Transcripts For CNBC Worldwide Exchange 20121203

In virgin atlantic. Delta is amongst the frontrunners. Comes around quickly. December, were already here. Not long before christmas and we have the november final pmis out of the eurozone confirmed at 46. 2. That was the flash, 45. 4 was october. So slightly higher. The highest since march. But 46 still deep in contraction territory. Output numbers, 46. 1. So thats going in the right direction. And the final manufacturing pmi export orders 46. 4. Again, a tick higher than the 45. 9 flash, the highest since march. So the contraction activity easing to an eight month low if you can explain away like that. Eurodollar 1. 3026. We did gets a high as 1. 3048 which would have been a six week high for eurodollar. Joining us for more is alan capp, head of credit straebtegyt lloyds. Alan, lets get your reaction. The number is going in the right direction. Does it make much of a difference . Right now the equity markets have had a great run. Theyre looking a bit overstretched. So im strul link to see how Financial Markets will respond positively to this. I think we need something bell to repel us forward. What do these numbers translate into in your forecast . What these are suggesting to us is manufacturing will not be able to support any growth in the eurozone, so it suggests that the downturn in gdp is likely to continue into fourth quarter, remain in recession and thats obviously a struggle on global growth, as well. And we stay in recession in the First Quarter . Were now in december. There are some signs particularly the china pmi numbers and what weve seen from gdp recently that maybe some of the markets key to u. S. Exporters may be showing signs of stabilizing, maybe get to growth. So that might mean moderation in the eurozone might ease in the First Quarter. But again, this is all dependent on what happens with that ongoing debt crisis and any step back in resolving that would obviously have a knockon effect to the economy. Im wondering whether germany as we look at theyre just above sort of recession territory at the moment. Im wondering whether if they get better growth out of asia, that will offset the weakness that theyre seeing in europe enough to keep them above the pencil line. What weve seen so far with todays numbers is exports are declining very sharp. Theyll need asia and the u. S. To offset some of that demand weakness, but again, the biggest market for most is the euro zone. If the eurozone is performing badly, that will have a thokon effect for those countries. Theres a number of strategists saying after the u. S. Has sort of led equities for most of the year, theyre now saying europe is the place to be. From i think really the question you have to ask yourself is when cash, equities, credit, government bonds, where do you want to be. And equity in my mind mind is absolutely not. You need good Growth Numbers to justify the equity markets going up. Now, i think theres a lot of investors looking at the yields on ghoechlt bonds or credits and thats motivating them to move into equity. I think the numbers are actually going to be relatively small. And i would certainly advocate against doing that because as you were saying, weak numbers, unless you see some much stronger growth, its hard to justify current valuations. Both of you stick around because well talk about china in just a second. Today well be out in tokyo, as well, to assess what options the bank of japan really has. Policy will not be dictated by market opinion. Well take stock of britains progress towards deficit reduction, this ahead of the chancellors autumn statement. Senior fellow for international economics. Will the numbers live up to the expectations. Meanwhile, over in ghi narks the mainlands factories are crank out more goods at the fastest pace in month. Chinese factories appear to be recovering. The hsbc pmi, a private gauge of manufacturing, and the governments official pmi, both show a steady improvement for the industry in november. The hsbc pmi final reading came in at 50. 5, the quickest expansion in over a year. The industry saw a pick up in new orders as well as stronger exports thanks in part to christmas demand. The concern is about the the unevenness of the recovery. The sub indices for employment as well as small and Medium Sized Companies ticked downwards and that suggested to some that the recovery is mainly led by investment in stateowned enterprises. A bigger worry is about the outlook for external demand especially in the United States. People here are worried about the fiscal cliff and the potential impact that it could have on American Consumers as well as the factories here. Eunice yun, cnbc, beijing. Are those fears right, is the the expansion just investmentled and therefore not worth as much and that seems to be the insinuation . Also i think china and china manufacturing has always historically been investment led anyway. Much Less Consumer dependent than what we see maybe in europe and the u. S. But, yes, that meeting is just back into expansion territory. Thats good in itself. Global growth will be looking for china to be going ahead. So good but modest. So any demand elsewhere could have an impact on china. Have we had the china slowdown . Weve had mosts of it i think. But again, china is very much in recent line with the cycle of the Global Economy and well be looking for some of the big growth engines to help them, as well. Whats the chinese swing factor for investors . Sitting in Europe Clearly its something we focus upon. Is it a driving force, absolutely not. The tail risk i think is what scares us. So do i feel heartened by the numbers in china, yes, its kind of a positive. But theres more important things. If youre worried about synchronized global slowdown, you need one begin sort of spluttering on a little bit better. The difficulty is that its a very large consensus among the investors in europe that come what may, theyre not going to feel terribly positive about the outlook for the eurozone. The best Case Scenario is people who have maybe 1 , 1. 5 , 2 growth and search weaker in the periphery. As a result, you need something quite astounding out of china to make you feel better. You talk about tail risk. What is the tail risk at the moment . Well keep giving greece money because we cant afford not to. Were still waiting maybe for the ecb to step in. What is the till rask . Anything we didnt know about . Lots of things we dont know. Thats the problem. It is the unknown unknown as they say. I think greece is probably too small to view. I think what really bothers me is spain which i think clearly bothers the whole market. The question, a growth going to fall off a cliff or whether it muddle through and a bailout will be sufficient. As you say, we dont know the answer to that question. That remains the tail risk. Until we do get close to a resolution, im not going to turn massively bullish. Whats your view on that . I think i go along very much with what hes saying. What is your view on what happens to spanish growth . I think spain has a lot of problems at the moment. Its not seeing a lot in the domestic market. Not seeing it move toward an export. In which case spanish growth is going to be very, very weak for some time to come. All right. Good to see you. Thanks very much. Alan will stick around. Time to bring you todays Global Markets report. Lets go to asia for the update. That upbeat pmi data failed to lift Greater China markets. There is pessimism over general lack of policy and also fears that over 800 companies lining up for ipos could further drain liquidity out of the markets. The shanghai composite extended losses in the afternoon to end lower by 1 . We saw heavy selloffs. Hang seng initially hit a fresh intra day high, but weakness in the mainland dragged it lower. Among the big losers were pc maker and mainland oil majors. The rest of asia gained ground. The nikkei at a seven month high. Exporters continued to gain thanks to the yen weakness. Construction stocks also surged on a domestic repair project and also their exposure to china. Elsewhere the kospi finished higher by 0. 4 . In australia, banks rose on expectations of a rate cut. Defensive stocks also helped you push the asx 200 higher. Sensex trading lower by 0. 3 . Back to you. All right. Here we are european stocks, first trading day of december, an hour and ten minutes in to the session. Not bad last month. Ftse up 1. 5 . Were weighted to the up side a little bit more than 7 2, advancers outpacing decliners on the stoxx 600. Ftse up 1. 5 last month, dax up 2, contact 340 up nearly 4 , xetra dax up 0. 4 . The ibex fairly flat. Lets show you where we are with bond rates, as well. Well take a look at gilts. Slightly lower, 1. 77 . Big day for uk. Manufacturing pmis out for the month of november. Italian and ten year sbpanish yields are also lower. Down on the greek announcements, but substantially below 6 . Ten year bunds 1. 37 . Those yields slightly higher. On the currency markets, we talked about this eurodollar six week high. Below that at the moment, but not by much. Dollaryen moving off the 7 1 2 month high at 82. 17. Aussie dollar weaker despite the good chinese data. Dipping below 1. 04 earlier on. We had retail sales data that was a little bit disappointing. Sterlingdollar back above 1. 60 as we wait for the pmis. The most searched terms apparently of 2012 were the u. S. Election and iphone 5. And while the most searched person of the year was kim kardashian, this is according to yahoo search engine, Kate Middleton and political polls also made the top ten list. So here is a simple question for you today. What dunk were the most interesting stories this year or the most interesting story, the election, the owe almost picks, the ongoing saga in greece. Let us thouknow. Worldwide at cnkrchlt nbcnbc. Co. Starbucks is changing the way it pays taxes in the uk this after Harsh Criticism of tax avoidance from the British Government. More when we come back. Having you ship my gifts couldnt be easier. Well, having a ton of locations doesnt hurt. And a santa to boot [ chuckles ] right, baby. Oh, sir. That is a customer. Oh. Sorry about that. [ male announcer ] break from the holiday stress. Fedex office. Words of caution from the bank of japan chief at forum in tokyo. The governor said central bankers need to take a long term policy perspective if they want sustainable growth. He quoted saying Central Banks must not look for markets to guidance and not overreact to expectations. This after the bank of japan has been the center of a heated political debate ahead of the election. A special report on how japanese lawmakers have been threatening to invoke the Central Banks independence unless the 130yearold institution does more to support growth. Joining us is chief correspondent for policy at reuters. Thanks for joining us. Is independence under threat . Is there such a thing really as an i said central bank . Because surely they have to set policy in conjunction with the government. I think the bojs independence is important and politicians understand that, but what politicians want is more coordination and bolder steps from the boj. And these threats made by the politicians are difficult to be realized given that parliament at both houses need to approve any law to revise the boj law. But it would at apply pressure to take worldbolder steps to pr any revision to the law. Could they just change the mandate . They could, but its probably unlikely that the mandate will be changed. Focusing on price stability. Some politicians want the mandate to be changed so that job growth is added among their policy objectives. Thats unlikely. But the government might ask the boj to set their inflation target at a higher rate than the current 1 , most likely 2 . Why is a change of mandate unlikely . Theyre unhappy with what the bank of japan is doing and youre a democratically elected government, whats wrong with changing the mandate and get on with it . I think whats happening in japan is that inflation is there for so long, that changing any mandate dramatically without having the clear means to achieve it would just undermine the credibility of central bank as well as politicians and their policy making. So i think politicians are very much aware of that, so while they do apply stronger pressure on the boj, they know they need to convey to the public a mandate that would appear achievable. And for now, i think 2 inflation is the best they could do given prices have barely risen for the past decade. This is what im struggling to understand. The bank of japans kept rates very low for many, many years. Its cared out qe and as a result has engineered low long term rates for many years, as well. What more can we expect from them . Thats exactly what the boj is struggling to answer. I think its pumping so much money for such a long time that there is really not much they can do unless the time bought by the ultra easy policy is spent by the government to pursue structural reforms. But there has been very slow progress on this front. So the boj could continue to buy more assets, but the question is will it fill it ter through to broader sectors. Thats why the boj is creating new tools to try to encourage banks to put in more to companies. But so far, i dont think there has been much progress from that end. Whats going to happen after the election . The markets have priced in bolder central bank easing already, but after the election, well probably have a new government with a Prime Minister that wants more aggressive easing. But i dont think dramatic boj policy loosening will happen immediately. I think well have to wait until the boj gets a new governor for real change to happen. Might that happen . It depends on how much pressure the government applies and what more the government wants out of the boj, despite expectations of aggressive easing or bolder steps by the boj, progress might be slow because despite the opposition leaders very aggressive talk about the need it for monetary easing, politicians understand that doing unorthodox steps might backfire given japan has a very huge step tile which exposed them to a risk that japans bond yields might spike if they force the boj to buy bonds too much. So, you know, there is a chance, pretty good chance, the boj will do something bolder, but it might take time. All right. Thanks very much indeed for that. Chief correspondent for policy at reuters. Meanwhile from japan to india. Also reporting improving Manufacturing Activity last month. The details from mumbai. Good to see you. What are the details . 80 basis point improvement in the index itself. Encouraging picture is that its being led by new order, particularly exporter orders. So that was the encouraging bit. But the problem factor being both output and input have again given. Input rising to about 60 from 58 1 2 and the output prices also to 56, thats a sharp jump. And thats the negative. Equity markets waiting for the rba to do something in terms of rate cutting. The Manufacturing Activities picked up a bit. On the flip side, inflation is not showing signs of any moderation. So that will be the key on what the rba does going forward. So, yes, picking up, but a mixed bag because inflation is not moderating. So that seems to be a slightly negative read through december spite the pick up of momentum. All right. Thanks for that. The parliament faces a crucial test this week on whether to allow global supermarket giants like walmart to set up shop in the country. Shares their highest in more than a year after the government ended days of political gridlock. But analysts warn market fallout if retail reforms fail to survive the vote. Gavin, thanks for joining us. Politics is such a big influence on how investors feel about india. Are they going to get it right this time or not . I think they are. Frankly, i think the fdi move should make to parliament. I think this is basically the oppositions way at getting back at the government and stalling progress. But i think fdi is pretty much through as we see it. So december high school toirs beingly has been a good month for indian equities, but is it going to be a good month this year . It will be a good month this year, as well. Momentum from Foreign Investors continues to be extremely strong. The highest in asia. So i think things are still looking very good. In fact we just released an interesting report last week where in we did a survey of the last 32 years for the sensex and we discovered that december has indeed been the best month for almost 90 of the time. You were talking about december. One of the key questions which i get asked by investors in europe right now is what are the prospects in the emerging markets. And it keeps coming back to india. 2013. If you had to give a view on where the sensex is going to be and the investments from pekts either for credit or for equities, what would your take be . It would be very positive. My view is the sensex has at least another 15 to 20 move through the next 12 months. I think the momentum besides foreign portfolio flows is the fact that the vol is now a near a high. There is increasing momentum from Retail Investors. In fact Retail Investors through mutual funds have sold almost 9 billion. And one of the larnest retail brokers in india. So we have a pretty good sense of what our investors are doing and over the past two months or so as the reform process has kicked off, weve seen a lot of retail interest returning to the market, which is obviously a big positive. And right now the rbi under pressure on easing rates in the coming quarters. Is that going to happen . Good question. I think the rbi i think now needs to come to terms with the fact that inflation is here to stay. Its sub bortubborn and not goin significantly anytime soon. So i think the rbi has started to ease only liquidity. But i think the market is now starting to price in at least a 50 basis points cut between now and the end of the fiscal year which is the 31st march. All right. Thanks very much for joining us. Good to talk to you. Pleasure. Joining us in the studio is senior fellow and former member of the bank of england Monetary Policy. Good to see you, adam. Well look at the data and talk all things uk. The manufacturing pmi 49. 1. A little bit better than the reuters poll of 48. New orders pmi at 49. 7. Again, better than the 47. 7 in october. So Manufacturing Activity shrinking less than expected in november for the uk, although the sector is still in a pretty precarious state. Orders still in contraction territory, as well. So lets get reaction to that. Sterling steady at 1. 6045. When you were at the bank of england, what did you place on these numbers . Month to month blips we tried not to Pay Attention to. So you cross check the movements over time and what other data points youve got. Something like this where its been above forecasts a couple times in a row and where a number of other indicators including the revised gdp are looking pretty good, you begin to say, okay, theres something here. Theres a bit of a disconnect between the pmis and the hard data. So how do you define the truth between those two . On the consumer side, its actually a bigger divide than production. The manufacturing pmis and hard data actually at the time to correlate pretty well. But you have to interpret everything out there and my take is theyre getting a little too down beat for the uk right now. The two are contradictory. Were still even if theyre too down beat, theyre predicting things that are miserable and im merely saying a week recovery. A weak recovery says do more. Marvin king says dont be surprised if we get another negative quarter. Is that too down beat . I think so. Even gdp numbers quarter for quarter arent things should you take that seriously. But i think that were going to be doing much better than that on average over the next year. Much better means i think well average growth in the one plus percent range, maybe 1. 5 if euro comes out okay over the next year. When you said growth one plus range, looking at the size of the budget deficit, i would imagine the markets will still remain agitated about the deficits if growth is so slow. What will make the markets feel better . Would it be some serious cuts in the deficits would which would undermine the one plus range or the range being broken on the up side . Obviously being broken on the up side would be great. That solves a number of problems without anybody having to do anything. But more realistically, im not sure i buy the idea that what the markets are upset about are the deficit. Because if we look at the data, you saw sterling going up, sterling has been solid since end of 2008, gilt rates remain very low. So if you look at innovations and pore, the market seems to respond more to bad news on gdp than bad news on deficit cutting. So i dont view the mar are ketss as uncertain that much about the deficit. Theyre uncertain about growth prospects, which is a different matter. Do you think therefore supposing the uk were downgraded over say the next six months, Growth Numbers at 1 , we would say the equity markets start to recover even if eurozone growth remains vulnerable . Could we stay optimistic . I would like to think so. The record has baeen theyre not the be all end all. Right now unfortunately were in a world where almost every aaa is under threat of downgrade. So the idea as long as the growth would to me trump. So should i buy uk names . In equity markets i never triz to individual because the individual are more important than overall. Alan, well let you go. Thanks for that. Adam, youre sticking around for another half hour. You stick around, as well. Still to come, caps lore has admitted that its taking longer than he thought to bring down the countrys debt levels. Well talk about that. Chinese factories pick up the pace hitting multimonth highs, both in expansion territory. Rhetoric ahead of the banking union. Says the euro should be traded within the block and not the city of london. And white house and congress may need to call the auto club to jumpstart budget talks which has stalled on discussions over taxes. Plus Singapore Airlines confirms it is in talks to sell its 49 stake in virgin atlantic. Reports suggest delta amongst the front runners. Equities up in the month of november. Ahead of the u. S. Open, up by a quarter percent for the ftse. Quarter for the ibex, as well. By and large the pmi numbers have been slightly better than expected. The revision on the eurozone pmi aunt wasnt on the headline composite number, but new orders were a little bit better. Still a long way away from the 6 mark. Gilt yields steady. Manufacturing pmi better than expected. Eurodollar hit a six week high. Dollar kren moyen moving away f 7 1 2 peak. Talking about the uk, George Osbourne says theres no turning back on austerity just days ahead of his annual statement. He continues to resist opposition calls warning that lack of budget discipline would have serious consequences for the british economy. Going back on our commitment to deal with our debt would be a complete catastrophe for britain and would put us into the place where some european compauntrie are at the moment. Adam is with us for the remainder of this section of the show. Is he broadly right with that statement . No, hes not. The chance lar lets not go through the past, but lets look at the present. The tactics theyre taking are throwing growth and revenues. And so the extent of austerity and form is swlf defeating. More overthe markets are not going to make the uk into greece. Theyre responding to growth news. And whether its the u. S. Fiscal cliff, people negotiating in greece, or in the uk when finance ministers say, oh, theres a catastrophe around the corner, there usually isnt. And saying that makes things worse. One cant deny there could be a set of circumstances in which the bond vigilantes wake up and say dumpster link. But at the moment theres no reason to think thats been happening. Sterling has been stable for three plus years now since the end of 08. Interest rates remain low. Plenty of opportunity for capital to leave the uk. Its not. And meanwhile the Growth Strategy is missing because the tax strategy is incompany here ept. In the end, austerity is only good insofar as youre actually paying for the right things an cutting the right things. So we cut investment spending but havent cut welfare spending. Exactly. Which is the wrong way around. But even then if you want to do tax cuts to stimulate the economy, why are we doing tax krets. Thats been on the table forever. Why do you think were not . I honesti honestly dont kno. Investment trax credits are things we have precedent for in the uk and other countries. Theyre business friendly. If you want to be business friendly, which most of us do, theyre inherently temporary because youre trying to get people to move forward. It is strange when David Cameron spoke last week, saying were putting growth in every ministry, there is going to be a growth agenda. So all this talk, but not followed up. Doesnt seem to be a company hair rent strategy at all. And i cant pretend to know what internal negotiations lead to that but a little bit of broadband hear and get off wealth incentive there is is not Growth Strategy. Growth strategy is recognizing the uk has had an enormous shortfall of investment are and it existed even in the boom years. And has gotten worse since 2008. The Financial System is a major part of it. And so you have to think about what it is thats going to get business investing. And obviously the Austerity Program and the government sticking to it has not led to a bonanza of business investment. With that backdrop, what happens to npc policy . Have we seen qe or not . Is that the end of qe . I think projecting out of three months of blackout, i think projecting forward talking about what i think is going to happen rather than what i want to happen, i think theyre not going to do much more. They may at the margin did a little bit more qe if theres bad news. But they wont be taking the steps they need to do which is to buy nongovernment bond assets, which would be to use their new powers to put competition in the Banking System which would be to try to coordinate with the government getting a Business Bank launch, securitization of debt. They wont do any of that. I think its not so much just whats happening on the fiscal side. A lot of my former colleagues have talked themselves into this policy defeatism that qe doesnt work or it hasnt worked or that slow growth has to be structural. I think thats all wrong, but i think thats where theyve talked themselves into. Does it change when mr. Carney takes over . Is he the right man on paper hes a central banker and as i wrote over the weekend, he like governor king has incredible toughness, work ethic, sxermt teaexpertise. But thats not everything. Because if that was the case, everything would be wonderful. One would hope the bank of england governor has those qualities. So the question is can he work effectively with the banking vukts. We have a Committee Structure now for financial policy and for prudential regulation which the bank of canada does not. More importantly, when you say what are they going dto do, the challenges mr. Carney faced as governor of the huang of england were frankly much easier. He deserves credit for not messing it up, but you had a commodity economy with good demographics where the Banking System was safe because they had already been through a horrendous financial crisis a few years before and had locked everything down. And then capital inflows. So nothing that bad could happen to the i dont mean to make light of his record, but its a different set of challenges than what hes facing now. Despite the fact that i worried putting this much sort of bidding on one person, again, not specifically mr. Carney, but when you have the government panting after any one person saying theyre the one unique person for the job and well pay them anything to get it, you worry that person gets too empowered. Is the new job too big for one person . I think in the interim they would have to delegate a lot because the integration of the Bank Supervision back into the bank is a huge process. Current person Andrew Bailey is terrific. But its a huge thing. Like merging two companies. Completely different cultures and completely different expertise. And at the same time, you have these committees to deal with. Theyre building new ground as they go. You make me feel like not messing it up would be an achievement. In general, but going back to where you started, will they do more than whats necessary, and i fear in addition to all the reasons my former colleagues are giving for why they wont do more, hes going to have all these distractions and other emif a cease. So i worry Monetary Policy will get shelved where it could still help. Well take a pause. Meanwhile in japan, a terrible human tragedy involving a tunnel collapse is having business. Thats right p the deadly collapse of an express way tunnel may seriously impact the logistics and travel industries here. Police have confirmed the deaths of nine people on the tunnel accident. Concrete ceiling slabs collapsed in a section of the tunnel stretching for around 110 meters trapping vehicles and starting a fire. Now the tunnel could be closed for a long time to clear tons of debris and tone sure safety. This would pose a big problem as the tunnels see a lot of traffic and volume increases toward the end of the year. Parcel delivery firms are having their drivers make detours and are worried deliveries may be delayed. Operators of Bus Companies are facing the same problem. The situation could get worse as the accident may lead to temporary closures on other expressways due to tunnel inspections. Many would agree, however, that the traffic delays are a reasonable price to pay for greater safety. Back it to you. Thanks for that. Have a good evening in tokyo. In asia tomorrow, Interest Rate decision day in australian. Majority polled expect a 25 basis point cut to 3 . Well find out if theyre right at 4 30 a. M. Cet. Otherwise a fairly quiet day. Hong kong london forum will be held, discussing issues like liquidity. And a strike at the port in long beach could cost the u. S. Economy 1 billion a day. More details when we come back. I always wait until the last minute. 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 ember 22nd for christmas delivery. Youeuro slightly firmer agt the dollar. This is bank of france governor says the city of london should no longer be the main trading hub. Is he whis links in tling in th is it doable . I think if you look at the figures they speak for themselves. At the moment 40 is actually this london compared to maybe 3 in france, 2 in germany, and its not just that london dominates, but that the long term trend is actually away from france and germany and towards london. So a tough challenge for the ecb. So even if eurozone banks i suppose can they lean on eurozone banks to move their trading floors to paris and frankfurt. I dont know. Thats true. And the fact is with currency, its not just about trading the euro, its what you trade on the other side, as well. London is the center for fx liquidity. Thats the way it is. So the direction of things is not favoring anybody moving their trading floors towards mainland europe. Fair enough. So what happens to the euro . Were sort of near a range high here at the moment. And how much problems are there going to the at 1. 3050 . Its an interesting level. 1. 3080, as well. A lot of this will depend on what we get this week on fiscal cliff negotiations. Risk appetite is really be holden to that at the moment. And the reality is were more likely to see Congress Delay another week or two before they really get going on the negotiations just before christmas. And so against that kind of backdrop, eurodollar may struggle to break higher and definitely to break lieuthrough 1. 31. Adam, youre in washington. How do you view fiscal cliff discussions . I was pretty optimistic until about three days ago. My sense was republicans had lost enough ground, they wanted to get a new deal before they got weaker. They admitted that there has to be some revenue. Meanwhile the obama team led by secretary geithner are comfortable with at least 2 1 what they would call entitlement cuts. So there was a lot of ground for a deal. Unfortunately, i think the threats from some Democratic Leaders that maybe its okay to go over the fiscal cliff, im worried some actually believe that and thats one thing that scares me. I think theres a deal on the table, get a few years deal, its only if obviously the Republican Caucus could do something stupid, but owes otherwise my main word is the dems decide they want to play for a long term deal that it all has to be resolved right now and its worth the risk and i dont think its worth the risk. Adam, always good to see you. Thank you very much indeed. We move on, stay in the United States, strike at the port of Los Angeles Long Beach is entering its seventh day and some analysts fear it could cost the u. S. Economy 1 billion a day. It means lost business for truckers and others who rely on the port for their livelihood. Combined they are the nations busiest handling nearly 40 of impossibles from asia. And google customers across europe will be able to access the largest repertoire of music in the world. The fruit of a collaboration between internet giant and european collecting societies. Kelly spoke to the director of Strategy Resources and asked him how instrumental google was in setting up the licensing platform. To facilitate their access and want to offer to every music provider to europe and perhaps the world. So access for all digital partner that have some services in europe. We should give you perhaps the task of figuring out the euro zone because youve manned to come together at least with regard to music. How difficult was to overcome those obstacles that those national ob kells that it seemed it held up your counterparts when it comes to trying to figure out for example budget issues . Thats the beauty of collection societies and collective rights that we have in europe. We are already representing 100,000 composers and writers, and this is of course much easier than if you are a Small Company representing a small number of organizations. So through this organization in europe, its much easier to come to a coordination between italy, france and spain that if we had little representative. So europe with this model of collection societies is making it much easier to implement in other countries. And what do you expect this to mean for the Music Industry as you look ahead as youve cleared this obstacle . Our aim is to make sure that the Digital Music market is developing. Take the work of people talking to the consumer and what we want is to make our content more available so that they can stimulate more the market and give some interesting value to the consume are. So our aim is to make the digital market growing even faster. And what model did you have in mind if any or did you have to create the model here . Well, you know, we are here to make sure that all digital platform we are here to support them. So whatever the models they ca imagine, were here to find a way to find the connection between our consumer and creators. Were here to facilitate and make sure at the end the music market is growing again. Still to come, u. S. Lawmakers stall on the fiscal cliff with just 29 days to go before it takes effect. The late fles washington. Here are your headlines. Chinese factories pick up the pace in november. Both in expansion territory. Another month of contraction for manufacturing in the eurozone. Still in the grip of the crisis. The white house and congress may need to call the auto club to jumpstart budget talks which are now stalled on discussions over taxes. And Singapore Airlines confirms its in talks to sell its stake in virgin atlantic. Media reports suggest delta is amongst the frontrunners. This is the start of your Global Trading week. Hope you had a good weekend. Not a bad month for european equities. A little bit mixed. Down 2 over the last two months. Nasdaq up just 1 last week. Today were slightly higher. The dow is about 7 1 2 points above fair value, 6 1 2 for the nasdaq composite, and we are pretty much on fair value for the s p 500. This is where we stand right now in europe. The ftse global 300 steady. Just up four points. European markets had a much better november than u. S. Markets. European equities outperforming the u. S. Today the ftse 100 just up ten points. Pmi better than expected for the month of november. Ibex up 0. 2 . Take a look at the yields. Still going down. Ten year italian yields below 1 4. 5 . Standish yields 5. 23 . A long way from that 6 mark. 4\. Standish yields 5. 23 . A long way from that 6 mark. 4\ 4. 5 . Standish yields 5. 23 . A long way from that 6 mark. 4\. Standish yields 5. 23 . A long way from that 6 mark. 5. Standish yields 5. 23 . A long way from that 6 mark. 5. Standish yields 5. 23 . A long way from that 6 mark. Rajoy saying he wont rule out asking for assistance, but at the moment he wont be tempted with yields like that. And uk yields just a little higher now post the pmi numbers coming in better than expected for manufacturing. Still below 50, but up to a 49 mark is where we stand. Currency markets, sterling firmer against dollar. Aussie dollar slightly weaker. Retail sales a little weaker. Dollaryen down from the seventh month high. Eurodollar not far away from the six week peak of 1. 3048. Lets check in on whats going on what has happened today in asia. Thank you, ross. Asian markets kicked off the week on a mixed note as chinese investors shrugged off upbeat pmi data. There is lack of policy and fears of over 800 companies lining up for ipos could further drain liquidity. We saw heavy selloffs in liquor manages, banks and miners. Weakness in the mainland dragged the index lower by over 1 . Among the big losers were internet giants, pc maker and Main Land Oil majors. The rest of asia gained ground. Nikkei ended at a seven month my. Exporters continued to gain thanks to the yens weakness on easing hopes. Construction stocks and developers also outperformed. Elsewhere south korean automakers and Technology Majors lent support to the kospi ending higher by 0. 4 . In australia, banks rose on expectations of a rate cut. Defensive stocks also helped push the asx 200 higher by 0. 6 . Sensex lost 0. 2 today. Back to you. Thanks for that. Have a good evening there. Meanwhile in china, mainlands factories are printing out more goods. Eunice has the details in this report from beijing. Chinese factories appear to be recovering. The hsbc pmi and the governments official pmi both show a steady improvement for the industry in november. The hsbc pmi final reading came in at 50. 5, thats the quickest expansion in over a year. The industry saw a pick up in new orders as well as stronger exports thanks in part to christmas demand. The concern is though about the unevenness of the recovery. The sub indices for employment as well as for small and Medium Sized Companies ticked downwards and that suggested to some that the recovery is mainly led by investment and state owned enterprises. A bigger worry is about the outlook for external demand especially in the United States. People here are worried about the fiscal cliff and the potential impact it could have on American Consumers as well as the factories here. Euni eunice yoon, cnbc. New export orders did hit their highest levels since march. But the sector pmi still deeply in negative territory. Question marks remain about the timing of any recovery. Eurozone finance ministers are meeting yet again in brussels today. Theyll hear details of the greek bond buy back plan. Prime minister says Pension Funds wont take part, but that banks should benefit from the vol taker buy back thanks to a liquidity boost under the proposed program, athens will use bailout cash to purchase around 30 billion euros of debt for a lesser price than if creditors had held bond until maturity. Rajoy has warned it will prove complicated to achieve the deficit target. Says he couldnt guarantee there would be no further spending cuts and that he would not have any doubts about using these omt programs should actually they need to. Patrick garvey joins us for more. Thanks for joining us. Just looking at where spanish yields are at the moment, sort of 5. 2 handle, i cant see spain rushing for assistarizon y too many soon. Thats right. Its been a fantastic few months starting off in july when draghi first talked about the omt program or gave hints about it. And its carried out to the past couple of weeks. Spain has been doing okay. For as long as i can continue, there isnt really any prospecs of spain asking for help. But i think the market knows that if spain does ask for help, theres always the back stop of the omt and thats why spain is doing what its doing. So so far so good. Starting to get ahead of a heavy 2013 program. Will that throw out problems . I think theyre pursuing the right strategy. The big difference on this front between italy and spain is that italy has a big fall in redemptions next year when it takes off pressure for sly flex year. Spain has the opposite problems, a rise next year. So its technically done for this year and the reason its funding is to take some of the pain away from next year. And again these options get done and it isnt a big drama. They do have to get digested. But the primary dealers do take the bontds down and ill expect no difference different on wednesday. So for the moment, no pressure relatively speaking. And yet were now looking at the downgrades for the bailout programs, as well. So how does that play into things . The downgrade announced overnight was as expected. This followed the downgrade to france last week by moodys. The fsf has taken the standpoint that they need to be a top rated agency, not necessarily aaa, but they could find a way to make themselves aaa, but theyve decided to accept the rating of aa plus. It doesnt really change an awful lot. It wasnt a huge surprise. And as we go in next year, well have the composite. So it doesnt make the funding arithmetic any different. It doesnt change the levels dramatically because the market already can discounted these events. So whats the trade as we go into the prechristmas period . Whats the trade, where is the tail wind . The trade is to stay long risk. I think at some point over the course of next year, well have issues. My opinion is that we stay risk on through to the middle of january of next year. And one of the reasons for that is that we do have as usual a big payout of coupons and redemptions through january. Youve got about 100 billion of cash coming back into the market. So i think february is the month where we could have levels. Thats when spain could come under pressure and ultimately i do believe spain will have a plan and will ask for help, but for now so far so good and the trade is to stay risk on. Sdl tha thanks for that. Have a good week. The most searched terms of 2012 were the u. S. Election and the iphone 5, this according to yahoo . The most searched person of the year, believe it or not, kim kardashian. Besides those, the olympics, Kate Middleton and political polls also made the top ten list. So we thought wed ask you what do you think has been one of the most interesting stories this year. Let us though. Worldwide cnbc. Com. cnbcwex, rosswestgate. Think about that, let us know. As we take a break, but when we come back, well be in zurich. Ubs reported to be nearing a settlement with both british and american authorities over the manipulation of lie werblibor. Having you ship my gifts couldnt be easier. Well, having a ton of locations doesnt hurt. And a santa to boot [ chuckles ] right, baby. Oh, sir. That is a customer. Oh. Sorry about that. [ male announcer ] break from the holiday stress. Fedex office. Ubs is reporting theyre near a settlement over allegations some employees manipulated libor rates. Carolyn has more details for us in zurich. How will this pan out, carolyn . Well, this is all based on reports in the New York Times that came out overnight, ross. And the most interesting piece of information in that report at least i think is the fact that the fine for ubs in connection with the libor investigation could be higher than that that was given to barclays in the summer. Remember, barclays paid 450 million to settle that libor probe. And at the time that was a record fine. So now the new york teams is talking about a fine that could be even higher than that. Ubs in zurich told me they have no further comment beyond the fact that they have been fully cooperating with regulatory and enforcement authorities in this libor investigation. So we didnt get any confirmation from ubs whatsoever. But the New York Times does report that u. S. Officials are hoping to complete the settlement with ubs maybe middecember, but of course there could always be delays. Is scant, but ubs is probably looking at a very hefty fine and shares in zurich this morning are underperforming the broader market, flat versus the market which is higher by 0. 4 . Ross. All right. Thanks for that carolyn. And just a reminder, the headlines from around the globe, fiscal cliff negotiations have stalled on tax hikes. Treasury secretary geithner is confident that republicans will yield. Manufacturing activity in china speeds up in november. The eurozone is confirmed in contraction. And sink more airlines is looking to sell its stake in virgin atlantic. Delta reported to be amongst the frontrunners. Its the start of a new week. Is this the agenda for the United States. We have november ism Manufacturing Index due out at 10 00 a. M. Forecasts there calling for a reading of 51. Also at 10 00, you get october construction spending, thats expected to rise half a percent. Bullard speaks about the economy at 1 40 p. M. Look for results from petitbop after the close. Budget talks are at a stand till with just 29 days to go before the u. S. Hits the fiscal cliff. Both sides are blaming each other for the standoff unsurprisingly. Timothy geithner is pushing the gop to offer specific ideas and predicts theyll eventually yield on raising tax rates on the wealthy, but john boehner is Standing Firm against those high taxes. Weve put a serious offer on the table by putting revenues up there to try to get this question resolved. But the white house has responded with virtually nothing. Why does it make sense for the country to force tax increases on all americans because a small group of governors want to extend tax rates for 2 of americans. No reason why that should happen. Geithner says republicans will be responsible if no budget deal is reached by the end of the month. Boehner says the fight has only begun and hes interested in cutting a deal and not sounding a fiscal alarm. Well be talking about how the two sides might be able to break the deadlock with a did democratic strategist in the next half hour or so. Now, Singapore Airlines has confirmed its in talks with interested parties to try to divest its 49 stake in the British Airline virgin atlantic. Didnt say who the party was, but reporting suggest it could be the u. S. Carrier delta air lines. Its been look to go acquire the stake for more than two years. But the discussions might not result in any deals being agreed. And mary shapiro has reportedly delayed a rule that could affect billions of dollars partly you because of concerns about the legacy. Reports suggest that disclosure comes from internal emails. Shapiro is stepping down and emails show she may have been persuaded by lobbyists to changer mind on a center peeftsd jobs act which makes it easier for Small Businesses to raise capital. Shapiro reportedly didnt consult with other commissioners in her decision to go against the recommendations. Still to come on the program, well have the latest from egypt. Activists have forced the Supreme Court to close ahead of a vital ruling on the constitution. As we go to the break, a reminder where european stocks are. Broadly up as measured by the heat map. [ 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. U. S. Futures pointing to a absolutely upwards start. S p 500 up 8, dow jones up 12, nasdaq up 8. Dow down for two months in a row. Nasdaq up a percent last month. S p up 0. 3 . European markets much better in november. Ftse 100 up 0. 2 . In egypt, protests outside the court kept people from getting into the building. The court had been expected to rule on the legality of the upper house of parliament and assembly that drafted a new constitution. David hartwell joins us now. David, ive seen a headline says egypt on the brink of a volcano. How plrecipitous are we right now . Its sort of a crating volcano if i can stepped it a bit. Were not sure what steps will happen next. The whole constitutional crisis really has blown up quite unexpectedly to some stepped because the judiciary have really begun to face off against each other. So you say where are we going next. You could argue on the one hand that the court doesnt necessarily need a building in which to make a judgment on the assembly and the Constitution Day fact tode facto, but were t of a standoff continuing at the moment. This started when mr. Moore ci morsi saying its new constitution would be shielded from the situation started on the 22nd of november when morsi issued this decree virtually exempting all president ial decrees from judicial oversight. Morsi has said this was necessary to speed up constitutional process. He may well have been right in saying that, but the draconian nature of the decree certainly wasnt perceived by his opponents has really set this up. So therefore the situation has escalated to the point where opposition elements are now viewing the judiciary as really kind of the last bastion of not the old regime, but the last bastion. Seen as an attempt to implement islamic agenda . It may well be the start of that. The language if you look at the constitution is not explicit, though i think there are concerns about how that will be interpreted. I think some of the lapse has been loosened at bit. There are new instances that mfthe perception is that some of the protections in the language have been taken away leaving it open to a greater degree of interpretation by the brotherhood and by morsi. As you say, very difficult to predict what will happen. Morsi a democratly elected president , but the opposition saying his legitimacy being eroded. The referendum as you say 15th of december. Judiciary have said theyll boycott that. So no judiciary oversight over the referendum, which could call the referendum into credit and the the credit ability of the mo vote into question. All bets are off frankly at the moment. Morsi has said hell make some bid to bring in a National Dialogue in the interim period, but really the judiciary have said they wont accept anything less than a resinding of the 22nd of november statement by morsi and hes showing no signs of doing that. So at the moment, were in for a protracted standoff. Whats meaning to the investments since the arab spring . This isnt going to help, of course. I wonder wherein investors are all holding off. At the moment, most are holding off i think and for very good reason. The economic stability that egypt so desperately needs especially the fall in tourist revenues is extremely elusive and it will be more elusive the longer the political crisis continues. Because at the moment, even say the referendum goes ahead on the 15th and were looking at elections probably for some time in 2013, even with the best and most optimistic scenarios, you wont see a return to normality quote unquote before the middle of next year which is sort of horizons probably that the investors are looking at. Okay. Well take a short break. Still to come, washington has come to a standstill. Washingtons and republican democratics and republicans arguing. Well discuss. And plus its a far cry from the highway traffic jam hitting russia. Reports suggest the main road from moscow to petersburg was backed up for 125 miles after heavy snow. One driver told reporters he moved just one kilometer in 24 hours. [ male announcer ] its that time of year again. Time for citi price rewind. Because your daughter really wants that pink castle thing. And you really dont want to pay more than you have to. Only citi price rewind automatically searches for the lowest price. And if it finds one, you get refunded the difference. Just use your citi card and register your purchase online. Have a super sparkly day ok. [ male announcer ] now all you need is a magic carriage. Citi price rewind. Start saving at citi. Com pricerewind. These are your headlines. The white house and congress may need to call the auto club to jumpstart budget talks. Theyre stalled on discussions over taxes. Chinese factories have picked up the pace in november. Both hsbc and the official pmi readings hit multimonth highs, both now in expanding territory. Manufacturing activity continuing to shrink albeit at a lower pace. And Singapore Airlines is in talks to sell its stake in virgin atlantic. Media reports suggest delta is the frontrunner. If youve just joined us, u. S. Futures are a slightly upward start. Not by much. S p 500 currently about 1 1 2 points above fair value, nasdaq 8 1 2, dow about 17 1 2 above pair value. Remember the dow down 2 over the last two months. The s p just up a third of a percent last month. Better performance from european stocks. Ftse global 300 at the moment is just up 5 points as we wait for the u. S. To kick into trade. European stocks are firmer. Ftse up 0. 2 . Xetra dax up a half a percent at the moment, ibex up 0. 2 as a number of analysts and strategists over here say european stocks might be outperforming u. S. For the next couple of months. So one of the things weve been talking about with our guests here today, heres a reminder about what theyve been saying about how we should be trading. Today i would probably buy the euro on some dips here. Leading up to that ecb meeting. I think bonds in general including the periphery, including bank bonds, all these things give you good returns next year. Because europe is doing the stubbornization phase as you can see from this chart that we did. Continuing to edge into equities, but still defensive. Id cite some of the banks as a good example. Its the same trend youre start accumulating some of the survivors and even the bonds. Some thoughts already expressed today. Meanwhile budget talks between the white house and congressional republicans, just 29 days to go before the u. S. Hits the fiscal cliff. Both sides are blaming each other. Timothy geithner pushing the gop to offer specific ideas and predicts they will eventually yield on raising tax rates on the wealthy. House Speaker John Boehner Standing Firm against higher taxes. Sgr we weve put a serious offer on the table by putting revenues up there. But the white house has responded with virtually nothing. Why does it make sense for the country to force tax increases on all americans because of a small group of republicans wont extend tax rates for 2 of americans. Theres no reason why that should happen. Democratic strategy from bgr joining us. Well always get a standoff at some point in these negotiations. Is it a terminal standoff . When does somebody blink . Its not a matter of who will blink or not. I think that the republicans are trying to go tit for tat with the president. You have to realize that the president has the bully pulpit and the ability to command media. So the republicans feel the need to respond to every maneuver. I think frankly that the president s put a detailed plan on the table. Republicans need to respond to that detailed plan and then they need to get in the weeds. Im still optimistic that well get something done by christmas. What gives you that optimism . Theres two things. One, the central theme of the president s election or Reelection Campaign was raising taxes on the rich. The American Public reelected him and that was the central theme. Thats in t thats number one. Number two, if the republicans dont do something and we go over the qulif, they will be overwhelmingly blamed for the situation because of the election and they will have to face the wrath of the American Voter within 24 months. I think the republicans can did the math here and understand they need to fall in line. Doesnt the president also need to come up with something credible on entitlement cuts . Absolutely. The president cant sit there and do nothing. He cant dig his heels in. America reelected barack obama to get the economy moving. History will judge him as a good president or not if hes able to get the economy moving. But i want to point one thing out tos a ive said before, this is the new barack obama 2. 0. Hes taking his he is message to the american people. He will not sit around and let the republicans litigate and relitigate things or let the chattering class of washington determine his destiny. Hell rally support and put the pressure on all of congress, not just the republicans, but democrats, as well. Is that the freedom that a second term president gets, right . Well, its the freedom when you try to work with the republicans and frankly some of the democrats, as well. You cant blame all the republicans. Some of the democrats didnt want to move on the entitlement issues and theyll have to move. So this is obama 2. 0. A much more engaged, a much more activist president. You series bringing a Business Community in, community leaders, small business, not for profit. Hell be much more engaged in this second term. Morris, on this issue, are we just going to get something that just gets us through this period . Because there are those who want to tie in a longer term debt strategy and solution. It seems if we do that, that will muddy the waters here short term. He what they need to do is c to an agreement on what they can agree on. The president said we should all be able to agree on this first 23 250,000 and then move to the next congress for something more comprehensive. Theres never going to be a situation where youll be able to swallow the whole pie. Comprehensive tax reform is very hard and dealing with all the entitlements will be very hard. So i think the best thing to do is get something that gets us past the dead line and then come back to the table and get something more comprehensive done. When it comes down to it, are politicians, in their guts you can are they really willing to take over the edge . There has been thought on the republican edge to take it over the edge for a couple of days and then put them in a stronger position. It doesnt put them in a stronger position quite frankly. The strongest hand for the president is to force all of congress to act, not just republicans, but democrats, as well. He has more leverage right now. If we go over the edge, were going into a situation where the unknown, and thats not good for business, thats not good for the economy, thats not good for the government, not good for the world. So i think they will be able to get something done because at the end of the day, all of congress is going to be up for reelection, so not just the republicans. I think the republicans will have more blame, but the congress rating is so absolutely low, no one has any confidence that congress can get anything done. So if the president puts a comprehensive plan forward like he has and the congress both republicans and democrats cant move it along, theyre both going to get blamed. All right. Morris, thanks for that. Good to see you. Morris reid joining us from washington. Always good to see you. Right. Weve had a Little German six month tbill auction out this morning. And the average yield negative territory, minus 0. 168 . So investors still paying the German Government the privilege of lending them some money. Still to come, well get behind the wheel of Hurricane Sandy may have boosted the bottom line of automakers last month as americans replaced cars and trucks lost to the storm. Well go inside the figures with the chief economist from the National Automobile dealers association. I always wait until the last minute. 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 [ maby december 22nd break from the holiday stress. For christmas delivery. Auto make irmaker sales for rise as consumers in the northeast replaced vehicles damaged or lost to Hurricane Sandy. Sales also likely boosted by pent up demand. Joining us is paul taylor at the National Automobile dealers association. Paul, good morning to you. How much of this demand rise are we going to see will be sandy rebound from sandy and actually real demand . We have low Interest Rates and old cars on the road. So a lot of the demand is real demand. But the other thing is that all the checks havent been written for sandy. Weve had about two weeks of checks coming from insurance companies. But there will be more probably next month of that than there is this month. So it will help. But its the general Market Conditions and cars that are on average 11. 1 years of age that are really driving car sales. In this low Interest Rate environment, this is the other big ticket item. How are people going to fund their purchases . You have an 11yearold car, how are they funding the replacement of it . Well, the availability of credit has improved dramatically over the last eight months or so. And were even seeing people with bumps in their credit history, subprime borrowers, getting more acceptances of their car loans. And of course there are a lot of incentivized Interest Rates from the manufacturers financing arms out there, as well. The overall softness in the European Market and with japan in recession, we think well see likely more incentives from manufacture are ers for customer the coming months because they have capacity theyre not using for those other market. So they will be targeting this u. S. Market and the consumer is in a pretty good mood. Part of that we believe is the stabilization of home prices which is the basic net egg for most middle class americans. It would seem whatevers going on where you are in washington not having an impact. Why do you think that is . I think they think it will get settled, although the weekend talk shows didnt give us encouragement in that direction. I believe there is just some kabuki theater going on and they will settle those tax issues. What of course has been lost over the last year is the stable expectations for businesses to plan because theyre always waiting to see what the government is going to do next. But they will do enough to get us through this into next year. And at that time, they will tackle serious tax reform. So what sort of annual rate do you think will be pushing them, how is 2012 going to shape up . Have we hit the 16 million vehicles, what are we looking at for the total this year . Well, were looking for 14 plus this year, probably 14 about. 2, 14. 3 Million Units. And were likely to add i believe about a Million Units to that next year. Remember, these are rates that many consumers havent seen since truman was our president. So its still a very attractive financing atmosphere for consumers. And so we think that plus the fact that the average car is 11. 1 year of age will result in strong sales moving in to next year. Vehicles are an awful lot more fuel efficient than 191yearold cars. Which i guess helps people think about how they can recoup the money theyre spending. Paul, thanks very much for joining us. Reminder of those headlines today. Fiscal cliff negotiations have stalled on tax hikes. Geithner is confident republicans will yield. Manufacturing activity in china speeds up in november while the eurozone is confirmed in contraction. And Singapore Airlines is looking to sell its stake in virgin atlantic. Delta reported to be the frontrunner. Tax issues here in the uk on the corporate front. Starbucks is reconsidering its tax arrangements for british operations in the wake of criticism by politicians and the media. The coffee chain is expected to make an announcement on the issue later this week. The same time, the British Government will unveil a 10 billion plan to clamp down on tax avoidance by foreign mumity nationals. And italy, charges that they avoided taxes. Claude kra hia has the details. Possibly a fashion faux pas down here. They actually were tried already in 2011 for part of what they are being accused of today and they were actually the trial was closed. But the investigation was reopened after an appeal made by the state. And today they will be heard. What theyre being accused of is after having sold the rights to a Company Based in luxemburg, 360 Million Euros was the value that they put on the brand while it appears that the appraisal made by the state says that was actually worth almost three times as much. So the first accusation is of a tributary issue based on the profits coming from that sale. The second issue is the royalties that are being paid in luxemburg are up 3 thats what the law expects them to be paid for there, whereas here it would have been royalties up to 27 of the profit. So of course, it is expected that they made this move because of the easier fiscal situation there, but it appears as though the sale that was made was made to a company that actually wasnt completely regulated. So the question is it a penal situation or is it just a tributary fiscal fraud. So it will be interesting to see how this pans out. But today the trial begins. All right. Thanks for that. Thats the latest. Meanwhile president obama and Michelle Obama paid tribute to this years recipients of the kennedy honors. Theyre recognized for contributions to the arts. When the brits in additionally kept their distance, led zeppelin grabbed america from the opening. We were ready for what jimmy called songs with a lot of light and shape. Its been said that a generation of young people survived teenage angst with a pair of head phones and a zeppelin album and a generation of parents wondered what all that noise was about. In the United States today, november ism Manufacturing Index out at 10 00 eastern. Forecast for a reading of 51. Also october construction spending. Expected to rise half a percent. And James Bullard speaks about the Monetary Policy at 1 40 p. M. A pretty light day for earnings. Look for results from pep boys. They are after the close. As far as u. S. Futures are concerned right now, we are implied for an upward start. S p 500 called up 1. 5 points, nasdaq 20. Dow has been down last two months . Nasdaq up about 1 . S p up 0. 3 . Singapore airlines has confirmed its in talks to possibly divest its 49 stake in injury begin atlantic. It could be u. S. Care krer delta air lines. Analysts say americas second biggest carrier wants to gain access to Virgin Atlantics landing rights at heathrow london airport. Its been looking to acquire the stake it for more than two years. Discussions might not result in any deal, always that caveat. Mary shapiro has delayed a rule that could affect billions of dollars in private offerings partly because concerns about her legacy. Reports say the disclosure comes from internal sec emails obtained by a congressional oversight panel. Shapiro is stepping done on december the 14th. The emails shows she may have been persuaded by lobbyists to change her mind on the jobs act which makes it easier to raise capital. She reportedly didnt consult with other commissioners and her decision went against recommendation of sec staffers. The most searched terms of 2012 r9 u. S. Election and iphone 5 according to yahoo . Most certained person, kim kardashian. Ska Kate Middleton and political polls also made the top ten list. John tweets says the reelection of president obama was the top story of 2012. Susie was the most interesting was the facebook ip ochtd and t and the tech glitch that ensued. Im sure well wrap it all up as we normally do in between christmas an new year. Lets remind you where we stand ahead of the u. S. Open. We had a pretty good november all told. Ftse up nearly 1. 5 , dax up 2 . It is monday, so it does mean eurozone finance ministers are having a meeting in brussels. And theyre hearing details of the bond buy back plan from greece. Grooe greek Prime Minister says Pension Funds wont take part, but the banks should benefit from the voluntary buy back thanks to a liquidity boost. Under the proposed program, athens will use bailout cash to purchase around 30 billion euros of debt for a lesser price than if creditors had held bonds until maturity. And over in spain, were seeing yields lower today. 5. 2 . Rajoy has warned it will achieve the deficit target agreed with the eu. He said he couldnt guarantee there would nobody further spending cuts and he would not have any doubts about using the ecbs omt program, though of course with yields where they are at the moment, they dont have to. In fact we spoke to Patrick Garvey a little bit earlier today that suggests that the riskon theme for debt will continuum at least the end of january. Remember, spain will have another batch of prefunding for 2013 later this week on thursday. Otherwise thats it for todays edition. Coming up, the first squawk box of the week and countdown to the open of markets state side. Whatever happens, we hope you have a profitable day. [ 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. Tis the pursuit of perfection. Good morning. Todays top stories. Fiscal cliff hanger. Theres now less than a month left for washington to broker a deal. In Global Market news, a survey suggests that chinas giant Manufacturing Sector has moved into expansion territory now again for the first time in more than a year. And on the corporate front, ubs is reportedly near a settlement with the u. S. And uk over those libor claims. Its monday, a new month for us here, december 3rd, 2012, and squawk box begins right now