Transcripts For CNBC Worldwide Exchange 20130109

Hello, this is todays worldwide exchange. Alcoa kicks off the earnings season with better than expected numbers. The aluminum giant says it sees brighter days ahead. European stocks are boosted on the news, and banks and Telecom Stocks lead the way higher as report suggest europes biggest teleco groups are in talks to create a pan regional network. Analysting warn about slowing growth. The cfo told cnbc hes confident. Weve got a great track record, frankly, over the last five years of delivering, you know, over 100 Million Pounds cost savings year on year. We intend to do that going forward. And a report says the bank of japan will likely cave to heavy pressure and double its inflation target to 2 . All right. Youve got to make the most of us today. Last day today. Only two days until next week . Until next week. A lot of good things coming up. Particularly, we talked about the dollar, when it comes into play. Theres a tweet conversation going yesterday, they are coming on air. I like that, education the conversation from twitter weve on air. Exactly. Thats what were doing. Its interesting. We have seen the dollar rallying. The question is will it last, tell become a theme for 2013. Exactly. A couple of other things well explore. The latest news in tech from sin city. The Consumer Electronics show is getting into full swing. Well also be live on the ground in madrid as spanish banking giants meet with unions about job cuts. And ubs executives testifying on the stands and culture of the swiss bank. Then well head to detroit for the latest on boeing after fuel leaks and a fire involving their 787 dreamliners and a boston airport. And oil, as well. Asia demand is growing, the Oil Price May act as a break in the World Economy. The Energy Revolution will have a Global Impact in oil flows toward asia. And the global shift is underpinned by huge energy investments. We are going to be talking about u. S. Energy. Yeah exactly. Were also seeing reports about how u. S. Oil import will be at the lowest in 25 years. There is a change afoot. I guess thats what the iea head is saying, asia is going to take more of the u. S. Demand. To earnings. Yes, alcoa swung to a Fourth Quarter profit matching forecasts. Results were helped by stabilizing raw Aluminum Prices. Higher prices and cost cutting. Revenues down 1. 5 to 5. 9 billion. That did beat estimates. Alcoa is also slightly boosting its 2013 Global Demand forecast from 6. 5 to 7 . Kleinfeld says growth in china is coming back and europe is doing better than expected. The stock up 1. 3 in after hours. In frankfurt, up 1. 72 . Join for the first hour, for the first time this year, charlie diebel. Hello. Good to see you. Right. Here we are. Weve kicked off earnings season. What do you make of it . Well, its only just begun really. I mean, i think that theres still risk of a disappointment trade. If you look at the retail numbers particularly going to the christmas season, they looked disappointing. I think there still could be bad news to come. But equally, were still playing with a lot of the macro issues we were playing with last year. You know, weve had phase one of the fiscal cliff, but it seems to be breaking down into five or six different phases over the next few months. And you know, as you were saying, you still have a situation in europe where the Economic Outlook is pretty fragile, and were a long way from complete resolution but what about the risks that quarter, big asset, right . We havent tested the system yet. I said we got rivet of the terrorists. Got rid of the terrorists, we priced them out. Right. But, you know, kind of getting into it here. For example, the spanish auction schedule that were facing over the first half is pretty onerous. Likewise, theres the threat of downgrades for not only spain but other countries in the eurozone, and an awful lot of supply coming. If at some point that starts to reapply pressure to the peripheral bond markets and you see yields going up, youre back into this risk of episode. Does it last, maybe not. Then the ecb and omt come into play. Thats an untested mechanism at this point. I wonder, is there anything to the notion of zigging when l alcoa zags . The company starts thing opposite to how earning season turns out. I think there is a risk that earnings season disappoint. Given that they if anything narj mally beat what was marginally beat what was expected. But as i say, its a long road. For sure. We dont really get into the thick of earnings season for a good couple of weeks this time around. Charlie will stay with us. And we are later going to discuss whats going on with Boeings Dreamliner flights. Just now, japans all Nippon Airways has canceled a domestic flight due to brake problems on a boeing 787. Comes amid a spate of similar reports. Well have more detail and explore the story further in the next hour. We dont know whether that means they couldnt take the brakes off or put them on. We need more detail. And despite recent mishaps, japanese carriers appear to be standing by boeing at least for now. Japan Airlines Says it has no plans to drop orders for the 787 dreamliner jets. It ordered a total of 45 aircraft including seven in operation. All Nippon Airways which placed orders for 66 dreamliner jets also says it has said its sticking with its purchase. Staying with japan, the bank of japan is reportedly considering further monetary easing this month. According to reuters sources, we might see the bank doubling its inflation target to 2 . Theres been speculation for months. In your view, is it going to happen . And almost more importantly at this point, given the runup weve seen in equities, can they get there . I think that is actually the more important question. You know, you can have any target you like, but given the inability for japanese authority, whether the ministry of finance or bank of japan, to create any inflation over the past two decades right. To say, were going to have a 2 inflation target as if that were the only problem. As if only the inflation target were higher things would have been different. Clearly thats not the solution. It would appear theyre pulling away from applying a time frame. Its an aspirational target almost. Youll have a 2 target eventually. If they achieve this, will it be disaster for the japanese bond market is. Clearly. Because that means after two decades, they would have actually succeeded in a reinflationary policy. Now the burden of proof is to the contrary. Theyve failed so far. Keep in mind that this is essentially a fiscal spend type scenario. And thats going to be debt financed, and japan has almost a 200 debttogdp ratio. You know, that is a natural break on how aggressive they can be. Right. Just i was interested to look at the difference in performance between japanese bond yields and treasuries since the fed minutes, as well. And also weve seen what happened to dollar dlsh y yen, from last week. Are we going to trade dollar up against the yen . I mean, whats the target and the story . I think the japanese authorities maybe not explicitly but theres a very Positive Side effect of managing to weaken the yen with talk about the reinflationary policies and almost the whateverittakes stance. Are the u. S. And japan locked in a currency war . Arguably that is sort of whats going on. There was a report the other day from the Cabinet Office in japan suggesting that the move that weve seen in the currency so far should add about. 2 to gdp this year. Obviously an exportoriented economy. If they succeed in weakening it further, obviously thats going to be good for the Economic Outlook. But historically, if you go back to previous episodes, the strong fiscal expansions that you saw, when you saw really strong policy measures taken, that actually inflated the nikkei. It started to bring in hot money to japan from things like hedge funds. You saw the yen appreciate. Exactly. I think this initial reaction to weaken the yen is all well and good. But if it catches fire in the nikkei and assets arent moving depends what becomes the main driver of currency markets. You know, it depends whether yields stop being the main driver for currency markets or whether growth takes over. Absolutely. Also weve seen Japanese Companies being more aggressive. On the m a front you think of sprint offset. If that inflows from investors that might stabilize or cancel the effect of the yen. For me its not so clear cut that theyre going to could . Blanket yielding the yen. What do you do with japan now . In the short term were cautious because the proof of the pudding will be in what policies get agreed and what the plan is. Theres a lot of smoke and mirrors going on with what theyre putting into the economy. In the short term were cautious and think the yen might recover a bit. But if they truly follow through and you do see some sort of coordinated action, youd have to expect the yen to weaken toward the 90 area over the next few months. Right. Sunday your thoughts here if you have send your thoughts here if you have questions. Email us at worldwide cnbc. Com. Ross . Thanks. Lets check in where we stand. Over an hour to trade in the european session, in ten minutes to be precise. Weighted to the upside. Weve got advances outpacing decliners by not quite 73 on the dow jones. European markets now again going back to their recent highs. The ftse 100 up 25. The xetera dax up. 3. The aka cac gulp. And yields 4. 3 , 4. 08 in spain. No real moves. German bund 4. 5 . We get fresh issuance coming out of the u. S. And the currency market, 87. 60. Rebound after profit taking on this cross rate earlier in the week. That 29month high was over the 88 level. Euro dollar, weve traded between 1. 30, 1. 50, 1. 32 the last couple of weeks. Thats where we stand in europe. We have the latest out of asia. Thank you. A mixed day of trade finish asian borses. The nikkei snapped a twoday losing streak ending. 7 higher. Talk as the boj set to ease its Monetary Policy this month by boosting its asset purchase program. After a brief pause yesterday the yen weakened against the u. S. Dollar again today fueling automakers and other exporter stocks. Elsewhere, the shanghai finished flat as investors remained cautious ahead of trade and cip data due out. Reports that more property curves will be made itted to tame rising housing prices. Agricultural stocks surged on expectations that beijings urban growth plan will support food production. In hong kong, the hang seng rebounded half a percent from the lowest level in the week. Mainly banks gained momentum after ubs upgraded icbc. Concerns over q4 earnings sent the kospi lower by. 3 . The fifth straight day of losses for south korean shares. I. T. Stocks and development ralliers pushed higher. 4 . Lastly, Indias Sensex in action, trading a touch below the line. Back to you. All right. Thanks, catch you later. As we head to break, you should head over to our web site to find out why a number of economists believe tomorrows ecb ratesetting meeting could mark a key moment in the evolution of the eurozone debt crisis. And forget alcoa in the u. S. Earnings season. Watch out for europes corporate performance. More on that story. Also, go to cnbc. Com for the latest on the online hacking of u. S. Banks and why the u. S. Government thinks iran is behind it all. Keep your eyes that. Still to come, ubs executives due to testify before the British Parliament today on the libel scandal. Well have a preview when we come back. What are you doing . Nothing. Are you stealing our Daughters School supplies and taking them to work . No, i was just looking for my stapler and my. This thing. I save money by using fedex ground and buy my own supplies. Thats a great idea. Im going to go. We got clients in today. [ male announcer ] save on ground shipping at fedex office. Welcome back. Spains largest bank is meeting with labor unions in an attempt to reach an agreement on job cuts following its merger with banesto. Joining us is spain correspondent at thompson reuters. Sonia, thank you very much for calling in. We want to get a sense of how many job cuts how many jobs are at stake here. And whether theyll be successful pushing it through given opposition to unions and political opposition, too. This is part of a wider malaise in the spanish Banking Sector in terms of jobs. This merger is related to its domestic subsidiary. Unions say theyre looking at between 3,000 and 4,000 jobs going here as a result of this merger. S santan der has not given a figure. Generally speaking, in the spanish Banking Sector there are job losses up as a result of the european rescue. Spains biggest staterescued bank is looking at laying off around 6,000 people as a condition of receiving european aid. And there are protests scheduled across spain today. Both employees taking to the streets to protest the job cuts. Weve seen in france the difficulty that automakers have had in shutting down production which everyone says is needed to write right to right size the profitability. In the banks, an easier sector to malign if youre the government. How do you ensure their future if you cant downsize now . The talks have just started now. I dont know whether they will have much difficulty pushing them through. Its part of whats happening across the board in spain here. Figures have come out for 2012. Spains got the highest Unemployment Rates in europe or one of the highest. Its neck in neck with greece. During 2012, over 2,000 jobs per day were destroyed here in spain. So a country with a population of, you know, around under 40 million. So its theres more than six million unemployed in spain now. Thats 1 3 of the unemployed in the eurozone. People are just beginning to see it as inevitable that there are going to be job losses. And in the banking successt b sector, spain had one of the most overbanked high streets in europe. You walk down a spanish street, and you see four or five bank branches. Its just an inevitable part of the ratification of the Banking System here. They just have to reduce the amount of branches on the street. A reminder of the negative cycle to some extent spain is stuck in. Sonia dowsett for thompson reuters. Thank you very much for that. A reminder, when she says, look, they lost 2,000 jobs a day in a nation of 40 million, 1 3 of the eurozones total unemployed. We learned yesterday the unemployment figures, 26. 6 Unemployment Rate for spain. Higher than greece which granted was latest reported as of september. At 26 , it may yet strike back. But extraordinary. Yeah. Yeah. I mean, that is theres a depression statistics basically. In the u. K. , the british finance minister, george osbo e osborne, wants the e. U. To toughen Bank Regulation across the 27 member states. Britains set plans in motion to separate Retail Investment decisions in part on proposals from the Finnish Central Bank governor. The fed is also reportedly considering a plan to help banks avoid costly regulations aimed at preventing Derivatives Trading from being subsidized by taxpayers. The Financial Times says it stems from the lincoln amendment, included in the 2010 doddfrank law. It prohibits banks that have access to federal deposit insurance or fed credit from acting as derivatives dealers. U. S. Banks will still be able to trade some products like Interest Rate swaps. Under the rule, foreign banks would be forced to move their u. S. Derivatives activities off their books. Yeah. If you followed that, you get a gold star this morning. Its a tricky one. Theres a law that means foreign banks will have problems trading derivatives in the united states. Charlie, any thoughts here . You know, its part of this broad Regulatory Framework being put in place. And its what banks all over the world are having to contend with. The problem is is that it it stops activity, and it stops banks doing what theyre supposed to do which is effectively providing the liquidity and lubrication if you like to keep the economy going and to get Economic Activity on the horizon. So theyre busy focusing on regulation rather than doing what theyre supposed to do which is linked. This goes to the point that weve made with guests which is how do you push forward on regulation at a time when it means undermining growth. And unfortunately theres not a great answer. It just means that the bank lobby, for example, whether in the u. S. Or other countries, is able to say and to have considerable success in saying, look, if you push forward, youre going to be shooting yourself in the foot. Yeah. Weve seen that already. Thats why the easing of regulations and Capital Requirements to go with that are a positive new england for the outlook from a macro point of view. That should encourage banks and their ability to lend and, you know, puts less onerous restrictions on how much capital and how many assets they have to hold almost as dead weight. On that note, we want to ask you is this a prudent move or another example of banks getting their way with regulators . You can join the conversation here on the show by emailing worldwide cnbc. Com. You can tweet us cnbcwex or individually. Yeah. Whats going on here sorry. No plan for a merger with o pal. The pressure for them to pick up the stake. Going back to the point that in spain the unprofitable Spanish Banks resulting in job losses piling up for the company. In fran the unprofitable Auto Industry resulting in job losses. Peugeot says we understand the pressure to pick up later. Weak carmaker dont nesties n weak carmaker dont nesties n necessarily make a strong dent necessarily make a strong carmaker. And in a letter to the f. T. Urged reform to a Single Market but warnings britain has to be careful not to rethink its total participation. The british Prime Minister, david cameron, expected to lay out a plan to renegotiate britains e. U. Membership later this month. And europes top teleco Companies Reportedly discussing an idea of creating a pan breaking news telephone network. Its seen as disjounted and hindering their ability to compete. Report said the idea of sharing infrastructure was discussed at a private meeting between the e. U. s competition chief and bosses of europes biggest teleco groups. Spanish companies are capitalizing on lower yields and a newfound confidence in the ken. Telefonica has raised 1. 5 billion euros through sale of a tenyear bond. This in one of the first debt sales in a major european country this year. The group has about 7. 5 billion worth of debt redemptions worth in 2013. A reminder its not just the spanish sovereign that has to raise funds. The Second Largest Bank has tapped the bond Market Selling 1. Billion euros of senior debt last week. And you can read this as a better sign for spain or an indication of just how far investors are willing to reach in order to get yield in these times. Yes. Probably go for the latter. Aig says it has an obligation to consider a demand by former ceo Frank Greenburg to join his lawsuit against the u. S. Government. The Company Board is meeting later today. Greenburgs suit claims the u. S. 182 bailout of aig deprived shareholders of billions because the government took a 92 stake and then imp e imposed high Interest Rates. The suit also argues the rescue violated the fifth amendment to the u. S. Constitution over illegal seizure of private property. And were told that they to some dig have to go through the review. Its not necessarily a sign theyll move forward with it. This is getting tons of attention in the u. S. With aig thanking u. S. Taxpayers now the current board for supporting them. The current board supporting them. The old board thats trying to still upset. Share your thoughts, worldwide cnbc. Com. Keep it coming. Stay with us also because well be back after this break. And these are the headlines from around the globe alcoa kicks off the earnings season in the u. S. With better than expected numbers. The aluminum giant says it sees brighter days ahead. European stocks boosted by the news, and banks and telecoms leading the way higher as a report that europes biggest teleco groups in talks to create a paneuropean network. And the u. K. Gross, slowing sales growth. Weve got a great track record over the last five years of delivering, you know, circa 100 Million Pounds of cost savings year on year. We intend to do that going forward. The report says the bank of japan will cave to pressure and double its inflation to. 2 . All right, an hour and a half into trading day in europe. You see we are up, the ftse 100 up, the ibex up, as well. Were getting trade data out of the u. K. November adjusted global goods trade deficit, 9. 2 billion. The global goods trade balance for october unrevised, a deficit of 9. 5. We have a narrow thats slightly. But the original forecast was nine billion. Sterling up. 1 . I love this threemonth goods export volumes to the European Union down 3. 7 on the year to outside the European Union, theyre up almost 7 on the year. It just really tells you where the demand strength is in the Global Economy. Its not coming from europe which is the u. K. s biggest trade partner, historically still credibly important relationship incredibly important relationship but a drag for them. The quicker they can rebound the better. Right . And thats whats been going on frankly. Over the past few years, you have seen somewhere close to 60 down 50 at the moment. Now below 50 in terms of the trade ratio. Does that account for the changing political rhetoric here, as well, the fact that were hearing more noise from, say, the conservativeled coalition about ending the relationship . Its bound to be part of it. I think that really its more of a natural reweighting away from the eurozone as a part and reflects where Global Demand is. If you were an Engineering Company britain, you know, millions whatever, youd weigh you just going to go for whatever the growth is, right . Doesnt matter. No. I think this is and obviously should be encouraged. But i wonder, again, whether that exposes sort of the political narrative to people that feel like, well, whats in it for us. I think the bottom line is, i think any poll at the moment would suggest that the majority of certainly people in england, im not sure about scotland, would be, you know, all for renegotiating in terms of e. U. Membership. I think that would be that seems to be what the polls are saying, absolutely. Do you think thats prudent or should people be reminded of the advantages to being part of the European Union . And there are. If we sit in isolation in the u. K. And you have a huge trade block that you have nothing to do with, that doesnt make send either. You know, the devil lies in the detail as to exactly what kind of e. U. Youve got, what the relationship is. You know, you cannot ignore europe. It Still Matters the bottom line is the e. U. Is changing. Especially with regard to the way that Financial Regulation is changing, being the biggest thing at stake potentially for the city here. Just also want to bring you some news here which says a Blast Furnace restarting in northern france. This the site of i believe it was a fire recently. The restart in response to a slight increase of steel demand in europe due to restocking. This is the plant that the french government got upset about. Criticized thats right. They were shutting it down. Now clearly, this is the point, though, theres a slight pickup in demand. Theyre saying thats why were doing it not because you told us to. The french government. Exactly. What it got very personal, didnt it . Yes. We heard them directly criticizing it. In any case, thats going to restart. Another volatile day of chinas insurance. Shares slumped after falling 4 yesterday. They did recover this afternoon. You see them up about a percent there. Reports say hsbcs 9. 5 billion stake sorry, sale to a thai conglomerate town in jeopardy. The paper says theyre set to veto the deal since theyre not sure whos funding it. The chinese insurers under pressure this week after a u. S. Private equity group, carlisle group, said it was selling off its stake in china pacific insurance. Now to look at the sector and why some Foreign Investors may beexiting, chief china strategist at macquarie joining us from hong kong. Appreciate it. Can you give us a sense as to whether were reading too much into this or is there is behind something that were seeing of late . Its a good thing for cdb to be back out of this long deal because if theres speculation that some chinese investors are behind the deal and the fact that cdp is going to fund the deal will make the deal look not like an armlength deal but a grand scheme of things, we continue to like the insurance sector as a whole. Through some of the companies, what about pingon in particular . s recognized as a neutral. Although the name is pingon insurance, i want to make it clear, half of the profits come from its bank. Pingon is half bank, half insurance, they also have a brokerage business. In the secular preference, the picc, automotive insurance and Casualty Insurance side on, the life side we like china pacific. Several companies there. Yeah, in terms that were still developing obviously the business in china, whats the how mature would you destroy it compared to the west . What do they still need to do . Insurance is clear in many areas. Thats underpenetrated in china. The challenge for the chinese Insurance Industry is that the Insurance Products are sold more or less like savings product in china. And in the last year and a half, the rapid growth of the management product have pulled away a lot of deposits from the Insurance Industry. Thats why the Insurance Industry has suffered a lot in the last year and a half. We have seen a couple of cases or debacles with respect to the Wealth Management products may have now made the consumers questioning the merits of some of those products, leaning more toward perhaps buying Insurance Products instead. General insurance, is general insurance picking up as opposed to the savings side . Thats what we believe. We also believe the asia market this year may have a very good year after three, four years of tough times. To play the rally in the asia market, the best place either Insurance Companies or brokers. We like both sectors now for the 2013 china strategy. Thank you very much for joining us. Chief china strategist at macquarie. Stay with asian financials. A new report for the nikkei says that japanese trading houses are again boarding their reach in iraq after staying away for two years because of the conflict. We have more from tokyo. Hi, ross. After nearly two decades of barely maintaining a presence, Japanese Trading Companies are now beginning to expand their businesses in iraq. The nikkei reports that mitsubishi will set up a joint venture with iraq south gas to build a Processing Plant in southern iraq. It will use gas produced in an Oil Production process and recycle it into natural gas or lpg. The total investment estimated at 17 billion. Meanwhile, toyota will open a new office in baghdad this spring and will handle car sales in its infrastructurerelated businesses. Theres a plan to open more sales and repair shops for cars and construction machinery. Many Japanese Companies had business based in iraq and other middle Eastern Countries in the 1980s. They were forced to close their offices after the gulf war in 1991. What were see regular fresh attempts to tap into the resourcerich country once again. Back to you, ross. Thanks for that. Dish network is making an unsolicited 2. 3 billion offer for clearwatch, trumping a 2. 2 million bid by sprint wireless. Dish would pay more than sprints 2. 97. They want to buy the rest of the company. Clearway says its preliminary. The deal would require sprints approval and they stay isnt viable. Theres talk that Charlie Jurgen is serious but other say hes amassing to flip for a big profit. Clear why dish and sprint stock in play. The big winner clearwater. After this was announced at ces last night, interesting, only up 9 . They were known as a soft bank. Exactly. And what theyre doing remember, it was after the soft bank Capital Infusion that sprint was able to say were going to go ahead with the buyout. And there was a btig analysts saying it should be higher valuation. At the time people said, well, there arent necessarily other bidders. Well have more on this chat next hour. People wondering about the whole soft bank deal. You know, and whether that puts us under threat. The huge deal. That was having impact on the yen yesterday. Exactly. That was kind of in the market. Microsoft says sales of windows 8 has hit the 60 million mark ten weeks after the launch of the new operating system. Pretty much in line with sales of windows 7. That came out in 2009. Remember 2009 . Microsoft wouldnt say how many surface tablets were equipped with windows 8 have been sold. The company introduced the tablet as a competitor to the ipad. Microsoft stock up half of 1 . Down 11 over the last three months. Apple is working on a cheaper iphone. It could hit the markets this year. The wall street journal, that rag, says the device may use less expensive materials such as a plastic shell. This would mark the first time apple has diversified its smartphone lineup with significantly different modies since launching the first models since launching the first in 2007. Theres been speculation. Apple shares are move being half a percent higher in trade. As you see, theyve been hit harder than microsoft over the last three months. Down about 18 . Extraordinary run. I know. Yeah. The ceo is in china today to meet with the countrys leading government officials. Tim cooks second visit to apples Fastest Growing market in less than a year. The tech giant sold more than two million iphone 5 handsets. They need to tie up with china mobile, the biggest teleco firm, to improve distribution. They declined to say whether cook is meeting with the provider on this visit. The key thing, kelly, the fastest gro market. They were down in the last survey in november. They were waiting for the latest launch. At that point, i think they were at the six down to sixth place, right, in the smartphone market. Exactly. Its lack of penetration into the Chinese Market is one of the main things apple has been criticized for, and perhaps one of the things spurring this new cheaper iphone if it comes to that. Now, panasonic may cut its headcount and sell noncore assets in a bid to raise cash and turn around its business. Speaking at the Consumer Electronics show in vegas, the president said the tech firm is looking to form joint ventures in its struggling operations to help bring back growth. He promised to deliver details of the revival plan by the end of march, saying units that cant hit a 5 operating margin in two years will be shut down or sold off. What else is going on behind the scenes at ces . We have a look. Reporter theres a lot to see at the Consumer Electronics show. Tvs, smartphones, p. C. S that swivel all the way around. Probably the biggest theme out of the show altogether is the smartphone as mobile hub. Ten years ago, it was all about the p. C. , connecting to web cams, becoming a universal remote. Now all that function is built into the smartphone, and there are increasingly ways that this is a Remote Control for our daily lives. Look at samsungs washing machines or at harmons cars where they use a smartphone to enhance the experience. It is Remote Controlled and enabling a network in the car. If youre using at t or verizon or sprint, youll have to change you wont have to change. Youll connect. You make the car a hot spot and use your same program. You dont have to subscribe to a program for car and program for your phone. We make cars so that they will work with any phone, whether its a motorola, samsung, or nokia or apple, and any provider. The reason that is possible is because smartphone penetration in the u. S. Is up near 50 with android and the iphone as the main drivers of that. Expect that to be a trend that we see for the next couple of years now that manufacturers know theres probably a smartphone in your pocket. All the gadgets around you can do that much more. John ford there. Ubs former chief executive and the current head of the Investment Bank are among the ubs executives testifieding today before the British Parliament. Now, in fact, as you see right there. This inquiry focuses banking standards following a spate of scandals at the lender including manipulation of libor and a rogue trading loss that cost the company some 2. 3 billion. Well be listening in here and there. So far, what weve heard from ceo of the Investment Bank is that ubs management is very focused on recovering honor and standi standing that the bank had in the past. Were keen to hear from him detail as to the shutting down essentially of the of the, ross, thick operations and focus on shifting the nature of ubs itself. Well bring those comments to you as we continue to get them. Well take a short break. Its been a big week or so of retail reports in the u. K. The latest today, hows it going. Will it be festive cheer ahead . Welcome back. A quick update on a story were following this morning. Now dow jones is reporting that that the all Nippon Airways flight we earlier told you was canceled, a boeing 787 domestic flight, was due to computer brake system problems. Still not clear much beyond that what is happening. No. Well keep you up to speed with that. French investigators will look into whether there was a secret bank account in switzerland. We have more. Tax exiles, secret bank accounts. Its all going on. Theres no proof yet. Theres an investigation which will be launched by the paris prosecutor. In december the news web site media part reported that the french project minister had a secret bank account in switzerland before 2010. The report is based on the recording in which the bankth is mentioned at ubs. The budget minuteser is rejected action zagds minister is rejecting accusations and saying the recording is not his voice. He filed a legal complaint against the web site reporting the story and welcomed the announcement yesterday of an investigation which he believes will help prove his innocence. The preliminary investigation in france will take a couple of months. It will lead to either being placed on the formal investigation, in that case it will be difficult to remain as minister. The second option would be the case to be dropped for the time being. Not resigning and received yesterday the support from the president hollande. Stay there. Gerard depardieu is in the news again about avoiding drunk driving charges. Hes said to be too busy to show up in his film in which he plays, get this, former imf chief dominique strausskahn. What more can you tell us about this story . It was indeed supposed to he was to appear in a french court to appear guilty for drunk driving charges but couldnt make it for professional reasons. Depardieu was arrested by the French Police in november. He had a small scooter accident and 1. 8 gram of alcohol in his blood, 3. 5 times the maximum for france. Perhaps its due to the size of the man. Hes facing a maximum jail sentence of two years and milwaukee and fine of 4,500 euros. He tries to joke about the situation. Translator im not a criminal. I just skidded on my scooter. I fell asleep. Even when i eat a salad with too much vinegar, i already have too much alcohol in my blood. That matter is settled. All is well, and i can return to my home, to france. There are no problems with that. The police like me a lot. I didnt know you couldnt get drunk with vinegar. Perhaps hes not using the same brand as im using myself. The reason why depardieu was not in paris yesterday is that indeed it was negotiating the budget for his next film in which he will play dominique strausskahn, another french story. Thank you very much for that. There must be a type of vinegar also that i dont know about. Extra strong. I thought if you drink enough of anything . It will have some impact. Extraordinary. Got more on hon hai, investigating employees in china on bribing and supply chain partners. I remind you, the Hon Hai Group saying the group aggressively pursu pursued. Theyre cooperating with police on the case, as well. The informers reported suspicious Accounting Records to support accusations. Well have theyre now investigating it effectively. Meanwhile, in the u. K. , the slowest sales growth posted in the christmas quarter, up. 9 year on year. Despite the numbers, ssainsbury saying hes confident. We have a pipeline of stores doing exceptionally well in the current environment. You cant survive in this industry unless you continue to cut costs. Weve got a great track record, frankly, over the last five years of delivering, you know, circa 100 Million Pounds of cost savings year on year. We intend to do that going forward. And joining us with more, founder and managing director at neeve capital. Thanks for joining us. How tough is if for the gross . Tough for morrisons. We get tesco tomorrow. I think it is tough and goes beyond the economy. I think whats happened is to some extent people are prioritizing spending on other things over food. Youve seen so much food inflation the last two, three years that people almost prefer to spend it on treat like apple, for example, or clothing. What that actually has meant is people are discovering or rediscovering that its cool enough to shop, and people have discovered you can get good quality stuff at really much cheaper prices. And i think in other terms, what people are doing is theyre shopping on convenience. They want to go . Where closer to them. They dont actually like the big stores. Sometimes youre tempted to buy much more stuff that you didnt want any anyway. Therefore, those stores theyre doing less of the big shop and more of if i used to go once every two weeks to the enormous supermarket, now i go a couple of times a week. Actually that way im my moneys going out, small amounts going out more frequently. Exactly. I think thats happening. The fact is some of us are getting older, as well. Therefore we dont like navigating the huge oh, no. No, no, no. The exact same thing is happening in the u. S. One reason why youve seen shares in dollar stores, which have added consumables, a lot of the milks and food items, do really well even as walmart, for example, has suffered. How does that explain weight traders doing so well, up market . I think it does well. I think youre seeing a bifurcated market. The same time its becoming cool for the middle class. I think the upscale people who still like the whole food providence like to know where chicken came from. Theyre completely stealing the market. Those people still care about food providence. To kellys point, the same is happening with whole foods in america. It is cleaning out compared to everyone else because there is a subset of people who care about it dont be in the middle. Pretty much. I think almost everywhere the mainstream grosses are struggling. Theyve also got there because of problems. Lets not forget all of these guys in the u. S. And the u. K. , all the mainstream grocers, as well, prioritized margins over sales the last few years. All of them despite a difficult economy led inflation climb to high levels. And we heard waitrose telling britains that food pricing will be rising sharply. Charlie, have you seen this . We had brc data out this morning that overnight i should say that was, you know, saying that the current rate was 1. 5 . Now, thats fine, but if you compare it to how real incomes are doing, that thats quite a hefty impact. And thats you know, that probably explains this sort of bifurcation youre talking about between, you know, those that have plenty of money can still go to waitrose. Everybody else is becoming more selective. I want to pick up away from the food guys. From sort of the general clothing guys. Whats clear is you you have to go with the winners, john lewis is doing well, next these guys have strong high street but have cracked the online market. Is that are those the winners, guys that got that very much so. High street band with a really good Online Presence . Very much so. I think if you didnt have that, you were the margins will not do well, hss, not winners. John lease extremely good at click and collect. Theyre trying to show its not just on line, its Convenient Online offer which is you can offer here on line, but you can go in at your convenience to pick the order up and shop. Again, thats the advantage over amazon and theyre playing it. Next is another point. I think zara blending the offer. Even some further behind, the instore sales waffling. They werent good. They had good christmases, up 5 or 6 because their online sales were almost big, big numbers. Not bad. And after christmas you worry about if youre worried that youll be in had something gets delivered knowing that its there. Im convinced one of the reasons weve seen chain store weakness in the u. S. Is because people are spending more on food. Yeah. Retail sales overall havent been as weak. Thank you very much. Meanwhile, quickly the head of the International Energy agency says the u. S. Is undergoing an Energy Revolution that will have a Global Impact. Speaking at a conference in o o oslo, maria vanderhuven says sales may act as a break in the World Economy and that 80 of e. U. , china, and india energy use will depend on imports by 2035. Although the u. S. Is clearly going the other way. Charlie, what happens with u. S. Asset prices this year . When you say asset price, you mean equities equities and yields actually, treasury yields. I mean, you know, you had someone on the show earlier who said let the ingredient the bond bull market is over. And that over time eventually yields have to go up. To a degree thats true. But that is all centered on the concept that policymakers succeed. Now weve had four five years of policymaker intervening in the markets to try and generate this economic recovery. So far we havent got any traction. And each time the scale gets more and more. I think for the time being, were still in that policymaker actiondriven low. Thereby the feds going to continue doing q. E. I dont think particularly as you still have further fiscal cliff issues to come, i dont think its a really bearish scenario for bond. Good to see you. Thanks. Lloyds banking markets. It latest on ubs after we come back. Welcome to worldwide exchange. If youre just tuning in, im kelly evans. Im ross westgate. These are your headlines alcoa kicks off the earnings season with a better than expected report. The aluminum giant says it sees brighter times ahead in 2013. And bank and Telecom Stocks easing the way as reports say europes Biggest Telecom groups in talk to create a panregional network. Dish network throws a wrench into sprints plans to buy clearwire, making a higher bid for the wireless provider and owner of valuable spectrum. A report suggests that bankers will cave from pressure from the Prime Minister and double inflation targets 2 . Lets quickly check in with u. S. Futures. The Dow Jones Industrial average is pointed higher by 14 points this morning. Similar gains, about three points on the nasdaq. A little bit higher for the s p 500. Weve seen a weaker tone to equities this week. But the report from alcoa last night may be helping to spur optimism. We like to ask our guests whether they see it as a reason to zig when alcoa zags when it comes to earnings. Look at the ftse cnbc global 300 for a sense of whats happening. Up. 1 , a quiet overnight session, led higher by some degree by asia. Heres whats happening with the european borses. Footse 100 up, higher for the xetera dax yesterday. The cac up ever so slightly. The ibex 35 adding to gains, up half a percent. A mixed picture across the board. Certainly not a session where you see a lot of strength one way or the other. Holding steady, thats whats happening with bond markets and currency markets now in europe. Thanks. Tenyear yields below 1. 5 , 5. 1 . Have nudged slightly higher in spain. This is where we stand on treasure yields, 1. 87. On the currency markets, dollar yen we did see it improve post comments out of japan. 87. 52. So a lot of profittaking this week. That has stopped this morning. Well over 88 with that 29month high that we hit. And euro dollar,. 3. Trading between 130, 1. 31, 1. 50, not much to kick it out. Lets remind you whats happened in asia. If youve just woken up, we have the news from overnight in singapore. Thanks, ross. A mixed day of trade finish asian borses. The nikkei snapped a losing streak ending. 7 higher. Talk is that the boj is set to ease its Monetary Policy this month and double its inflation target to 2 . After a brief pause yesterday the yen weakened against the u. S. Dollar again today, fueling automakers and exporter stocks. Elsewhere, the shanghai composite finished flat. Investors remained cautious ahead of trade and cpi data you do out. Cement makers were the losers following reports that more property curbs will be needed to tame rising housing prices. But agricultural stocks surged on expectations that beijings urban growth plan will support food production. In hong kong, the hang sane rebounded about half a percent held by strength in mainly banks. Mgm china soared 7 on news that it has received approval from the government to build a new casino in the kotai strip. Concerns over earnings sent the cosby lower. 3. The fifth dee of losses for south korean shares. Elsewhere, i. T. Stocks rallied pushing the asx higher by. 4 . Lastly, Indias Sensex just shut shop, ending lower by. 4 . Back to you, ross. Thanks for that. Alcoa swung to a Fourth Quarter profit matching forecasts as results were helped by stabilizing Aluminum Prices and higher sales to the Aerospace Sector and cost cutting. Revenues down 1. 5 to 5. 9 billion. That also beat estimates. Alcoa has also boosted its 2013 Global Demand forecast. Its now 7 . Previously 6. 5 . The growth says clikleinfeld ber than expected. The stock up 2. 4 in frankfurt, up 1. 3 after hours in the united states. Coming up in the next halfhour of the program, well go inside alcoas latest report with senior metals and mining analyst at clsa. We had a chat yesterday on twitter. This after several analysts have come on the show. Ive had three in the space two of days predicting that eventually this year the u. S. Dollar will big a psychic likal play and cyclical play and will rise with the s p 500 pushing against the backdrop of a stronger u. S. Economy. Many have pointed to divergence to the s p 500 and euro dollar trade as evidence of things to come. So as i said, this has become a discussion on twitter. And two protagonists join us. Chief global strategist at ctnx. From new york, managing director at b. K. Asset management and a cnbc contributor, as well. G gents, i enjoyed our chats yesterday. Thanks for picking up on my original comments. We had barclays, you know, and then independent strategy were the firms that came out and said toward the second half of the year, we could see this trifecta happening. Boris, how plausible is that from where you sit . I think thats definitely the current trend going on in the marketplace. Everybody picked up on this note mainly because the divergence between the euro and s p has really accelerated. And i think there are a lot of reasons for it. Primarily the key reason now is were entering into a phase of what i call every man for himself environment. Every government we used to after the 2008 crisis, most of the global Central Banks and global governments came together and coordinated policy, fiscally and monetarily. Now everybodys following their own different path. I think that youve seen a divergence thats going on. Now the dollar supercycle, king dollar thesis, rests on an interesting idea. Basically theres a virtual cycle in the u. S. That u. S. Economy is now becoming the engine of Global Growth. And as u. S. Economy continues to expand, yields are going to improve for the right reasons. Yields will go up because growth is going up, not because of inflation. And that was going to create more capital flow toward the dollar and more capital flow toward the u. S. Equity assets. You see this kind of a trend that has not been in place for the last four years where the u. S. Dollar and equities could go up in tandem. Whether thats going to be the case still remains to be seen. Im a little priim skeptica because i see the biggest risk in the u. S. Economy not economic but political. As everybodys been talking about, the debt ceiling crisis is going to be the next big hurdle that we overcome. If that passes without much problems, i do think that thesis could be real. If we get into a situation where we have massive stand ooff and that creates a stall in the u. S. Economy, that could go out the window. We have been here before with this we have been here before. Im looking at the analysis and feel like im in january 5, 2012. So many smart people said the dollar is going to go up. The yen is going the yields are going to go up, stocks are going up because of the cyclical advantage driven by the u. S. That didnt happen. I think this trifecta could actually happen. But for a brief period of time in the second half. It will happen. Whenever you see some hawkish minutes from the fomc, several members with in english, one or two, dont want to extend the asset purchase until the end of the year. That might be a good boost for the dollar. It might be good for yields. But in the currency market, there is something called the dollar. The dollar does not move in itself against the yen which this thesis is going to go up because of the abe story and because of him forcing the bank of japan to go more of a reinflationary trade. What about this thing called the eurozone . Theres a good chance that greece growth is going to hit positive. Not because there is a great improvement but because of what we have in the u. K. , because of the comparative. A quarter against quarter. Italy might hit also positive. And then there is also the possibility that the Credit Rating agencies going to start to upgrade one of the peripherals. When that happens the euro is not going to tell the u. S. Dollar go ahead because of the trifecta. The euro is likely to cap those dollar gains. So the thesis sounds good. It makes perfect sense. But it does not behave by itself. I think the euro is going to try to spoil that story. Boris . You know, actually, on a very near term, i think dollar yen is grossly overbought. If you look at dollar en yen on technicals, only three to four times over the last five years has it been at these high overbought levels where the rsi was above 75. Every time it corrected. It doesnt mean that i think the rally is over. But i think we definitely have a reasonable chance here. Were probably going to try to go for a double top at around 88. 40. Then well correct toward 85. I am dubious about whether the boj is going to be able to create the kind of inflationary pressures thats necessary in order to move dollar yen higher. But it does speak to this point of what i call, you know, fracture, every man for himself situation. Look at abe. Abes been the most nationalist leader that japan has had in a long time. Hes following very much policies that are japanese positive. I think thats what happened the last three, four years is japan sat around the sidelines and watched as the fed pumped and pumped and devalued the dollar. They couldnt take it anymore at this point. His election in many ways is a reflection of the japanese saying enough, were not going to have our your currency devalued and us being more competitive. And again its important to have a discussion without ignoring this thing called the euro. After the u. S. Elections when obama won, you had the risk aversion trade, stocks came down, but actually the risk metrics in the eurozone were much better. That means bond yields in the eurozone went up by less than the s p fell and the euro fell in percent animal terms by less, then stocks went down and bond yields in the eurozone went up. That is thanks to the man that was elected the man of the year, mr. Januaandraggy. He was able it do it without doing the omt. That capped the rise in bond yields in the eurozone, supported the euro, and thats the main reason why, the correlation between the euro and the s p kind of weakened to the favor of the euro. And if the thing that i mentioned this year will happen, which is basically, you know, the gdp growth in greece may come back up, i think that will be good for the u. S. Boris, response briefly. Yeah, but you know, we can play the same game on the euro side where we we heard that story over and over again. What we have, moderation of periphery yields, euro rallies, then again we have another flareup of the crisis. So my question is, will the spanish be able to refinance all of their debt . Will italians be able to finance their debt . I think a lot of the positive compression of periphery yields is in the euro. Now i agree, i dont think the dollar is going to have a massive rally against the euro unless theres a major source of friction in the eurozone as we go forward. I think a lot of the benefit that the euro has seen has already baked into the cake. I agree with you that in a sense, yes, dollar could rally more against the yen than against the euro, but nevertheless could strengthen against both if we clear the hurdle of the political problems in the u. S. I agree. Thanks. By the way, this started on a twitter conversation we had yesterday after comments that i made. I looked at your photo, boris. Look, whos this guy whos that guy on the left . Right, where was that . Exactly. Barcelona . That was taken in barcelona, i believe. Right. Two or three years ago. We were at a conference. No idea who the guy on the right is. We know the two on the left. Thanks for joining us. Thats todd gordon, contributor for cnbc. Is it oh, yes. I hadnt focused there. Money in motion. I cant believe they cut you out of the picture, ross. Wasnt nice. Theyre not allowed to use, you know, they hadnt paid to use me. To use my likeness. Couldnt fill it in. Thanks for that. Good to see you. Boris schlossburg, as well. Thank you both. Good photo. You guys havent aged. So kind. Stick around only taken last month. Straight ahead, flu season has arrived early. And its hitting people extra hard. Just how can you inoculate your portfolio against the virus . Well take the temperature of possible flu stock winners and losers. [ male announcer ] how do you turn an entrepreneurs dream. Into a scooter that talks to the cloud . Or turn 30million artifacts. Into a hightech masterpiece . Whatever your business challenge, dell has the technology and services to help you solve it. Impact wool exports from new zealand, textile production in spain, and the use of medical technology in the u. S. . At t. Rowe price, we understand the connections of a complex, Global Economy. Its just one reason over 75 of our mutual funds beat their 10year lipper average. T. Rowe price. Invest with confidence. Request a prospectus or summary prospectus with investment information, risks, fees and expenses to read and consider carefully before investing. Welcome back to the program. These are your headlines alcoa eases Global Growth fears with better than expected earnings. European shares cheer the Fourth Quarter earnings season. And dish network with an offer for clearwire in a bid to grab valuable spectrum. We told you were following comments from head of ubs Investment Bank whos testifying in the u. K. Today. A couple of flashes for you. He says ubs believes everyone involved in the libor scandal has been appropriately dealt with and that, in fact, 18 staff have left or been fired due to the scandal. He said we entered businesses that were too complex to manage, and were moving toward a more Human Organization thats also more focused. He said the firm underwent massive growth and entered busy that it didnt know well businesses that it didnt know well. The Industry Needs to change, and that management is focused on recovering the companys honor and standing. And if i could just mention, ross, egyptian pound fresh record low against the dollar. Keeping of course on that rol g rolling situation. Still to come on the show, boeing hit more tush len. The dreamliner suffering another setback. Weve seen one of the heaviest volume days in boeing stock for about four, five years. Well have details coming up. [. ] ive been training all year for the big race in chicago, but i can only afford one trip. And i just found out my best friend is getting married in l. A. Theres no way im missing that. Then i heard about hotwire and i realized i could actually afford both trips. See, when really nice hotels have unsold rooms, they use hotwire to fill them. So i got my fourstar hotels for halfprice men hotwire hotwire. Com announcer save big on car rentals too, from 12. 95 a day. Problems appear to be piling up for boeing after japans all Nippon Airways said it was canceling a 787 dreamliner domestic flight due to problems with the computer brake system. This after boeing shares nearly dropped 5 over the last two days following incidents on two separate dream liners operated by Japan Airlines in as many days. A fuel leak forced one aircraft to return to bostons Logan Airport yesterday. A day after an electric fire was discovered on a different aircraft heading to boston from tokyo. We have more from detroit. Phil, good morning. Thanks for joining us. How big are the implications here . Weve seen one of the heaviest trading days in boeings stock yesterday since 2009. Huge implications, ross. I think right now were at a point where investors are looking at this and saying, is there in t comes down to one question. Is there a legitimate Systemic Risk to boeing because they may have problems with the production of the dreamliner. In other words, it is natural for there to be what we call teething pains whenever you bring out a new aircraft. Everybody expects that. Is that the case with these incidents, or are we looking at something much more profound here which is theres a manufacturing problem, there is a design problem with the 787 dreamliner. At this point, most people are saying we do not think that there is a more serious issue here in terms of a design issue for the dreamliner. Having said that, we are now in the area of headline risk for investors of boeing. Look what happens today. Theres a canceled flight on a domestic flight in in japan for el nippon. That happens all the time but it will get attention because of the dreamliner. Thats what we were going to ask about. All nippon saying it canceled a flight on computer brake system problems. Youre saying this is more evidence of the headline risk that were talking about as opposed to concern about this particular flight or something more deep going on here. Exactly. Its the same thing that happened yesterday in boston. Theres news video, breaking news reports, twitter is lighting up with a Japan Airlines flight that it canceled due to a fuel leak of a plane that is being ready ready to fly from boston to tokyo. Immediately people say, aha, theres another problem with the dreamliner, here you go. You got a problem aircraft. Fuel leaks happen all the time. It is i wouldnt call it common but it happens all the time in the world of aviation. They fix the leak quickly at the gate after they brought it in. Plane took off, no problems, flew all the way to japan. Having said that, we are in the area where people look at this plane and say whats going to go wrong next. Its going to take boeing time to get past this. Each day bring new challenges. Phil lebeau from detroit on the latest. We should mention calling from detroit because he has been seeking with General Motors ceo. That will play out at 10 10 eastern time. Thank you very much. The commercial Airline Sector, the boeings customers, showing no signs of slowing down. The Airline Index up to a fresh 52week high yesterday. The highest since january, 2011. Large carriers among the big winners. There was a feature actually in barons magazine predicting the industry is finally poised to take off after years of sluggish growth weighed down by labor disputes and high debt. And the article singles out delta as the best position to reward investors. Joining us with more, Portfolio Manager at anc capital. Good to see you. Thanks for joining us. When we spoke how are you . Im all right. When we spoke in november, the delta virgin announcements going on, you said that there have now been a fundamental change finally in the Airline Sector after years of being the living dead. We now had a really investable asset class. And actually the see what stocks have done since you said that, as well. What happens now . Have we gone too far . No, i dont think weve gone too far. I think, again, as i look at the industry and what delta is doing, the other carriers are doing, were in a period where theyre going to continue to earn, start to earn cost of capital, exceed that, have earnings in a sluggish economic growth. That statement by itself and the results, the empirical evidence is powerful. That was brought by the consolidation that we started a few years ago. That will continue. Do you agree that delta is the best positioned . If you like them, how important are dividends to the thesis . I think deltas very well positioned. I think they had a head start with the merger with northwest airlines. You had Richard Anderson running delta who also was running northwest airlines. So you had familiarity on both sides where you did the deal versus united continental. I think as you look forward, i dont think dividends are that important. I would rather see them take capital and do share buybacks and shrink the capital base. I think dividends for that company will be irrelevant. What happens is when you pay dividends, boards get whetted to dividend policy as part of their capital budgeting plan as they talk to the management running the company. Id rather see them do buybacks if theres an opportunity for some consolidation, ala virgin, a la the refinery. If you dont have a dividend, you can either slowdown a stock buyback and use capital to buy the strategic assets and invest in those assets. I do not want to see a dividend. Great point. I wonder, too, the big concern for delta or other airlines really comes down to pensions. They may have time before they need to be fully funded, but its a significant challenge that at least on the in terms of their been sheet. How do they navigate their Balance Sheet. How do they navigate this going forward, can investors look beyond it . What delta did and this was on the northwest side, in 2005 they got relief from the senate. They were lobbying the senate so they can preserve their pensions and bankruptcy which is very rare, northwest did it fully. Delta did it for most of their guys excluding the pilots. The pension, the way it works is 2031, it has to be funded. They have a special rate which is 8. 85 . So the liability, let me rephrase this. The cash theyre paying out per year is about 600 to 700, manageable for the company. Youre not going to see the number come up. Im not worried at all. Okay. If rates do go up, the liability on the Balance Sheet goes down dramatically. Thats a big deal. 2031 im not worried at all. 2031. Incredible figure. Portfolio manager at anc capital. Arthur, appreciate your time. Good to see you in boston. Still to come on the show, alcoa eases fears over Global Growth in solid earnings. Well tell you more. Welcome back to wrecks wrec to worldwide exchange. Alcoa kicks off earnings season with good results, seeing brighter days ahead. Bank and telecoms doing better. The reports that europes biggest teleco groups in talks to create a pan digital network. Sprints plans to buy clearwire, a wrench in the plans. And a report suggests the bank of japan will likely cave in to heavy pressure from Prime Minister shinzo abe to double its inflation target to 2 . Quiet trading session overnight. U. S. Futures expected to bounce a little at the open, adding 20 points on the dow. Similar magnitude for the nasdaq and s p 500. Now asian equities were helping to buoy global stocks, the ftse 300 up, but the european borses, mixed picture. The dax among the underperformers. The ftse 100 up, the dakotas dakotas up. 1 . It is at a level of 7,703. Coming off a year in which it was up 30 . The cac one of the strongest performers yesterday, addi adding. 1 . And the ibex, despite the concerns weve been talking about with regard to the spanish economy, in particular the outlook for unemployment to continue rising from its already high 26. 6 , look at this up. 6 today. Ross, shrugging it off. Yeah. There we go. So that moving higher there. Alcoa also swinging to a Fourth Quarter profit, matching forecasters results. Stabilizing raw Aluminum Prices or aluminum as kelly says. Higher sales to the Aerospace Sector and cost cutting. Revenues were down 1. 5 to 5. 9 billion, but that had also beat estimates. Alcoa slightly boosting its 2013 Global Demand forecast to 7 from a previous 6. 5 . The ceo class kleinfeld says growth is coming back and europe doing better that expected. After hours in new york, stocks up 2. 3 , frankfurt trade. Joining us is senior metals and mining analyst at clsa. David, the stock tracking a little bit higher. Whats your own thoughts . Im not as excited as some other people. I mean, you know, everybodys talking about the 7 Global Demand growth. You know, it was 6 in 2012. Most of the Global Demand growth is coming from china. At the end of the day china can produce its own aluminum, hence its own system. So im not as excited as what you guys have been saying this morning. Some of their big end markets Like Aerospace still growing at 9 to 10 . Thats down from 13 to 14 last year. Still good numbers, but again, i think the big thing is that china is most of the growth, and china has its own aluminum. So i dont know how that helps significantly to alcoa. Presumably Aluminum Prices down 11 roughly in 2012. They need to get prices higher. That is looking illinois at the mome looking unlikely at the moment. Its about the aluminum price. Theyre doing things like cost cutting and things, except aluminums about 91 cents. I dont know what its doing this morning, 91 cents as of last night. They need the aluminum price to get back over a dollar. Even with their 7 Global Demand forecast, theyre calling for a 500,000ton surplus in 2013. Its hard to see prices moving significantly higher if we have a surplus. David, overcapacity has long before a concern in the industry, capping Aluminum Prices and the shares to some extent. A lot of it, too, comes down to china as you mentioned. If you rely on that country to rightsize or reduce capacity and yet it has its own prerogatives, why would you bet at this point on the fact that prices or will go up or that supply will come down . I wouldnt be betting on it. I mean, i was there recently, and basically capacity theyre producing about 20 million, 21 million tons now. In the next two years, theyll have capacity for over 30 million tons. Theyre not going to slow. They needed it for the local government for gdp growth. Were not going to see any shutdowns. Any of the new production theyre bringing on is lower cost type of production in the west because it has its own power source. Its not you know, doesnt need high cost power in which we see on the east coast. So i dont see the price the price can move higher just because of markets, but at the end of the day, i dont see it enough to get alcoa going from 9 or higher. Yeah. And david, what is china doing to ing planning to do with their stockpile and production . The Strategic Reserve board just bought 100pltons, trying to keep people afloat. Theyre giving subsidies from the local governments to some of the aluminum smelt force keep them going. Again, they have stranded coal in the western part of the country. Its too expensive to ship the coal to the east. What they do is they build power plants and build aluminum smelters on top of it, they can ship. That thats what theyre doing. Keeping you know, keeping production going because they need to. All right. David, good to speak to you. David lipschitz, senior mining analyst at clsa. Well see if the move fades after the initial rally. Want to bring you the result. Germany has auctioned off fiveyear that would be february, 2018, the offer to cover ratio and average yield 0. 35 , a total of just over four billion euros worth of the february, 2018, bauble. Big question are you feeling woozy . Are you . Are you i think i we both are this morning. I should ask myself. Or nauseous is that why they gave you this read . You say nauseous, dont you . We say nauseous. Are you burning up it . It might be the flu. It arrived earlier than expected this winter. Health experts say its hitting people much harder this year. My brother included who immediately coming to visit upon the holidays caught the flu. Theres reason to beware. As cnbcs Bertha Coombs reports, there are also opportunities to profit from the virus. Reporter the centers for disease controls most recent report shows 41 states with elevated flu levels around new years day. A lot of analysts watched googles flu tracker which looks for searches related to flu terms for realtime indicator. Overall, flu searches up some 200 from the threeyear average this time of year. Search activity is most intense in north america, as you see, in the u. S. In particular. Lots of red and orange, thats high to intensity, to really intense intensity. Uals moderately high in the also moderately high in the eurozone, as well. As a key provider of flu shots in the u. S. , walgreens is seeing a modestly outsized benefit from higher demand for shots. Drug stores also benefit from higher flu medication sales. Sales are strong for roches tamiflu. Influenza antiviral treatment. The drugmaker is having trouble keeping up with demand. In canada the government announced tuesday it was releasing stockpiles from the nations emergency supply because of shorjs. Lots of shortages. Lots of runny noses should mean higher sales for kleenex maker Kimberly Clark and procter and gamble who makes puffs. After slower unit sales the same quarter a year ago. Because of the mild 2012 season, cold and flu season also important as a sales driver for helen of troy which makes vaporizes and thermometers. Lee rink swann analysts think diagnostics firms like whole logic could see Strong Demand from more people seeing doctors who ordered tests in the Fourth Quarter. And with influenzarelated hospitalizations up sharply, hospital zovolumes could be stronger this quarter. Management associations, community health, and hca have more than 80 of beds in the states with the worst flu levels here in the u. S. With all of the increased medical spending, insurers could take a hit on higher costs. The estimate is that the peak of flu season is still about five weeks away. For more, check out my story on cnbc. Com. Now back to you. That was bertha cook. Weve been doing a geography lesson looking at the map. Arizona look at all the states around arizona. Pale orange. Arizona is almost pinky whats going on in arizona compared to its neighbors . Still dont think it was as red as most of the middle of the country. The northeast that was more pink. It was different from the neighbors. Actually this time of year here i am you should be playing golf. This says aggressive nasty flu hit arizona. Although it was in the phoenix business journal. Might be a home bias to reporting. Two days ago. It is troubling. How many people do we know that have had the flu here and elsewhere . The cases in britain were up 70 from a year ago. Scary stuff. A traditional thing, flu. Great. You put out the holly, get the Christmas Tree and get the flu. Its what happens. Im glad we were able to participate in that british custom this year. As mentioned earlier, dish network is looking to outrun sprint with a bid for clearwire. More coming up. [ male announcer ] dont just reject convention. Drown it out. Introducing the allnew 2013 lexus ls f sport. An entirely new pursuit. But dont just listen to me. Listen to these happy progressive customers. I plugged in snapshot, and 30 days later, i was saving big on car insurance. With snapshot, i knew what i could save before i switched to progressive. The better i drive, the more i save. I wish our company had something this cool. Youre not filming this, are you . Aw camera shy. Snapshot from progressive. Testdrive snapshot before you switch. Visit progressive. Com today. [ male announcer ] how do you make 70,000 trades a second. Reach one customer at a time . Or help doctors turn billions of bytes of shared information. Into a fifth anniversary of remission . Whatever your business challenge, dell has the technology and services to help you solve it. You are watching with the worldwide exchange. Find out why the rate setting meeting could mark a key moment in the eurozone debt crisis. Forget alcoa and the u. S. Earnings season. What you should be watching for is europes corporate performance or so says someone who weve quoted over this. Now you can check out the latest on the online hacking of u. S. Banks and why the u. S. Government thinks iran is behind it. Ross . I think my mother said it. For clarification. I was trying to tease, you know. Find out who said that. My mother, she says a lot of good things. I should get her on twitter. She should be on the show. An instant hit. Besides, there are Telecom Companies here, one of the best sector performers on the Dow Jones Stock 600. My mother called in to talk about it. Here we go, telecoms up 1. 7 . The reason, theyre reportedly discussing the idea of creating a paneuropean telecom. This is an art that says the firms see the Current System as disjointed and hindering their ability to compete. Now theres this idea of sharing infrastructure. Thats been discussed at a private meeting to the e. U. Chief and bosses of europes Biggest Telecom groups. Telecoms best performer. Retail the worst to date. Disappointing christmas sales numbers. Back to you. All right. Thank you very much. If youre just joining us here on worldwide exchange, alcoa eases Global Growth fears with better than expected earnings. European shares cheer the upbeat start to the Fourth Quarter earnings season. And dish network outruns sprint for an offer with clearwire in to a bed to grabl valuable spectrum. Dish network is making an unsolicited 2. 3 billion offer for clearwire, trumping a 2. 2 billion bid by Sprint Nextel for the wireless provider. Dish is now aiming to over 3. 30 a share. Sprints offer was 2. 98. Sprint is clearwires Majority Shareholder and wants to buy the rest of the country. Clearwire says dishs offer is only preliminary. But the deal would require sprints approval. Sprint says the offer isnt viable. Theyre unlikely to give it. Some analysts say the bid confirms that dish chairman Charlie Ergen is serious about becoming a wireless provider. Other say hes amassing spectrum to flip for a big profit. The relative stocks, though, does mean clearwire up 10 in frankfurt trade. Dish down slightly along with Sprint Nextel. Thats adding it was up 8. 9 in afterhours trade. He announced this at the Consumer Electronics show, adding to speculation over what the motives are. I cant go through the sprint what is sprint prepared to say yes . And so they which has a lot to do with soft banks saying yes. That was one of the biggest m a deals of 2012. Thank you. And we got this this was sort of the chat was coming through the markets yesterday, wasnt it . We saw the yen actually weaken a bit on this, news that soft bank might not go through. The dollar yen weakened, not the yen. The the dollar yes. The yen wouldnt be flowing into america. Is the answer. If sprint has the deciding interest on it, not going anywhere. It comes down to the value as some analysts the end in hertz per pop. Is the megahertz per pop s. It worth 40 cents megahertz per pop or 20, the Single Digits that some argue the sprint value was at. Undervaluing clearwire, should shares at 3 be trading up to 5 and how would that affect a bid . At the time one wells fargo analyst noted that part of the reason this was going to go through is because there was one logical buyer. Now dish is coming forward with a better offer. It may not be the last that we hear. I want to ask you to explain megahertz per pop. Bandwidth per number of persons in a market. You did it. Got the test. Brilliant. Pretty much. Now the tech wars at ces arent just about hardware and market access. Theres a battle brewing on the internet streaming side. We have the details. Reporter so many of these devices here at ces are designed to stream content. And its a war. Digital players like netflix along with cable and satellite tv providers, theyre all fighting to make their content stand out. So theyre launching flashy mobile apps and new bells and whistles designed to hold on to subscribers in a competitive commoditized environment. Netflix is testing streaming in 3d, plus new personalized profiles to allow each Family Member to manage her or his own queue and receive individual recommendations. , tube is making it easier to watch its videos on tv. Its app allows users to pick videos to watch on their screen. Cable and satellite tv companies are fighting back by going mobile and embracing Internet Access and integrating internet content. Cox and cisco developed new technology to brows live and ondemand content. And search for videos across the likes of netflix, as well. And dish is upgrading its hopper with slingbox technology. Allowing subscribers to watch any show on any device anywhere and any time. Dishs ceo says in a world where distributors cant differentiate with content, they have to distinguish themselves with cutting edge mobile technology. The goal is to make all these gadgets here at ces work for them and not against them. From ces, reporting for cnbc. All right. Thats the latest from vegas. The ces conference. This is where we are ahead of the european stocks. The ibex in spain up. 2 . The xetera dax and cac flat. The u. S. Futures sitting roughly unchanged. Dow trying to add 17 points. Whats remarkable, as of yesterday, Dow Jones Industrial average up 7. 25 this year. Its, what, january 8 . Remarkable. Yeah. Plenty more coming up. What are you doing . Nothing. Are you stealing our Daughters School supplies and taking them to work . No, i was just looking for my stapler and my. This thing. I save money by using fedex ground and buy my own supplies. Thats a great idea. Im going to go. We got clients in today. [ male announcer ] save on ground shipping at fedex office. We can afford to take an extra trip this year. First boston. Then san francisco. Hotwire checks the competitions rates every day so they can guarantee their low prices. So our hotels were half price. Hotwire. Hotwire. Com your Financial Advisor should focus on your longterm goals, not their shortterm agenda. [ male announcer ] join the nearly 7 million investors who think like you do. Face time and think time make a difference. At edward jones, its how we make sense of investing. Welcome back, a couple of stories to keep you up to date on. Aig says it has an obligation to consider a demand by former ceo Hank Greenburg to join his lawsuit against the u. S. Government. The Company Board is meeting later today. Greenburgs suit claims the u. S. 182 million bailout of aig deprived shareholders of billions because they took a 92 stake and imposed high Interest Rate as part of the package. The fed is reportedly considering a plan to help big foreign bank avoid costly new regulations aimed at preventing derivative trades from being subsidized by u. S. Taxpayers. The Financial Times says changes stem from the lincoln amendment included in the 2010 doddfrank law. Prohibits banks that have access to the federal deposit insurance or fed credit from acting as derivatives dealers. U. S. Banks will still be able to trade some products like Interest Rate swaps, but under the current rule, foreign banks would be forced to move their u. S. Derivatives activities off their books. Well see where that happens. Apple is working on a cheaper iphone that might hit the market sometime this year. The wall street journal suggests the device may use less expensive materials. Oh, no, a plastic shell. This would mark the first time apple has diversified its smartphone lineup with significantly different models since it launched the first iphone all the way back in 2007. What a gamechanging moment that was. I dont think i was born then. No. Staying with mobile phones for the moment. Microsoft says sales of windows 8 have hit the 60 million mark. Ten weeks after the launch of its new operating system. Thats roughly in line with sales of windows which came out in 2009. Microsoft wouldnt say how many surface tablets which are equipped with windows 8 it has sold. The company introduced the touchscreen tablet as a competitor to the ipad. Microsoft shares there are outperforming the market, up. 6 in frankfurt, down, though, 11 in the last couple of months. Now lets look at the agenda in the u. S. Quiet, no Economic Data or fed speeches. Just a few earnings reports on the calendar. Wine and Beer Distributor constellation brands, shaw communications, and products maker helen of troy along with Texas Industries among the reports to watch for. Joining us is chad morganlander, Portfolio Manager at stifel nicklaus. We want to get your initial take on alcoas results and the outlook as its shaping up for earning season. Good morning. Well, it looks as if alcoas earnings were somewhat better than expected. In particular on the revenue front. And this is going to be a story for 2013 for alcoa. As you see the Global Economy reaccelerate, in particular china. Now weve talked with analysts on this program, chad, about whether to really believe that this is going to happen given some of the overcapacity issues plaguing alcoa. Are these companies specific issues, is there a readthrough from results or as weve seen in prior quarters, is it the case that, you know, as alcoa goes, everyone else tends to go the other way . Right. You know, alcoas a Global Growth story. Its a base metal company. So as you start to see Global Growth reaccelerate where 2012 it was decelerating, then alcoa will go higher. Now, you know, look, they have their problems. They have a product mix that theyre trying to get to a higher margin, more stable business to balance out their business line. But really it is a global macro play. And its a high beta stock. Thats why investors want to be in that company if they think the Global Economys going to reaccelerate. Yeah. Weve got to see whether the price goes up, as well. Chad, what about here we go. Kelly saying the down, what, 7 in the first start of the year. Thats quite a start. Does that continue . Yeah. You know, were thinking that its going to be a bumpy ride for the first half of the year. Youre going to have global gdp reaccelerate, 3 , 3. 5 . United states gdp should be around 2 , but it will be dead in the water for the First Quarter to second quarter. And then reemerge ag you start to see Capital Spending kick in. As well as the Housing Market starting to improve in the united states. So that should bode well for for the broader markets on a global basis. And here in the united states, you know, you should see about 7 to 8 total return. Were basing that off of earnings of around 105 for s p earnings for 2013. There are plenty of risks, chad, including what happens with the debt ceiling negotiations. If we could just get specific here, where are some of the places you think investors can kind of ride out some of the volatility . You know, so were looking at Technology Stocks because theyre very, very cheap at this point in time, as well as Consumer Discretionary on the big mega cap stocks. So for instance, walmart, very good company. Blue chip company, growing profitable, well capitalized, has a rising dividend of roughly 20 over the last five years. You also want to look for technology companies. You know, the Technology Stocks are ridiculously cheap. Apple, 525 price. They have 125 of cash their Balance Sheet per share. And you know, theyre earning probably about ten times this years earnings. Cisco, for example, 12 times next years earnings. Okay. Over 2012. These are all very cheap companies, good quality companies. They should be able to ride out turbulent times. And also get some upside if we hit that price target of 15. 50 on the s p. Chad morganlander, well have you back to follow the year as it progresses. Thank you very much for joining us this morning. Thats it for worldwide exchange. Coming up next, squawk box and the countdown to the u. S. Open. With the spark cash card from capital one, olaf gets great rewards for his Small Business pizza [ garth ] olafs Small Business earns 2 cash back on every purchase, every day helium delivery. Put it on my spark card [ pop ] [ garth ] why settle for less . Great businesses deserve great rewards awesome [ male announcer ] the spark Business Card from capital one. Choose unlimited rewards with 2 cash back or double miles on every purchase, every day whats in your wallet