop open somewhere 24 hours a day, thats the plan. Weve got a couple more places to go. All right. Phillip green talking to me about his results. Now, the National Labor Relations Board says it wont be able to act in time to stop worker protest and rallies outside Walmart Stores on thanksgiving and black friday. A group called our walmart is seeking better pay and benefits, its affiliated with the yietded food and commercial workers union. Last week, walmart filed a complaint with the nlrb, saying the Workers Group and ufcw were attempting to disrupt its business. A new survey by the Consumer Electronics association finds 60 of u. S. Adults say they will shop this weekend. They plan to spend on average 218 on gifts between thursday and monday. A third will brave the crowds at the stores. 20 apparently will shop online. So how are you feeling about the Holiday Season . Is it time for retail cheer . Will you keep your wallets in your pockets . Email us, or tweet, or direct to me. Still to come, well look ahead to that Holiday Shopping season. Plus an hp analyst who says the tech giant has more shoes. A. Oh, ah sir. That is a customer. Lets not tell mom. [ male announcer ] break from the holiday stress. Fedex office. Hes, hes on my back about providing for his little girl. Hey dont worry. Etrades got a killer investing dashboard. Everything is on one page. Im watching you. Oh yeah . Well im watching you, watching him. [ male announcer ] try the etrade 360 investing dashboard. This is worldwide exchange. Im ross westgate. These are your headlines from around the world. Angela merkel says the greek financing problem can be filled. They all failed to reach an agreement on how to resolve the sustainability of the countrys debt problems. The fbi has launched a probe into the Hewlitt Packard deal. The former boss has hit back in a cnbc interview. The first we heard about it was a press release. We utterly refute them. These are absolutely factually incorrect. Wed like to learn more about them. Im afraid the details havent been shared with us. And no cease fire as Hillary Clinton joins egypt in attempting to broker a deal between israel and hamas. This as rocket attacks continue. Youre watching worldwide exchange, bringing you Business News from around the globe. All right. Welcome to cnbcs worldwide exchange. If you just joined us this morning, the start of your Global Trading day, one day ahead of the thanksgiving holiday. Many people might be leaving early today. European stocks fell flat. This is where were indicated on the dow at the moment, 27 points below fair value at the moment. The nasdaq is some 12 points below fair value and the s p 500 is 3. 7 points below fair value. The ftse global 300 meandering along, not doing an awful lot, just up a point at the moment. Some slim gains yesterday for european stocks. The dax and the cac up. This is where we stand at the moment. Were a point down for cac and only 8. 5 points down for the ibex. It doesnt get an awful lot flatter than that. We didnt get an agreement on greece last night. More on that in a few moments. Euro dollar got down to about 1. 2748 during the session. 1. 2666 last week was sort of the twomonth low. This is where we stand at the moment. 1. 2785. Dollar yen up to a sevenmonth high at the moment. Euro yen has been up at a sixmonth high. More trade export today. Aussie dollar slightly weaker. Sterling unmoved by the fact of growth in october, came in much bigger than we might have expected. About 2. 6 billion pounds worse, putting much more pressure on george osbourne. There will be thoughts that the obr will say youre not going to make your targets. Lets check in on where we are. Sixuan. Thank you, ross. Asian markets wrapped todays session on a mixed note. The nikkei climbed to a twomonth high despite worse than expected october data. Exporters continue to rally on a weak yen. Auto makers all gained over 2 . It was a choppy day of trade for china markets. The shanghai composite opened in the green, then dipped to a three and a half year low before rebounding. Property stocks were among the gainers. The beaten down liquor producers and resources also recouped some early losses on bargain hunting. The next key data reports to the hsbc flash pmi tomorrow. Steel jumped over 7 on news of a stake sale to its control in shareholder. Several corner stone investors including aig for its Hong Kong Ipo early next month. The kospi and the aussie market ended marginally in the red. After nearly 12 hours of talks, the ecb and imf officials have failed once again in their quest to agree conditions that would have allowed the next rounds of bailout catch going to greece. What went wrong . Jules is in athens. But first, lets goat silvia. This isnt anything to do with greece. This seems to be about whether the imf and individual eurozone countries can agree on what is a sustainable debt path from here. Whats the Sticking Point . There are a number of Sticking Points. The eurozone wants to give greece more time. The imf couldnt quite agree with that because they said we need to bring the debt level down, and there are other ways of doing that. Just pushing the time horizon doesnt do it, either lowering Interest Rate or a debt moratorium or an Interest Rate moratorium of up to ten years or a Public Sector involvement, and in that sense, the scene has shifted from here to berlin where we have the general budget debate going on there at the moment. There is indeed a lot going on, informed the various parties about the greek discussions here overnight. The man never sleeps, less than i can or anybody educational here, informed everybody whats going on here after the various parties went into their own sessions. We started the general budget debate. The democrat said look, we dont even have to vote on the budget because we dont know what kind of burdens are coming from the greek debacle. We might have to up the budget before we can actually vote on it, so theres a lot of political toing and froing going on there. Curiously, Angela Merkel said she could imagine increasing, beefing up the efsf in order to accommodate a further buffer for greece. So things are kind of on the move in the fine print. At the moment probably more there than here. How are they reacting to this news in athens, julia . Reporter there was a fair amount of optimism baked into the cake here. So quite expected that thats been replaced by some level of concern and also a level of frustration here. I mean, i went to get a coffee this morning and the lady in the coffee shop said to me what more can greece do . That highlights to me a level of misunderstanding too about just where or what side the disagreement currently lies on. I think that needs communicating by the government here that perhaps yes weve seen a delay, but ultimately its talking about addressing the longer term issues for greece and that were not just going to get a shortterm fix. The message that theyve been promoting this morning is to keep calm, that they were prepared for this and they do look at the expectation that they get something. The government here has tone favors for them in the measures that theyve passed a few weeks ago and all theyre getting back is insults, so we have to watch the pressure on the coalition here. People on the streets keep reiterating to me that the Prime Minister has been saying to the people here that their country ran out of money on november 16th, so the focus really was on this meeting overnight. I go back to the point that i think the government needs to reiterate here that its not about greece and its about hopefully seeing a longer term plan for the future for greece, or the skeptic in me says for as long as that lasts. For now, though, ross, back to you. Thanks for that. An explosion on a tel aviv bus. We will be out in tel aviv with the latest news as well in the next 15 or 20 minutes. Theres a sense that greece is going to get the money. Theres a serious discussion going on between various members of the eurozone and the imf as well. How disturbed or not are you by this . Good morning, ross. Im not entirely discouraged by it. A little bit disappointed to see Angela Merkel discuss that, but at the end of the day, i think well go back and forth. I suspect youll see them give them the money and thats whats happened each way so far. Is your base case very weak, muddled through but no bustup . Well, so i think that a bustup is a real possibility. I think its one way that you can solve the issue. I think in europe, you have what to me is a sociological issue and were trying to fight that with monetary fiscal policy, so i think thats a tough battle. So im not we could see that prevail. We could see the area come together and unify with a national identity, or i think you could see it start to break up. But i think its really a sociological issue thats very difficult to forecast as a forecaster. Okay. Meanwhile, lets just turn our attention to the u. S. The u. S. Markets, the stocks did weaken. Ben bernanke said the central bank doesnt have any tours available to offset the impact to the u. S. Economy going over the fiscal cliff. The Economic Confidence of both Market Participants and the general public will actually be influenced by the extent to which our political system proves able to deliver a reasonable solution with a minimum of uncertainty and delay. Peter schiff says bernanke and the fed pose a bigger threat to the u. S. Economy than the fiscal cliff. If it wasnt for his accommodation, all the qes, we wouldnt have to go over the fiscal cliff. In fact, ultimately, because of what the fed has done, were going to have to go over a much bigger cliff as part of the solution to solve the problems that the fed helped create by allowing the government to get so big. Is that fair, craig . It certainly is fair that longterm, what weve done with Monetary Policy could be a challenge. It could be a very big challenge. I dont think saying that if we if the fed hadnt done what theyd done, you wouldnt have to go off the cliff. I think you still have to deal with the fact that Government Spending has been too fast over the past well, since the recession ended. Our gdp has grown at a rate of around 900 billion, while debt has grown at 1. 7 trillion on an annualized basis. So at the end of the day, you have to deal with that. Weve been living beyond our means as a country for too long and at some point, you have to pay a price for that. Where does that leave you with your view of bonds . I mean, a lot of people you talk about storing up future bonds. Where does that leave your view on the fixed income at the moment in the shorter term . Sure. Well, its a tough market. We hear from from our customers every day. Right now, just as an example, if youre an overnight rate, if you want to take on two years of Interest Rate risk, theres very little reward for going out and extending. So thats what has a lot of Bond Investors nervous about. The fact that the fed has expanded their balance sheet. Theres another concern. What happens when they start to unwind that . Its a tough market, but i think at the end of the day, a guaranteed rate of return, thats something thats very appealing in an otherwise uncertain environment. So i would say we tend to be bullish on bonds just in regards, just so much as their fixed rate of return and the fed is going to be very hardpressed to let rates rise. If you do let rates rise, first it impacts the housing market, which is a very tenuous recovery right now. Secondly, it impacts the cost of finance u. S. Debt so. There are a number of reasons the fed is going to have to try to keep rates low for a very long period of time. All right, stay there, well come back to you in a few minutes as well. Well look tecum side of the economy. The u. S. Holiday shopping season kicks off in the u. S. Retailers pulling off all the shops to draw shoppers into their stores. We put several promotions to the test when we come back. [ male announcer ] this december, remember you can stay in and like something. [ car alarm deactivates ]. Or you can get out there with your family and actually like something. The lexus december to remember sales event is on, offering some of our best values of the year. This is the pursuit of perfection. Can i still ship a gift in time for christmas . Yeah, sure you can. Great. Wheres your gift . Uh. Whew. [ male announcer ] break from the holiday stress. Ship Fedex Express by december 22nd for christmas delivery. These are the headline ts today from around the world. Angela merkel says the greek financing hole can be filled. The fbi launches a probe into alleged accounting issues in the hp autonomy deal. Mike lynch denies the accusations. And reports of a blast on a bus in tel aviv sends all futures high. Hillary clinton is continuing emergency talks with the middle eastern leaders today. We will be out to tel aviv for the latest in the next ten minutes or so. First, though, the u. S. Holiday shopping season is kicking off tomorrow as several big chains, including walmart and target, are going to open their doors just a few hours after americans have finished their thanksgiving dinner. Theyre rolling out several promotions to draw shoppers in that go well beyond the traditional free shipping. Courtney regan has been putting the Big Box Stores to the test. This year, sears is making the fiveminute pickup promise. If you make a Purchase Online and drive to the store, theyll have the item loaded in your car within a surprisingly short fiveminute window, even on black friday. Really . So we put sears, best buy, and Walmart Store pickups to a race against clock. Of course, our own undercover cameras were rolling so we wouldnt get any special treatment. Our speerexperiment starts onli. The purchase, a nintendo hand held game console. First round, the clock starts the moment we click buy and stops when the console is ready for pickup. Walmart sends us a ready for pickup email in 41 minutes. Sears shoots an email for pickup in just eight minutes. We never got an email from best buy, but when we checked the order status ourselves, it said ready. That was one hour and 15 minutes later. The clear winner in round one, sears. Now for round two, the actual store pickup. The clock starts when we hand over the receipt and stops when weve got the console in hand. Sears claims it can get you in and out fast, promoting the fiveminute promise. Lets see if they can do it. At the jersey city location, theres a kiosk inside to scan the confirmation email. Promise achieved. One minute and 44 seconds later. Next, walmart in new jersey, no time promises here. Our producer presents the receipt and gets the console in two minutes and five seconds. Now best buy. No guarantees on wait time here either, but after the receipt is taken, we have console in hand in just one minute and 58 seconds. Have a great day, enjoy. Sears wins begin. We did this before black friday, of course, and there is a Human Element involved, so the results could vary as the season picks up and volume increases, but so far, the programs do work, and the sears that we stopped at didnt have the car delivery. We had to go inside for the kiosk. But it was still the clear winner. Thats courtney with her view of the special deals that may be offered. Craig, final word from you on this. How is this Holiday Season going to shape up, and how are consumers going to fare over the next few months . Well, this Holiday Season i think is going to be, you know, moderate. Just listening to that report, i think were going to change our Family Tradition and start going out shopping on thanksgiving from now on. Not really. But i think when you look at the indicators for consumption and for retail sales, it looks to me like well see growth around 2 to 3 . Im interested the see what black friday sales come in. But at the end of day, black friday sales arent always a good indicator. I think when you look at growth and disposable income, that points to a moderate growth in holiday sales. So decent, but not great. Greg, thanks for that, have a good day and a happy thanksgiving to you as well. We dont do that over here. Still to come on the show, were going to be in tel aviv amid reports of a bus explosion. More when we come back. I just want to give her everything. [ whistles ] three words dad, etrade financial consultants. Theyll hook you up with a solid plan. Wa wa wait a minute; bobby . Bobby what are you doing man . Im speed dating [ male announcer ] get investing advice for your family at etrade. Weve had reports of a bus explosion in tel aviv. Joining us for more is chapman bell, reporter for nbc. Hes in the city. Can we flesh out any more details about what we think has happened . Ross, at this point, all we know is moments ago we heard from local media and a few other media sources here that there was a bus explosion here in tel aviv. Sources now tells us that initially, it bears the symbols of a terrorist attack. The hm hallmarks of a terroris attack. All we know, there are several wounded, but we havent heard any report s yet of deaths. Its important to say if this is a terrorist attack, it could really influence how this cease fire agreement were to go in gaza and also if it is, in fact, a terrorist attack on a bus, it would be the first one in about eight years here in tel aviv, so this could be potentially substantial. As of now, im hearing more sirens from emergency vehicles than usual here in town, so it does seem that something has happened. But at this point, were still getting information at this moment. This, of course, as Hillary Clinton, secretary of state, is in the region trying to help negotiate peace talks here and a cease fire at this point, and the egyptians have been very influential. So at this point, we dont know but it could hamper any peace agreement. Were just hearing now from a netanyahu spokesman while youve been speaking, who suggests the tel aviv bus blast is a terror attack, so lets follow on on what the implications might be. Well, its hard to say at this point what the implications could be. What we do know is yesterday afternoon we were very close to a cease fire to the Current Situation in gaza. Now, this could substantially hamper the cease fire talks, and also, as i said, its substantial because it has been rockets flying out of gaza into israel that started this conflict. If there are now attacks on buss in populated tel aviv, its important to remember there are troops at the border of gaza, israeli troops, so there could be the potential to start a ground invasion. However, theres no indication that could happen. But it is a potential. So far, its only been air strikes and attacks from the sea inside gaza. I guess well have to wait and hear more how they respond to this attack. Chapman, thanks. We have just seen a spikeup in brent on that news. U. S. Futures this morning, well show you where we stand with that. European stocks are being very, very flat. Right now down five points. The dow down 41 points. The nasdaq currently down 15 points after whats been a very flat european session so far today as well. Well take a short break. Still to come on the show, getting from point a to point b. Millions of americans will be traveling this Holiday Weekend to spend thanksgiving with friends and family. Are they going to face head aches on their journey . Well talk with Peter Pan Bus Lines when we come back. Youre watching worldwide exchange. Im ross westgate. These are the headlines today from around the world. Angela merkel says the greek financing hole can be filled as they fail to reach agreements on how to resolve the countrys sustainable debt issues. The fbi has launched a probe into the alleged accounting issues in the Hewlitt Packard autonomy deal. The first we heard about it was a press release. We utterly refute them. These are absolutely factually incorrect. Wed like to learn more about them. Im afraid the details havent been shared with us. Israel says a bus blast in tel aviv was a terrorist attack as pressure builds to find a cease fire agreement. Were counting down to the thanksgiving hollywood day. U. S. Futures suggesting a downward start at the moment for u. S. Markets right now. The dow is some 27 points below fair value. The nasdaq at the moment is somewhere below fair value. European stocks as well have been very flat indeed. The ibex down 19 points. So fairly uninspired in terms of directional trade. And that may be because of whats going on in america. The highways and biwyways are going to be jammed. This is the busiest travel day of the year in the u. S. If youre among those in the northeast who were hoping to rent a car, im afraid your luck may be out. Phil lebeau joins us on the phone now. Is there any chance of getting a car now . No. At this hour, if you dont have one, youre out of luck. This is the carryover effect from hurricane sandy. With so many vehicles that were either damaged or destroyed, its been for some time now a very tight market when it comes to rental cars in the northeast, in the new york, new jersey, connecticut area, rhode island. And as a result, what you have is a market where people who might in the past have rented a car in order to drive 300 or 400 miles, this time, theyre out of luck. Theyve got to find other ways of getting around. Thats one reason why here in the United States, especially in the northeast this year, there is expected to be an increase in the number of people who are taking a bus. I know we have the ceo from the Peter Pan Bus Lines coming on shortly. But thats what were going to see in the northeast. So its a little unusual. The good news, if there is good news, ross, the weather is okay. Youre not going to see massive long delays at the airports. Thats certainly good. Hopefully for those who are driving who do have a car, whether its their own or a rental car, theyll be able to get around rather smoothly. Phil, because of this shortage of rental cars, because of superstorm sandy, what has that done to premiums and what people had to pay in the northeast, if they are renting a car . Well, there have been a few complaints, as there always are going to be, whenever you have a tight supply like this. But there have been no cases that weve been able to find of true gouging, if you will, and thats always the concern when off situation like this. For the rental car companies, its their market. Its a sellers market. Theres a limited number of rental cars in the market. And theyve known for some time that theyre going to have a tight market. So thats what youre seeing this year. Oh, phil, good to talk to you. Happy thanksgiving to you as well. Do you do turkey . Do you do goose . Whats the lebeau Family Tradition . Turkey and plenty of football. Okay. Typical american family. Sounds good. Phil v phil, have a very good break. You, too. We will be speaking to the bus lines in a moment as well. Before that lets remind you of some of the other stories were following today. Eurozone finance ministers have failed in their quest to agree conditions that would have allowed the next bailout funds going to greece. Officials did agree to meet again next monday. They can always agree to meet again. Speaking after this mornings talks wrapped up, they insisted that they are close to some form of agreement. Its just the Technical Details needed to be worked out. In other words, they cant agree on extending majorities or official Public Sector involvement in any kind of debt writedown. Theres also some corporate news. Hostess brands is moving forward with a plan to go out of business. This is after the company says lastminute talks with its striking bakers unions have failed. To two sides were pushed into mediation in an effort to save more than 18,000 jobs. A Court Hearing is going to resume today in new york at 11 00 eastern. Hostess makes twinkies, wonder bread and drakes cakes. Research in motion may be losing a big government. The ntsb may switch to the iphones. The ntsb says blackberries have failed at inopportune times and the iphone would better link with the ipads that the agency is already using. This follows the u. S. Immigration and Customs Bureau switching to iphones last month and the atf made a similar move earlier this year. The values did close up about a percent in new york trade yesterday. Were going to talk more transportation when we come back. Well also keep our eyes on whats going on with brent. Its trending higher this morning on confirmation that there has been a terrorist attack on a bus in tel aviv. More when we come back. Can i help you . I heard you guys can ship ground for less than the ups store. Thats right. Ive learned the only way to get a holiday deal is to camp out. You know weve been open all night. Is this a trick to get my spot . [ male announcer ] break from the holiday stress. Save on ground shipping at fedex office. We just heard from phil lebeau, talking about the shortage of rental cars in the northeast corridor. How much might that benefit Peter Pan Bus Lines . They primarily serve the travel northeast corridor. Joining us is frank doherty, Vice President of operations for Peter Pan Bus Lines. Thanks for joining us. Have you seen more bookings this year post sandy . Because other methods of rental cars there are just less of them. Were seeing about a 15 overall growth in the business for this holiday period versus the same time last year, so yes, theres a lot of contributing factors, but weve seen a significant growth. Yeah. And, you know, whats the sort of average length of trip, where people are going, how much are they paying . Well, our footprint really connects people from most of the major city peers in the northeast. Most of the trips are probably between three hours to four hours long. And the price of our fare really varies. If you buy early, you get a ticket as low as a dollar on some of our schedules and the price progress as the buses fill up. Most of the time, you can get a ticket on our bus for probably about 25 to go between these big cities. Many spaces left right now, or are you pretty full . Were pretty full. The wednesday before thanksgiving is probably our busiest travel day for the entire year. We have instituted a reservation system a couple years ago thats really helped us manage our business and its helped our passengers, and were happy to say that thats worked very well. We have seats left in most of the corridors, but theyre going fast. Yeah. I dont know, are you like an Airline Business . As you get less seats, do the prices go up . Do you manage it like an Airline Booking System now . Not exactly. We manage the pricing by the miles traveled, and we manage the pricing by the time in advance that people buy the ticket. But we generally are cognizant of the fact that were an economical way to travel and thats what people are looking for, so we manage it based on the fact that we want to be priced as attractively as possible to the customer. Look, i know you have your own brand of buses. Im presuming you cant really can you lay on any more capacity or not for thanksgiving . Are you sort of limited to the number of buses that you have . We are limited to the amount of buses that we have, but we do layer on extra buses. We reach out to other bus companies, Charter Companies in the area that may have buses available, and as we sell out of our own equipment, well move in to some rentals that well put on to get people where theyre going. Whats the toughest challenge in delivering people to where they want to go over this Holiday Weekend . Well, the toughest challenge for us is getting them there happy and on time. The last few years, the traffic was really kind of spread out over the thanksgiving holiday. People are traveling more on the monday and tuesday, where traditionally they used to leave on the wednesday and that would cause some fairly serious traffic delays, but the last couple of years, people have managed their travel much better and the highways did we lose frank . We just lost frank. I was going to ask him about competition as well. I dont know if we can get him back. My apologies. I think we have lost him. Frank, sorry, we just lost you briefly. Our apologies about that. Weve got you back. I just want to ask you, have we got because weve got a weak economy, is that driving more people to use buses as opposed to trains or planes . Who are you competing against . Is it market share, is the pie growing . Whats going on . Well, as you put it, the pie is growing. It is market share. We are competing against all those entities. And what weve seen happen over the last couple years, weve done some things in our own business to capitalize on the fact that people are returning to the buses, and thats economydriven and fueled the price of gasoline and fueldriven, but when we get them back, our focus has been on retaining them and weve done some pro active things to compete in the market and weve added wifi to buses and outlets and plugins for our customers so they can use their technology on our coaches. So yes, its Market Driven and it is a byproduct of the economy, but the retention of those passengers is something were really cognizant of and weve done a good job with that. Yeah. I havent been on a bus in a while, so i was going to ask you what the experience is like now. Youve spent a long time traveling on airlines. What is a modern day bus experience like . I think youd be surprised if you were to get back on a bus and find its very similar to an airline now. Weve done a really good job of revitalizing our fleet and bringing new equipment in to the markets and most of the buss that you get on today are going to have leather seating, theyre going to have spacious seating. Youre going to have a stainless steel bathroom, a full amenity in the lavatory. And youre going to find that the ride is much better than it used to be. Youre going to be connected to the internet for your entire ride. Youll be able to charge your phone and use your electronical devices on the bus. Thanks for joining us. Although stocks did weaken after ben bernanke speaking in new york, the central bank doesnt have any tours available. The Economic Confidence of both Market Participants and the general public likely will be influenced by to the extent to which our political system proves able to deliver a reasonable solution with a minimum of uncertainty and delay. Peter schiff says bernanke and the fed pose a bigger throat the u. S. Economy than the fiscal cliff. If it wasnt for his accommodation, all the qes, we wouldnt have to go over the fiscal cliff. In fact, ultimately, because of what the fed has done, were going to have to go over a much bigger cliff as part of the solution to solve the problems that the fed helped to create by allowing the government to get so big. Well take a break. Still to come, spoke to one hp analyst who says the tech giant has more shoes to drop than immelda marcus. Stay tuned. [ female announcer ] with the etrade 360 investing dashboard. Free streaming quotes, all your investments, positions, and even your trade ticket are all on one customizable page. See the 360 investing dashboard at etrade. This is worldwide exchange. A recap of the headlines. Angela merkel says the greek financing hole can be filled. The fbi launches a probe into alleged accounting issues in the autonomy deal. Mike lynch denies the accusations. And news of a blast in tel aviv sends all futures higher as Hillary Clinton continues emergency talks with middle east leaders. Brent futures have continued to move higher after news of a blast in tel aviv. A spokesman for Prime Minister netanyahu has declared the blast as an act of terrorism. We got brent up to nearly 111, just came back slightly from that. But up pretty much a dollar on the news. European stocks today very flat ahead of the thanksgiving holiday. The ibex down 15 points. U. S. Futures indicated for a downward start at the moment. Were currently indicated some 36 points below fair value for the dow, the nasdaq currently indicated 30 points lower and the s p 500 indicated some three points lower. A reminder of the agenda in the United States. A pretty light one. At 9 00 a. M. , well have november market flash u. S. Pmi. At 9 55, the final report on Consumer Sentiment is out. Autonomys former ceo says hes been shocked by allegations of accounting fraud at the company he helped to form. Hp as been forced to take a 9 billion charge because of what it says is serious accounting improprieties, which was bought last year. In a separate interview, lynch says the trouble arose after hp took over the company. Weve been talking about a massive elephant in the room that wasnt spotted, and the reason it wasnt spotted is very simple. It wasnt there. It was done, in their own words, meticulously and great detail. And then they actually ran the company, including doing all of the books, for the last four quarters. Hp shares down 12 just about on tuesday, closing up a tenyear low. You can see for the last three months the down over 14 . Joining us now is the data analyst from san francisco. In the studio, ben rooney, tech correspondent at the wall street journal. Brian, lets kick off with you first of all. We heard from yesterday. Here we are first thing in the morning. What is your reaction now . Well, unfortunately, we downgraded the stock yesterday from a buyer to a neutral. Basically we did have a positive view prior to this obviously and we felt that there was a real good hidden value opportunity with hp. Unfortunately, theres just too many issues. Now you cant even rely on numbers at the end of the day, both in the past as well as in the future. So just didnt make sense to have a positive. So unfortunately, we had to downgrade the stock. So were pretty disappointed obviously. Yeah, you said this was an attempt at value play. Now is it just a value trap . For sure. Obviously 20 20 hindsight. What we thought was different about hp and why it wasnt a quintessential value trap is the numbers had bottomed for quite some time. Almost 2 3 of the way through this year. While other companies were taking down numbers, hp was actually keeping about 4 in annual earnings power. But up until the analyst day, that did not that was true up until the analyst day and the numbers started to come down recently. So really started to erode pretty quickly. Right. Ben, lets talk about this autonomy aspect. Its another big part of the writedown theyre taking. Theyre saying hardware sales are reported as higher margins. Longterm deals were reported as short term ones. I think you have to look and see what mike lynch has said about this. He makes the point that during the whole Due Diligence process, that hp, in his words when i spoke to him last night, said they threw everything at us. So he does have this argument which is if there was all of this going on, how come he says they put 300 people into that Due Diligence. How come that wasnt spotted in the period when they were doing this Due Diligence . And its a pretty fair question to ask. Would it be fairly easy to spot . Ill ask brian as well. You would imagine so. Im not an accountant, but, you know, if you look at the size of the writedown that hp is doing, and effectively, they are laying the blame almost entirely on autonomy, youd think theyd spot that. What do you think, brian . Its pretty clear, people were astonished by the price they were paying to begin with, just on the ordinary financials. From an execution standpoint, it did not pan out. If youre taking into consideration other well, large, fraudulent issues in the past, you know, these go on for many, many years. Sometimes theyre very difficult to finally uncover, but i think it only is a matter of time before they are actually before the truth comes out or the accusations are proved false. So i think its going to be a situation where we have to wait to see what happens. Brian where does this leave hps management at the moment . You know, pretty much in a very difficult position. I think from an investment point of view, it almost is uninvestable at this point, because you cant really i mean every time management opens their life, the stock seems to be down another 10 . I think you mentioned before, more shoes to drop than imelda marcos. Its a very frustrating situation. We can no longer support what theyre trying to do on their timeframe. Ben, were now going to get an official investigation from the United States into the autonomy deal. Where do we go . And at this end as well. Mike said no one has been in touch with him. Thats his claim on the whole thing. That at no point no one has spoken to him. We have to wait now for books to be open, for the investigators to go in. Either way, when this thing pans out, someone is going to end up looking very bad indeed. Its not going to end prettily. Presumably, hp will try to get some of their money back. One assumes so. Theyve already said that. Theyre going to look to recover what they can. You know, its the lawyers, im sure it will drag on for quite a long time. Thanks very much indeed for that. Ben rooney, brian marshall. Now, plenty more to come. Squawk box continues its countdown to the state side of u. S. Markets ahead of thanksgiving day. For all of you in north america, wed like to wish you a very happy thanksgiving. Viewers in europe and asia, we will be back tomorrow with a special extended version of worldwide exchange. But right now, youve got a few hours left if you havent got the turkey. Squawk box continues here on cnbc. [ male announcer ] this december, remember what starts with adding a friend. Could end with adding a close friend. The lexus december to remember sales event is on, offering some of our best values of the year. He pursuit of perfection. Good morning. Todays top stories, no deal. They fail to reach an agreement to release the countrys next bailout payment. Hostess will proceed with a plan to go out of business after lastminute talks with striking workers broke down. Its the final full trading day of a holiday shortened week. Wednesday, november 21st, 2012. Big macys day parade is tomorrow. Squawk box begins right now. Good morning, everybody. Welcome to squawk box here on