Hello. Welcome to todays worldwide exchange. Im ross westgate. And im kelly evans. These are your headlines from around the world. Investors cheer barclays strategic overhaul, the bank is cutting 3,700 jobs, trimming weakness. Inching towards global currency wars, the warning from the world bank will urge economies to stick to a market base Exchange Rate system. And another day, another bank. And were just hours away from president obamas state of the Union Address. Hes expected to call on more tax hikes and fewer spending cuts. Announcer youre watching worldwide exchange, bringing you bes news from around the world. Welcome to todays program. It is tuesday. Yeah. And loreal is talking about the strong euro in france. Right into trading down double digits this morning. Another story in italy, it seems like the entire world press core at this point will be desending on trade. Yes, they will, with the pope and the italian elections. I think it was Something Like 10,000 journalists for the pope the last time. Its a huge event. It will be four days after the italian election. I dont know how the bars cope, frankly, right when thats going on. Were going to head to the stages of hollywood, florida. The etf shows in signs of chilling down. And well get a view from the french finance minister on the strength of the euro. Plus well get a view from seoul as firms have conducted a Third Nuclear test. And well be looking at loreal, suggesting that the strong euro is a problem in france. But first, turn our attention to barclays. Its unveiling operational changes. The goods reducing head count by around 3,700 people by reducing its overall cost cutting base. Barclays will close its structured Capital Markets business and focus on investing in britain, u. S. And africa. They also posted earnings for 2012, down 6 Million Pounds versus 5 million last year due to a reduction in the value of the banks debt along with situation payments for the selling of financial products. Barclays rate dividend to 6. 5 shares for 2013 is off to a fairly roam start. Joining us first is oliver ralph, Financial Times lex writer. Oliver, thank you so much, indeed, for joining us. What do you make for what youve heard from Anthony Jenkins this morning . Theyre obviously trying to say its going to take time, were trying to restore our reputation. Is it the right thing . Yeah, it is the right thing. Theyve launched the business. The core of the bank remains the same. London Investment Bank and new york Investment Bank. The core of the bank remains the same. Theyre making changes around the area and the core of it is as it was. Talk about the Investment Bank in particular. This has been the place where not just barclays, but a lot of the competitors, too, try and wind things down. This is a place thats been pretty profitable in the last quarter. It is. And theyre tied slightly with the Investment Bank. Its a big part of barclays profit so he couldnt make big changes. Hes announced radical cuts last year. That said, he has promised changes to bring costs down which would shift the balance slightly of shareholders. The cost income ratio was about 55 in 2012. He promised to bring that down to the mid 50s. Just to stay on this point for a second, even ubs has quietly slowed, perhaps, what it was planning to do. It was the Investment Bank, in fact, that was one of the healthier parts of the business. Absolutely. Its been a good end to last year for some parts of the Investment Bank. Maybe bad to cut back too hard on that. And i dont think Anthony Jenkins could have done that given the amount of profits that it provides. Nevertheless, credit cards and retail bank are traditionally high returning areas. Why do you think investors are so cheered by what they hear out of barclays this morning . Stocks up about 3. 7 . I think they like the cost cuts, they like the t talk of investment elsewhere. Also, the fact that finally hes laid out what it is in terms of investors. Since Anthony Jenkins took over last year, hes talked a lot about making barclays a more ethical bank. Weve seen those in the results this morning at 2. 5 pounds revisions. So i think they like the take in that and hes now added to those fans in terms of financials. We have an analyst that is suggesting the stock is up because there was a fear of something more radical. Do you think thats fair . Yeah, there was i suppose a question mark about whether he would try to split the Investment Bank off from the retail bank. There was some political pressure to do that. I dont think that financially they will trade a lot in the Investment Bank and this isnt really a great time to do that. Its doubtful whether they would find the investment for that they would need. There was a lingering fear that might happen. Oliver, thank you so much for joining us. Now, north korea says it has successfully carried out its third underground nuclear test. It involved a miniature device. That could indicate they have produced a warhead small enough to fit on a long range missile. The eu secured Council Called an emergency meeting. Chery joins us now from seoul. Can you tell us first of all what the general reaction has been there and a lot bit about the impact of the economy. Were watching, for example, the south korea and won take a hit this morning. Well within not much of a reaction on the kospi. It did end down just about 0. 26 here. But i wouldnt say its a big tumble and it is korean won gained. I think by now investors have learned that north Korea Related tensions and developments, geopolitical issues like this have had impact on the korean market. So that explains the absence of such strong reaction on the stock market. But the latest that we have on this development is that we have chinas reaction to north Koreas Nuclear tests, as well. Chinas Foreign Ministry statement goes that it is chinas firm stance to realize nonnuclearization for the Korean Peninsula and prevent a Nuclear Proliferation and maintain peace and stability in northeast asia. Remember, china is north koreas probably one and only ally and that its been pretty patient with its bad behavior and this nuclear test could complicate things a bit, given that the Chinese Support was to maintain the status quo in the region. Guys, back to you. Chery, thanks very much. We should note the International Response has been swift. You saw president obama calling for swift reaction. India saying reports of the nuclear test are a matter of deep concern according to a Foreign Ministry statement. Moving down to conco which has expressed solidarity with its ceo who has just been arrested for alleged bribes. Shares have just resumed trade in malan. Now, ross, theyre down something less than 9 . We did see closer to a 15 decline earlier. Over to you. Thanks for that, kelly. Here we are just over an hour into the trading day in europe. Pretty even stevens, actually. Were keeping our focus in the uk on barclays. As we are on the xetra dax and the ibex and the cac 40. So no clear direction, as you can see. Now, the nikkei was trading again today. Lets show you where weve finished with the nikkei. Up 2 . This morning, the yen was weakening again. Weve seen it down against the dollar. We were bound at those may 2010 lows yesterday. Shanghai composite up 0. 5 . The hang seng up slightly, as well. We were flat in australia and the kospi down slightly flat. The aussie dollar continuing to weaken in this, as well been bond market you do that sometimes. They throw et up. It should have been gray if it was closed. I dont know why it wasnt. Spanish yields are slightly low. 5. 37 . Were looking at btb auction which will be key for italy tomorrow. In the uk, keep our attention on cpi. The annual rate of inflation is expected to tick up to 2. 8 from 2. 7 the last time around. Of course, were getting Inflation Reports tomorrow, as well. On the currency markets, euro dollar. Currently trading at 1. 3394. 1. 3325 is the low that we hit at the beginning of the week. Dollar yen, 94. 13. 94. 65 with the may 2010 highs as we hit the session. Aussie dollar, 1. 0236. Sterling dollar, below 11. 56 as we wait for that intlagz report. Thats why we stand. Its a tale of two commodities for mining giant xstrata. Well give you all the analysis and what it means for the sector when we come back. Great, everybody made it. We all work remotely so this is a big deal, our first full Team Gathering i wanted to call on a few people. Ashley, ashley marshall. Here. Since were often all on the move, ashley suggested we use fedex office to hold packages for us. Great job. [ applause ] thank you. And on a protocol note, id like to talk to tim hill about his tendency to use all caps in emails. [ shouting ] oh im sorry guys. Ah sometimes the caps lock gets stuck on my keyboard. Hey do you wanna get a drink later . [ male announcer ] hold packages at any fedex office location. Michelin has raised its dividend. The worlds second biggest carmaker is pledged to hold on to the gains even as Sales Volumes remain flat. Sales are tradeling higher for michelin. You can see shares down about 0. 2 in early trade. Asia continues to be the groups major driver of growth. They also, ross, have an iconic kelly bag, i believe. Not that i have one. I think i would need a mortgage to have one of those bags. Thyssenkrupp says it doesnt anticipate the Global Economy this year. The group posted a 38 . Its core markets are likely to see minimal growth. And mining giant xstrata posted key results in its copper business. Nicholas brooks joins us now. How do you play this as an investor . Do you do the reverse . What i say is that generally in the environment were in thou, were seeing a pick up in u. S. Growth, pick up in chinese growth. Were starting to see a pick up in demand for key industrial commodities. I think at this point youre starting to see investors shift away from the cyclical commodities such as gold. Its shifting away from the nor defensive types of assets and even more in the commodities space moving more to the industrials. Paladium, platinum up at sevenmonth highs. What is behind that . Were starting to see a pick up in growth in china and the u. S. The worlds two largest economies. Also youre seeing issues on the copper. There are a lot of problems in terms of getting these medals out of the ground. For platinum, 80 of it is produced in south africa. When you have labor issues, it has a big impact on supply. On the palladium side, we have the russian state slowing down substantially. Its stockpiled sales. Youre seeing a squeeze supply side issues, as well. Absolutely. And youre seeing a pick up in demand. Thats been driving prices. Are you suggesting that maybe copper because we always look at the gauge of industrial copper demand . Is it not the best metal to do so any more . Is it gold, is it Something Else . Its a good question. I think in the end, copper will perform fairly well. If there are power issues in the congo or issues on the labor side and at the same time, were seeing a big pick up on increasing demand in china. When i look at etp flows, the largest weve seen across our Exchange Traded products has been in etps. What about the number of commodity hedge funds that have been shutting down that havent been able to generate the returns. Is it affecting liquidity or the types of products that are out there . No, i dont think so. I think its unfortunate that the past couple of years have been pretty volatile markets and have been driven by a lot of factors that are particularly hard to predict, like issues in spain or greece and global macro factors and i think thats had an impact on a lot of hedge funds results. I would argue as we move into this year, things are going to become more clear because were moving into more normal commodities. Why do you see gold etfs going, as well . Its struggling to get above where are we, 1700, 1750, back of those ranges. I think whats going on with gold are Interest Rate expectations are increasing. Higher Interest Rates and a stronger dollar usually are good for goal. Gold is facing a lot of headwinds. I think thats going to continue as long as were in this risk on environment. But i would make the point that gold tends to perform very well when you see big risk events. For example, if you start to see issues in spain, spain yields start backing up in a substantial way or if you start to see problems north korea with the atomic bomb explosions. So a lot of investors are holding gold and gold will perform well. Is the biggest risk to gold, though, is when yields, Government Bond yields back up and then when we get a return of a yield environment, isnt that when gold is going to step up . Because then the opportunity cost of holding it shoots through the roof. Absolutely. I think that definitely causes head wednesday. But you have to look at the big picture. And as long as weve got the debt problems, particularly in the u. S. And also in europe, there are concerns about Currency Debasement and the idea that its going to be very difficult for these country is to pay back their debt without at some point driving inflation higher, i think there are a lot of core investors, a lot of longterm Strategic Investors including central banks. Look at the russian states were recently that i think are going to want to hold gold because were in a very special environment with the worlds major developed economies that are backing the worlds major reserve currencies having structural debt issues. And i think a lot of investors are looking at gold as an alternative hard currency. Thats for sure, Nicholas Brooks from Etf Securities joining us on set this morning. Thank you so much. Thanks. Group of seven nations reportedly planning to issue a statement on currencies, speaking of which, at 7 00 cnt. Weve seen some pretty sharp currently moves in and around the statement this week. It comes this week after the g20 meeting this russia where the group is expected to from market determined exchange rat about growing rhetoric about currency wars. Ross, its kind of extraordinary when youre in a situation where theyre talking about the need for emphasizing the need for marketbased currencies. Yeah, exactly. Currencies were also discussed last night. The officials at the g20 summit at the end of the week is a more appropriate place to discuss currency moves. Silvia wadhwa is in brussels and she recently caught up with the french finance minister and began by asking him about just how concerned he is about the strength of the euro. In a strong euro to a dead euro. Six months to go, the question is is the euro going to survive . The euro is going to survive. If people today buy the euro, its because the euro gains confidence from the people. But at the same time, its not a good news if we are not able to answer the aggressive attitudes on the parts of the world. We must fight the currencies. We must enter into currency wars. But at the same time, we must be capable of define iing at the wd level and call on its approach in the long run trying to stabilize because of the currencies. And in order to have these currencies reflecting the fundamentals of our economies. We had this discussion today between us at the level euro group. We dont all agree on the solutions. We all agree on the questions and we will have to have that discussion in moscow in the g20 by the end of the week. Now, we know, of course, that often there is lip serviced played. We all want a strong currency. But then, of course, the policies are exactly the opposite. What do you think europe can do or should do to countermand such an agent . I think europe must act alongside with the neighbores and partners. And the good feel to discuss that is certainly the g20. And silvia is in brussels. She joins us for more. And we heard the loreal executive saying the currency is hurting business. Nothing is going to happen on this, is it, siylvisylvia . I kind of dispute that. It might hurt the sheets when you trade back into youre own curren currency. Were not talking about something that happened on a fiveyear term. Were talking about something that happened on a two, three, fourmonth term. Do people really stop with their delivery contracts . Do they cancel the import or export contracts . I think history says otherwise. As for all the statements coming out of it, theres a bit of a trip, isnt it . On the one hand, we see the markets should decide where the currency should be. I think the biggest contribution to countermanding the volatility would be maybe to shut up. The more we have statements about where the currency should go or the other, the more we get volatility in the markets. So i think bottom line is what were going to see out of the g20 is probably straight from what weve seen before. They probably copy and paste the statement they had before. A strong currency in the long one is good for the economy and no one wants to embark on policies that dont reflect that proper economic power. But at the end of the day, we know in the real world it doesnt quite work like that. The americans have always locked their currency on the head and the japanese are doing likewise and the europeans are caught in the middle with a euro that remains strongish. Im rather struck by the ireland sign behind you, sylvia. Are they feeling good about themselves, are they . Im not sure that is the right way to feel good about themselves, but this is their contribution to the ireland presidency. They will be heading out to dublin in april. Always good, dublin. Thanks, sylvia. Bring us back some guinness. Americans express is expanding its presence on twitter letting products link to their twitter accounts. We want to know if you would trust twitter and am ex to make such a payment. Well, there is no payment associated with twitter. Its a messaging service. Its just linked up. Well explain that. Sounds like someone is all over it. Investors cheer barclays strategy overall. Its going to cut 3,700 jobs and trim its Investment Banking business after posting weaker than expected profits. The g7 is set to the foreign stage as finance ministers coordinate Economic Policy to avoid a currency war. Shares in mechanico plunge after a helicopter deal with india. And were just hours away from president obamas state of the Union Address and the economy is expected to take center stage with the president calling on congress and more tax hikes with fewer spending cuts. It was forecast, rpi, the annual rate on that. 3. 3 . That has ticked higher from 3. 2. Rpiix, 3. 3 . That was forecast at 3 , as well. The biggest contribution to cpi from alcohol and tobacco, kelly, the main downward pressure. Is that just for me . Alcohol and tobacco. I just wanted to make sure you knew about that. Its never a good sign when those are where the price targets are coming from, suggesting its not fundamental strength but rather structural price changes. Lets get a reaction to that. Sterling has been down below 156. As i say, it was the annual rate slightly below what we were expecting. So its picked up against the dollar. Don, good morning to you. What do you make of this number . What does it mean going into tomorrows Inflation Report . Bang in line with expectations. So no changes as far as the market is concerned. This is increasingly about outside risk inflation. Weve seen that manifested in the gilt market in rising inflation rates. Part of that is on worries that the bank of englands focus on unflagz is likely to likely to diminish a little bit over the next year or two as it focuses more on supporting Economic Growth. But there is nervousness ahead of the Inflation Report. I wonder if you can elaborate on where we go from here. Im not so much a currency expert, but certainly with regard to with regard to the overall picture, gilt, bond yields,en flagz, you know, theyre increasing worries about upside inflation risk Going Forward. I think this is you know, were in a bond market environment now where yields are steadily moving higher. And i think, you know, increasing worries about inflation at the very margin are helping to support this move and its likely to continue over the coming months. As i said, if break even inflation rates are pushing higher, were seeing greater interest and stronger demand. And i think this is something which will likely continue over the next year or so. Weve got break even innation rates in the 20year sector around about 320. I think we could well see a move up towards 350 basis points over the next five or six months or so. Wages arent going up and just in core inflation, dipping on the annual rate, 2. 3, 2. 4 down minus 2. 4 . There are two focuses here, the shortterm move and the longterm outlook. Environment is depressing. The uk economy is arguably more inflation prone, certainly, than core european economies. And irrespective of this downward pressure on growth. I think its astonishing that we havent seen weaker inflation outturns in the uk over the last two years. So theres a sense that i guess the inflation environment is more vulnerable in the uk than the uk or core europe. And these worries persist. And, you know, any change to the focus and Central Bank Strategy with regard to focusing on the inflation target i think just helps to exacerbate these concerns. All right. Don, stick around. Well come back to you in a short while. Don smith from icap is still to come back to you, as well. European stocks are pretty flat on the session. The ibex slightly higher than it was. Take a look at whats happened with the reaction. 2. 1 , i should say, following from that weaker than expected inflation data. Bunds roughly unchanged. Pressure coming off in italy with those yields moving ever so slightly lower to 5. 37 to 5. 8 respectively. As far as currency markets are concerned, we just saw sterling reaction. Euro dollar is what we hit 1. 3325 with the low earlier in the week yesterday. Dollar yen is not far away from 94. Just off to the may 2010 high which we hit 94. 46 or in u. S. Trade the. That was a big move. Now, president obama will deliver his state of the Union Address at 9 00 p. M. Eastern. Hes expected to revive his message asking congress about more tax increases and spending cuts. The congress will be focused on stabilizing the middle class and repairing the economy. His agenda is expected to include more money for education, clean energy, manufacturing jobs and infrastructure. Some ideas will be repackaged from his first term. The white house says there will also be new ones. Well have special coverage of the state of the Union Address tonight at 9 00 p. M. And 11 00 p. M. Eastern. And Michelle Obama will have a special guest in his box, the apple ceo tim cook. Its the second year an invitation has been extended to apple. Last year, steve jobs widow was invited. And democrats plan to unveil a series of targets on tax increases on top earnings this week. That would replace the automatic cuts set to take effect on march 1st. Aides say the tax dut would allow for a tenmonth delay to that sequester. The plan is likely to be introduced on thursday, but the proposals are expected to be rejected by republican leaders. President obama may sign a protective order aimed as decreasing number of Cyber Attacks on wednesday. The order would give the department of Homeland Security the lead role in sharing Cyber Threats with private industry and protecting critical infrastructure. Now, the story we mentioned earlier, American Express is expanding its presence on twitter by allowing consumers to directly use the social networking site. Theyre not buying from twitter. The service is for customers who link their am ex card to their twitter account. A variety of products will be available as part of the first promoosal push. Card holders basically tweet the products they want with a special hashtag and you reply to that tweet to confirm. Then the item will be sent via free twoday shipping. Youll get a tweet from the brand saying are you interested in buying this product, special promotion. You will respond to that tweet with a hashtag. At the same time, am ex will receive a copy of that tweet because theyre linked up, know you want to buy it. Can i just say, you know how much we we leave ourselves logged in here all the time. Im sure you want to buy it. Then youll go yes and am ex will see the transaction between it and the brand. Its basically taking the well, no, theyre just using it as the message. They could do it on the mail. Here is a special pro340egz. But its all about verification. If theyre able to verify something, a handwritten payment or youre checking out and you show your i. D. Or a credit card, with twitter, all you have to do is be logged in and send these tweet toes confirm it. American express is pretty good, if theres fraud, you call and they take it off. But we stay logged in on twitter. Its not that hard for someone to pop into your account and be like, would ross like a new xbox 360 . Yes, sure. If am ex is sending a message to you on twitter saying, do you want this . And and how often do we see twitter hacked . Quite a lot when its mine. Thats what im saying. Are you sure you want to sign up for this . Actually, i love sitting next to louisa. Shes the most talented in the world. These are apparently things i write. So given this, would you use twitter to make payments . Weigh in. We want to know what you think about this world. Worldwide exchange cnbc. Wex. Now, were continuing to follow this story out of north korea overnight. More response from the international community, nato has condemned the north Korean Nuclear testing. We heard earlier the eu saying the north korea test is a blant challenge to the nonproliferation treaties. Russia is urging halting illegal actions and we mentioned some of the early response we had heard from germany and the u. S. , ross. Yeah. Right. Weve got spanish auction results out. 2. 5 billion euros at sixmonth bills. 3 billion euros of 12month bills. All told, it looks as though theyve raised about 5. 5 billion worth of short data paper. We got the bid to cover 2 versus 2. 2 on the 12month. The bid to cover 2. 9 versus 3. 8 on the six month. Not quite the same bid to covers. Have we got the yields . Havent got the yield. Havent come through yet. It is a step down for the bid to cover ratios. The yields should be higher. Here is the bid to curve. Yields are slightly lower. 0. 88 versus 0. 92. And the im still waiting for the 12 month. Yields. Which i dont have. Well get that. Unless we get the yield. Are you going to harass the news wires to get that to us more quickly smp. 12month yields, 1. 58 versus 1. 52 . Up a little bit. Don is back with us. What do you make of this news out of spain . In view of whats happened recently is that, you know, the results of this auction certainly underscore the lack of panic there is in the markets with regard to the spanish situation. In a bid to cover ratios are pretty high, the amount issued is right at the top end of the forecast projection. The market isnt panicking. We saw a selloff ten days ago. In fact, spain and the bond markets has been outperforming italy over the last week or so. So it just underscores that. And where does this leave us ahead of tomorrow ahead of the italian elections . Well, italy has been underperforming. Its been underperforming germany and underperforming spain, as well. The overall environment, i think the btp auction should go very well. I think it would be a shock to the markets. I dont think everybody is pricing in. Were in this environment now where Market Sentiment remains broadly stable. Spain, as i said, it has underprmped a couple of weeks ago and outperforming italy and germany in recent days. So that is a sense of the overall environment. Obviously, the yields are back off the recent lows. How long can we stay in this space . I think its astonishing how effective this strategy has been. I think its surprised just about every bonds analyst out there going into last year. There was a sense that things could gradually unravel last year if spain didnt go for any help. How long would it last . Probably quite some time, i think. I think, you know, really, were looking now at the market focus is on any ratings downgrades or any of these peripheral countries, any evidence of social unrest, Major Political change. I think the election, you know, a 2 on risk in italy. But for the moment, things seem to be reasonably stable. Unless the Economic Growth environment in the eurozone really starts to slide significantly. And were not seeing any evidence of that. And continuing to deteriorate, but not at any alarming rate. Then i think for the time being, things look recently stable, recently well supported. Even if we see some sell off in peripheral countries, i dont think its going to be extreme. The next shock might be second half of the year if we start to see eurozone growth start to seriously underperform. All right. Don, good to see you. Don smith, Government Bond strategist at icap. Were going to take a quick break. When we do, head over to the website and check out a couple of the stories online. Seller gain markets do not necessarily signal a longterm gold trend. The rally in stocks is the result of easy money by the central banks. You can see the full interview at cnbc. Com. As investors get more comfortable about the Global Economy and fears about a dreaded hard landing in china reseed, is it time to put your monies back into emergency Exchange Traded funds . Theres plenty more on our website at cnbc. Com, ross. Still to come in the program, the worlds biggest Cosmetics Company posted rosy profits in 2012. But just dowhat does loreal expt in 2012 . To grow, we have to boost our social media visibility. More likes. More tweets. So, beginning today, my son brock and his whole team will be our new senior social media strategists. Any questions . Since we make radiator valves wouldnt it be better if we just let fedex help us to expand to new markets . Hmm gotta admit thats better than a few likes. I dont have the door code. Whos that . He won a contest online to be ceo for the day. How am i supposed to run a business here without an office . [ male announcer ] fast, reliable deliveries worldwide. Fedex. Shares of trade are sharply up on loreal. The company says it expects to beat market forecasts again despite evidence of a slowdown in asia and at its luxury division. Carolin joins us from zurich. So, look, whats your reaction . Whats the analyst reaction . Well, tan list reaction is actually quite positive. Deutsche bank, for example, says etf and Revenue Growth were in line with expectations. Having said that, etf was boosted by a lower tax rate. If you look at the market, loreal is higher by 4 . Thats a big jump. This has to do with the announcement of a Share Buyback program. That actually matches the amount that lsoreal brought back in the second half last year. With regard to the Share Buy Back program, ross, i have to say analysts are split here. Ubs says it is a little disappointed by shah Share Buyback. I dont think ubs is so spot on here. Deutsche bank says it is fantastic news because of prefers this kind of shareholders rather than value destructive m as. Thats the line from Deutsche Bank here. Its a pretty positive one because, obviously, it benefits from this renewed Share Buyback program and analysts see a slightly positive impact on etf estimates. Apart from that, loreal hiked its dividend by 15 . Thats another positive. And the only fly in the ointment as you pointed out is the slowdown in luxury sales in the Fourth Quarter slowing to 6. 2 . If you go back to the First Quarter of 2010, we saw 12, rather, we saw rates around 12 . But this is not what investors seem to be worried about today. Stock up by over 4 . Back over to you. Carolyn, thanks so much for that. Michelin has raised its dividends. The worlds second biggest carmaker posed to hold on for the year even as Sales Volumes remain flat. And in luxury news, airmiss has posted its own forecast. The maker of the iconic handbag says asia continues to be the groups major driver of growth. Shares, though, not too excited about it. The last time we checked in, they were weaker. So they are at least flipping to the upside, ross. And barclays has unveiled sweeping changes in an attempt to reposition the libor scandal. The group cut its overall cost base by 1. 7 billion pounds in 2015. Barclays will close its structural market business and focus on investing in the. This came alongside barclays Earnings Report for 2012 showing pretax profit fell just 246 Million Pounds thp compares to 5. 9 billion pounds in 2011 and reflected a reduction in the value of the debt. Barclays did raise its dividend to 6. 5 pence and said 2013 got off to a good start. Barclays, one of the top performers in the stoxx 600 this morning, up about 3. 8 . And we will shortly be hearing ceo Anthony Jenkins. Yeah. Thats coming up in just a few moments. And the mayor of London Boris Johnson says the city will remain at the heart of europes Financial Services industry. I think that london and the uk will remain for our lifetimes the economic financial powerhouse of the European Union. I dont think that theres going to be any change in that. Its inevitable after the shake up that weve seen in the last few years that there will be downsizing in some of these banks but that doesnt mean that you wont continue to see huge number oefs people employed in Financial Services in this city. This place, london, has the right time zone, it has the right combination of skill, it has the right language to be the best place on earth in which to raise capital in the Global Economy. And the situation surrounding greece and cypress has taken center stage at the euro group talks. Silvia wadhwa call up with olli rehn and asked him just what was decided on cypress. We have plenty from cypress on the bond program for cypress could be taken in the course of the much. And the other things to watch to get our partner wes detroit and with the eurozone member states. Are we talking about bailins or bailouts . What kind of scenarios are we talking about . Talking about any concrete scenarios of that kind and our intention is to ensure stability. We are, of course, aware of the concerns that led to Financial Stability and we want to ensure that both in cypress and in the rest of the eurozone. There have been a lot of headlines about a currency war and action has to be taken on Exchange Rate policy. Give us a bit of a feel what kind of issue that was at your meeting today. There was some discussion about that policy in the europe. I can say on the commissions behalf, i will be representing the European Union in the context of the g20 meeting and the next step began friday in moscow. I can say that we are committed to the International Framework of ensuring stable monetary relations. We want to work for a stable Monetary System in the world and we want to continue our commitment to market based Exchange Rates and the hiring line with the economic fundamentals. We expect that, of course, also from our g20 partners, as well. More to the point, are you concerned by the present strength of the euro . And the euro is within the frame of its longterm. Labor is the European Central bank that usually comments by Exchange Rate policy. I fully agree with the Exchange Rate is not a policy target but, of course, the changes in the Exchange Rate have an impact on both growth and inflation. Thats the indirectly that may have an impact on the foundations at the time that are done in monetary policy. And still to come on this show, the money keeps rolling into etfs. Well ask how the industrys biggest players are fighting to piece their piece of the pie. Worldwide exchange continues right after this. [singing] hoveround takes me where i wanna go. Where will it send me. One call to hoveround and youll be singing too pick up the phone and call hoveround, the premier power chair. Hoveround makes it easier than any other power chair. Hoveround is more maneuverable to get you through the tightest doors and hallways. More reliable. Hoveround employees build your chair, deliver your chair, and will service your chair for as long as you own your chair. Most importantly, 9 out of 10 people got their hoveround for little or no cost. Call now for your free dvd and information kit. You dont really have to give up living, because you dont have your legs. Hoveround replaced the legs. And now every hoveround comes with this handy tote bag and cup holder for access to your favorite items. And right now, get this limited edition hoveround America Travel mug free with your hoveround delivery. [singing] hoveround takes me where i wanna go. Call or log on to hoveround. Com to find out where a hoveround can take you welcome back to worldwide exchange. President obamas state of the Union Address is expected to take center stage regarding the know. And this as the World Bank Tells ministers to coordinate economic policies to avoid a global currency war. And transforming barclays, the financial giant cuts 3,700 jobs and will trim its Investment Banking business after posted weaker than expected Fourth Quarter profits. Cnbc Anthony Jenkins tells cnbc hes upbeat about the strategy. Its a very confident plan. Im confident the investors will digest it and they will appreciate it. Youre watching worldwide exchange, bringing you Business News from around the globe. I dont expose thats going to have any impact at all on currency traders, kelly. Well worth waiting for, though. Absolutely no movement in that statement expected. We did see some swings in currency moves in the last 24 hours or so. The dow joins industrial average is pointed down by about 19 or 20 points. 13904 is the value of the level there. It was a down monday which as our own cnbc markets points out has been the pattern for this year and much of the last year, too. So far, signs suggest not this tuesday. Barclays is supporting the index. Xetra dax down about 0. 3 . Cac 40 down about 0. 02 . And we just saw 15 minutes ago for spain, they raised quite a tbill auction. This will help italian yields slightly lower. There will be a test ahead of the italian election webs but bond market is still relatively relaxed. In the uk, yields are slightly lower post the inflation number. Came in at an annual rate. Consensus was tick up to 278 . If you strip out alcohol and tobacco, core cpi was also weaker, as well, than you might have expected. So that is why gilts are slightly better than you might have thought. On the currency market, eu euro dollar, 1. 3378. 1. 3320 was the recent low that we hit in the last year. Dollar index is up at a onemonth high and dollar yen not far away from that 2009 high. 94. 18 for dollar yen. Ross, thanks so much. I want to bring a few more details from the g7 statement. They will slowsly consult with regard to Foreign Exchange actions. Theyre reaffirming long standing commitment to market determined Exchange Rate say the monetary policies were made focused on domestic objectives. Trying to reiterate it will not be used as a tool for devaluation. Although these things are and they have that size impact. Exactly. Okay. They also interestingly say they will cooperate as appropriate on Foreign Exchange markets. So well keep an eye on that again. The u. S. Has given the blessing to japan for their policy. We saw the yen weaken on that for these key levels. The market decides with the monetary policy. The uk barclays unveiled sweeping operational changes as part of an attempt to reposition the bank in the wake of the libor scandal. Theyre going to take time with roughly 3,700 people. Ceo Anthony Jenkins join us this morning. Good morning, guys. A rare treat. And if i like it, it might stay. You never know. Does that mean i can take a break, then . You guys can sort of just carry on . Well, we have a bromance of old. But Anthony Jenkins, okay, he needs to deliver today. Did he deliver . I think the analysts on this one are rather split. And most of the analysts that ive been looking at after the announcement have said, could have done more here, 3,700 is not enough in the scheme of things. This is a Global Organization with 150,000 employees. If he really wanted to move the needle on the cost side, you should have gone for 7,000, 8el,000, possibly 9,000. One of the barclays issues is that the employee cost is somewhere around 40 revenue. That is high relative to a lot of other banks that are in this bracket. Maybe they should have been more aggressive on this. The other side of the coin is did they do enough to reduce the cost base Going Forward to 2015 which is when this plan runs to. 1. 7 billion is the amount theyre taking out. The suspicion was that it would be in excess of 2 billion through the weekend. So a little bit of concern that maybe he hasnt really grasped this bank and turned it around. But i look at the share price reaction and pat myself on the back. Up 4 . Its a pretty big move. Its lifting the sector. I think he would have got a lift smt share price today, anyway. Because i think that the numbers are in line in terms of the earnings. They could have been dramatically worse. What the market likes is that the banking side is still generating some money. Lets listen in. I love this point withi jenkins. I said, look, the market was looking for bold moves here. Was this bold enough . I think the analysts havent had a chance to digest what were launching today because we havent done the analyst presentation. What we are launching is to get the return of equity above the cost of equity in the course of 2014 which is what our shareholders have asked for. To do that, we have to work all the business, manage our capital effectively, strategically reduce our cost base and, of course, we have to continue to make progress on reducing the ratio of compensation to our net income. And thats what were talking about today. Its a very comprehensive plan, confident that as the digee investors digest it, they will like it. Also, 2 billion in cost savings rather than the 1. 7 billion. Again, was this plan bold enough on those two areas . Well, i think it is absolutely bold enough. Were not boding for a reduction number. Head count is a product of the Cost Reduction. And what were talking about is a 1. 7 billion Cost Reduction number, which is a very big number to deliver. Critically for us, and different from other snugs, were committing to bring our absolute cost base down by a billion pounds from 2012 to 201. Thats an absolute reduction and thats a very important difference to some of the other targets we communicated. When a going to be the Growth Drivers for the banks, then . So we have 39 markets around the world where were confident they can deliver good growth. As ive mentioned frequently before, the macroeconomic environment in which we do business is quite muted. So we dont expect there to by huge top line growth. Well get more than our fair share. But low to mid Single Digits top line growth is what we expect. As a result of the cost measures were taking and the Capital Management were taking, we dont deliver the return. Its important to say this is paired with our very strong new purpose values and behaviors. And i believe what that will do is allow us to deliver returns in the sustainable overtime for our shareholders. As you know, shareholders like the consistency as much as anything else. Why did the structured Capital Markets business have to close . I think its not with our values and purpose that weve laid out Going Forward. I think its absolutely appropriate that we should have our clients take into account the consequences of tax when they do underlying transactions. What we are not doing Going Forward and we are not doing transactions for the sole economic benefit of the transition to tax. Its a powerful signal the way that were running barclays differently Going Forward. For all of us, why did the Banking System need this radical restructuring . How did we all get it so badly wrong . I think if you take a big step back from everything thats happened, there are two fundamental things changing. One is the external industry and one is the industry itself. Externally, the big powerful force that drove the Industry Forward are either stalling or reversing. So lower Economic Growth, more regulation, less globalization. So there are the external factors. Internally to banks, i think this is true of the industry and its true for us, i think banks became too short side, they became too aggressive and too selfserving. And so banks have to change. Banking is different to other industries. We sit right at the heart of the economies where we do business. So the responsibility is barclays and Financial Services companies is our responsibility. And the focus today is on the restructuring and some of the legacy issues. But they do hang around. Where are we on the question of payment for loans to the uk government having to step in and provide Financial Support . Well, that is an ongoing investigation, so youll appreciate i cant talk about the specific details. But it would be unrealistic to expect some of the legacy issues are going to run away. The legacy issues will be around for probably a number of years to come. What we need to do is deal with them effectively and efficiency, which we will do, but equally, we need to build the barclays im describing today with the go bank and execute the plan were lying out. Anthony jenkins telling us about what hes announced today. We talked briefly. I asked him that question about qatar because i think these legacy issues continue to be a problem for the bank. And you can see that in the earnings as announced. The adjusted pretax 7 billion looks like a good build on the 5 billion or so that they did last year. The problem is, of course, all of the fines and the horizons that are pretax issues. So it wipes out all of that 5 billion from 2011. They made a 728 return on equity. In the process of them turning that around so quickly in 2013 . It seems like a bit of a stretch. Thats the line Anthony Jenkins wants you to take away from this and thats the point of this restructuring exercise. Beyond the jobs, beyond some of the other Cost Reduction issues, its key to get that number back into double digits, which is why theyre looking at about 11. 5 , i think, for 2015. Good luck. So we watch and we wait. But i think, again, just to talk about why the shares are up today, i think its the 8 return out of the Investment Bank which was better than the expectations even though in the rounds the numbers werent necessarily and people might have feared the kitchen sink which didnt happen. More of a plot. It didnt happen. Yeah. Less kitchen sink than draining board, perhaps. I like that. Also, its interesting. Its the first time ive seen anybody manage to wear a tie that is the same color as the barclays low know. I wonder if they had that made. Its a really strange blue. Geoff doesnt have one on, either. To be honest, i didnt even take the coffee. So there was no danger of me being impeached in any way. You are scrupulous. Geoff cutmore, thank you so much for coming by. President obama is going to deliver his state of the Union Address at 9 00 p. M. Eastern, expected to revive his populous message by asking congress for more tax increases and more spending cuts. His agenda is expected to return manufacturing jobs and infrastructure. Somed ins will be available from the current term. Well discuss what the president will hope to achieve tonight and how his speech may be received in the next half hour. Cnbc will have special coverage of the state of the union from 9 the oclock to 11 00 p. M. Eastern tonight. Dont miss it. Great, everybody made it. We all work remotely so this is a big deal, our first full Team Gathering i wanted to call on a few people. Ashley, ashley marshall. Here. Since were often all on the move, ashley suggested we use fedex office to hold packages for us. Great job. [ applause ] thank you. And on a protocol note, id like to talk to tim hill about his tendency to use all caps in emails. [ shouting ] oh im sorry guys. Ah sometimes the caps lock gets stuck on my keyboard. Hey do you wanna get a drink later . [ male announcer ] hold packages at any fedex office location. Yeah, the cisco ucsc series server, with the intel xeon processors, help us scale smoothly, like a perfect golf swing. How was it before . Clunky and full of unnecessary impediments. Like charles swing. I heard that. The g7 just released a statement regarding market stability. Theyre stating the obvious, arent they . Yes. I mean, if i was homer simpson, i would say, duh. Did we really hear anything new out of that . I wonder what prompted this need for issuing a statement out of the blue when everybody yesterday, last night at the Euro Group Meeting said were going to discuss this at the g20 in moscow and there will be a statement forthcoming then. In any case, what we saw out of this statement thats been issued now is everything we heard before in what the 151 other statements on how they want to cooperate, on stable, strong currencies and keeping volatility out of the markets. So its no big surprise necessary there. One may wonder how concerned they really are about this or who is pushing for this right now. We, of course, know that within the euro group and within the eu there are the differences of opinion to put it mildly with the french always hopping on about we have to have auction, we have to make sure volatility is kept out of the markets. But at the same token, saying a strong currency in the long run is better than breakup talk. So i think theres a lot of contra decisidictions here and end of the day, they will go back to markets, as usual. By the way, its pancake day today. Are you lemon and sugar or chocolate . Lemon and sugar, definitely. Well whip one up and send it over to you. Thank you very much for that. I didnt know pancakes, by the way, were such a thing. Im used to fat tuesday of mardi gras or generally stuffing yourself, but not necessarily with pancakes. How do you take them . I like mine chocolate. We have a price war brewing among the etf sector. The etf boom shows no signs of slowing down as average investors seek to diversify their portfolio. Investment firms are taking notice by launching more competitive pricing and launching new funds. Cnbc has been covering the latest sector trends from the etf conference in hollywood in florida. He filed this report. 1300 attendees at the index universe insight etf conference here in hollywood, florida. Assets under management are growing fast. In fact, jack brennen, the chairman of vanguard addressed this and said assets under management could grow to 2 trillion in the blink of an eye. But there are worries out there. Brennen expressed the sentiments of many out there talking about Niche Products out there that are causing some worries. Specifically, volatility products or lev raemged and inverse etfs. Some participants feel there should be more regulatory control of these kinds of products because Retail Investors dont understand them very well and can get confused easy. A lot of other people felt that the marketplace would eventually weed out etfs that werent worthwhile. Also, the really hot products, international investing, investing outside the united states, International Bond etfs and wizard tree has a lot of product people are talking about. They buy Japanese Equities but at the same time they hedge out the currency risk. For example, you have less risk of investing in japan when the yen drops and the dollar appreciates. On top of that, pimco will be launching a new actively managed currency etf. Back to you. Joining us now for more is jeff molatori. One of the top three etf providers in the world alongside blackrock and stage street. They control more than 8el 0 of assets under management. Jeff, welcome. Thank you. Thank you. So i guess some of the questions in this industry are more about how stable is it from your point of view with the cost cutting that weve seen in order to entice investors . How do you keep clients coming without undercutting your own profit model . Were a little different because were owned by our own investors. So our model in terms of profit versus state street or shares are very different. We welcome you and costs are going down. That will be better for investors and at times, at any times costs or critical elements in terms of getting net return for investors. But at this point in time, were really happy. We think its good for investors. What is your business model, then . Vanguard investors, Vanguard Funds which own the vanguard group. So in that regard, it operates on pretty much a net cost basis. That element is very different. When we see now the popularity of these products with a lot of Retail Investor webs anything to be worried about from your point of view, then . I think there is also something to be worried about when people were jumping after the most recent hot idea. For people to use it as part of a core longterm position, that meets what theyre trying to do for their longterm objectives, its a great vehicle. It can be very efficient, onetime purchase. Take it, get it in there. Its a great vehicle. Bear in mind, you know, where we are right now with equity markets and fixed rate gains for the s p at the beginning of the year. Where is the money going at the moment . Which space of etf is the money coming out of and going into . It was a big month of january in terms of cash flow. Overall, the jack brennan could go from 1. 3 to 2. Youre seeing a transition of people in the u. S. Where Retail Investors are the investors. Maybe to advisers or not. Thats one thing that hasnt happened in europe. That is something that probably will happen in europe that will accelerate the growth. What hasnt happened in europe . Now youre looking at the differences between these markets and the u. S. There are some different models. In the u. S. , it used to be that it was primarily institution. But 80 and 20 retail. Now its flipflopped, so its 80 20 the other way. Its getting the vehicle to that people can buy it easily, efficiently, get advice from a good adviser. And which sector or strategy etfs are taking the money at the moment . What you always say is on the margin, money follows what has worked. So its a value way to invest. With last years winners. Right. Momentum works until it doesnt. But we think going with broadly diversified portfolios is something people can do well with. Is the difference that americans are active . People tend to use etfs as a gambling product than a true product in europe just isnt the same mindset . I would say europe is probably you know, there are ropes in every corner in the u. S. Great point. You do see it, its harder to walk down the block without running into one of these. Thank you so much for coming by. Thank you. And go to our web page for far more indepth analysis on the etf sector. We will be covering every angle for a special report on etf. Cnbc. Com. As we take a break, here is a look at how futures are trading on wall street. It might be a down tuesday, as well. About eight points off the dow at the open. Well be right back. [ male announcer ] any technology not moving forward is moving backward. [ engine turns over, tires squeal ] and youll find advanced Safety Technology like an available headsup display on the 2013 lexus gs. Theres no going back. What are you doing . Work . Work. Cdw configured these Lenovo Thinkpad ultrabooks with intel core i7 processors. So, we can work anywhere. Anywhere . Sure on the beach, in the woods, at the lake. What about on the green . Lets not get ahead of ourselves. Oh welcome back to worldwide exchange. The g7 says it remains committed to market determined Exchange Rates. It does acknowledge disorderly movement to threaten economic stability. Were just hours away from president obamas state of the Union Address with the president calling on congress for more tax hikes and fewer spending cuts. And transforming barclays, the giant will cut 3,700 jobs and trim its banking business. Ceo Anthony Jenkins tells cnbc hes upbeat about the strategy. Its a very comprehensive plan. Im confident as the investors digest it, they will appreciate it. Major indexes, the s p 500 coming off a sixweek winning streak. We saw a breather yesterday, not usual for a monday. Were seeing a bit of a pause today. 1500 is the level there. China, taiwan closed for the rest of the week in order to celebrate that lunar new year. But here in europe, there has been a bit more activity after yesterdays quiet session. The ftse 100 supported by barclays which was seeing shares rally about 4 , one of the best performers on the stoxx 600. Elsewhere, the xetra dax down about 0. 2 . The cac 40 barely in the green. The ibex rebounding trying to add 0. 3 there. Meanwhile, what do you expect to do on this tradinging day . Here is what some have been telling us. Im very bearish on gold and it has nothing to do with korea. If people were legitimately concerned with some kind of an external risk, gold could catch a bid for once. But its been a rel of dog for two months and will continue to be by relative of growth die verging globally. At the moment, i think were still long euro yen. I think theres no reason that cant push things higher and even euro dollar will be back in the high 130s, maybe touching 140 by tend of the year. I think theres a lot of bearishness on the core Government Bond market at the moment. Weve probably taken it just a little bit too far. In the long run, yes, yields are going to rise. But in the very shortterm, i think theres an array of risks down there, particularly with people being somewhat negative on equities, even though i think thats probably a mistake in the long run. So i think perhaps theres a value to be found in this core market. Now, in just a few hours time, president obama will deliver his state of the Union Address at 9 00 p. M. Eastern tonight. Hes expected to revive his populist reelection message. The president s speech will be focused on stabilizing the middle class and repairing the u. S. Economy. His agenda is expected to include more money for clean energy, infrastructure. Some of the money will be repackaged from his first term. Cnbc does have special coverage of the state of the Union Address tonight from 9 00 to 11 00 p. M. Eastern. So it could be a late one. Joining us now, sara fagan, cnbc strategist. Former white house political director george w. Bush. Sara, good morning. Good morning. What do you expect to hear from the president tonight . Whats the point or what kind of agenda is he going to set out for his second term . Well, i think youll see him depart a bit from his inaugural address, which was surprisingly social and surprisingly liberal focus. I think people expected him to talk about entitlement reform and he didnt do that. He wont go that far tonight, but he will focus on the economy. And specifically what well see him talk about is making the economy work for everybody. Still a huge focus on the middle class. Lifting up people in lower incomes and putting them back aggressively in this economy. Do you think well hear specific details on how he hopes to avoid the sequester . Were starting to get into the nittygritty as to how the u. S. May avoid the spending cuts. President s man versus what were start to go hear trt other side of the aisle. Is he going to get specific on that . I think its possible you could see him talk about farm subsidies and other specific cuts that could avert the sequester. But most likely what hell wroo the speech for as it relates to see quester is to put it right back on republicans. And we may see some of his harshest rhetoric and tone around the sequester and directed directly at the opposing Party Tonight the. And what about the response from marco rubio . Whats the republican line likely to be here . Are they similarly going to use this as a way to make their case to the public as a place for avoiding the sequester or not depending on what the the agenda is . I think they will. I think what youll see senator rubio do who, by the way, has a tough job tonight. Its very hard to deliver a speech in the format directly following the president and look at it all on equal term. First, he has to lay out a thoughtful critique as to what the president s plan is. To your point or sequester, tax raise easy, i think youll see marco rubio lay out a vision for how a longterm spending cut plan will be better for the economy. Secondly, he has to be positive. He has to be uplifting. The republican brand has taken a hit over these last spending hikes can it cannot afford to keep being seen as the party of keeping people down, so to speak. And as a result of that, i think youll see him give a very uplifting, very personal accounting of his rise in america and how that can be true for everybody here. Sara, how powerful the president s speech might be on that side, of course, youve still got the republicans, representatives under republican control. So were still going to have to deal with this political reality. Is that is that going the play out post your speech . Well, youre right. I think youll likely see a whole lot of nothing happen as it relates to the sequester. And the reality is that parties are very far apart on how to deal with the spending cuts and republicans feel like they gave on these tax increases in january that taxes did go up for 77 of americans and that it would be imprudent for them to allow another tax to go forward. Yet the president is very dug in on this and believes now we should close additional what he would call loopholes in the tax code. And so the parties are so far apart, youre lickly to see the sequester kick in, maybe not permanently, but at least temporarily. Sara, thank you for that. Did you see these guys . About 40 people from congress, no labeled problem solvers. Nlps. Theyre going to wear badges during the speech declaring stop fighting, start fixing. Theorizing above. Yeah, theyre trying to rise above the issue. First lady Michelle Obama will have a special guest with her at the state of the Union Address. Apples ceo tim cook. This is the second year an invitation has been sxened to apple. Last year, mrs. Jobs was offered a seat. Still to come on the show, you might want to tune into power lunch today. I have a feeling youll be tuning in. Welcome back to the show. Stellar gains and equity markets do not necessarily signal the start of a longterm bull trend, says jim rogers. The rally in stocks is a sense of ultra easy money providing by the world central banks. See the full interview on our website, cnbc. Com. As fears about a hard landing in china are received, is it time to put money back into Exchange Traded funds . Check out analysis for that on our website, cnbc. Com. Kelly, italian state owned defend contractors in italy. Here we go, down 8 , as you can see on the italian bores. The head has been arrested, although hes arrested into an ongoing probe over allegations of his role in the sale of helicopters to the indian government. They say they have confidence in the legal process. India say says its now investigating the payment of 40 million rupees that were allegesly kickbacks for expediting the finmeccanica deal. Kelly. And if youre just joining us here on worldwide exchange, these are your headlines. President obama gets set to Pressure Congress during his state of the Union Address tonight. The g7 moves to offset fears of the currency war. And barclays ceo tells cnbc his banks overhaul is absolutely bold enough after reporting profits shy of forecast. Now, i just want to bring you this news out of the Swiss Central Bank which is interesting. Just on the heels of getting this statement from the g7, talking about the need for smkt Exchange Rates, take a look at what is happening here. The euro jumping about 0. 1 against the swesy. Talking about how the central bank will stick by the francs feeling without restricts. In other words, as you see that level there, theyre going to defend the 1. 20 level, ross. And the Exchange Rate will remain as long as necessary. And the swiss franc remains an overvalued currency, he says, which some would take issue with. How does that fare . Some of the other stories were looking at today bank of new york mellon will take an 850 million charge in the First Quarter. The government challenged 900 million tax benefit claimed by the bank which stemmed from a 1. 5 billion loan from barclays. The tax court ruled the benefit lacks economic substance meaning it was done solely for tax purposes. Take a look at shares of new york mellon. Meanwhile, the home of the whooper wants to be known as the home of the latte. Hmmm. Burger king s a announcing a plan today a partnership with starbucks. It will roll out decough and hot clock lat this week as well as full load ice coffee next month. The move is reminiscent of what it did years ago. Mccafe introduced a line of drinks. They were incredibly popular. They helped to boost sales. Now the other chains are trying to do the same thing. Oog im going to have to get the hot chocolate today, though. You know thats what i am giving up for lent, chocolate. And its pancake day today in the uk, which is our mardi gras. In new orleans, they have a carniv carnival. In rio they have a carnival. Here in the uk, we make pancakes. And you like yours with chocolate. I do a very thin chocolate pancake. How dow like yours . Maple surus, true american fashion, lots of butter. Thats what we do. Oh, please, with your chocolate pancakes . Oh, you mean relative to carnival. Yes. You dont want to eat pancakes in apy kenny. True. Coming up, s p and mcgrawhill are the subject of a a well examine that when we come back. To grow, we have to boost our social media visibility. More likes. More tweets. So, beginning today, my son brock and his whole team will be our new senior social media strategists. Any questions . Since we make radiator valves wouldnt it be better if we just let fedex help us to expand to new markets . Hmm gotta admit thats better than a few likes. I dont have the door code. Whos that . He won a contest online to be ceo for the day. How am i supposed to run a business here without an office . [ male announcer ] fast, reliable deliveries worldwide. Fedex. [ male announcer ] fast, reliable deliveries worldwide. All stations come over to mithis is for real this time. Step seven point two one two. Verify and lock. Command is locked. Five seconds. Three, two, one. Standing by for capture. The most Innovative Software on the planet. Dragon is captured. Is connecting todays leading companies to places beyond it. Siemens. Answers. Barclays has unveiled sweeping operational changes as part of the attempt to reposition the bank in the wake of the libor scandal. Its cutting its overall cost base by 1. 7 billion pounds in 2015. This is as quarterly provtsd came in just shy of forecasts. Earlier, Geoff Cutmore spoke to Anthony Jenkins and asked him if the steps taken by the bank were indeed bold enough. I think the analysts havent had a chance to digest what were launching today. What we are launching is a very positive strong to get the return on equity above the cost of equity in the course of 2015 which is what our shareholders have asked for. To do that, we have to work all the business, we have to manage capital everybodyively, we have to strategically reduce or cost specs and we have to continue to make progress on reducing the ratio of conversation to our net income. And thats what were talking about today. Its a very comprehensive plan and im confident that as the investors digest it they will appreciate that. That was barclays ceo Anthony Jenkins. Here is a look at whats on the agenda today in the u. S. The mostly federal budget state will be out at 2 00 p. M. Eastern. Hours before the fed drae draets. A pair of fed officials speak about the economy today. Coke reports before the open approximately well hear from avop, possibly goodyear. After the close, we get numbers from buffalo wild wings, Western Union and clearwire. Goldman sachs Lloyd Blankfein will be on street signs later today from san francisco. Mcgrawhill reports earnings after the opening bell. And theyre saying mcgrawhill could with stand the hit of a 5 billion fine. Joining us for more is joseph stellar. Thanks very much, indeed, for joining us, dennis. Do you think the fine is just fed, that level of fine if you get it. If you think about what happened in financial crisis, most of it could not have happened if the worthless junk securities were rated aaa. The most secure investor anywhere in the world can purchase aaa. While the rating agents are not alone in having engaged in egregious and illegal conduct, they certainly were the absolute key enabler for the entire bubble. Yeah. I mean, there was not a principal that you had something in the 95 prior to. Is there anything in our in respects or it has to be done. They didnt get one or two things wrong. They rated trillions and trillions of dollars aaa and many of those, literally hundreds of billions if not trillions went to zero. Its not like it was one or two bad ratings and its not like they lost 5 or 10 . They lost 100 in these securities. And the complaint alleges that in june of 2007 alone, s p rated over 25 billion worth of subprime derivatives, aaa, is and sold them in june of 07. Many of those securities very quickly became worthless. So the allegations are very serious and detailed that s p knowingingly committed fraud by putting fraudulent ratings on the securities. And the damages, if you think i tell about, 35 billion from the damage of the kb, 5 billion is a drop in the budget. The s p would argue that they were taken out of context. There were a bunch of rating agencies that did the same thing. And the rating agencies, they hire somebody to rob a bank, they jump into the car and they get away. The Police Arrest the person who opened the bank. They ought to go after the people who slapped these ratings on worthless securities, but they ought to go after the big banks on wall street that created, packaged and sold these securities throughout the world. Dennis, thank you for seeing us. Now its the week after that sierp bowl. That means people everybody where will be able to they had there. She will be talking to our own Brian Shactman today on power launch. If youre stibing around the office to catch that, im going to know whats up. Apparently brian has worked more than he has in his krefl crew. Brian, dont take that. [ engine turns over ] [ male announcer ] we created the luxury crossover and kept turning the page, writing the next chapter for the rx and lexus. This is the pursuit of perfection