Transcripts For CNBC Worldwide Exchange 20130307

Welcome to todays Worldwide Exchange. Im kelly evans and these are your headlines from around the world. Its decision day in europe. The ecb expected to hold off on further easing as the stalemate in italy continues. But its forecast could move markets. And will the bank of england launch fresh rounds of quantitative easing . Economists are split on what the decision could be. And no added stimulus in the bank of japan this time around, but investors expect more action next month. Plus, discussing the deficit over dinner. President obama is dining with several key lawmakers in washington last night. Youre watching Worldwide Exchange, bringing you Business News from around the globe. Welcome to todays edition of Worldwide Exchange. Its decision day, as we said, Across Europe. Both the European Central bank and the bank of japan will meet for their decisions this afternoon. This whole week has been pretty busy. Sadly, im here on my own this morning. Ross westgate is headed to italy where hell join us with the latest on what hes hearing from the minds meeting down in the forum there. On todays program, its not just about Central Banks. Well meet with Standard Banks ceo. He joins us from johannesburg after stepping down as the banks arrive in full youre profits. Well speak to the former venezuelan government after the death of hugo chavez. Well head to new york and get you the latest on u. S. Banks before the Federal Reserve releases the annual stress test results. And the European Central banks, yes, its expected to keep rates on hold at 0775 today. Ecb president mario draghi isnt expected to unveil any new information today. Carolin roth is in frankfurt. Carolin, what is the gossip there . What are people expected today . I think by and large, theyre expecting that mr. Draghi will be more dovish, he will point at some easing in the future, but it would be premature to believe that the ecb is going to be cutting rates from its record low of 3. 11 today. Why is that . A couple reasons. First of all, we havent had a warning in mr. Draghis communication yet and he usually gives us one or two months warnings. Second of all, your dollar rates have dropped by some 700 pence since the last meeting and that in itself could be boosting growth, albeit with quite a considerable delay. Thirdly, mr. Draghi, an a italian himpz, may not want to give the impression that he is too concerned about the political situation in italy, and that is why he will probably hold off on easing the rates or cutting the main rephi rate. Now, there is a choiance, of course, that they will cut the deposit rate. But this poicht, though, many analysts believe that the cost will outweigh the benefits. If were not going to see a rephi rate over the next couple of months, some economist ves pointed out to me that we could see some other measures being put in place, such as further easing of collateral roles. But, again, there is many arguments on top of that. We may see the ecb embarking on another record of ltro. So a couple things that could be happening, but i dont think were going to see a rephi rate cut, kelly. It comes at a time when were seeing europe tightening up its balance sheet. I suppose the question is whether they need to do more more targeted for a country like italy or just generally be more accommodative. Look, a fivequarter recession, we know thats the case. That matches the 08 09 perd of the downturn in terms of length. It almost seems as though the evidence is right there in front of them for doing something more. Kelly, youre absolutely right. If we look at the macro data in the last couple of weeks, we saw very weak export data yesterday, softer than expected pmis, we saw very, very weak lending data specifically towards the periphery. That shows you that the transition mechanism that the ecb has said is its main priority, that still is not properly working. With regard to italy, thats an interesting one, as well. As an italian himself, mr. Draghi will probably not give any indication that hes going to be any easier on the conti e continuelty as far as t is concerned. What were going to hear is something along the lines of any country could act as the omt as long as the main preconditions are from bills. Thank you very much. Were going to have more on this program. Now, jurgen is joining us now. I was asking carolin if the data doesnt point towards more easing urgency. What do you think . I think theres more room to go for more easing. We are likely to see further downward provisions for 2013 where they like to move to Something Like minus 0. 4, minus 0. 5. And if the ecb takes its target of close of below 2 inflation target seriously, they probably have to think again how they can achieve this. I think that gives plenty of room to reduce rates down the road. But i agree, it is not likely it happened today. If they do that, if they take down their growth forecast, they cant do that and then do nothing, can they . They have done it in december and is they have done it in times before. I think its crucial to see how the pmi and other sentiment indicators develop. In january, coming after a month of significant downward of projections, they did nothing because we saw that in germany and also in france. Sentiment indicators continue to increase. In that respect, this assumption that the economic recovery will take place in the second half of the year becomes much more uncertain. It may be another fall after sentiment indicators reported later this month. Maybe then the trigger for rate cut and we think theres a decent chance that the ecb will cut when the refaye rates in april. Can you explain why they might cut the deposit rate . The deposit rate is much more controversial because we dont know what has happened. It increases the pain of the banks that hold excessive liquidity. And i can thats one of the reasons why its so controversial. Some banks may start increasing the lending rates because they want to keep the margins constant. I think these are still quite a few risks out there. Also, it has influence on the interbank market. In that respect, the reduction of the deposit rate is to be coming along with the last round of using the Interest Rate instruments and we expect them in the second half of the year when the ecb is likely to cut to 0. 25. The deposit rate will go down to a minus 0. 25. We want to leave it there. The big question is whether or not were seeing an expansion of the quantitative easing measures. Mervyn king, again, voting to increase the size of the program to 4 had 00 billion pounds sterling. Outvoted. You wouldnt see that in the u. S. And after that going public. Do you think theres any sense where he pushes for it again . I think theyll look at the weakness of the economy and the economy for ongoing weakness and inflation not being very high or not as high as the central bank probably wants to have it. We think there is quite a decent chance of another round of qe, around 25 billion per quarter. However, after the small increase of the pmi readings, it is not certain to do it today. What does that mean for pound sterling . Is it because people are sniffing out the prospect that theyre going to do more . I guess at this point, that would raise the odds of a disappointment if they dont. I think that is right. Theres some expectation that its lodged to come through. That probably contributes to further weakening of sterling not just against the dollar, but also against the euro. In that respect, if they dont act today, they may come from the decision and then well have to see how things develop and then i think its just delay and further sterling weakening is coming along in the next couple of months, anyway. Jergen, thanks very much for your time. In just a couple of hours, well get the policy decisions from the bank of england and well bring this to you live. Should the bank of england spain qe . Head to our website. Share your thoughts with us. Stay tuned to cnbc, because at 11 00 p. M. , cnbc will bring you the bank of englands Rate Decision as it happens. Thats 12 00 noon for those of us in london. In a key speech today, Prime Minister David Cameron will highlight the benefits of his cost cutting measures. The Prime Ministers speech comes less than two weeks before his chancellor, george osborne, delivers the annual budget. Its expected to call for conservative activism. Meanwhile, could mark carney be granted more powers to play with . The uk government will give the central bank more room for latch unioners. The option is being explored. And potentially even scrapping the inflation mandate altogether. Now, speaking of which, as expected, no change in policy in the boj this time around. Investors are looking forward to a new regime change at the central bank when a new chief comes on board. If all goes well, kuroda could be confirmed next week. Many expect the central bank to release fresh moves. Is this then the calm before the storm . Well have analysis on just what the new governor has up his sleeve live at 10 20 cet. First, though, check on markets in asia. Li sixuan joins us from asia. We just talked about the bank of japan. What was the Market Reaction . Thank you the despite the dow racking up another record high, asian bourses were. The boj may be bracing for bolder actions under the new governor at its next meeting in april. The nikkei 225 rose briefly ending a fresh 4 1 2 year high and ended up 0. 3 . Olympus shares made solid gains today, up 5. 5 after the nikkei business daily said the company ames to slash interest bearing dead with around 1 billion for the year. In china, investors remained cautious with key Economic Data out due out tomorrow and this weekend. Recent outperformers less the losses such as military shares. A flatteneding for the hang seng. The property place and utilities let their support casting losses in other sectors. Elsewhere, south korea lost 0. 8 . Samsung electronics tumbled 276 following the weakness in its global peer such as apple in the u. S. Meanwhile, australias asx 200 eased about 0. 1 after the countrys trade deficit widened more than expected. Indias sensex bucking the downward trend, as well. Back to you. Sixuan, thanks very much for that. In europe, the mood is broadly positive, but its lackluster, shall we say. Lets take a look at some of the major bourses. Broadly, the fwts if it is mib is rebounding after a couple of days in the red in italy. The xetra dax, which as weve seen has had a strong couple of sessions adding to its move by about 0. 2 . The ftse 11 is 00 higher, as well. A couple of top stocks moving today, aviva down 13 and this is what happens when you cut a dividend. The company has slashed its dividend by about a quarter. Investors are not happy about that one. Carrefour, up about 2. 9 . And aggreco up almost 10 . Trying to offset that move we saw from aviva. So as Companies Continue to tinker with their dividend payoff policies, were seeing the reaction. We can see what investors want from shares and they want yield. Taking a look at bond rates, we can see whats happening with italy and spain. Italy is down to 4. 6 . We saw this almost back up towards 5 after the italian elections. Frankly, after a couple of days of concern, they have continued to rally. Now spain, 4. 97 . We are watching this one all week waiting for it to go below 5 . Today it is decidedly below 5 . Well bring you the results on the three, five and tenyear paper as soon as it crosses. Forex, some important moves here. The euro dollar, up 0. 4 . Holding above 11. 30. The dollar yen is below 94. The aussie dollar holding relatively steady, about 1. 4 . Sterling, down by 0. 2 . As we were just discussing with jergen, there is a sense built in for the bank of england to do further easing measures. If they dont, look for the reaction across sterling and frankly across markets. The bank of japan meets for the last time before the new leadership shuffle. Find out why our next guest thinks a new era of Monetary Policy is on its way. Stay tuned. Oh this is lame, investors could lose tens of thousands of dollars on their 401 k to hidden fees. Is that what youre looking for, like a hidden fee in your giant mom bag . Maybe i have them. Oh thats right i dont because i rolled my account over to etrade where. Woah. Okay. They dont have hidden fees. Hey fern. The junk drawer . Why would they. Is that my gerbil . You said he moved to a tiny farm. Thats it, im running away. No, no you cant come [ male announcer ] etrade. Less for us. More for you. Stil the next poj policy meeting is scheduled for april. Many are expecting the unveiling of aggressive monetary easing. Joining us now from singapore is alvin lu. Senior economist at lb. How is this priced in in terms of what the market expects kuroda to do . I think there is something being priced in already given that the yen is at 94 versus the u. S. Dollar. Two months ago, its pretty much power. But, again, the nomination, once it gets kicked in because of its previous, i think his reputation of asking for a yen thats supposed to be weaker, but despite the fact that during that time it was higher than 20. People might actually have a knee jerk reaction by the time his appointment comes into place. I guess what i wonder is when were moving into the phase of the nikkei weakening on expectations of policy to now the policy having to deliver. Is the onus really now on the bank of japan, on kuroda and on the government, as well, to come forward with some significant measures . And, again, were seeing dollar yen about 94. If they dont deliver, is the dollar headed back up . Definitely. When the nomination takes place and we look at a first meeting next month, then there would have to be a negative reaction and well see immediate Dollar Strength and the yen would strengthen immediately. But i dont think that would be the case. I think he would be quite rapid and quite sweeping, aggressive kinds of monetary policies, changes. For example, i think he will be announcing forward the open ended program for them and at the same time, they might be just announcing the purchase of the lodger bonds themselves. Right now, maintaining it below the two years. Weve seen some of these proposals slowed, even at the meeting today. Is that a preview of whats to come . I think so. And, k, today weve seen that the finance minister has said that it is the Central Banks responsibility for the inflation target and clearly if they come up with a hot target and the time frame itself that will also push more expectations of a weaker yen going forward. How much do you expect it to weaken further from here, alvin . If on the top of my mind, once his nomination is confirmed, i think it could easily push up towards the hundred mark against the u. S. Dollar in a rapid time. But i think it would come back down. Going back towards the policies that were announced in late april, the boj meig, we will probably see yen moving towards the 96 level. There might be somewhat of a correction. I think if the move is too aggressive, they got a lot of response coming from the International Fund especially for other major Central Banks. If you put that hat on for just a quick second, first, we saw the nikkei responding almost as a mirror image to the weakness that we saw in the yen. The if, as you say, the yen isnt going to move that much ultimately beyond what were seeing now, is that a headwind for the nikkei or can it continue to rally . I think its no knee jerk. Events happens during this period of time. By the time his nomination comes to pass and first boj meeting happens in april, i wouldnt be too surprised to see it going well. Weve seen that happening to the dow jones. And this probably might be just a reflection of people who are getting into more risky assets and this could be an excuse to go in. Thats a great point. Join us here on the conversation, email uses, tweet us if you want to respond to that or anything else youve heard on the program so far. A couple other top stories this morning, bhp billy top says its committed to increasing liquidity in the stock market and transparency. Talzs come amid the National Development ask reform commission. Some miners and daid traders had delayed iron ore shipments sending a false signal of iron ore shortages. And as the National Peoples congress continues, cnbc spoke with one of the delegates to the advisory body. Bon bong made several proposals to the group including incentives to encourage projects of low cost housing. For the higher end property second is something people talk about. The detail is yet to come out, but people are reading it in a different way. The market has reacted negatively over the next couple of days. But there is a solid demand, particularly in the big city. The impact may be necessary. As far as the higher market is concerned, theres no denialing the demand remains high in the major cities. The idea was to examine some of the tax payments for people who are willing toni vest in the low rent housing property. That is the program that the u. S. Has used in the past and was very popular. And forget saying till death do you part. How about till taxes do you part. Theres been a surge in divorce rates in beijing. Couples are reportedly opting to untie the knot and divide their Property Assets as individuals. Once the sale is complete, they can remarry. People will do anything to get around taxeses. Nicolas sarkozy has entered a return into political life saying he might be forced to run for the good of the country. Sarkozy slammed his successor warning that frances economic crisis will be followed by a social crisis. Meanwhile, mitt romney is going back to work, but steering can clear of politics. Joining his sons investment firm. Hes expected to serve as one week a month serving as the companys executive economy, will consult, but has no plans to fund raise for the firm. Interesting there to see car cozy coming back to france, romney coming back to private equity. Maybe they should switch jobs. We want to know what you think. Email us. Tweet us, as well. It seems berlusconi isnt the only one who wants a second act in politics, or a third or a fourth or a fifth. Our next guest warns the crisis is far from over. Well be right back. [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. 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And no added stimulus for the bank of japan this time around, but investors expect more action when kuroda takes to the helm next month. Ahead of those Rate Decisions were expecting mid day, equity markets are moving higher. The ftse up 0. 3 . The xetra dax building on its strong rallies for the last couple of days. Same for paris and italy and same for spanish and italian debt. Look at spain, 4. 98 . We knew it was headed below 5 . Now its sitting comfortably below italy, 4. 62 . That differential will narrow a bit. Moving on to forex, sterling, as i said, below 1. 50. Euro dollar is stronger, basically telling you what kind of decisions investors are expecting today. Action from the boe, inaction from the European Central bank. Now, its been keeping rates on hold, the ecb is, later today. President mario draghi isnt expected to unveil any new measures to help the eurozones indebted countries. According to a new report, the ecb has taken extraordinary steps to alleviate euro crisis fears. But the group warns that a period of calm is far from secure. On that note, dr. Bob swaraff, coauthor of the report till debt to us part is joining us. Welcome. Good morning, kelly. This is being called more or less a depression, likening it to the post world war ii period and ug sg were far from reaching any resolution to this crisis. I think it may sound depressing to a lot of people, but our view at lom pardon research is that were only in the middle of this. The simple reality is when you look back on the 1920s, the 1920s were a tragedy of small decisions. Im not saying that lombard street ask we dont believe that to this day. You now have a situation where its quite terrifying. You have through versus gold. You have a belief that crushing austerity is the answer to solving this problem. And more importantly, we have the situation now where the concept of the identify crisis starts today. And yet for all that, you can make the argument that weve seen rerating in spanish labor unit costs that were forcing internal devaluation, that its happening and that germany is growing strongly at least in terms of its consumers. So were nevertheless seeing the kinds of shift happen within the eurozone that you need to see and that the European Central bank is standing there at the ready to avoid this crisis from breaking out again. Well, i think the problem you have at the moment is that you arrive and theres change happening at the structure level to some extent in spain, in greece and other places. However, that is being forced out from top and the resultling population is starting to go towards more popular spotty. And certainly look at antieuro sentiment, that is starting to build up. If you look at greece, while they are still ready to some extent for the euro, there is certainly a call for restructuring. And what you have now, even by the aus tirty that they have, you end up taking so long doing it. And there are two key calms in this report. One is there is more debt restructuring. It is unfathomable that they will ever be able to pay it back. Who is leaving the euro . Its a good question. I think it depends on the restructuring. Now suddenly youve got the irish promissory note. And the problem that you have is that between north and south, periphery growth is further. But, you know, spain is very close, i would say. Italy, perhaps. Germany, bear in mind is the biggest losers. And the message for investors . They shouldnt lose sight of the fact that they are tail risk in the window. What we havent done is actually made the shifts that are necessary to results from the longterm. Dr. Bob suares, thank you so much. Maybe it would affect the outcome. Theyve done a great job in trying to do what it can to keep rates down. Well leave it there. Thank you so much for coming by. My pleasure. Respond to that conversation or anything else youve heard on the program this morning, worldwood cnbc. Com. The company that built the dubai mall and other projects in the gulf is looking beyond the region for new business opportunities. In a rare and exclusive interview with our own yusef, he joins you now from dubai. What did you learn . Where are we going to see the next mega mall spring up . Well, kelly, its a fascinating story. This is an arab company that has operations in over 50 companies and revenues in the range of 6 billion last year. Despite its experience in dealing with confidence and turmoil in this part of the world, its scaling back its exposure from 70 to 50 . Also the countries like saudi arabia. They need to address youth unemployment and the need to diversify their economies away from oil. But to do that successfully, they nooid need to coordinate better. Lets be honest. The problem, in my opinion, in the gulf is they tried to copy similar economies. I would have thought this would have been more well planned to have a differentiated economy. Now everybody wants to have his own airline. That can hardly be sustainable, can it . I think as the world becomes more competitive and as these economies want to grow, they have to look at for differentiator. And the differentiator is what their own market can produce for them and what they can give to the other parts around the world. If du buy is successful with something we copy it and that cannot work. Here are some countries hes focusing on. I think three countries, kazakhstan, turkistan with the Third Largest gas reserves. But its sand locked. Kazakhstan has a huge amount of oil and gas, but still its pipeline is going through russia and recently made it to china these three countries definitely will be the growth area. Make sure you tune in tonight to access the middle east as we. Our conversations from davos. Youll find out why building big, kelly, does not necessarily translate into healthy profits and why the company is deciding to stay in greece despite the eurozone debt crisis. Thanks very much. That is a program you wont want to miss. The faa is not what does this mean to the suppliers for the dreamliner fleet . Hi, kelly. The nikkei 225 stretched today winning streak into a sixth day, renewing the 2013 high up 0. 3 . The rise was modest compared to yesterday anticipates 0. 2 surge, but despite that, the benchmark index dropped for the First Time Since december 2008. The pung the top gainers, stocks jumped nearly is 1 at one point on news that the faa is closing to signing off on a certification plan. This plan could allow boeing to carry out test flights of the 787. Authorities will determine whether to lift the flights ban or not during this test. Hinting that its relation with the aircraft manufacturer is still firm. Thats all from nikkei business report. Back to you. Staying in the region, olympus shares made solid gains today after the nikkei daily says its prepared to slash interests far more than the previous cuts. Olympus plans to do this from increasing its business from its medical supply inventory. Cnbcs david faber reports carl icahn has built a stake of about 100 million shares in dell or about 6 of the company. The move could complicate michael dells 24 billion buyout deal. Icahn reportedly wants dell to issue a special dividend and would likely oppose the buyout. Shareholders representing 14 of dell stock have said theyll vote against the deal. Dell shares up, adding 1. 2 if frankfurt trade this morning. And its a solid debut from maple tree. Greater China Commercial trust on the singapore bores. Shares climbed 10 as it opened from its issue price. The listing was nearly 30 times oversubscribed, allowing maybel tree to raise over 1 billion. And whats really interesting about this is it raises a couple of issues, one being whether singapore is a more attractive place to go public than hong kong . By the way, mention, speaking of whats happening in london and europe, that its european ipos, which have been among the best performing one these year, thats according to a report from Price Waterhouse cooper. It expects, by the way, more private equity backflow toes happen in the market in the first quarter. So a couple of gauges suggesting there is some life in the market even if it is more morabund. We have spanish debt auction coming up on a delay when leron, this would suggest that demand should be pretty healthy, no . The demand has been pretty heavy and the market has been fairly stable. If anything, i think, you know, theres been some shorts which have been setting you up ahead of the eye tall yap elections and this socially is an opportunity for a lot of people to go back a little bit more towards neutral. So i would expect a very decent auction despite the lower yield lefs that we are seeing. And we are getting some of those results. We can bring them to you now. Spain has sold about half a billion euro in the three year, about 2 billion of the five year. Im going to drop this all down. It sounds 2. 5 billion euros of the 10year. As we said, about 2. 5 billion or just over 2 billion, as well want of the fiveyear. Bid to cover, were seeing a bid to cover ratio 4. 9 . 2. 3 for the five and tenyear paper respectively. 4. 9 wid to cover ratio in the threeyear paper, that is typically where we look as a gauge at what the Central European bank is doing. What signal does that send to you . Well, i think clearly a lot of the International Demand over the past six months has been at the shorter end of the curve where there is the potential back stop from the ecb omt. That will continue. At the same time, san franciscoish treasury is trying to lengthen the maturity of the debt. The bid to cover will always be short. Its where the natural falling demand is. I think the key question is how much in ten years, how much in the longer end . You can really issue on a regular paves. Weve got these 5 billion auctions basically twice a month now for the remainder of the year. So its a long haul process rather than, you know, you have to take one good auction at a ti time. What does this broadly tell you about what investors now see for the spanish economy . I think you have got to put the 5 in comparison with what you get on tenyear bunds or tenyear france or the core, the semi core countries. The 5 is still elevated compared to the Economic Conditions in spain. What is their value for tenyear spain . On some of the mothers, i would say its roughly speaking where we are, maybe 20, 30 basis points around where we are. Its still at a fairly high level because you still have quite a bit of execution risk, on the deficit versus the central performance. And you still have in the background some political noise about some of the issues that the king has been involved recently. Is on we should be around here. We are going to take a quick break. When we come back, spain just issued 10 isyear debt at below 5 . Welcome back to Worldwide Exchange. Youre taking a look at the euro. The spanish auction raising the high end of what they were hoping to and is raising tenyear bunch below 5 . Leron is still with us. I just wanted to ask because after the italian election with its uncertain outcome, we did start to see italy creeping back up. We were talking about whether the yields jump above spain again. Now, you look at whats happening in the market today, and its not just that spain is falling, but italy is, too. Where do they go from here . I think the spread used to be around 100 basis points, if you remember, at the end of the last year. Now its around 30 basis points. Its where you should be. You dont have that many big differences in terms of positional investor Risk Appetite on italy versus spain. The fundamentals, youve got more fundamental risk on the spanish side, but the political situation in italy is a little bit more uncertain in the near term. So, you know, the 30base point stred, thats more or less where we see it. And i think it will move more or less in lock step. From here, we would expect a stabilization, as i said, in spain and also in italy with the potential for a rally if the short positions that have been put up ahead of the elections are slowly being covered if people get more comfortable with the resolution of the election uncertainty. And why theyre so comfortable around at a time when it seems like every headline is telling us theres less prospect of a coalition. Maybe theyll bring in a technocratic government. Yet the market continues to rally. Yeah. I think its the combination of the need for yields. You can interest in italian oneyear paper at 1. 50 or Something Like that. And all you can invest in tenyear bunds at 1. 50. For a lot of investors who have been sticking to italy for the past 18 moss, the big liquidations were really at the end of 2011. For a lot of investors, they doed dont need to add to italian risks. They need to roll their exposure. And the yield is very attract e attractive. And, you know, the uncertainty on the political side in italy has been a feature for a long time. Investorses have been pretty relaxed. It puts italy into a more project ill position if something happens. If there is a big risk off move, i think there you could see italian yields and spanish yields moving much higher. But in the current environment, i think youre more likely to drift back a little lower. Okay. Well leave it there. Thank you so much for all your time this morning. And, again, it seems to be the trade searching for a catalyst. Everybody is eager to see this backup happen. Every time it happens, investors are eager to buy back into it. Anyway, its now launched an internal audit. Its cooperating with u. S. Authorities and its in talks over u. S. Dollar transfers involving countries targeted by u. S. Sanctions. Shares on Societe Generale are down by almost 2 . Airbus, seeing news out of that company saying that 181 aircraft orders in january and february, 162 net aircraft orders, it delivered 80 aircraft during that period, including two a380 super jumbo jets. Eads saying sheers up 0. 6 . Aviva shares have plunged after the company slashed its dividend for the fist time in four years in a bid to free up cash for its turn around plan. Shares down 12 on the ftse. The uks second largest insurer slashed dividends as profits drop 4 . Meanwhile, a Strong Capital position and solid growth in its home market, shares benefiting on the back of that news adding 11 is. 4 , just 11 over the past seven days. Shares in carrefour trading sharply higher today after net profits came in better than expected. 2012 results less than forecast at 6. 6 on year. The ceo says carrefour is bracing for a slowdown in 2013. And get this, Fourth Quarter adidas profits rise after a writedown due to the weak performance of its reebok unit. I believe they had warned about that. Up 3. 6 in frankfurt this morning as investors had expected that news. On the website, meanwhile, fancy a change of scene. If youre flush with cash, you might consider some of the worlds most expensive real estate markets. We have a slight show taking you through prices of the worlds top 12 property hot spots. I suspect some of them have to be here in lopped. And if the s p 500 can climate , lit mark the fifth longest bull market for the index sips 1938. Analyst offer their views at cnbc. Com. You can offer your views here on the program. Respond annoying youve heard by emailing us, worldwide cnbc. Com. If youve got a message for ross, ill pass it along. Tweet us. Stick around because later on the program, its job done from ceo jacko morini. Well talk to him first on cnbc when we come back. Welcome to Worldwide Exchange. Im kelly evans ask these are your headlines from around the world. Its decision day are a cross europe. The stalemate continues in italy. The bank of england could launch a fresh round of quantitative easing. The euro hits a fresh high in the latest auction of longer term debt. Societe generale shares down after the french bank says its cooperating with u. S. Officials involving Companies Targeted by u. S. Sanctions. And president obama looks to make a big budget deal with republicans dining with lawmakers in washington last night. Announcer youre watching Worldwide Exchange, bringing you Business News from around the globe. Its another morning and another key level, 14,301. It seems like just yesterday oh, it was yesterday. Maybe the day before we were at 14,2 hunl and were taking out another level of what futures are indicating this morning. 31 points above fair value. We are looking for rebounds after this index was sitting out of the rally yesterday on weakness in apple and a couple other names. Here, trying to head back to that level. The nasdaq is one of those indexes well below its 2012 highs. The nasdaq, 2,796. The s p is trying to add a couple more points, as well. The cnbc ftse global 3000. 1 today. The bank of japan stoot stood pat at shirakawas last meeting as bank of japan governor. European markets, for the most part, are in the green, including the ftse mib which has been sitting that out mostly. But adding 0. 7 as italian debt is rallying. In the bond space, italy and is spain are rallying. 4. 96 for spain on the ten year which did come through with an auction of three, five and tenyear debt. Well show you the curve of the auction went off fairly well. And the bid to cover especially over here on the three year was exceptionally high. Over on forex, the euro dollar was higher after news of that auction. Now about 0. 6 above 1. 30. Sterling dollar is still weaker before the bank of england meets later today. And the dollar yen, adding 0. 11 . Lets get straight out to will i sixuan. It seems as though the yen is resuming its weakening. Yeah, sure, it is. The market is still outperforming the rest of asia and as we can see, plenty of red arrows in asian bourses despite another record closing high in the u. S. Many expect the central bank to unleash new money at its next meeting in april. The nikkei 225 bucked the down trend higher by 0. 3 . Olympus shares made solid gains up 557 after the business daily said the company ames to slash interest bearing debt around is billion. There is also concern that chinese regulators will allow ipos to resume. Banking shares were under pressure after the pboc monday up liquidity from the markets for the Third Straight week. The hang seng managed to finish flat with utilities offing lesses elsewhere. Sang sung trumbulled following its global peers australias asx 200 eased after the countrys trade deficit widened more than expected. Indias sensex sending higher by a strong 1. 1 . Back to you. Thank you so much for that. Standard bank has reported an 8 rise in full year profits, 1. 8el building. The Johannesburg Bank also announced the resignation of its ceo. The bank is refocusing its business offing markets. Joining us now for more first on cnbc, it is jacko marice. Thank you so much for your time, jack oh. What do you hope your legacy is from your tenyears at this bank . Today, Standard Bank is a 150yearold bank. So ive only been in the driving seat for 13 years, which is a long time at one level, but a short time at another level. During my time, weve obviously expanded our avenue cap franchise tremendously. We both link with icbc, the biggest bank in the world in china want were very well positioned in relation to africa, asia and particularly china flows. I think weve put the name in place and no eats up to him because and has that come back to haunt you . That the reasonable youre stepping down . Absolutely not. The share price is at an alltime high. The dividend has gone up. With the changes to all the rules on capital, basul and so forth, you have to be judicious about your expansion. We were trying to become an emerging markets bank. Two or three years ago, we contemplated on being an african bank. So so tease a producible bank on the continent. If what youre saying is regulation, why do you think the bank is any better with a change in management now . The team that has put the strategy together is the same team. The people who are taking over have been following my team for about ten years each. So this is just in the progression of time as opposed to a dramatic change as a result of any particular event. The bang is fairly well positioned. Im curious, too, seeing this stake that the icb in china has had in your company, a lot of people looking at the role that china has played in terms of deploying capital across africa. Who is how has that relationship, in your opinion, is it indicative of what youre seeing more broadly across africa, these partnerships with china, perhaps a move towards more as opposed to trade and the investment flows with the west and the north . Definitely. If you look at the graph of trade just within the bric countries and africa, you will see that its going up exponentially, but not with china. So, yes, i think it is important. China has a stated intention of building close links across the continent. We are well positioned within a huge bank having 20 Share Holding in us from which they paid 5. 5 billion seven years ago. So its reflecting their view on our bank and their view of africa. It looks like youve stalled out in argentina. How difficult have things gotten there . If we look back at chavezs death, whether it remains a difficult place to crack . The decision for us to scale back our decision was dismantling some of the our other emerging market exposures. Iccb has remained one of the largest shareholders. We think with icbc coming in, its indicative of ourselves and our relationship with icbc. And back at home, a tough time politically, as well. Its been a difficult period for south africa. What needs to happen to improve the Business Environment for you . Undoubtedly, there have been a number of sad and unfortunate events that have happened. But if you look at the essence of the south of can economy, which is, of course, our biggest concern, the economy is still growing at around about 2. 5 , which is not as high as it needs to be, but its certainly not a major problem. So if you look, theres a lot of new activity, a lot of new people coming into the banking system. While there might be a high level negative perceptions about south africa in the media, i think the economy itself is still performing roamly well and is were doing well as a result. Record high provtsd, record high profit sharing, thank you for your time today. The ecb president mario draghi is not expected to unveil any new measures to help the economy in their meeting today. Carolin roth is in frankfurt ahead of that meeting. Carolin, earlier we were discussing the options that the ecb has in front of them. It sounds like theyre not going to exercise any of them today. Absolutely. If you want to be geeky, if you want to look at a 25 basis point cut in the refi rate, that may be justified. Also, if you look at a soft it may be warranted, as well. On the other hand, i think that the ecb is going to be keeping its powder dry partly, also, because weve seen the euro dollar raid cutting down significantly since the last meeting and weve seen this pressure. As far as the impact is concerned, that has certainly come down. On the other hand, if you look at the Spare Capacity were seeing in the eurozone economy, as you pointed out, the inflation forecast for 2013 and 2014 may still come down. So the ecb may not be cutting rates today, but it may lay the groundwork for some easing to come potentially in april or in may when it cuts its growth and inflation forecast. On that note, kelly, back over to you. Carolin, thanks. As i mentioned, well have more from carolin coming up in the program and in our rates special. It will follow Worldwide Exchange and the bank of englands Monetary Policy. Most Analysts Expect rates to be kept on low at a record low of 0. 5 . The big question is whether well see a change in the ecb quantitative measures. Results of the poll question suggest views are pretty split. It looks like people essential willy are calling for 4r5 dwred yb 45 no. Many dont know. Our informal poll of leaders more or less lines up with the fist interview of economists. You dont want to miss that. Shaping up to be a battle among billionaires, carl icahn is upsetting plans for michael dell to take his company private. [ kitt ] you know whats impressive . A talking car. But ill tell you what impresses me. A talking train. This ge locomotive can tell you exactly where it is, what its carrying, while using less fuel. Delivering whatever the world needs, when it needs it. After all, whats the point of talking if you dont have something important to say . Its decision day Across Europe as the ecb is expected to hold study. The euro jumped to a session high as spain hits its funding target in the latest aukdz of longterm debt. And president obama trying to make a budget deal with republicans and they discuss the deficit over dinner in washington. President obama broke bread with a dozen republican senators last night, having dinner with them at a washington hotel. The president personally picked up the tab and they talked about how to reach a major agreement. Both said say it was a full exchange of ideas. And will pay a visit to house republicans, as well. The house passed a bill wednesday to fund the government through september. And the Federal Reserve will announce the latest round of its Bank Stress Tests today at 4 30 p. M. Eastern. Its a twostep process. The fed will first reveal how much capital the banks will have to hold under hypothetical downturn. Next third, those results will be publicly released after a banks have had a chance to adjust their capital plans if theyve been rejected. In the meantime, david faber reported carl icahn has built about a million shares in dell, or 6 of the company. Icahn reportedly wants dell to take on some 9 billion in debt and issue a special dividend. He says he would like le oppose the sellout. Former french president Nicolas Sarkozy said he may be forced to reenter the political front. Meanwhile, mitt romney is also going back to work, but steering clear of politics. The republican, onetime candidate, is joining his sons investment firm. Hell consult on private equity matters, but has no plans to fund raise for the firm. On that note, we wanted to know, should sarkozy and romney swap jobs . You know, shake things up, maybe bring a fresh approach to france, a fresh approach to private equity . Still to come on the program, what is next for venezuelas industry after the death of hugo chavez . Well speak with the former opec governor when we come back from a short break. While were going, head over to our website. A slideshow takes you through the top 12 property hot spots. As venezuela continues to mourn the death of hugo chavez, new election res set to take place next month. The successor faces a tough challenge of reviving Venezuelas Oil industry. Total output declined to 2. 5 Million Barrels a day. Since chavez took office in 1999. Joining us for more, the former opec governor for venezuela now ceo at hq. Buenovito. Thank you very much. Off the bat, we were going to talk about the oil market, but how much does this complicate what you think needs to happen for vpzs industry to get back on its feet . Yes. Actually, i mean its going to be happening is that the constitution will be followed step by step by the government. And theyre clear on whats stated by the former officials for the government and the president in charge. According to the constitution, the National Electoral council has to call for an election soon and the late for that election will be established and then after this, they will be candidate from each side. So the process, which we had last year, will be i mean, happening again. Probably in the shortest time than it was before because its based on the incidental situations. Right. Now, who would you let me take the opportunity to say that i mean we, all venezuelans, actually we are i mean, in mourn because of the passed away of our president. All venezuelas together, all positions and nonposition pes. There are people who say, though, that his passing could be an opportunity for the country to pursue a more marketfriendly, more investor friendly approach that could help boost oil output, help the countrys prosperity. Basical basically, if you look at the fact that he took office when barrel was how much lower and he didnt take advantage of that period to help raise wealth for venezuela. Since 99 to 13 time frame when president obama was in office, production remained primarily unchanged. But the Proven Research but they cant get oil . In any change of government, there are change in the oil policies sector, talking about i mean, in the Energy Policies well have to see who will be first the candidates from the official sector and there might be one candidate from the opposition which is not clear today. Even with the process of election, then who resulted as a winner of these elections that will happen this year, probably seems to be that will be very soon and well see how this timing of the Energy Policy to make it a approach to the international sectors, private and sectors priority in terms of investment and increase in production or not. Venezuela is in a very difficult spot right now. Production has been falling even though proven reserves have increased. It hasnt taken advantage of the high price of oil, which we dont know if it will stay high at these levels. What in your view needs to happen here for the country to take advantage of its oil reserves, to get the right technology, to take advantage of the High Oil Price and not squander the opportunity again . Well, actually, it doesnt matter where the investments come from, national or international. Its needed because everywhere in the global world, you need the aspects, technology, unit markets, unit investments. To get production. And the evolution of the Energy Policy assignment will decide. How much national or International Investment will be put into the process of getting more barrels, what for sure venezuela needs to be this is the most important income, i mean, the income cash and income resources that we have today. So, i mean, this is a merit that we have to say. I think sometimes the new investment will be dependent on what the new assignment will decide and also what the and also who will win the elections. Right. In the person. Major issues here ahead for the venezuela. The real question is whether theres going to be a change of policy, a more market friendly investment coming in. Thanks so much for inviting me. Keep in touch. You, as well. Dont get stressed out. Are will there be in the failing grounds . Bethany weighs in when we come back. Welcome back to Worldwide Exchange. Im kelly evans. These are your headlines from around the world. Its decision day Across Europe. The ecb expected to hold off on further easing pass stalemate knitly continues. But the bank of england could launch a fresh round of qe. The euro hitting a session high after spain hits the high end of its funding target and sees strong bid to cover ratios in the latest sales of longterm debt. The french bank says its cooperating with u. S. Officials over dollar transfers involving countries targeted by u. S. Sanctions. Plus, discussing the deficit over dinner, president obama looks to make a big budget deal with republicans, dining with several key lawmakers in washington last night. If youre just joining us, you missed the excitement half an hour ago when the dow was up 14,300. Now 14,296 which still indicates the kind of attitude were seeing in u. S. Futures this morning. But it doesnt quite give you that pretty round number, does it . It could happen today, though. Certainly the impressive gains weve seen on this index are not necessarily seeing any give back just yet. Were looking to add about 32 points above fair value when trade opens for the time being. This comes ahead of the major jobs report tomorrow. Despite the fact that the first day of the month wasnt a strong one for the index, bucking the trend as weve seen. The nasdaq heading back towards ta 2800 level again well shy of its nominal highs. The s p 500 about 20, 25 points away from taking out its nominal high. Potentially in the longest pull market in 28 years. Here is whats been happening overnight, though. Across the world, the global 300 is barely up higher, up 0. 04 . There is weakness in the bank of japan after the least meeting of the boj decide not to do anything now on the Monetary Policy front. The ftse 1100 adding 0. 3 5ers today. The xetra dax strong, too. The cac 40 in paris and the ibex are participating. Were seeing bond yields in italy and spain falling decisively today. Were seeing forex, as well. How do you make money in these markets . Here is what some guests have been telling us all morning. A lot of people overweight. Both in italy and spain. And i think, you know, what the election outcome has done, its been the most disappointing in a way that we could have seen for the market. Its clouded the structural reform, and the growth paths to the economy and the Fiscal Consolidation that were seeing. Its all its going to embark on a multi month, multi year fall out. Kind of a really confident to the dollar rally across the board. Now it could extend cable lower and it could be a reflect job of that, as well. The World Economic system is looking more stable, start to go turn tharnd. Some of the big investors are starting to get out of gold. I know a lot of the hedge funds are thinking about where do you start shorting this. And the Federal Reserve will announce results of the latest round of Bank Stress Tests today at 4 30 p. M. Eastern. Its a twostep process. The fed will first reveal how much capital the banks would have to hold under a severe economical downturn. The central bank will tell them privately where they can expect buybacks. Next thursday, those results will be publicly released after banks have had a chance to revamp their Financial Plan fess theyve been rejected. Joining us now, bethany, good morning. Interesting process here, i guess, to focus first of all on this twostep approach. Were going to find out a little bit today, a little bit more next week. Why does the stress test matter . Well, the stress tests matter because youve had a Banking Sector that arguably helped cause a gigantic financial meltdown. So everybody is curious just to see earn these new stress tests how strong the Banking Sector actually is. And they matter because banks want to begin paying out more money to shareholders and doing more stock buybacks. So the fed is going to tell them what they can and cant do. Exactly. This really seems to be what its all about, the extent to which regulators are saying specifically to banks, yes, you can do this, you can give back capital or no, you cant. We saw what happened to vickram pandit after they said no to citi. Do you think banks have learned this time around . I think arguably the Banking Sector is overcapitalized, in anything. I dont think anybody is expecting any drama this year, which means if there is drama, it will be dramatic, indeed. I think the expectation is that the major banks will all pass and theyve all have good news on the dividend and buyback front. So if there are any embarrassments, like last year, i think it will be pretty shocking. What about the comments were getting that perhaps the Obama Administration is getting more serious about breaking up the big banks . I think theres still a lot of risk for the Banking Sector, the political atmosphere is still quite fraught and maybe more fraught. Theres an john shroud of regulations and it remains to be seen how costly those are. You could make the argument that banks have made a lot of money in past decades of this expansion of credit ask debt and the developed world. Without that, if all the developed economies need to be retrenching, i think its still a challenging environment for banks. I want to go back to the point you made about banks being generally overcapitalized. Is that a fair statement to make . I realize that relative to where we were, certainly capital levels have improved. But are we where we feed to be . Right. Well, banks argue that theyre overcapitalized. Some economists arguing that levels arent high enough to with stand potential problems like we saw in 20308. And i think this is going to be an ongoing argument between economists, academics and bankers. But theres a sentiment in the industry or amongst investors, maybe, i should say, that no amount of capital is going to save a badly run bank and that one of the challenges for banks is going to be managing these much higher capital levels and running efficiently with them. And bank of america yet yesterday was one of the strongest performers. It was up 3 . Theres been a sense after some struggles, some missteps over the years is that now perhaps is finally the time when they can go back to investor webs hand out that capital. Perhaps that was the play here in the Share Performance lately . Well, theres been a huge run up in many of the big banks over the past year, particularly the last six to nine months its been really, really dramatic along with the overall market. And, you know, i tend to be a bit of a skeptic, so i look at some of the problems fatesing the Banking Sector and say, wait a minute. The bank of america certainly participated in that and i think there probably will be good news on the dividend and buyback front for them. And you can see, again, that is priced into shares. So i guess there better be. Its shaping up to be a rather large battle for dell and carl icahn. Well have more when we come back. Exports from new zealand, textile production in spain, and the use of medical technology in the u. S. . At t. Rowe price, we understand the connections of a complex, global economy. Its just one reason over 75 of our mutual funds beat their 10year lipper average. T. Rowe price. Invest with confidence. Request a prospectus or summary prospectus with investment information, risks, fees and expenses to read and consider carefully before investing. A talking car. But ill tell you what impresses me. A talking train. This ge locomotive can tell you exactly where it is, what its carrying, while using less fuel. Delivering whatever the world needs, when it needs it. After all, whats the point of talking if you dont have something important to say . Youre watching Worldwide Exchange. If youre just tuning in, these are your headlines. Central bank watch under way in europe. The ecb is expected to hold steady. The bank of england could reveal a fresh round of qe. Markets boosted by solid ded debt auction in spain, sending the euro higher. The question is whether well see a deal for dessert. President obama broke bread with a dozen republican senators last night, having dinner with them in a washington hotel. The president personally picked up the tab and they apparently talked about how to reach a big agreement on the u. S. Debt and deficit. Both sides described it as a Good Exchange of ideas. Dont they always say that . President obama meets with the full Senate Caucus next week and will pay a visit to house republicans, as well. The Senate Passed a bill to fund the government until september. Carl icahn has baeth about 6 of dell. The move could complicate michael dell anticipates planned 24 billion buyout. Icahn reportedly wants dell to take on now debt, as much as 9 billion worth and issue a special dividend and would likely oppose the buyout. Southeastern management has also said theyll vote against the deal. They were up almost 2 but is giving back some of those issues. Reports say the faa is close to approving boeings battery fix. The dreamliner has been grounded four seven weeks now, costing an estimated 350 million. Boeing and dream liner batterymaker gs rossa is seeing shares up today. Yuasa up almost 9 on that news. And facebook is holding a press Conference Today to unveil a apparently a redesigned news feed. In january, the ceo said the new line could include nor videos, more photos and a new edge curving ad. A recent survey found 51 of users have taun a sabbatical. Facebook closed down fractionally wednesday by about 0. 25 . What more can they do to keep people engaged . I dont want to know. Societe generale says its in talks with u. S. Authorities. According to an annual report reviewed by reuters, the french bank said it would launch an internal audit. Shares have covered since earlier losses on the news, but are still in the red today. Theyre down about 0. 3 in paris. Straight ahead, wall street doesnt suffer from a post market high hackover. The dow is pushing to another record low. Well preview your trading day, next. Take a look at these curves. Were talking about spain, of course, just after the auction of its three, five and tenyears. Were seeing yields on the tenyear below 5 . This is often where the International Community likes to play, and is frankly, a 2. 7 yield on three years, maybe not that bad. Look at forex, as well. It was firmer by about 0. 5 and now its down about that. And it is ahead of wa is expected to be a decisionwith the bank of england front. The data has been weakening. The ibex is echoing what were seeing with that there. In the u. S. , weekly jobless claims are out at 8 30 a. M. Eastern. Also at 8 30, the january trade deficit is expected to widen. And revised Fourth Quarter productivity and is labor costs. Later at 3 00 p. M. , january Consumer Credit figures are out. On the earnings front, kroger super market chains, r r block and Pandora Media report. U. S. Retailers report february samestore sales today. The total expect action is lower. Cold weather isnt enticing consumers to splung just yet, excludeing department stores, results should look a little better. U. S. Futures are pointed higher. We were looking at dow 14,300, at least about half an hour or an hour ago. Were now just sitting below that level, but it is extraordinary how many of these levels we deny to take out. For more on what to expect today, joining us from philadelphia, phil serapalis. Bill, hi. Its great to see you. Whats the view from philly there . Will this ral by continue at being with fresh new his today, press new highs tomorrow. You have to break from tradition. These are different times and you have to have a different view. And i think these markets are going to do things that not many people expect. Such as . Move higher. Youre going to see money in motion. There are trillions of dollars that have been scared, that have been on the sidelines stuck in their thumbs now for years basically earning zero. As that money goes to work, youll see asset receipts flagz, prices of homes, prices of Office Buildings, art, stocks, all reflat and go higher. And that will bring lots of happy boy smiles to people all around the world. I sxoets expose unless, of course, people start to get in right as theyve missed the big move at this point. That would be, i guess, the theyll scenario. Could you get a little bit specific . Where is and how should investers play this market . Number one, buy and hold is ste dead. Volatility will increase. A lot more than weve averaged in the last couple of years. So tactical strategies, etfs have a global approach, the best values in the womtd word are in the united states. There is no prosecute position of its economy. It sounds like there are a couple of themes there. You were saying earlier there is a big central bank party, but now youre saying theres a lot of fundamentalal health in the u. S. Economy. What youre arguing for is a strong case for investing here at home. Absolutely. Whether its the multi nationals, the real estate, the home builders. The new construction in Office Building is at 50year lows. You look at the single family, it goms goes back to 1960. Autos on the u. S. Highways are all that theyve been since world war ii. So theres a lot of pent demand and thats going to become unleashed. There will be side effects. Its not a tightened missile straight up. So you have to have a sense and a tactical approach to managing risk. Bill, you mentioned the stress tets. Would you throw them in the bucket as fundamentally attractive . You have to. You look at some of these historic benchmarks, book value, and we go out there and pick them. That entire sector is still wildly undervalued. Unless youre in the view that the the world is going to end, dont listen to me. Yes, there will be consequences. Yes, there will be side effects. Yes, there will be volatility. But if it were easy, everybody would be having a good time. And it might be baseballs spring training or something. Theres something in the air or water there in philadelphia. 6 thanks for your time this morning. I just wanted to look at a couple stories you saw earlier. Nicolas sarkozy says he might be forced back into political life, that e might be forced to run for the good of the country. He said his successor was potentially sending france into an economic crisis followed by a social crisis. And in the meantime, mitt romney is going back to work. The republican president ial candidate returning to the private sector joining his sons vx firm. So we asked whether sar kocsarc could be back. Fought sure how she would feel about mitt romney. Merkel, not sure what that would do. Stay tuned to cnbc. Were about to bring you the latest decision from the bank of england. Louisa bojesen joins viewers here with special coverage after the beak