Transcripts For CNBC Worldwide Exchange 20130129

Hello. Youre watching todays worldwide exchange. Im ross westgate. And im kelly evans. Japan is facing a 255 million euro loss for philips. Cutting a key Interest Rate by 25 basis point is the bank of india. And the boj is keeping tune rate until theres a significant drop in unloimt. And ahead of todays parliamentary hearing, italys economic mip sister takes grilli takes center stage. All right. Reunited. Back together. So nice. You know that song . I sang that to you the last time. Weve had a couple of reunions and a series of time spent apart. How are things sthp. They are great here. How was davos . So far, gone, in the distant memory. Dont worry about it for another year. Plenty to worry about today, though. Korea. On todays show, plenty of good stuff coming up. Were going to be in madrid as the Prime Minister is reportedly releasing a plan to relief some of the pain of austerity. Then its south korean steel giant posco reporting Quarterly Earnings today. Well have the latest live from seoul at 10 15. And its day one of the fomc meeting. Economists are awaiting more clues from the stimulus program. Well be live in new york about 11 00 Central European time. Before that, were going to head out to mumbai as the rbi cuts Interest Rates for the first time in nine months. We can gauge the market fall out now from that move. All right. So lets just show you where we are in global trade right now. One hour into the session here in europe, it was a soft close for u. S. Markets. Were struggling for direction and thats where we are right now for u. S. Markets. Pretty equal. The Dow Jones Stoxx 600. And as far as the ftse 100 was concerned. First thing this morning, it was up 13 points. The ibex is up three and cac 40 down 1. Like the u. S. Market, struggling for direction. Moving on for you, lets show you where we stand with yields, as well, on the bund market. 1. 687, steadily creeping higher. Spanish yields, 5. 27 . Italian yields, 4. 22 . Once theyve grossed over the 2 mark, they havent been able to get over. Around 1. 57 is sterling dollar. Aussie dollar, 1. 0458. Dollar yen, 90. 53. Euro dollar, 11. 3452. Thats where we stand right now in european trade. No big directional movement. Lets bring you up to speed with the Asian Session today. Sixuan is with us out of singapore. Hi, ross. A mixed day ahead of u. S. And china data and more corporate earnings. The shanghai composite gained 0. 5 . Brokerages fought for the second day as beijing may allow them to provide fund cuts to these services. But the hang seng finished just a touch below the line. Look at Hong Kong Listed stocks. It slipped 2 today after the 1 billion share fell down by Goldman Sachs which was placed at a 3 discount to yesterdays closing price. In japan, the nikkei gained 0. 4 . Nissan saw its shares move to the highest level in more than four years, 4 1 2 years, in fact. This after the automaker reached an agreement with daimler and ford to develop Hydrogen Powered cars. Elsewhere, kospi snapped a fourday losing streak ending higher by 0. 8 . Samsung and hyundai rebounded strongly on bargain hunting. After the bell, posco reported a slump in its q4 profit so well watch its shares reaction tomorrow. Elsewhere, Indias Sensex is currently down by 0. 3 after the rbi cut the Interest Rates for the first time in nine months. Back to you. Okay, sixuan, thank you. Catch you a little later. Now joining us on the set is allan miller, Founding Partner at stm private. The top thing on everyones mind, allen, welcome first of all. Whats happening with markets . Equities around the world and a lot of other markets are at multi year highs. Theyre on these winning streaks. Yesterday we saw that start to break down. Is there a significance to that . We never look on a oneday view. If you look further out, theres substantial value in equities compared to bonds. But when you actually look at the sharp rise as weve had in the last few months, its not unusual for some of that to be basically given back. And if you look at the volatility of markets, the vix, its down to the lowest level its been for years and years, which is normally a negative sign in the very shortterm for markets. Because you guys like to take a contrarian view when it comes to investing. How do you read this . Do you look at the last couple of weeks and say we need to blow some of the froth out of the market. Would you almost say you would like to see a healthy correction . I dont think there will be a healthy correction. I think there would be a sideways move or a slight pullback. If you take what we did last year, for example, were moving money into emerging markets, into europe when its completely out of favor, in japan which now seems to be everybodys consensus is bullish on when it felt extremely worrying, putting money into japan at the time last summer and now were actually taking some money out of small cap, midcap in the uk which is over 20 . What about toous . In the u. S. , again, we took money out of u. S. Equities Third Quarter last year. I think the real terms of value is emerging mblth. If you look at the companies, and thats what you own when you buy indexes is underlying companies, you get higher growth and lower valuation. Youd rather take money out and put it somewhere else than buy Downside Protection . With the vix so low, you could go and buy yourself some cheap down side insurance. If you talk about indexes following the blitz, normally a recipe for losing 50 to 90 of your money over a fiveyear period. You can tie the market over a oneweek or twoweek view. Fine. But i dont like betting against the odds. Those indexes are based on volatility and disaster. No, im just saying it suggests insurance at the moment. But you could buy option insurance at the down side is pretty cheap. Well, what we tend to do is basically increase the cash when were short the negative, reduce the cash when were more positive and thats what we have done consistently since 2009. Were starting to get into earnings season here in europe following earnings season which is off to a reasonably good start in the u. S. Are earnings relevant in this context . As we look, for example, at the u. S. And what weve seen there, its come in relatively okay. Apart from apple. Exactly. Yeah. The u. S. Has been more positive in terms of earnings against other markets the last 12 or 18 months. I mean, this year, that gap is likely to narrow. And i think actually people probably underestimate it in europe the impact of the strength of the euro against everybodys expectations. And for a lot of markets, a lot of exports in europe, that could actually reduce earnings quite considerably. Talking about earnings, lets tell you whats happening with phillip. Fourth quarter loss in line with expectations. The Dutch Electronics giant agreed to sell the unit to japans ny electronics for 2 million. Earlier he was asked about the companys strategy for growth. Im confident that the accelerate program is making philips a more agile and Entrepreneurial Company where we are able to reposition us to Growth Markets. To Growth Markets like china, Southeast Asia grew by more than 10 in the Fourth Quarter. Compensating for the the negative growth in europe which still is in a recessionary state. Yes. So what do you think of what do you make of what theyre doing . Well, i havent looked at philips for 10 or 20 years. And the reason for that . The reason for that is when i look at individual stocks, i tend to focus on the uk. Youre not worried about what the big condmrom rats are doing. Well, i look at stocks from the big index and the investment index. Samsung being 25 to 30 of career stock market has a big impact or, you know, the four or five stocks in russia. But obviously, philips is tiny on the european market. So what do you think of samsung . The worrying fine is whether the korean won will strengthen. The impact that has on samsung, relative to apple. I think the power in a way is moving from apple to samsung. And if you look at the year on year growth, its 20 to 25 growth from samsung, zero growth from apple. Tomorrow rim is does rim report tomorrow . No, its the blackberry ten launch. Oh, the blackberry 10 launch with the positive reviews rolling in from davos. Every review rolling in for davos. It was a smart strategy for them to come and get the gadget in front of everybody and getting everybody excited and talking about it. It was funny to get everybody with Lloyd Blankfein and jamie dimon. Did you just drop the name Lloyd Blankfein . Okay. Mario draghi met victoria grilli last night to discuss. Officials had been questioning how much italys central bank and mario montana tys governmet knew about applying for state aid. They have rebounded. They are atop the euro stoxx 600 today. By the way, a lot of people say thats not a good thing having drinks with those two guys. Be careful who you hang out with. Yeah. Be careful. Spain could be given more time to meet its equity targets. Stephane is in madrid probably running away from the french employment minister bearing in mind his remarks. Is that why you got out of france, because its bankrupt, stephane . No. I went out of france for tax reasons. You know that. Spain might be even more trying to reduce its public deficit over the next couple of years. European officials will not make a decision until next month when they will assess the spanish Austerity Program on the 22nd of january. It was explained that europe information would have to take into account the Growth Prospect of the fiscal space for each country in europe and could, indeed, soften the spanish deficit target if the economy continues to contract. Thats precisely what we are expecting because for the Fourth Quarter, we are expecting the spanish gdp to shrink by 0. 4 . For the time being, spain has a deficit target of 4. 5 for 2013. That seems to be really ambitious if not out of reach. Because to meet this new target, the government would need to find 20 billion of additional euro cut. That wont help the spanish economy to go out of recession. For that reason, oli rehn thinks spain will need some incentive from stimulus measure toes improve its economy and boost its labor market. It has to be complemented with policies to help the unemployed find new work or training opportunities. Its important for our Financial Sector to give credit so they can invest and create jobs. And it will be important to maintain the fiscal consolidation. And the stimulus measures are indeed on the agenda. The Prime Minister will make an announcement on the 20th of february with a package to boost the economy and help small and medium tax breaks. We know after austerity comes the time for stimulus. Over to you. Stephane, thanks for that. Also to come, were going to hear about ten coming bank of england governor about what else . Reform. And mark carney will join us. Well be right back. Welcome back to the program. The fed begins a twoday meeting today and will deliver a report tomorrow. The fed said as long as inflation stays subdued, rates could remain at historic lows until unemployment dips below 6. 5 , which they predict could take until the end of 2015. In india, the central bank has lowered its key policy rates for the first time in 15 months. Ecta, the first rate cut in several months here. Are we expecting more to follow . Well, that is the rabbit in the hat, actually. The policy in terms of commentary was extremely deliberated and balanced in terms of what the forward looking guidance would have been from the rbi. They have said that inflation will be pretty much range bound going into 2000, 2013, 2014. So that would give them space to maneuver in terms of the monetary policy. But, again, there will be two conditions that they will be looking out for. One will be inflation and the wpi inflation tragedy and whether there would be any sort of upside to it into the next year and second would be any discernible down take in terms of the current account did i have deficit and the current deficit problem which india is facing at this point in time. In fact, they did make quite a statement in terms of current account deficit. They put a lot of emphasis in terms of the macro accounts reviewed yesterday. Otherwise, there was definitely some amount of relief for the markets. The rate was cut around 25 basis points. The first time after nine months, the last one was a few basis points in april. Trying to include liquidity into the system and a discerning amount of credit. Otherwise, the markets were pretty much sanguin about it at this point in time. But now they have opted to pay higher at this point, just about trading with the negative highs. The broad markets showing much more pressure at this point. Back to you. Okay. Thanks for that. Thats the latest and well talk more about this rbi decision, as well. Meanwhile, Incoming Bank of England Governor Mark carney has given his assessment of the Global Banking system in his capacity as xarm of the banking stability board. Car carolin, its not so far to go, frankly, from davos to zurich. Absolutely. Thats what mark carney, the chairman no. But thats exactly what he did. He probably took the trade, maybe took the helicopter, we dont know that. But its a twohour ride on the train, i can tell you that. Anyway, hes the chairman of the Financial Stability board and the Financial Stability board met in zurich yesterday to talk about the banking sector, to talk about ogc derivative rules. But i wanted to know from mr. Carney whether he during his time in davos felt any sense of complacency on part of european policymakers given that markets are trading at multi year highs and risk premiums have come down. I wouldnt say that there is a sense of complacency amongst policymakers. And that id say on the basis of both private discussions in davos and the public points that were made by christine legarde, for example, ignacio fisco. Im not sure i heard a public policymaker exhibit those signs which is a good things. Because while tail risks have been reduced, extreme negative outcomes have been reduced, they certainly have not been eliminated. And its going to require a sustained implementation of policy that extends well beyond actions of Central Banks to true structural policies and National Fiscal and structural measures and in the case of Europe Institution building is ultimately going to fully address some of the risks that have been manifest over the course of the last couple of years. So here is the good news. Mark carney, the chairman of the fsc and the incoming boe governor, he sees no signs of complacency just yet. But as he pointed out during the press conference yesterday, there is still a big Downside Risk for the economy. Im quoting him now. Given the weak Growth Prospects and high levels of public and private sector debt. Kelly. Carolin, thanks so much for that. I think well have more of that interview, too, in the next hour of the program. In the meantime, its the 20th birthday for the etf. We know to know whether youve invested in these products and have etf changed your trading habits for better or worse . Worldwide cnbc. Com. Tweet us, cnbcwex or individually. Allan miller, you guys have three main funds, all of which invest etfs. Yes, they did. Why . Well, because one of the reasons why etfs are so unpopular for a manager is you have more diversification, less you cost, more liquidity and its easier and cheaper to deal with. Thats why more and more private investors like it and more and more Fund Managers dont like it because they offer wealth. But do they offer longterm value, though . What i worry about is that the popularity of so many of these products, whether theyre leveraged etfs or derivative etfs, when youre talking about buying the s p 500, great. But if youre talking about some of the other newer products, theres much more potential for individuals to get burned. People sa a, but obviously if you give investors a choice, i think its good for investors to have the choice. I might want a plain vanilla s p 500 or ftse 1 hup. But isnt it nice to have the wide choice you can invest in, commodities, equities, bonds, emerging markets, developed markets. But the point, are you getting options about investments, but are you being not tricked, but are you overlooking the costs of getting exposure to making these best because of the way they hold products and if they roll, they destroy your value over time. In terms of roll, youre talking about commodities, and whether you hold commodities physical there is a cost. Theres always a cost. But the beauty of etfs or etc is you can see the cost. So you can make a judgment. What do you think is going to be the return . What do you think is going to be the cost . And compare one with the other. And thats the great pit fall of many funds. If youre investing in a bond fund at the moment, investing in government bonds and those government bonds are yielding 2 and the costs from top to bottom of that fund is 3 , its a pretty stupid decision. Right. Yeah. I mean, over time, and maybe if youre a retail investor, youre retailing in pensions and mutual funds, how much do costs higher costs damage funds . If youre doing over 10 or 15 years this is one of the great wonders of the world, its compounding. So people think theres only an extra 1 , 1. 5 if youre investing at 20 or 30 years, thats 30 of your capital gone in fees and costs. And its like going up an escalator. More for the fees and charges, the higher that speed of the escalator and the harder it is to actually end up ahead. Now, it doesnt mean that people cant achieve that. It just means its harder if theres a lot of costs. We know the etp industry crossed the 2 trillion mark. Does it cross the 3 trillion mark . And how soon . I dont know how soon. I just think its a great way to invest. It has incredible advantages. Four years from 1 trillion to 2 trillion and it was 19 years up to 1 trillion. Its like population. Allan miller, scm private management, thank you for coming by this morning. Thousands of egyptians took to the streets overnight to order a curfew in three cities along the is you ez canal. President morsi imposed the curfews to try and curb destruction. Meanwhile, french and malian troops took control of timbuktu last night as rebels set fire to buildings in the unisco World Heritage site. Frances military mission in mali is now two weeks old. Most of the individuals have fled out into the desert and mountain regions. As china sets its sights on resource rich markets of africa, is it creating a new form of imperialism . Well discuss that when we come back. Its lights out for phillips audio and video business. It posted a 350 million loss in the Fourth Quarter. Indias Central Bank Gives the government what it wants cutting Interest Rates by 25 basis points. And the fed kicks off a twoday meeting. Want to pass on cdc . Shares moving higher on the banks trading loss scandal. Indias economic minister grilli will take center stage. Right. Were an hour and a half into trading day in europe and no direction. Completely directionless trade, as you can see. There we go. Flat. Maybe you can help him out on audio a little bit. If youre listening, theyre flat. There are not a lot of consistent themes here. We can look at the bond space maybe for a little mover direction. The answer there is mixed. Theres a little bit of a bid towards spain and periphery and out of the socalled core. Were showing yields there and its completely opposite. So were moving out of spain and italy and into bund and gilt, even though the red would indicate outflow is the other way around. Bund yield over the last week. 1. 67 , absolutely. 1. 44. Did it get quite that low . Yeah, i remember, that one, i wrote it down. The uk Economic Outlook weakens. Gilts are up. Theyre selling off and not terribly minded that the pound is weakening considerably. Short cable, long dollar. Thats right. Talking about cable, there we go. Sterling dollar, 1. 57. Everything else is pretty steady. Can dollar yen maintain above 90 . Well see. In a surprise move, the rbi cut the cash reserve ratio by 25 basis points to 4 effectively bumping more money into the banking system. These moves come as indias headline inflation fell in december. The rbi says it now expects inflation to stay around current levels this year and next. For more, were joined by singapore, rahoul. Wa do you make of that reserve rate cut . A 25 basis point rate was widely expected, but the 25 basis point cut in the cash reserve ratio was somewhat of a surprise, especially after the guidance sentiment in january has been slightly more on the hawkish side. So this needs to be seen in the context of overall positive upset the rite price. What is the impact of that going to be . In terms of its impact, the sense is that it will be seen that the central bank is willing to do a little bit more to support the economic lookout of the country. The finance minister has been trying quite hard to try to provide Investor Sentiment and this will probably try and help support that initiative. However, in terms of the on the ground impact, its not going to do a lot in providing the Growth Outlook in the shortterm. Yeah. I mean, clearly, indian banks said theyre going to lower their Interest Rates, as well. And are we comfortable about inflation with this extra liquidity . Well, it would seem so. I mean, in the last three months, we have had pretty big downside surprises in the wholesale inflation. At the same time, the central bank has lowered its own expectation of inflation by end of march to around 6. 8 from 7. 5 earlier. So certainly the expectation of lower inflation is being built and given the antibiotic aggregate has been declining at a fairly rapid rate, expectations of infusion is quite low at this point. The Indian Government comes out, says its doing a lot of reforms, starting to do a lot of reforms. Is this helping the economy . Is it helping to revive prospects . Well, it is certainly help and financing the current account deficit. I mean, into the equity markets and increasingly the bond markets have been picking up and the cycle is showing some signs of revival in india. So that has been a pretty positive improvement in the last few months. However, some of the more structural issues around infrastructure, around supply side reforms have not been completely undertaken. And our sense is that the is going to be the medium term challenge for the government and trying to convince people some of the most significant reforms would be unleashed over the next few months. And talk about more reforms for the government. They did shoot themselves a bit in the foot last year. Have they been able to rewind some of the damage done . Whats going to happen to Foreign Investment flows . Well, they have in the sense that the regulations around the prospect of tax has been pulled back and we have seen that being recognized by investors to hire secretary inflows. Fiscal consolidation is going to remain the key priority from the governments perspective. Our sense is that equity inflows will remain supportive and thats going to support the iron ore in the near term. Ral bojoria, thanks for joining us from singapore. Staying in the region, prosco was hit by soft demand and falling prices and chery kang has more from soeul. What does this tell us about conditions for steal . Posco was not immune from the overall industry slowdown and the industry slowdown can be characterized by slow demand for Steel Products and falling prices for Steel Products. Its Fourth Quarter operating profits dropped to 51 coming in at close to 347 million coming below market expectations. Now, nowadays, we look at how each Korean Company coming out with its earnings assesses the impact of the strong won. Posco says the won is helpful because it imports most of its materials, but do note that some analysts are pointing to the fact that the currency factor will still eat into automakers and other korean exporters demand for steel if they themselves are hurting with the strengthening won and the weaker yen. That will have us focused on the currency factor down the road. Now, looking ahead to the year 2013, though, poscos ceo says the firm expects much better earninor tuarter of this year, thanks to one lower cost of Raw Materials and, two, a pick up in steel prices over in china. Kelly, back to you. Great, cheri, thank you very much for that. Now were boosting up concerns thanks to cost cutting and rising communications. Few ch fushiko has this story. Strong gains in banking and broke ran counters helped lift stock expectations for high year earnings. Mizho Financial Group up almost 3 . The nikkei is reporting today that the recent stock market rally boost japans top three banks net profit for the fiscal year ending in march. Its net income expected to rise more than 5. 5 billion. Mitsubishi usjs ninemonth profit is likely to have exceeded 5. 5 billion while mizhos hotels about 4. 4 billion. Higher stock prices pushed up commissions of the sales of investment trusts. The weaker yen helped lift earnings. Brokers Like Nomura Holdings were also higher today. Back to you, kelly. Great. Fushika, thank you very much. The first full year budget compiled under shinzo abe, tokyo still needs to depend on borrowing to cover nearly half of its spending. Together with its extra stimulus plan signed off earlier this month, the budget will likely push japans record budget debt even higher. Nissan saw shares push to their highest level in more than 4 1 2 years. The project will cut Technology Costs and ames to produce the First Vehicles within five years. As you can see there, shares up better than 4 today. Interesting looking car. There seems to be healthy interest for shares of chinas biggest banks, itbc. Goldman sax 1 billion share sale of the bank wag was oversubscribed between one and two times. In response, shares dropped 2 as you can see yes, that doesnt say dropped 2 . No. Looks like its up about 0. 2 . Disregard what i just said. Chinese workers have been flocking to resource rich emerging markets across africa and latin america. Our next guest has been following the trend closely and he says the communist nation is creating a new informal imperialism. Pleased to be thousands of people have been evacuated in australia after massive floods. The weather sdraefrt has claimed four lives. The massive Tropical Storm brought deluges of rain. Its forced companies to close low. The group has received already 5,000 claims related to the disaster. Sticking with the insurance theme, a new report by moodys says the outlook for property and casualty insurers is pretty stable and its more stable for the Life Insurance segment. According to the analysis, 2013 will be a challenging year for life insurers due to slow Economic Growth and the impact of regulatory changes. Simon harris joins us now. Welcome. Morning. So lets Start Talking a little bit about property and casualty. How significant have some of these extreme weather events, whether in australia, the earthquake, Superstorm Sandy been in terms of profitability . One of the things we said about the pnc report, it will be hit by Superstorm Sandy. Many of the products that people buy on the pnc side are mandatory. So unless these risks come along and they will hurt their earnings, the impact is stronger because theyre less affected by the direct environment. Are we enter ago harder market . Which is to say can Insurance Companies start to raise premiums across the board . It varies a lot by line of bit in my country, but certainly post super storm sandy there will be hardening of rates. In the uk, though, with the rates going down, even though motor has been not that profitable why is that. Because the competition is a pretty competitive environment. And we had changes in the motor race, though. Weve had a big eu change on the agenda. Yeah. We dont know how thats going to come out in the wash, do we . That changes things around. But in the shortterm, it does mean that the markets are a little more volatile and it has been a sizable change. Its just unfortunate to some degree that these natural disasters which affect many people and are stressful events to live through then cause Insurance Premium toes rise, which sounds like thats whats happening in part of the u. S. It varies, but longterm insurers will look to make profit over a period of time. When they do happen, they have to look at have they been in line with all their expectations . And whats happening with capacity . Its dictated by capacity levels. Yeah. Pnc, capital comes in and out frequently been we are seeing money coming into the insurance sector. As capacity comes in, rates will go down. I want to talk about life, but first to cap off what happened with Superstorm Sandy, it took a while to get a sense of how costly that event was. Whats emerging . I think most of the q4 earnings, theyre getting it down to where they think the results have been. It wasnt as big as the japanese earthquake was. It was a big event, but it wasnt a hurricane. The big reason that sandy was a big event is because it went through new york and new jersey and thats the reason for the high cost. And lets talk about Life Insurance. They make a lot of money from selling its products. In this environment and its harder to provide guaranteed returns, is that a declining revenue stream . The problem with life insurers is a lot of their products they sell are discretionary. As people have less income and maybe they cant pay their mortgages, firstly, the top line is going to go down. Secondly, as you say, a lot of Life Insurance profit is dictated by the return. As returns are low, property is under pressure. They have sold a lot of structure products to higher end investors. Are those in decline, as well . Yeah. I think a lot of complex analogies. And we have sovereignty two coming up which they keep fighting against. Do we know what the full impact is going to be . Its still in debate. So i think the impact will be an improvement in Risk Management across the industry. Thats a big win in the industry for a whole. They have more on the guarantee they offer and a more wholistic regime should make the industry stronger. And in the meantime, we can figure out whether the uk is leaving the eu. And then the uk has to worry about selling their products into europe, right . Simon harris from moodys Financials Institution group, thank you very much. Thank you. A minor boom has called an extraordinary meeting next month to let investors decide on the plan or the boards shakeup. In a first on cnbc interview earlier, russ said shareholders had very little choice but to push for reform. Nick von shernding is a good man. We hired him as a pr man. However, he is not at all qualified to be the ceo of a Global Mining company. And im not just saying that because he tried to make himself more qualify by embellishing his cv last week. I seem to have been a lone voice in trying to deal with the serious issues at hand. Some tough talk there. A judge today will rule on bps ruling on man slaughter. Bp agreed last november to plead guilty to charges related to the deaths and for lying to congress. Shares have weathered reasonably well, up nearly another 1 today, 3 over the past week. And reportedly there are plans to approve liquid gas to shell. Its thought the deal would likely by be around 2 billion, about 1 billion less than what repsol was hoping for. And the irs has approved the government for getting documents from ubs. The u. S. Government previously accused wegelin of using a corresponding account at ubs to correspond monies for clients from the u. S. U. S. Authorities are reportedly pushing for royal bank of scotland to agree to criminal charges as part of its libor settlement. But executives are reportedly rejecting the plea. And happy birthday. Not to you, not to me, to the etf industry. Very exciting. It is the 20th birthday of the first major index. Almost old enough to drink. Youre in europe now, okay . We want to know whether youve invested in the products. Has ubs changed products for better or worse . What should the drinking age be . Email us, worldwide cnbc. Com and tweet us, cnbcwex to get involved. Its 16. Or 18 . I think is 16 old enough to invest in etfs, do you think . You can be any age to invest, right . Weve been asking guests on the program, and this st one of the debates that, yes, they have ach lower cost, they allow you to invest across products. And its very complicated because then youre getting into accounts party risk and youre supposed to be you know, these are pretty plain vanilla safe options. As with anything, the derivative side, its very hard to work out, actually, how these things work out. And the debate is to whether managers outperform over a long period of time. Now they do. But then youre wondering, im paying to actively management my etf. Anyway, well take a short break. Still to come, the Federal Reserve is expected to keep policies on hold. Its kicking off its twoday meeting today. Well bring you the very latest when we come back. Welcome to worldwide exchange. If youre just tuning in, im kelly evans. And im ross westgate. Here are your headlines from around the world. If fed kicks off a twoday policy meeting. The central bank isnt expected to make any major policy changes. Investors decide on cofounders planned board shake yumm. Investors advised shareholders to vote against all the changes. Yahoo s shares rise after reporting betterthanexpected earnings boosted by higher ad revenue. And retail sales in spain plunge in december. The Prime Minister preparing for stimulus measures to relieve the pain of austerity. Announcer youre watching worldwide exchange, bringing you Business News from around the globe. Well, these chips have been very deceiving for the last couple of days. Yesterday they were in the green even though taking pair value in account. We were pointed to head lower today. Its the opposite story. Theyre showing red, but were poised to open higher about 10 points for the Dow Jones Industrial 500. The nasdaq looking to open a little lower. The s p 500 just a little higher. 1495 is the level there. Try to stay above that 1500 closing level and just could not. Now, overnight, the ftse cnbc global 300 gives you a sense of what were seeing. Very quiet and calm out there. Almost early calm. Up 0. 16 for this index. European markets, mixed picture. Not a lot of huge moves. The ftse 100 up about 0. 2 . Xetra dax down 0. 1 . The other is the cac 40 is down about 0. 1 and about 0. 25 coming off the ibex 35, ross. Pretty similar for the bond markets, as well. Tenyear bund yield is lower, but higher than where we have been been at 1. 67 . Spain at 5. 24 . Weve been keeping our eye on the pound which has been weakening over the last week or so. Sterling dollar, steady above 1. 57. Aussie dollar, 1. 04. Dollar yen, above 90 and euro dollar, 1. 3437. The s p caseshiller index is out at 9 00 a. M. Eastern. At 10 00, its january consumer confidence. Analysts are reading, looking for a slight downtick from december. Well hear from eli lilly and pfizer. Dr horton, a home builder, emc, Harley Davidson and jet blue and after the close well hear from amazon. So a busy day both in terms of earnings and data. A busy week, in fact, well hear from the fed tomorrow, the jobs report friday. Gdp tomorrow. Im all excited. Today the close yesterday, i dont know on, yesterday was pretty directionus when we closed. It was amazing to see that cnbc index. We dont usually see that. Its been very quiet in markets despite all of those major events. You wonder whether people are positioned to move open. Weve had this big run, a little breather. Weve got the fed coming up, as well. Theyve got the twoday policy meeting today with a decision due tomorrow at 2 15 eastern. The fed widely expected to hold firm, sticking to its low rate message. Last month, the central bank figured it would stop tying policy to specific economic target. The fed said as long as inflation stays subdued, rates could remain another historic lows until unemployment dips at 6. 5 , which they predict could take until 2015. Joining us now, jerry webman. Jerry, good morning. Good morning. Whats the mood, jerry, as the fed meets today . We know when we got the minutes a couple of weeks ago, markets read tightening into that. Are we at a point still where the fed is going to maybe be talking more about an exit than a sticking to the current course . I would be we dont know what theyre going to talk about behind closed doors. Of course, theyre not going to do a News Conference afterwards this time. So well have limited knowledge of what theyre really thinking about. But, you know, theyve been very clear about what theyre looking for, how far away they think it is. I think there may be some growing i dont know whether to call it skepticism or optimism that the numbers might get a little better before they expected them to. But we kind of know what to expect. And i dont think the market is holing its breath, waiting for the fed to tell us anything very different from what weve heard now for the last couple of meetings. And i wonder, actually, if as someone suggested they would look at the reaction on to those minutes and say, you know what . We want to emphasize with bernanke, will he come out and bat against some of these expectations . Are they at a point where markets are going to keep pushing the fed here . The markets always push the fed. The fed, if we look back, for all of the respect i have for them, and among commentators, for all of my respect for the fed, they have not been particularly good longterm or even medium Term Economic forecasters. Theyve been much better at responding to situations in the market, sometimes better, sometimes worse. So the market always leads the fed and what the market is telling us right now is that, you know, the Economic Situation is finally Getting Better after the i dont know, what, six of the seven biblical years that follow a financial crisis like the u. S. Went through, starting in fact most of the north atlantic went through starting in the beginning of or the fall of 2007. So were getting there. Thats what the market is saying. I expect the fed to listen. Jerry, just on that one point about economic forecasting, i mean, even the best forecaster gets it right, what, 60 of the time . 65 of the time . I mean, you know, its an art, right . Well, you know, theres so many jokes about this, you know . Where economists are out there so we can make meteorologyists look better. It has to tell us, as well, the things that really matter are unpredictable, but that the market, the u. S. Economy is on a healing path right now, not that it isnt fragile and things cant get in the way. But its on a healing path. Thats the message and thats what the market seems to be echoing back with them to reflect back what the fed told us. Eunian economics, there you go. I dont know where that came from. Its early in the morning. Its a whole new theory of economics. It will be in a school of University Near you soon. The union school of economics. Quite a title. Stick around. Were going to take a quick break. But spanish retail sales, they have continued to swing. When we come back, well have more from jerry. Stick around. [ male announcer ] make your escape. Twice as rewarding. Earn Double Points or double miles on all your hotel stays through march thirty first. Sign up now at hidouble. Com. Now, indonesia focus minor booming has called a meeting next month to let investors decide on the planned board shakeup. Executives have advised shareholders to vote against all the changes. But on a first in cnbc interviewers, it was says shareholders have very little choice but to push for reform. Nick von shernding is a good man. We hired him as a pr man. However, he is not at all qualified to be the ceo on of a gleebl Mining Company. And im not just saying that because he tried to make himself look better by embellishing his cv last week. Its starriggering that there h been members of the board who for two years have been against me raising the concerns about the Corporate Governance of the company. I seem to have been a lone voice in trying to deal with the serious issues at hand. Most people who have raised questions, he will be moving in as the present director of one of the main call operations. Are you saying that independence is not going to be forthcoming anytime soon at this company . Echo budinto has worked for the party for almost three years. Hes had a relationship with the backris for over ten years. He has a checkered reputation. He worked at ibra, which was the Indonesian Bank Reconstruction Agency during the bank bali scandal when a Third Party Company was paid as a front for the gold part company for services that were not required under the restructuring law. Furthermore, he has no operational mining experience whatsoever. And you have to contrast echo budiento against an individual like brock gill who is a world class ceo, relocating from the tollway project in gone goal ya or against the chairman, an independent chairman like dr. Wallace king who built layton into the largest contract Mining Company in the world. It could not be more black and white, the choice that shareholders have. What you highlight here is one of the issues with a company like this. The whole idea was to go into a Growth Market like indonesia and that is to go on board with a lot of indonesian experts. Youre going to have those political connections, the lack of independence, i guess, in some ways if you do want to pursue a market like indonesia. Well, first of all, wallace king built layton into the biggest Mining Company, the biggest contract Mining Company in the world. Today, its a company that he created from scratch is the largest contract miner in indonesia. They mine about 88 million tons of coal a year. Layton built a school and it still exists today. It is simply not the case that westerners cannot operate in indonesia. And on top of that, we have a local, a new local indonesian partner. Hasim who is more than qualified to fulfill a minority shareholder role to provide us with the expertise and the local knowledge that we would like to have. Right. That was Nat Rothschild. Thanks for joining us, nick. First of all, how do you respond to the personal comments about Nat Rothschild about you saying youre a great man, but youre the wrong man to run this company . Look, i dont really want to get into a personal slurring of anybody here. I think the facts speak for themselves. Ive had 25 years of financial and operating experience in the career at angelo american and debeards both in south africa and at times in india. Ive worked closely with two chief executives at angelo and more recently cynthia carol. I have no issues with that. The key issue here is this company is in a total mess today and that mess was created when Nat Rothschild brought the structure to the london market. So you would say to him as the reason for all of this trouble in the first place . One of the flaws in the transaction that Nat Rothschild brought to them in the london market was that he gave control of the poc to the backrys. That is a flaw. We are trying to sort out that mess by removing the backries from the shareholder structure of this company. As i said before, i would say to all shareholders, including nit and the backries, its time for both parties to step back, allow an independent management to do the right thing, and that what is what were trying to do, the right thing for the company and that is to get rid of the troubled assets, booming resources and to focus on a coal company, rename it and move us out of this mess. And how long until that how long before that investigation concludes . I mean, there have been so many different allegations of financial wrongdoing. When are we going to know once and for all what is happening . Well, the investigation is still alive. Its still under way. It would clearly be inappropriate for 34th to get into any sort of details that would compromise our ability in terms of any wrongdoing that has occurred. And as might compromise others to seek compensation going forward. What about the claims that his computers were hacked, that there was some sort of forensic wrongdoing . What is going on here . Well, that is clear. There has been an investigation into the chairmans computers that have been hacked. The material that was provided by in terms of this investigation appears to be illegally obtained. That to me is not the key issue. Frankly, if its going after wrongdoing, i dont really care where the problem comes from. It is an issue in indonesia. They often challenge us there. But were working around that. Whats the personal history like between you and Nat Rothschild . Nat hired me. I think nat is in many ways a talented guy. But the fact is, you know, theres been a complete breakdown in founder shareholder relationships between him and the backries and thats where the problem is. Why is he saying youve embellished your cv . Have you . No. I have no idea. Why is he saying that . Youll have to ask nat. I have no idea here. There does seem to be some personal acrimony here. Not from me. All im saying is step back and let the independent management do whats right. We have to get the backries out, separate the troubled assetes and focus on our operating process. With new management which weve announced this morning. All what i call the low road scenario. The backries will not leave with Nat Rothschild. Why is that . Nat rothschild took 390 million shares. They will not simply walk away with Nat Rothschild and the new board here. Can you separate the resources . Operating income down 60 last year. 632 million derivatives lost. Can you separate yourself from yes, we can. The proposal on the table at the moment by the backries is to buy back that stake for 270 million in cash and the cancellation of their 23. 5 share in plc. The total value of that deal is almost 600,000. Its a fantastic deal for the shareholders and frankly anybody not grabbing that with both hands should have their head read. And how do you start delivering value back to the shareholders . Clearly, youre looking at almost a quarter of the share capital. You have 278 million in cash. In addition to 500 million cash operating. So with him have net debt position of about is 00 million. Thats a fantastic opportunity for us at the the low point in the coal cycle if we want to look at any future acquisitions. Very significantly, we have also brought on a former angelo american poc tech who i know and have worked with very closely, tony redmon. And this being the better route simply because because we are able to deliver the spagz from the backries. That being the key issue that youve highlighted. But what about operationally with the company is that issue . Im not sure what and really i dont focus around what Nat Rothschilds plans are. He got us partly into this mess and as i say, were trying to get out of this mess. And the two Board Members that nat wants to keep, have you spoken to them . Whats their view, that he wants to keep on the board . Well, tw t two Board Members have come out publicly saying they do not wish to serve on Nat Rothschild board, they believe that this board has the right strategy going forward. Its binary. Who can deliver the exit of the backris from this company . We can been that is why theyre staying. Are you going to be with the company in a years time . Yes, i will. Are you confident youre going to win the shareholder vote on the 21st . I am confident. Im not going to put names out there, but yes, i am confident i will win. Nick thank you very much for coming to speak with us. Still to come on the show, the largest etf turns 20 today. Well take a look at how Exchange Traded funds celebrate as we celebrate the birthday. All stations come over to mission a for a final go. No go call. This is for real this time. We are on step seven point two one two. We have entered our two minute hold. Cabin venting has been inhibited. Copy that. Sys two, verify and lock. Command is locked. Flight computer state has entered auto idyll. Three, two, one. The falcon 9 has launched. Preparing for nose cone separation. Standing by for capture. The most Innovative Software on the planet. Dragon is captured. Is connecting todays leading companies to places beyond it. Siemennswers. train horn vo wherever our trains go, the economy comes to life. Norfolk southern. One line, infinite possibilities. 0 yoorgs ago today, the state street launched the spider etf, giving birth to what would become the largest Exchange Traded fund now with more than 123 billion in assets under management and the most traded equity security in the world. According to blackrock research, t it hit the 2 billion assets just this month. Dodd, good morning. Good morning. Earlier we had one guest who basically said, look, is the is the way he investors. Etp is here to stay. How much bigger do they get . Well, we think that the growth really has just begun. As you mentioned, with he we hit 2 trillion in assets earlier this month. And we attribute the growth, really, to a variety of different factors. The most important one is the breath of investors using the products. Its growing. Theyre using it in a bigger way. And were also seeing more innovation in new products being launched that are very compelling ways for investors to access variety of capital markets. Dodd, 2 trillion is a huge number. Can you give us some sense of what kinds of products that covers, where the growth is coming from . Yeah. The Fastest Growing segment of the market, ironically, is fixed income. It really is a game changer for investors, allowing folks to be able to access in overthecounter market in a more efficient, costeffective way. And in a more precise way. So were seeing a tremendous amount of growth there. In 2012, we saw assets increase 27 . It was just an amazing run. And inflows increase 51 . Its extraordinary. I wonder when were talking about fixed income etf, its a different kind of investment than if were just talking about something that attracts the stock index. What do investors need to know as they continue piling into these products . What happens when rates rise . How exposed are they . Yeah. If its a very important question, i think the value of selecting exchangetraded products is as important as the value in selecting an active manager. So at the heart of the matter is really taking a look at what your exposures are. And the really important thing to look at is the underlying index methodology, the Underlying Holdings. One of the great things about exchangetraded products is theyre transparent. You know exactly what you own at all points throughout the day. Throughout your holding period. So really understanding which markets you want to access and what the Underlying Holdings is the key to understanding Exchange Traded products. Okay. Thanks for that, dodd. Good to see you this morning. Global head of etf research at blackrock. Hard to believe its been 20 years. As we celebrate that birthday, we want to know whether youve invested in the product and if so, have they changed your trading habits or better or worse . Please join the conversation. Email us, worldwide cnbc. Com, tweet us. And if you want to respond to anything else you heard, including that exchange between Nat Rothschild and nick von schernding, feel free to contact us. Well preview the numbers when we come back. [ male announcer ] make your escape. Twice as rewarding. Earn Double Points or double miles on all your hotel stays through march thirty first. Sign up now at hiltondouble. Com. 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 . Welcome back to worldwide exchange. Im kel will i havely evans. And im ross westgate. The central bank is not expected to change its tune, keeping rates low until theres a significant drop none employment. Sales in spain plunge in december. The Prime Minister reported saying stimulus measures to relieve the pain of austerity. Yahoo shares rise after betterthanexpected earnings boosted by higher ad revenue. And miner booming calls, investors decide on Nat Rothschild stakeholder shake up. I am confident. Im not going to put names out there, as others have done as to who supports them. But yes, i am very confident we will win. As you mentioned, a little bit of a deceptive color here to the chips behind me. Because the dow, if you take fair value into account, still looking to open higher only by a couple of points. The s p 500 roughly flat. 1494 is the level it tried to close above that 1500. The dow yesterday snapped a s sixday win streak. After having a significant run, markets are start to go take a breather. Here is what happens overnight, the cnbc ftse global 300 shows weve been pretty even stevens. European markets are a mixed bag, not a ton of move. Ftse 100 up 0. 6 . Xetra dax outperforming after software aig down almost 14 on disappointing results there. The cac 40 down by almost 0. 3 . The same goes for the ibex 35 over here, ross. All right. Thanks for that, kelly. Now on to earnings. Fourth quarter profits from yahoo dropped, but still beat forecasts. Revenues rose 2 and minus advertising costs came in around 10 million ahead offen list estimates. Search ad prices rose, helping to offset a 10 decline in display ads. Not as much from the consumer shift to pcs. The company is projected First Quarter revenues that are slightly below forecasts. Yahoo stock was up 3 in after hours in frankfurt. You can see up nearly 4 . Now in terms of earnings, pharma will be in focus. A pair of u. S. Drug companies do report Fourth Quarter results in the next couple of hours. Eli lilly up first at 6 30 a. M. Eastern. Positive catalyst may come from japan and ee mermging markets while pfizer, it will follow its 7 00 a. M. Eastern and expected to earn 44 cents a share on about 14. 3 billion. Barbara ryan is a cnbc contributor from Deutsche Bank senior farm analyst. Jerry webman is also still with us from oppenheimer funds. Barbara, good morning. Lets start by looking at these companies. Eli lilly up first. They dont necessarily have the same drugs in the pipeline as the pfizer. Is that a problem for them . Well, i think, you know, lily has a little bumpier road than pfizer over the next couple of years. Pfizer should be commended for having gone through patent cliff, losing the patent on lipitor and maintainling modestly growing earnings in the face of that due to restructuring. And they are willing looking at a number of new projects which we can talk about. Lily is going to face another issue for the year. They have 13 products in phase three development, but those are several years away. Earnings at lily will be several years behind. The markets will be focused on their restructuring efforts and the new products at the portfolio, specifically whether they will file for ramu, a drug for Gastric Cancer in the early part of latter part of this year. Now, barbara, i wonder what investors are going to focus on. Are we still in the period where shareholders are rewarding rnd . This do they want to see these companies continuing to spend, continuing to invest . Or would they say look at your cash piles, maybe you continue to buy up the smaller Tech Companies that have had some good luck here . Good question. I think investors want both. I think investors want these companies that would to increase their share holdings, youll see a variety of things that the company is doing for shareholders. One, it is divesting its noncore assets, so its selling i nutritional business. That will sell this quarter to nestle. Theyll net about 8 billion to 10 billion and probably buy stock sw that money. They have paid out 75 of their Free Cash Flow to shareholders. They will be ipoing 20 of their Animal Health business this week. Thats widely anticipated to be priced on thursday. The net proceeds there will go to share pushes. Theyve be launching iloquest this week and we are expecting within the next several months that they will launch the first new drug for rheumatoid arthritis, which will go into a market thats 23 billion globally and still growing. Barbara, its ross here. Kenneth frazier told us last week they totally intend to keep spending on rnd, research and development. The big question is, government want lower prices. If youre going to get lower prices for the drugs and the Development Costs are going up, how do they get around that . Innovation. I think weve seen time and time again that the market will pay for new, innovative products, that expands both the quality and lengt of life. Certainly if we look at the epidemic of alzheimers globally, if we had drugs to really reserve or just to halt the progression of a devastating disease like that, i think we would see that these companies can still make very handsome profit. Jerry, just put this in the broader context. How important is continued investment spend, whether its rd or some Pharma Companies for the outlook for 2013 generally . Well, you know, that is one of the most exciting things, were saying exciting probably overstates it, but positive things that were seeing is u. S. Companies are continuing to spend some cash horde on Capital Investment planned equipment and software. Some of that includes doing research. So we just began to see a turn last year of the weve watched a lot the balance or ratio between the cash that companies are holding and how much theyre spending on expanding their business. That started to turn in a favorable way last year. You know, it has some shortterm implications for werings, but from an economist point of view, it has very positive longterm implications for the growth of the economy. Because as your other guest said, innovation, due products and Pricing Power are critical to both corporate success and economic success. Barbara, just going back to another macro factor here, obviously, obama care as these points get implemented, how significant is this . Is it already priced in for shares for all of these companies sdmp. For the first part, its already priced in. Weve seen the costs of obama care and medicare and medicaid on u. S. Revenues flow through the p ls of these companies over the last two years. I think investors still worry, though, that pricing for whats called the dual eligible, peeble who are both indigent and on medicare. The concern is that that pricing will fall to the lower medicaid pricing. The impact of that would be manageable, but certainly would be a negative of a couple of percent for most companies. Okay. Well look for comments on that from washington going forward. Thanks very much. Jerry webman, hell stay with us for the a little chat in the next segment. See you again in a second, jer jerry. Meanwhile, higher taxes taking their toll will be in madrid whether we come back. Every year we pick a new city to explore. But thanks to hotwire, this year we got to take an extra trip. Because they get us ridiculously low prices on really nice hotels and car rentals. So we hit boston in the spring even caught a game. And with the money we saved, we took a trip to san francisco. You see, hotwire checks the competitions rates every day so they can guarantee their low prices. So, where to next . How about there . Hotwire. Hotwire. Com welcome back to the program. Spanish retail sales slumped 10. 7 in december. And that was the 30th straight month of year on year declines. Stephane pedrazzi is our man in madrid today and joins us now. Stephane, it sounds like no end in sight here in terms of these declines. No, its not a big surprise the decline in december came after a 7. 8 decline in november. As you say, that was the consecutive decline, same as in spain. Thats not a positive signal ahead of the gdp numbers. The average forecast is a contraction of 0. 6 . And, again, its raising the question about how much austerity can the spanish economy take to go out of the recession. Yesterday, the eeanhl commissioner for economists say clearly in madrid that perhaps we should ease the deficit target for spain because the target for this year is 4. 35 of gdp and if the government wants to meet the target, it will help to implement an additional 20 billion euros of Budget Reduction this year. Thats smaller than what was implemented and, of course, that seems to be far so much to get out of recession. Stephane, thanks very much for that. No good news on that portion of the spanish economy. Day one of the fomc meeting with the central bank is expected to stick to its current policy. Indias central bank, meanwhile, has cut rates for the first time in nine months including reserve requirements. And yahoo finding strength from search, reported betterthanexpected earnings in the Fourth Quarter. U. S. Investors get a fresh snap of the housing prices today. Prices are forecast to rise 5. 5 yesterday. The National Association of realtors reported pending home sales down in december, but still well above last years levels. Jerry webman is still with us. I was speaking to Robert Shiller on this program last week and he said hes still cautious about the Housing Market because six months he says is just not enough to suggest theres been a major change. And if you look at japan, you know six months isnt enough. What do you think . Demographically, were not like japan. But one of the things hes been saying for years, and i think very correctly, is that we shouldnt get too excited the runs in the housing hkt. Housing tends to go up about the rate of inflation. So we got excited about it last decade when it was making up for slow growth a decade before. The Housing Market is Getting Better. You always want to look behind the numbers and say, is there a reason . That i can understand . And the reason we understand here is population growth and household formation. Young kids, including a couple of my own who are forming their own households, finding housing and increasing housing demand. So this steady as she goes trend in housing is probably with us for a while. Is it 2005 . It isnt ask we better hope it doesnt become. Thats a fair point. Jerry, great you have to on the program today. Thanks for joining us. Pleasure. Here is a quick reminder of where europe is trading. Were going to take a quick break. We are seeing arrows pretty much across the board. Xetra dax down 0. 15 . Can u. S. Futures turn it around . Theyre struggling this morning. 1493 on the s p 500. Well be right back. Welcome back. Just a couple of stories to draw your attention to online. Risk appetite is back and its boosted european stock markets as more investors rotate out of last years safe haven trades. But has the rally to multi year stock market highs run its course . Find out more at cnbc. Com. Also with the impending arrival of the much hyped blackberry 10, research in motion has gotten some mojo back. See what analyst res saying at cnbc. Com. It will be fascinating. Can they do the lazarus . What do you think . Are you going to buy the blackberry 10 . No, ive never bought a phone for myself in my life. Im hoping that the company may upgrade ask decide its a marvelous product. Thats the the way we like things to work. Now, another bottomny saga, this is indonesian miners. 2. 3 . That was lifted in pnc. Its planning a meeting to let investors decide to the shake up. In a first on cnbc earlier, rothschild said investors had very little choice but to push forward. Nick von schernding is a good map. We hired him as a pr man. However, he is not at all qualified to be the ceo of a Global Mining company. And im not just saying that because he tried to make himself more qualified by embellishing his cv last week. Its staggering. I seem to be the lone voice with trying to deal with the issues at hand. And speaking first on this show in response, the ceo said hes confident hell win a vote from shareholders to block the man and said the move is about getting the company back its feet. Look, i dont really want to get into a personal slurring of everybody here. I think the facts speak for themselves at angelo american in both south africa and at times in india. Ive worked closely with two successive chief executives at angelo turning tray and more recently cynthia carol. I have no issues with that. The key issue here is that this company is in a total mess today. And that mess was created when Nat Rothschild brought the company to the stock market. One of the flaws that Nat Rothschild brought to the london market is that he gave control of the plc to the backries. We are now trying to sort out that mess by removing the backries from the shareholder construction of this Company Approximately as i said before, its time for both parties to step back, allow an empty management to do right thing. Nick said he has no idea why Nat Rothschild said he embellished his cv and he doesnt have any personal issues with Nat Rothschild, either. A u. S. Judge will rule today on whether to approve bps deal to plead guilty to man slaughter and other charges for its role in the 2010 gulf oil spill. Under the settlement, bp would pay a record 4 billion in criminal fines. They will hear from the families of workers killed. Bp agreed in november to plead guilty to charges related to the deaths and for lying to congress. Shares there are moving higher, agd. 7 in trade. And the fbi is reportedly probing whether Media Companies helped facilitate Insider Trading by releasing market moving data prematurely. Among the the companies investigated, bloomberg, Thompson Reuters and dow jones. They will look at whether they used high speed transmission systems to give some investors an sess to data a politic second. Its interesting because theres been focus on the data providers, too, as to whether theyre providing information to clients ahead of the general public. Well, yeah. I dont know. The interesting thing is, you the prerelease, right, and something is due out, a speech, something do out at 8 30, sometimes you seem to think what happens is that they the speech starts and then they release the entire transport out so you actually can get ahead of whats coming. Which is another issue. But in this case, its specifically getting that information to people ahead of time. So well follow that story. The Federal Reserve beginning a twoday policy meeting today. But their decision is due at 2 15 eastern tomorrow. Thats expected to hold pat sticking to its global rate message. It will Start Holding policy at specific targets next month. Rates could remain at historic lows unless unemployment dips below 6. 5 . What does it all mean for markets . Ben lichtenstein, good morning. Were in a bit of a situation with the markets. 2 we pushed through on the tenyear yesterday. Will that hold . Well, i think that the bonds actually do have some Downside Potential at this point. Weve been seeing a big move off that 1. 52 level, 1. 53 level. Were basically 10 points off where that move started. The rates have potential to see more upside activity as the futures price continues to come off. Theres a lot of people right now that are starting to talk about fed actually moving and starting to raise rates. Weve seen the potentially tsh we watched that the fed was concerned about raising rates amid a lower stock market prices and concerns that that would actually weigh on the stock market. Were into new year highs for 2013. The other thing that i think is very notable is amid this bid activity that weve been seeing in the stock market, albeit very low Interest Rates, low volatility environment as well as low participation, keep in mind were seeing the dollar hold its own, if you will, around that 180 level. That was another key component were all looking for in terms of the fed being able to act is strength in the dollar associated with a strong stock market. How would you describe the dollars behavior over the last few sessions . This seems to be the other side of the coin. Well, i think for the most part the one word i could use to describe it is lethargic. Weve seen sideways activity in most of the currencies, in the Euro Currency thats been weve seen that in reflection in the dollar. The one currency thats been on the move is the yen if youve been watching that. A huge move to the down side. Potentially more momentum continued that energy that we havent seen to the downside. But, really, the dollar has been kind of parked at this 80 even level. I think for the most part the fed is enjoying that right now. As i mentioned, i think there are a lot of people bewildered about the fact that amid this strength in the stocks that we havent seen the dollar coming off. Potentially some of the money in the yen coming into that, potentially some of the money coming out of the yen in the stocks. But certainly all eyes on the fed right now. As you mentioned, unemployment coming up later on in the week. I think were looking for around 7. 6, 7. 7, a bit of a downtick there, but not enough to get us into that level that you mentioned, around 6en 7. But zee roy signs of inflation right now is completely in line. And we will get that data watch, for the fed to talk about how low its willing to tolerate employment before it moves. Thanks so much, ben lichtenstein. And dont forget earlier, we marked the 20th anniversary of the etf by asking you if youre investing in the products and 23 so, thou the etf said, its made it easier for investors to dee verse phi risks and still spending some cuts. And thats it. Company company is up next for kelly and i. Keel see you back here tomorrow