Transcripts For CNBC Worldwide Exchange 20131010

Deep discounting at stores could bring them short of its target. And global pc shipments slump in the Third Quarter, missing out on the usual back to school boost, but Chinas Lenovo says competitors are taking away more sales and market shares. Announcer youre watching worldwide exchange, bringing you Business News from around the globe. Hello and good morning, everyone. Youre watching a brand new edition of worldwide exchange. Ross westgate is out today, but weve got a jam packed show for you. On todays show, the bank of england is expected to maintain its record low Interest Rates, but wa do unemployment levels in the uk mean in the banks for guidance . Were live at 10 10 cet. Shell may be licking its wounds after big losses on sales, but russians tnk says is it hit big on a recent boom. We speak to the chairman, also known as the prince of pipes. Brazils central bank has increased its benchmark borrowing rate with no indications it will slow the pace. We talk to the ambassador of brazil in the United Kingdom at 11 10 cet. Janet yellen is officially nominated to take over the helm in january. We get the latest from washington at 11 00 cet. And back in london, we speak with a celebrated Fashion Designer tamara melon about her controversial claims that jimmy chu didnt design in the shoes. If you have any comments, any questions to our guests this morning, our guest host, hes waiting in the wings. Feel free to send in your thoughts and your comments. The email address is worldwide cnbc. Com. To our top story this morning, president obama met with House Democrats at the white House Wednesday evening. He told them to be prepared for giveandtake in budget talks. The president will meet with House Republicans later today. He had invited the whole gop caucus, but House Speaker john boehner is sending 18 leaders and committee chairs. House republicans are considering a short increase to buy time for broader policy discussions on the budget. On wednesday, republican senator Susan Collins proposed a plan to reopen the u. S. Government and raise the debt ceiling in return for killing the medical device tax. That, of course, is part of obama care. Treasury secretary jack lew testifies about the debt ceiling before the Senate Finance committee. Thats at 8 00 a. M. Eastern. Hes expected to warn lawmakers he wont be able to guarantee payments to any group such as Social Security, military veterans or used bondholders if congress doesnt agree to raise the debt limit. Lew plans to say he would do all he can to minimize the pace, but he would be relying on an erratic slow of incoming tax revenue and theres no certainty the u. S. Could make interest payments. The fed and Treasury Department are reportedly preparing contingency plans in case of a possible debt default. Officials are closely watching the market for banks often use bonds as collateral for shortterm use of our banks. Officials reportedly dont want to divulge specific details because they dont want to suggest to investors and republican lawmakers the u. S. Cant muddle through a dead default. Meanwhile, Fidelity Investments, the largest u. S. Mutual and Money Market Fund company has sold all its data debt that comes due this month and in early november. Thats the window considered by investors to be the most exposed as the u. S. Government defaults on its bills. Fidelity says while it expects the debt ceiling toish be resolved, its taking these steps to protect its customers. Fid fidelitys move isnt deterring the bills growth, so he tells cnbc pimco continues to buy u. S. Debt. For pimco and for blackrock and fidelity in terms of the bonds funds outside money market space, it is no problem whatsoever. And a buyer in treasury in the next would be advantage and pimco has been advantaged for 35 basis points as opposed to what existed prior to that at three basis points. Is it a lot of money . No. But its what an active manager should be doing and its what weve been doing for the past few days. Gross says the odds are about a million to one that the u. S. Will default on its debt, but that doesnt mean the threat isnt affecting the markets. Before we pick up on the talk about the debt ceiling and the Government Shutdown, i want to bring you some news flashes. The ecb and the Chinese Central Bank have agreed to a currency swap line. This is set to last three years. The ecb is set to have access to up to 350 billion yuan. And the pboc in turn can access up to 45 billion euros from cecb. Lets bring in our guest host for the first hour, v is iat. Thank you so much for joining us this morning. Good morning. What do you think are the chances of the u. S. Breaking the debt ceiling and defaulting on his bet. I agree with bill gross. The best scenario would be a grand coming out of this painful discussions and heckling around. I would assign the probability probably between 15 and 20 . Thats not in the market. We should not forget that the worst case, a default on the debt ceiling, thats not in the markets, either. And i would aseen an almost zero probability to that. But it doesnt mean that markets dont care. I think it will become so painful the closer you get to that deadline and the impact on markets that it simply will not happen. And thats also what the treasury warned about last week, that we could see this freeze in the credit markets, a big slump in equity markets. We have seen a little bit of worries, not panic, but worries in terms of tbill yields. Theyve spiked up, even though theyve come back down a little bit. But in terms of the rest of the treasury curve, everybody has been very, very calm. Why is that . Because a default is basically almost unfeasible. It would be a total breakdown and it would look like a chicken game. Therefore, nobody assigns any probability to it. It doesnt mean as we get ever closer to it that this one acts up in the market behaving in a different way. Theres a significant loss in business and Consumer Confidence already the last ten days. And that has a real impact on the markets. Absolutely. And, you know, its interesting that with all this object session about the debt ceiling, about the Government Shutdown, it seems as though weve completely forgotten about Third Quarter earnings season which kicks off this week. It has kicked off this week in the u. S. Alcoas earnings are slightly better than expected even though the guidance has come down, as well. Do you think thats going to be moving the needle in terms of what markets are going to be doing or should we forget about earnings season because its outdated . We should not forget about earnings season because that is what is going to move here medium term. And i think the primary trend in the market is for equities up and for bonds down and we have a global synchronized recovery. But mark of issue here and that mark of risk coming out of washington is dominating everything for the right reason. And it seems to me that the average american has more common sense and less than the average conman and thats reflected in the polls these days. Thats the hope on, isnt it . Yeah. Well get plenty more thoughts from you and more Investment Advice over the next hour. Meanwhile, most members still think its appropriate to taper the Bond Buying Program this year, even as they held off moving in september. Markets were caught off guard by that decision, which the minutes show was a relatively close call. Fed members thought investorses would read a september taper as a signal of their willingness to start exiting qe3 and they were worried higher Interest Rates could slow the broader economy. The bank of england shows its monthly meeting with few expecting change to benchmark Interest Rates or asset purchases. The imf recently revised up its growth trajectory but current output remains well below crisis output levels. Earlier on, Andrew Stanton said he believes now is the time to start rate hikes. When the euro crisis seen, now wasnt the time. Interest rates have come down to extremely low levels, much lower than they were in the Great Depression of the 1930s. So its quite a challenge to start to gradually raise them. And if we dont start earlier, and keep delaying, we may have a further rate hike down the track. Helen, do you think mr. Carneys Forward Guidance will be somewhat vindicated today or over the next few weeks . As weve seen, the recovery in the uk is patchy. Its not a broad based recovery. And youre absolutely right. What happens yesterday where productivity missed expectation, well kind of tune into the narrative weve seen from the bank of england which is talking about this much longer, much more difficult, much more, as you said, patchy recovery than maybe the market and lots of other economists have been talking about. But remember, Forward Guidance is really all about telling the market, this is how theyre going to interpret the data. And theyre looking fourteen employment to hit 2457 . The question is when they think it will be kind of in the beginning of 2016. But a lot of people say that coming earlier. Joining us now is phil rush, uk economist. Can you tell us, new lines have been much more bullish on lines coming down quicker. Why is that . Its been a longterm fall. Weve expected that essentially what should be a fairly uncontroversial assumption that firms see higher demand for their products and have to go out and meet higher staff to meet those demands. When do you think unemployment is going to reach that threshold . Were expecting to get to the 7 threshold in the second half of 2014. All that requires is for the upward trend in employment that weve had over the past few years to be maintained. Incidentally, thats exactly the same job pace creation that weve had. And where are you in terms of growth . Obviously, weve had a blip in some of the Economic Data yesterday, but weve had positive second numbers over the summer and over the course. Where do you stand in terms of growth in the uk . Its been a surprisingly strong summer. Aided by the very nice weather that weve had to get the consumer out and spending. Weve been expecting a bit of a weaker winter and the kind of data that weve been seeing over the past few weeks no longer surprising matters to the up side. This is exactly the sort of thing that we need to see to justify our forecasts, which are actually a little bit more pessimistic than the bank of england in terms of gdp. So do you think some of those surveys that we saw over the summer were too optimistic . Yeah, exactly. Id say theyre frothy both in terms of what we can expect in sustainability of growth, but the trend of growth that were going to get from the uk. But also relative to what well see in the hard data. Theres a tendency for those survey toes overpredict gdp. And a hundred days into the job, our governor, mark carney, has he done a good job of getting that forward message out to the market . Theres been some concern that maybe the market is misreading it or they havent delivered it. It hasnt gone swimmingly well. Not in terms of getting the market to believe the unemployment forecasts. But thats not so much what the bank is trying to do. Its trying to communicate what its reaction function is. And that seems to be believed by the market. More importantly, as far as the bank of england is concerned, its being believed by households and firms who are unusually confident to go out and borrow or at least not save at the rates thefb. Carney is saying that hes not interested in what the markets think, just because people in business are concerned. What about these warnings that were hearing about this asset bubble in housing . House prices have gone up hugely. Youve got a Flagship Program from the treasury. How dangerous is this . Its potentially quite dangerous. Already weve seen the new builders go out and jack up the price of their houses by some 10 off the back of the extra mope that the consumers can go out and pay for. This, i believe, is the primary care of the recovery were seeing now, though. Strong asset prices are making households feel better and a net worth perspective and thus their large stock of debt is not concerning them in the way it has been over the past couple of year when these teams come to an end, those terms are going to come become and it could be a painful correction for the uk. And the bank of england has been given a review by the chancellor. Is that enough of a tool to keep a check on things like health if it is indeed as dangerous as you say . It has the potential to step in and it could easily reverse the buybacks if it so chose. However, i very much doubt it will. Why . Because charney is the chancellors man . Yes. Has good form in blowing up housing bubbles. Thank you very much for joining us. I think everyone would agree that its going to be very difficult for the governor to step in, even though the treasury has given him that mandate. Well see to see until their review next year. Thank you so much for that. Meanwhile, lets take a quick check off european markets this morning. The stoxx europe 600 showing quite a nice recovery after three days of losses. It is up by almost 1 , just off the session highs. Remember, this in large part is tied to the optimism that were seeing in markets around a deal in washington because republicans, Congressional Republicans are meeting with president obama later on today. I want to show you european markets. One by one, were seeing some outperformance on the french market. The cac 40 is up by 1 is. 4 after falling around 0. 5 yesterday. The xetra dax gabing nicely to the tune of 1 . And the ftse 100 a relative underperformer, but still in the green one 0. 7 . In the Government Bond space, were seeing core prices moving a little lower today. Yesterday, remember, the tenyear gilt yield hitting the lowest level in some six weeks on the back of industrial output and trade data this morning at 27705 . The tenyear bund yield at 1. 83 . And the tenyee italian yield is at 4. 36 . Remember, we did see a really good demand for that sevenyear action yesterday. Today were getting a 12month tbill action. Lets take a quick check of the forex markets where were seeing Dollar Strength coming through. Again, this is on hopes that we will get a deal between the republicans and the democrats. The u. S. Dollar against the japanese yen is 97. 70. The aussie dollar did see some seesaw trading earlier in the session after jobless claims came out. But then it fell because the Participation Rate was lower. And the cable is 1. 5936 after disappointing data yesterday. The pc market was denied a back to school boost in the Third Quarter as consumers put off new purchases or turned to lower cost tablets. Gardeners latest figures show sales dropped to multi year lows. But lenovo managed to pick up gains in market share and shipments. Thats despite a share in its chinese market. Lenovo traded about 1. 3 higher on the news. Lets check in on how asia is trading today. We are seeing some outperformance on the nikkei 225. Sixuan has all the details for us. Good afternoon. Yeah, good morning to you, carolin. Thanks for that. Its a mixed bag for asia today, but japan outperformed its asian peers on the back of strong data. In a stronger dollar against the japanese yen continued to lend support to ex forter stocks. The nikkei 225 climbed over 11 , climb to go a oneweek high. But china markets pulled back after rebound trading ahead of more official data due out later this week. Koreas kospi is waking up from yesterdays onedaybreak ending down by just a touch. Over in australia, the latest jobs data is taming low expectations for further job cuts and the asx 200 lost a modest 0. 1 . We have earnings news out of japan. Takashimaya was a top gainer. The Department Store is increasing its outlook and is expecting its first half profit to jump over 15 all year. Shares of taiko pharma raised its outlook and shares ending higher over 4 . Back to you. And still ahead on the show, why ecb president Mario Draghis whatever it takes attitude has one strategist turning bullish on eurozone equities and why he is calling this a goldie locks environment. Thats coming up after the break. I love having a free checked bag with my united mileageplus explorer card. Ive saved 75 in checked bag fees. [ delavane ] priority boarding is really important to us. You can just get on the plane and relax. [ julian ] having a card that doesnt charge you foreign transaction fees saves me a ton of money. [ delavane ] we can go to any country and spend money the way we would in the u. S. When i spend money on this card, i can see brazil in my future. [ anthony ] i use the explorer card to earn miles in order to go visit my family, which means a lot to me. Welcome back pop show. Spain and friends can begin to slow their austerity drive according to a top imf official. The positive comments didnt flow through to greece, though, with the organization warning the indebted country will miss its 2014 bailout target. In a report, the imf said recent Budget Surplus would hit 1. 1 of gdp next year, instead of the 1. 5 target required under its bailout program. Greece is unlikely to get the next aid if it fails to reach this target. Margo draghi took aim at u. S. Critics says euro doubters underestimated the regions political will. In the dark days of the crisis, many xheb taters on this side of the atlantic looks at the euro area and were convinced it would fail. They vastly underestimated the depth of europes commitment to the euro. They mistook the euro for a fixed Exchange Rate regime which, in fact, it is an irreversible single currency. And it is irreversible because its born out of the commitment of european nation toes close integration. The ceo doesnt doubt the eurozone recovery and thinks now is the time for a rotation into european equities. You are nodding as we played that tape of mr. Draghi. You completely agree with him and thats why you say we should be piling into European Equity peps. Well, i have no do it whatsoever that hes right and has been right about it. And he has a classic turn around situation right now in equities. Investors realize that the integrity of the victim is reserved and its a single currency. Thats one thing. The second point is that the eurozone has exited its recession, just read the bundes bank report and they are certainly not talking nice or writing nice. Its now stabilizing. The thirs third thing is, theres plenty of liquidity, Interest Rates, the corporate Balance Sheets are very strong. Thats now starting to have a look at it. Absolutely. Also, i want to draw the discussion to u. S. Equities. You said about a week ago that your view remains unchanged. The 2013 and 2014 are the years in which equities will beat bonds and cash by a significant margin, particularly in the u. S. Is that still the case with all the political wrangling thats going on . Yes. It can hurt shortterm. They have a Global Expansion in the Economic Cycle that the Central Banks will do whatever it takes to accommodate the situation and that corporate Balance Sheets are very, very strong. I have a question for you and viewers, as well. The worlds most expensive bottle of wine will go on sale today at just under 200,000 a bottle. Ohm six bottles of the 2009 chateau margeaux goes on sale. So a ridiculous amount to pay, or worth ever drop . What is the most you would take for a good bottle of wine . Get in touch with us by email, world would it cnbc. Com, via twitter cnbcwex or direct to me carolincnbc. How would would you pay for a bottle of wine, 200,000 . Certainly not. But the conundrum here is that the demand is rising with rises prices. Its not about to drink that wine from that bottle but to show everybody else that youre able to afford that. Thats the point. So its a great thing for the buyer. Probably, too, but for the various reasons. Lets see what the viewers say. Beat, thank you for for your input this morning. Thank you. Celebrity endorsementes and liberal mentions in tv shows likes sex in the city, how they share a global shoe empire. But now the cofounder has claimed chu himself did not actually have a chance in the designed of the trademark heels. Accessory editor tamara melon makes the revelations in a new book which slams the role of private equity in developing the luxury brand. My colleague, karen, caught up with the fashion brand to find out why she has ditched pe. Private equity was a very difficult thing for the fashion business because its two different worlds that dont understand each other. For me, i think whats happened is private equities become something that was never meant to be. A lot of these guys now, they want to come and flip companies for a carried interest. And a fashion brand cannot go through a sale process every two to three years. Its just not sustainable. How hard is it to Access Capital without private equity or a big backer . Well, the most interesting things about jimmy choo is private equity never put capital into the business. They bought shares. And, in fact, they bought shares with debt. And the company had to pay the interest on their debt from cash flow. So not only were we growing ourselves, but we were also paying off their debt. Well, you do have your own brand now, tamara mellon. Just how different is your strategy in 2013 . Its completely different. What im doing now is just the pioneering which is what i did with jimmy choo in the early days. The world has changed. Since Fashion Shows are online, everyone can see them, b but it takes six months to get into the store. So were broad, were over it because weve been looking ate for texas months and we want the next new thing. So ive designed a Business Model where im doing monthly fashion drops and in season. So its buy now wear now. The fashion calendar is also off. Department stores have pushed designers so much to have the merchandise first that its got earlier and earlier. Now you have coats in july, Spring Summer dress necessary january and nobody wants to shop like that any more. I dont want to think about a coat four months in advantage. Jimmy choos success was built partly on the growing demand for Luxury Products in asia. How sustainable is that growth . Stay tuned to hear more of tamara mellons thoughts on that. And still coming up on the show, shell may be looking at big losses, but russia tmk says it has one big on the recent boom. We speak exclusively to tmks chairman after the break. President obama sends out an evite to try to find some Common Ground over the u. S. Government debt ceiling. No resolution on the u. S. Debt ceiling would push Member States back into recession next year. A threeyear currency swap deal starts between europe and china. And the ecb will gain access to 350 billion yuan. Japans south retailing brings out record full year sales and operating profits ahead of next years sales tax heex. But deep discounting stores keep earning short of its targets. Good morning, everyone. Lets take a check off where european markets are. We are seeing optimist returning to the market. This is hopes for a deal between republicans and democrats later on today. The ftse 100 is showing gains around 0. 8 . The xetra dax is up 1 . The ftse mib is up 1. 5 following three days of losses. So a modest bounceback for european markets just off their onemonth lows. In terms of the bond markets, as a result of that optimism, were seeing core prices moving a touch lower this morning and adversely, yields are moving just a smidgenon higher. Tenyear treasuries, been unchanged over the last two weeks, really. Its fascinating just how stable its been despite the rangeling on capitol hill. Yields at 6. 9 and the tenyear gilt yield recovering a little bit from yesterdays big fall after the disappointing Economic Data at 2. 7 . The dollar is higher against the yen at 97. 76. It is higher against the euro at the sterling. Sterling dollar at 1. 5939. It fell back on the back of the down beat Economic Data and euro dollar stabilizing just below that 1. 35 level. If you have any questions, comments on anything you see on this program, do send in your emails to worldwide cnbc. Com. Shares in telecom eye taitaa are higher. Claudia is here in london, not in milan. It denied that report, but a sale is going to come at some time, right . Well, sure. It is the telecom that is in focus as of late. This is after the Spanish Group did gain the majority control of telco, which is a company that controlled telecom italiap. After that, the ex chairman and ceo did step down from that position and he was pushing for a capital hike versus the sale of the asset. Yesterday, the stock did rally on the heels that that stock may be closer. The company did deny that. That asset could be worth somewhere around 9 billion to 12 billion euros. Today is stock is trading flat yash. The fixed line network is ready to be spun off, as well. That could be helping on the debt front as some of the debt may be put in the company that gets formed there. So for telecom italia, where domestic business is quite flat if not declining, their debt is, of course, very important, as well. Claudia, were watching italia is continually suffering woes. Theyre scheduled to meet today to discuss a Capital Increase which the carrier needs in order to avoid a default. Can italia make it . Its strange. Alitalia hasnt been making profits. Its in and out undid itted up to 1 billion euros. And the fuel provider for alitalia said its not their job to keep alitalia flying. So they want that money that theyre owed. Investors are kl ready to put some capital. Will air france that owns 25 of alitalia underwrite a big question . For alitalia, the future is unclear. Will they go bankrupt or will they get this money . They need 500 million euros. Will the government take a step . They met with the industry minister, as well, last night. What happens next is the big question. Italy wants to keep some sort of hold for that carrier. It means a lot so its dominating the news even though its not listed. Claudia, thank you so much for that. Saying in the air, europe is bracing itself for region wide disruptions as a region wide strike takes place. The French Division of Aviation Authority has requested a 10 consolation for all flights today in froons because of the strike by air Traffic Controllers. This is mainly impacting flights to and from the southern part of europe, mainly in spain, italy, and northern of africa. Roughly 10 of flights but because the strike is also disrupting the traffic over the country, some european flights have been canceled. Its the case for easy jet and from a 30 consolation of their flights today in france. Air Traffic Controllers are protesting against the plan to reorganize the european sky to create a single sky. The plan was to have a pan European Strike today, but all plans have pulled out of the movement except for two small movements. Thats the reason why the disruptions today are rather limited. But we have consolations, roughly 10 of flights today are out of paris. So thats the reason why. Were watching Air France Klm. As claudia was mentioning, there is another reason to watch Air France Klm to make a decision regarding the future of alitalia. The pressure is increasing on Air France Klm. Stephane, thank you so much for that. Staying in france, we want to bring you comments from the president of the bank of france. It was says the bank of france has actively supported the ecb pboc swap deal that we were just telling but a few minutes ago. This is a swap deal that will last about three years. The pboc can access up to 45 billion euros from the ecb and in turn, the ecb will have access to some 350 billion yuan. Noyer says the ecb pboc deal gives eurozone banks longterm security, is for a significant amount and just to add, its said this deal recognize tess rapidly growing role of yuan in internshl finance flows. Peter roser maybe regretting the companys huge gamble on shale sales, but another deal is benefiting from the boom. The 1. 2 billion investment allowed the Russian Company to take advantage of a surge in demand as Oil Companies in the u. S. Rush to expand oil reserves. Now its poifd poised for continued focus as the focus in the u. S. Shifts from shale gas to shale oil reserves. Pietra, thank you so much for coming in today. Thank you. I know you have a busy day today. What are you going to be telling your investors who may have been concerned in the first half of the year about pricing pressures in your business . Well, i would say to them that they have very well situated in the most dynamic pipe market in the world. The United States drills 45,000 wells a year. Thats three times more than any other region like latin america or russia. So its a very dynamic market. Were well positioned. We now have 13 plants in the United States and canada. Weve been working on taking costs utah of our production. Weve been ramping up on the services side. We have 20 of the on shore premium connection market and in a special niche called the intergrove premium connection market, were almost at 40 so were well positioned. Before we drill down further into the u. S. Business, which is obviously very promising, i want to extend a little bit more on europe where you saw very challenging environments over the last couple quarters and russia where you mentioned that you saw an unfavorable sales mix. How are these regions supporting . Well, europe is i think in your on previous interviewer made the point that europe is stabilizing and perhaps even beginning to grow again. So we look forward to growing with europe right now. Of course, we are down there. Russia is a very stable market because theres few players. 35 ill and gas companies. We tend to find longterm contracts with them. They are doing a lot of drilling. Theyre going into eastern siberia and drilling. Russia is really the motor of the company and the american operation catch. The up side win this volatile American Market turns around, which its beginning to do. But the u. S. Market to some extent has been dogged by overcapacity. How is that affecting you . Well, the overcapacity has come from unchecked and unfair imports. So the industry has gotten together and started a trade case. The six itc commissioners voted unanimously to pursue the case. So we think that that is going to take some of that pressure off the market pricing. In terms of overcapacity, there are a lot of plans being planned. But we think that that overcapacity of the new plants will take out the import one to one, really. In our introduction to you, we said that you were profiting from the fact that the u. S. Is moving from gas shale to oil shale. Talk us through exactly how you would be benefitting from that. Well, for one thing, the move from gas to oil has been dramatic. Five years ago when we bought the american operations, 75 of our pipe was being used on gas wells. And today, its the other way around. The only real difference to us as a supplier of steel pipes is that as our clients move to oil, they tend to require larger diameter pipe. Otherwise, the rest of the mix is the same. Except perhaps for the connections. Drilling for gas requires metal to metal seals, a fully premium connection. Oil requires a semi premium connection, which we have introduced to replace the standard api connections. Very quickly, before we let you go, what are you expecting to come out of president obamas decision on keystone . Are you worried about that . Do you think that the environmentalists have won him over . I think that keystone is required by both countries. Canada wants to sell its Oil Sands Oil as much as the United States needs it. Because the United States has 37 refineries on the mexican gulf coast and theyre set up to run heavy oil. And the traditional suppliers, mexico and venezuela, are not keeping up with the demand. Okay. Unfortunately that is all we have time for, but hope you have a couple of good markets today. Hope the one in new york went okay. Thank you so much for coming in. Retail earnings are out with strong results. But they show benefits mostly benefiting high end consumers. Hi. Theres 26 in the yearended august and sales jumped 20 compared to last year, topping the 1 trillion yuan mark for the first time. But most of this growth is coming from china and the other asian markets. At home, average shoppers continue to hunt for bargains. Meanwhile, Department Store operator earnings are strong cashing in on high end consumers. It is upgrading its net profit full year forecast by 6 hoping many will rush in to buy expensive goods before the sales tax hikes in april. Still, they say the Consumer Spend sg still not recovered and expects to lose some 20 billion yen in operating profits over the five years following the spring tax hike. Thats all from the nikkei business report. Back to you. Thank you so much for that. And still to come on the show, rbs says theres a 60 billion pound economic potential being missed in the uk. More on women and business after the break. Dont go away. Janet yemen is the first woman ever considered to lead the fed and along with german chancellor Angela Merkel and the imfs christine legarde, three women would hold three jobs with the most impact on the global economy. Well, yellen is most likely not on the list this year. Fortune magazine reveals its annual ranking today of the 50 most powerful women in american business. Also being held today is the annual 25 most powerful women in banking awards dinner. For more on the female business leadership, im joined by heather jackson, founder of Business Forum and andy keeling from the royal bank of scotland. Hello, ladies. Its an allladies round this morning. Thats great. Heather, let me kick things off with you. What are the main impediments to a gender diverse business . Many impediments in this business now is actually the pipeline. The pipeline in the flow remains coming to an organization. The majority of companies now are attracting great female graduates saying 60 are coming in at graduate level. The finding is now in the uk of 6 . We have to try and build that pipeline better now. Youve said putting women on bores is just a farce. I take the point because at this moment in time, we havent got the state of resolutions. Its a cosmetic reactive model. What the uk and the world right now need is a sustainable model that tracks women all the way through. Because gender balance team throughout an organization builds better balanced business. An did i, would you agree with that . Absolutery, i would. Its not just about getting to the top. Its building that sustainable pipeline for Sustainable Growth and economic success for the future. So at rbs, what exactly are you doing about that problem . So i guess weve invested in this over a number of years. But right now, my job in bank wouldnt have existed a few years ago. And it focuses not just on how we support women inside the organization and getting into more senior positions, but also the i guess economic values for the future, both in supporting female Led Businesses and out to our Customer Base doing that and working with our corporate customers to work with them on this agenda. Because other than the usual wall for talent, we dont compete at this. And the brt we work together, the quicker well turn the dial on achieving success. Heather, i know you brought in research saying that companies would have gender Diverse Businesses that perform better. Andi, do you see that as you get more women in Senior Leadership positions or even into middle management . Do you actually see evidence of that . Its not easy because in the uk, were not brilliant at doing it. But the research sluicely suggests and states that those companies who do have that balance in Leadership Teams and at broad levels do achieve that discuss. Let me play devils advocate here. One of the frequently used arguments against introducing a quota for women in companies, obviously, is, you know, get the person with the best qualifications, with the best skills in there. Does it matter whether its a man or a woman . It goes it definitely does because what we need is a diverse team and the diverse team is sinking into it. How does that make a business better . It supports confidence in the business. It quadruples innovation. Now, you tell me it starts to react to the business. But one of the big holders back on this, it wants to take more women to the top. The government cant be putting on the pressures on the and the chairman puts pressure on the chief exec. But what weve now get to is build the organization with women. Their skills and talent is required. Andy, i dont think we should feel sorry for any banker in london. Would they not with at the males, would they not feel disengaged, miss dissolutions about their prospect . Its different on decision making. I think thats a good thing. Men and women do come at things from different angles and in different ways. Different challenges are made and thats where you get different decisions made. Which i think is a good thing. Okay. Thank you so much, ladies. Heather jackson, founder of womens Business Forum. Still to come on the show, obama needs gop leaders later as the Government Shutdown enters day ten. But are you over it already . Our next guest, the financial outweigh any political negatives. Welcome to worldwide exchange. Im carolin roth. These are your headlines from around the world. President obama sends out an evite holding talks with democrats and republicans trying to find Common Ground over the u. S. Debt ceiling. Shares in europe trade higher this morning, rebounding from onemonth lows on hopes of a resolution in washington. Investors keeping an eye on the bank of england. The oecd secretary says no resolution on the debt ceiling would push Member States back into recession next year. The pboc and ecb great on its debt ceiling saying it will give the european banks security. Hello, everyone. Good morning. Youre watching a brand new edition of worldwide exchange. If youre just tuning in, thank you so much for making the time. Lets show you what u. S. Futures are up to. Were expecting a bounce for u. S. Stocks today. This follows the slight rebound in yesterdays session from those fourweek lows. That is a big percentage off for the s p. The nasdaq was off 17 points, but the dow was up by 0. 2 . Yeartodate, still up by 13 . So were expecting to see a continued positivity in the u. S. Trade today. The ftse cnbc global 300 is just off the session highs, but up by 0. 3 . European markets by and large, theyre trading higher after three days of losses. This is on hopes for a resolution between republicans and democrats as they meet later on today. The cac 40 and the ftse mib, the periphery seeing a little bit of outperformance up by 1. 4 . And the xetra dax in germany showing nice gains of almost 1 . In the bond market, we see prices of core bonds moving a touch lower today. This is, of course, as a result of the optimism. Tenyear bund yields at 1. 836 . The gilt yield falling on the back of weak Economic Data for the uk in terms of trade data and industrial output. The yield sitting at 2. 7 . And i want to show you the tenyear treasury yield. It is at 2. 69 . In the forex markets, we are seeing is a little bit of a rebound in the u. S. Dollar against all major currencies against the japanese dollar, the euro dollar has actually fell below that 1. 35 level earlier on in asia trading. The aussie dollar showing volatility this morning after the release of the jobless claims and the pound is just down a touch below that at 1. 5935. Lets check in on how the asian trading session is fairing with sixuan in singapore. Thank you, carolyn. A bit of a candy stretch today for asian markets. Japan outperformed its peers on the back of strong data. In a stronger data, the yen continued to lend support to japanese exporters. The nikkei 225 climbed to a oneweek high. But china markets pulled back after two days of gains while stocks remained range bound. In australia, the latest jobs data extend lower expectations for further rate cuts. And the asx 200 lost modest 0. 1 pefrs. Moving china some related stocks outperformed the broader index on speculation the northern chinese port city may get free trade zone approval. Property developer jinbin and tj songjiang surged 10 and 3 respectively. And tianjin marine surged almost 6 . These were up yesterday by 10 and they continued their upward trend in todays session. Back to you. Sixuan, thank you so much for that. President obama met with House Democrats at the white House Wednesday evening. He told them to be prepared for giveandtake in budget talks. House Speaker John Boehner is only sending 18 leaders and committee chairs. Reports say House Republicans are considering a shortterm increase in the u. S. Debt limit to buy time for broader policy discussions. On wednesday, republican senator Susan Collins proposed a plan to reopen the u. S. Government and raise the debt ceiling in return for killing the medical device tax that is part of obama care. Joining me now is ken heyman. Thank you so much for coming in. Are you as optimistic as equity markets this morning that this could be paving a way for this big deal . I have to say, i wasnt pessimistic to begin with. These types of thing have an anatomy of their own. Both parties are digging in so they could say to their core that we tried, we did what we could and then we come to the table. Its deja vu all over again. The shut yao has happened now for the 18th time. Theres an anatomy for these things and its following the script perfectly. Theres still that 1 chance of the u. S. Defaulting on its debt. With that in mind i dont think theres a 1 of them defaulting on their risk. It makes a great headline, but default means were not going to take in for bonds. Its more of a shutdown thing. Its more about paying for people to do what they do. Its a different issue. But i think markets are actually taking it pretty inch stride. If there was a real concern that we were shutting down and it was all over, the markets would be trading 30 lower than where they are today. Absolutely. And then treasury yields wouldnt be where they are right now and have been extremely stable. Lets move on. Treasury secretary jack lew testifies about the debt ceiling before the Senate Finance committee at 8 00 a. M. Eastern. Hes expected to warn lawmakers he wont be able to guarantee payments to any group such as Social Security, military veterans or use bondholders if congress doesnt agree to raise the debt limit. Lew plans to say he would do all he can to minimize the plan, but he would be relying on an erratic flow of incoming tax revenue and theres no certainty the u. S. Could make payments. The fed are reportedly preparing cob tingsy plans in preparation for debt default. Interest rates hit fivemonth highs on wednesday. Officials reportedly dont want to divulge specific details because they dont want to suggest to investors and republican lawmakers the u. S. Can muddle through a debt default. Meanwhile, Fidelity Investments has sold of its short data u. S. Debt that comes due this month and in early november. Thats the window considered by investors to be the most exposed at the u. S. Government default on its bills. While it expects the debt ceiling issue to be resolved, its taking these steps to protect its customers. Fidelitys move isnt so they continue to buy u. S. Debt. For blackrock and fidelity in terms of their bond funds outside money market space, it is no problem whatsoever. And a buyer in treasury states the next 30 days would be an advantage. Its been an advantage for 35 basis points as opposed to what existed prior to that at three basis points. Is it a lot of money . No. But its what an active manager should be doing and thats what weve been doing for the past few days. Fidelity sells, pimco buys. He says the odds are about a million to one that the u. S. Will default on its debt, but that doesnt mean the threat isnt affecting the market. So whose camp are you in . Theyre both in different games entirely. Fidelity with the mope market issue does have an issue. If they do default, if they do delay making payments, not even a default, they have their money markets down dramatically where the longer term holder can take advantage of getting some extra yield. So theyre boith doing entirely different things. And gold ticks a little higher, but largely its been unchanged over the last two weeks. Weve seen more Downside Pressure than upside pressure. You would think gold would rally against this back drop. Why hasnt it been behaving as a safe haven asset . Well, you have a number of things going there on the gold trade. One is that without tapering starting, the fact that easy money is going to stay around for a while, it says that inflation is not the boogeyman that the fed is worrying about. So if you look at gold as an inflation hedge, weve been told that thats now pushed out. Its not the type of thing theyre losing sleep over. With janet yellen being appointed to the fed, you have a more dovish stance coming for a longer period of time. And so why not buy gold now . We have a bit of a runway, maybe theres lodge iblg in holding off. Plus gold has disappointed a lot of people over the last year, lets say, and you have a lot of them not enamored with the midnight commercials about owning gold, owning gold, so i think youre seeing a shift in psychology from people thinking its a safe haven asset the. Because while all the rhetoric is the highest, you would think gold would be going to your point and it hasnt. Theres a lot of novemberis players that are flooded into the gold market and a fear trade. Ken, stay with us. Were going to talk about another safe haven asset potentially. The worlds most expensive bottle of wine goes on sale today. The wine goes on sale at a luxury wine dealer in dubai. So a ridiculous amount to pay or worth every job . How much would you pay for a good bolthsdz of wine . Join the conversation here on worldwide exchange. Very quickly, how much would you pay for a bottle of wine like that . I dont think id pay 200,000 for a bottle of wine. I wouldnt, either. How much would you pay, 250 . Thats what the director just said. You reach a point in your life where you realize you cant take it with you. If thats your thing and you want a bottle of wine, i suggest its a good use of capital for something. Andrew stanton says now is the time for mark carneys team to start raising Interest Rates. Stay tuned. Well ask next if anyone agrees. Opportunities arent always obvious. Sometimes they just drop in. Cme group can help you navigate risks and capture opportunities. We enable you to reach Global Markets and drive forward with broader possibilities. Cme group how the world advances. U. S. President barack obama invites republicans and democrats to meet. The oecb warns europe could slip back into recession. And the ecb and deals with a currency swap with the peoples bank of china. The bank of england holds its monthly rate meeting later today with few expecting change to either benchmark Interest Rates or asset purchases. The imf recently revised upwards its forecast for the uk growth trajectory, but current output remains well below crisis levels. Many people said they would be a bit of a smooth seg, but thats exactly what mark carney wants, right . Yeah, i think you are right. Its going to be a quiet day in terms of Interest Rate decisions. I dont think were expecting any difference in the qeo any difference in the Interest Rate decision. I just know the Inflation Report is coming out in december. But that doesnt change the debate that is rambling on, which is can we sustain mark carneys kind of Flagship Program of Forward Guidance when weve got so many positive indicators in the economy . I mean, you spoke about the blip we saw yesterday where productivity didnt match expectations and youre quite right. But essentially, for the last two or three months, every other Economic Data weve had out has been positive. Especially that from the imf this week. Earlier, they said that they would have to revise their forecast for gdp, both this year from 0. 9 to 1. 4 growth and next year. Thats a hell of a turn around. And its happened across the board. But what the bank will say behind me is things like yesterday prove that this recovery is going to be a lot slower than expected. And fears about things like the housing market, asset bubbles, they have not of the volume yet that needs any kind of interference from the bank. I think what might be interesting, carolin, is whats going on in the u. S. As we understand it, people within the bank have already reached out to people in the city asking them what kind of contingency plans are in place. If there was a default coming out. And that really is maybe the most kind of interesting chat thats going to be happening at mpc. Now, whether we ever hear about that, whether it will be in the minutes, i dont know. But almost certainly it will be on the agenda today. Absolutely, everyone is watching that. Thank you so much for that. Meanwhile, the minutes from last months fed meeting show most members showing its appropriate to taper their Bond Buying Program this year even as they held off in september. Markets were caught off guard by that decision which the minutes show was a relatively close call. Fed members thought investors would read a december taper as a signal of their willingness to start exiting from qe3 and they were worried higher Interest Rates could slow the broader economy. Now, how much do you actually care about the fed minutes . Because first of all, they didnt tell us much about when taper sg going to start. And secondly, theyre completely outdated because the landscape of the u. S. Economy has changed so much in the last three weeks. Yeah. I think the thing people have to keep in mind is the story for the fed is prewritten. Its a timing issue now. We know tapering is going to start. We know at some point Interest Rates are going to start going back up. Its a question of when. All we had over the summer was an expectation that the party was going to end and in september we found out people can hang around for one more drink. But the reality of it is that the answer is already out there. Its just a question of timing. So people need to prepare their portfolios in such a way that we will see tapering. If not by the end of the year, i would certainly think we would see it by the end of the First Quarter and it will be quite a while before we see Interest Rates move. So its much ado about nothing at the moment. Ken, i want to change gears at the moment. It takes it wont be giving in to blackmail over seized Prime Minister. This morning, britains secretary hague says he condemned the abduction of the libyan Prime Minister and he called for immediate release. Still tom to come on the show, disturb bornly high Interest Rates in the country have been raised. When will the tightening stop . After the break, we talk with his excellency, the ambassador of brazil to the United Kingdom. Brazils central bank has increased its benchmark rate by 50 basis points. The bank gave no indications it will slow the pace of increases. Joining me now, the ambassador of brazil to the United Kingdom. Thank you so much for joining us today. Brazil is facing a conundrum like many other emerging markets right now. Why is brazil putting a priority on fighting inflation . Brazil has a history of very high inflation. And this has hit the country very hard for more than 20 years. We have this balanced microeconomic organization. And this is a priority for the nation. And so keeping inflation low, according to inflation targets, is a must. If Interest Rates move into double digits, if thats at 10. 5 now, that will be unpallet knowledge ahead of elections next year. Is that the not a factor . That as an intellectual impact, as well. If we look at growth in the Second Quarter, that bounceback kwies surprisingly was up 3. 3 on the quarter. Is that a one up or do you think growth has hit a bottom and its going to recover more consistently from here . We are very confident about that recovery of the growth process in brazil. Were undergoing a change. We have a very inclusive growth process. This is going to continue, but this is not going to be the most for growth any longer. In fact, were undergoing a change which is reversed what chieng na is doing. Were increasing investment and growth based on investment. I think this is going to help shape future growth for some years. Weve talked about this time and time again. To what extent will the world cost the olympics booth growth in your country . Well, they have accelerated and investments and infrastructure that was required. All of this requires enormous investments for the world cup specialty and also for the olympic games. These were investments that were required in infrastructure business. Theres also the investments on the stayed ya and this is a different matter, which is subject to some department. But not investment. Because 75 of the world cup is really infrastructure investment. But its also, at the same time, led to considerable social unrest. Is it worth all the cost . Well, this is obviously an open question. The assessment i have personally is that its clearly worth the cost. Not only that, but that when brazil was announced as the host, there are issues involved that should be cleared. Isnt it fascinating how at the beginning of the year, everyone found out the global currency war was going to be the big topic in the World Economy in terms of forex markets and now its completely moved off the radar. And brazil is getting an example. Theyre now trying to boost their currency. Can we just completely forget about global surnt currency wars . Well, thats a very big statement that we can totally forget about it because a lot of people make their living in joining the battle. But i think what were starting to see is that a lot of world is flattening out, if you will. The economic tides that have flowed by first china, you know, really sucking so much resources out of the Raw Materials out of the globe and low Interest Rates being able to fuel the emerging markets, you know, certainly from an infrastructure point of view is really, you know, spurred that along tremendously. But what were seeing now is a demolition of that activity in the emerging markets and bra z zill. Regarding tapering, weve talked about it and now its janet yellen being the new fed chair woman. That may have been pushed out. Also, of course, relating to the u. S. Government shutdown. Does that still worry you when it happens . Well, of course, it worries everybody. Up till now. I think they have adapted. In the case of brazil, we have enormous buffers. But also in terms of the Central Banks that i utilize to make sure that were going to have a smooth transition through that period. Okay. Thank you so much for that. Ambassador, brazil to the uk and ken cayman, thank you so much for your input, as well. I want to bring you the latest on libya. We told you about these reports that the libbal Prime Minister zeidan had been taken hostage. He has now been freed, according to government and security forces. If we have any further development, of course, we will keep you updated. Taking a check at brent prices, theyre up by roughly 0. 5 at 109. 56. Still to come on the show, most employment reports are delayed due to political issues in washington. All eyes are on the weekly jobless due out today. How the Government Shutdown has affected employment figures, after this. And well leave but a look at how the futures are trading what ed of the open on wall street. Mine was earned orbiting the moon in 1971. Afghanistan in 2009. On the u. S. S. Saratoga in 1982. [ male announcer ] once its earned, usaa Auto Insurance is often handed down from generation to generation because it offers a superior level of protection and because usaas commitment to serve current and former military members and their families is without equal. Begin your legacy. Get an Auto Insurance quote. Usaa. We know what it means to serve. Welcome to worldwide exchange. Im carolin roth. These are your headlines from around the world. President obama sends out an evite to republicans and democrats to find Common Ground over the u. S. Government and the debt ceiling. Shares in europe trade higher on hopes of an end to the impasse in washington. Investors keeping an eye on the bank of fwlnd. But u. S. Treasury secretary jack lew is set to Warn Congress today as they have the consequences of a possible debt default as the government reportedly makes contingency plans just in case. And the oecd secretary general cautions that no resolution on the u. S. Debt ceiling would push Member States back into recession next year. Good morning, everyone. If youre just tuping in, thank you so much for joining us on the show. Heres how markets are faring ahead of the u. S. Open. The dow, the nasdaq and the s p have upped their values taken into account are set for a positive start to the trading day. This follows yesterday anticipates slight rebound. The s p was up slight lit, the dow was up by nearly 2 and the nasdaq lost by 17 points. The biggest off its threemonth highs. Were seeing a similar picture here where were just off the onemonth highs. Up by 11 points and the italian market is doing nicely. These markets just off a onemonth low. How do you make money in these markets . Heres what some of the experts have been telling us this morning. We would argue pay is relative. And even if they do, this would be a something that would change over a few days and then you would get that back again. On the equities side, people are worried about issues around regulation, what popularity is going to be given a much Bigger Capital base. But febl in an economic recovery, over time this group should outperform. But i think theyre still quite cheap. Theres still a lot of legal incentive. We have an ee complex im turn around situation right now in European Equity peps one thing is that the investments realize that integrity of the system is reserved and its not a fixed currency regime. Thats one thing. The second point is that the eurozone has exited recession in the Second Quarter. The option key employment figures since the start of the u. S. Shutdown has left its economist on the start. Recent jobless claim p claim figures have remainsed around a sixmonth low and are back to precrisis levels. Thats great. However, a slight forecast is expected for todays announcement as employers are expected to ceasefire as confidence slides in the economys shutdown. Joining me now from cnbcs headquarters is patrick okeefe, director of Economic Research at conresnic. Patrick, thank you so much for talking to us this morning. So to what extent will jobless claims reflect the Government Shutdown . Is it too early . Well, we should see in a special category claims jump because with respect to federal workers we have a special program for them. So to the extent that we have a direct furlough effect, we will see that in the federal claims. I think in some of the other areas, we may see an uptick because some employers, particularly those who are immediately dependent on clash flow from the federal government may have furloughed or laid off some workers. So i anticipate we will see a bit of an uptick in the initial claims this morning. Patrick, even if we see further out takes for the next couple of weeks, surely this Government Shutdown hasnt been solved just yet. Would it really scare markets . I think temporarily. A lot of what is going on in the general economy and in the markets is the expectation that at some point the elected leadership will come back to their senses, reach a deal and move on. The real problem is that this over time could become a cumulative drag on the economy. If its within the normal fluctuations that we see this time of the year, maybe a little bit above it, well say, okay, thats the turmoil in washington and we wont draw any longer term inferences about that. Even if we see an uptick on the jobless claims, you think this is a screaming buy. Tell us why. I think what investors have to do is look at the market and realize that stocks, equities train on corporate Balance Sheets, on the prospects for corporations. And those are doing very well, not political angst. And right now, if you know what you want to own, maybe when the market ran up earlier in the year a couple months ago and some stocks got away from you, now might be the time to readdress that list. Remember, whats going on as your guest just said, what is going on in washington is going to wind up being the speed bump. Were going to look at some anomalies and numbers a month out or two months out from now. If you have something on your Shopping List that got too expensive, maybe its moving to a price youd own it at, now is the time to move it. Thank you so much for that, ken. The minutes from last months fed meeting show most members saying its appropriate to taper their Bond Buying Program this year. Even as they held off moving in september. Markets were marched by that decision which the minutes show was a relatively close call. Fed members thought investors would read a september taper as a signal of their willingness to start exiting qe3. They were worried higher Interest Rates could slow the broader economy. Joining me now, patrick okeefe. Patrick, its interesting. One trader said to me, look, the impact of this nom nation isnt going to be that huge. The bigger impact, really, is who is going to be the new vice chair and more importantly, the rotation of the fed governors who are going to be voting members next year. Eve got two hawks coming in. Would you agree with that . Well, i think the entire composition being in flux the way it is is a problem. Maybe thats one of the real issu issues. She has both the stream of consciousness by which the fed has been driving itself and at the same time help the members of the fomc keep the consensus. Patrick, what have you heard from the minutes last night . Is there anything that gave you further indication that tapering is going to be pushed out until next year . I thought that the minutes did at least flesh out the thinking. And that the debate was as close as it was was a little surprising to me. Because i thought given what the data was, given what we had hanging over us in terms of the fiscal follies were going through, i thought that the fomc would say, look, weve got to take a pause in the pause. Looking forward, i still think that the data does not support and knight not because im a supporter of the qe, but because the fed has laid out its markers, i dont think the data shaurts tapering at any time this year. I think were into 2014 before that occurs. You could argue that the feds month move in september was a wise one because of the troubles on capitol hill. Stay with us, patrick. Well come back to you for more later on in the show. Coming up, one mutual fund giant takes steps to support the default. Details, straight ahead. [ male announcer ] this store knows how to handle a saturday crowd. [ male announcer ] the parking lot helps by letting us know whos coming. The carts keep everyone on the right track. The power tools introduce themselves. 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Welcome back to the show. Fidelity management takes steps to protect investors in Case Congress fails to reach a deal regarding the debt ceiling next week. Good morning to you, carolin. Were starting to get worried about what specially could come. If a dil dellty says it sold off all its holdings of fidelity debt that comes due. Thats considered to be by many investors to be the most exposed if the u. S. Defaults on its obligations. And the treasury must pay 85 between november 1st. For Social Security, medicare, as well as pay for military vets and interest on u. S. Debt. Nancy pryor, the head of fidelitys money market groups says the company has been refocusing its portfolio and has moved a significant portion. Pryor says, we expect congress will take the steps next to avoid default, but in our position as money market managers, we have to take precautionary measures. Fidelity has taken similar actions before, most recent willy in the summer of 2011 bht u. S. Comes close to a default and downgraded the countrys credit rating. For pimco and fidelity and bond funds, it is no problem whatsoever. And a buyer in treasury space for the next 30 days would be advantaged and pimco has been advantaged for 35 basis points as opposed to what existed prior to that at three basis points. Is it a lot of money . No. But its what an active manager should be doing and thats what weve been doing for the past few days. Sofa dellty sells and pimco buys. Gross says the odds are about a million to one on this debt. But that doesnt mean it isnt affecting the markets. Here is a reminer of your headlines this morning. U. S. President obama invited democrats and republicans to meet in a bid to prevent washington gridlock. And europes Central Bank Announces a multibillion currency swap deal with the peoples bank of china. And lets take a look at these other top stories. Chevron is warning its Third Quarter results will be lower than in the Second Quarter because of the significant drop and were finding earnings and fuel margins were squeezed. Analysts have been expecting Third Quarter earnings of 3. 08 a share up from 2. 77 a share from the previous quarter. Chevron reports full results on november 1st. And shells shares fell by roughly 0. 5 . The move would prevent new investors from gaining sizable control of the company, diluting the value of its stock and flooding the market with new shares. Mens wearhouse says the plan was adapted in response to the joseph a. Bank offer, but not to prevent a future bid the board finds more favorable. Mens wearhouse closed up 29 on wednesday. Meredith whitney rose to fame on a well timed called ahead of the financial crisis. In 2010, whitney predicated a wave of municipal bankruptcies across the u. S. Which has yet to prove true. Still to come, bridging the gap. Will president obama and House Speaker john boehner be able to put politics aside to open the government and avert a u. S. Debt default . Opportunities arent always obvious. Sometimes they just drop in. Cme group can help you navigate risks and capture opportunities. We enable you to reach Global Markets and drive forward with broader possibilities. Cme group how the world advances. Welcome back to the show. Markets are higher in hopes of a resolution on capitol hill. U. S. Futures pointing to a higher open. The dow, nasdaq and s p 500 are seen just modestly higher after the nice bounceback we saw in yesterdays session. Lets give you a look at whats on todays agenda in the United States. September import prices and the october federal budget statement were due to be released today, but theyve been postponed because of the Government Shutdown, of course. Jobless claim will be out at 8 30 a. M. Eastern. The fed governor dan tarullo and sdpran fed president John Williams speak this afternoon. President obama met with House Democrats at the white House Wednesday evening. He told them to be prepared for a giveandtake in budget talks. The president will meet with House Republicans today. He had invited the whole gop caucus, but House Speaker john boehner is only sending 18 leaders and committee chairs. Reports say House Republicans are considering a shortterm increase in the u. S. Debt limit to buy time for broader policy discussions. Treasury secretary jack lew testifies about the debt ceiling before the Senate Finance committee at 8 00 a. M. Eastern. Hes expected to warn lawmakers he wont be able to guarantee payments to any group, such as Social Security, military veterans or u. S. Bondholders if congress doesnt agree to raise the debt limit. Lew plans to say he will do all he can to minimize the pain, but he would be relying on an erratic flow of incoming tax revenue. And theres no certainty the u. S. Could make interest payments. For more on the shutdown, im joined by ed okeefe and still with us is patrick okeefe, director of dmk research at resnik. There is optimism in the market today that we are going to be sealing a between between the republicans and democrat. Could this by r be a false dawn . Absolutely its a false down. Were marveling down here in washington to the fact that wall street sxinter National Markets still believe that a deal is on the verge of happening. Its not necessarily. You know, the president is bringing in the different caucuses of the house and the senate to talk. But nothing seems to be happening. I think the fact that he warned his colleagues in the house who are democrats yesterday to be prepared to make perhaps some concessions is a signal that the white house may be moving now in the next few days to begin to try to make a deal. But what that deal is and what exactly it will look like is still very unclear because, among or other things, republicans cant agree on what it is they might offer the president in the form of a negotiation. Patrick, would you agree with this . Is it, in fact, a false dawn . From where we sit here, yes. I think building on what ed has said, even outside the beltway that were not seeing more of a reaction to this political spat within the beltway is because the general public recognizes that a lot of this is political feeder and expects that as that deadline approaches, the elected leadership will sit down and do their jobs. But i must say that those who keep asking the question, who gets the blame, in several different meetings over the past couple of days, its very clear that everyone is quoting romeo and juliette, saying a plague on both their houses. Who has more to lose at this point . If you look at Approval Ratings for Congressional Republicans, this really hit rock bottom. Theyre at about 5 . You would think that they would be more worried about their actions going into the midterm elections next year. They might think that but, you know, if theyve hit rock bottom, they dont have much farther to go. I think the white house and Senate Democrats especially are sensitive to how they might be perceived in the coming days. If theyre seen now as inflexible while republicans are attempt to go put forth something, their numbers may crater, as well. Were still more than a year from the current elections. Democrats think they can use this current flight plus republican rejec of so many other proposals and use that against them next year in hopes of holding on to the senate or somehow picking up the house. But thats still more than a year to go. And if theyre going to merely extend things for another couple of weeks, then this will continue on. While there might be some political gains, certainly the economy will remain in shambles and washington certainly wont be able to do anything else. So its an incredibly frustrating time. And, again, there appears to be no were not any closer today than we were yesterday. We may not be near the end of today towards an agreement. The treasury secretary is coming up here and has to remind people of what might happen if the debt ceiling is exceeded. It shows you that theres still the lack of appreciation for what might happen and there are still dozens of lawmakers here who dont necessarily think it would be bad to exceed the debt limit or dont entirely understand what that would mean. And the fact that there are so many and the fact that the treasury secretary feels the need to come up here and remind you of that still shows you that theres this large gulf in understanding and is somehow reaching an agreement. Ed, quickly, do you think that october 17th date, is that flexible at all . You know, to some extent, i think it might be. And i think jack lew will be hard pressed today to explain why it is that october 17th is the drod drop dead if the treasury has said november 1st really is the drop debt because thats when they have to pay out 90 billion in Social Security payments. If its not the 17th within might they be able to go until perhaps the 20th or the 21st . Well see. Thank you ed, thank you so much for patrick, as well. Thats it for todays show. Im carolin roth. Well see you tomorrow. Mine was earned orbiting the moon in 1971. Afghanistan in 2009. On the u. S. S. Saratoga in 1982. [ male announcer ] once its earned, usaa Auto Insurance is often handed down from generation to generation because it offers a superior level of protection and because usaas commitment to serve current and former military members and their families is without equal. Begin your legacy. Get an Auto Insurance quote. Usaa. Know what it means to serve. Good morning. It is day ten of the u. S. Government shutdown. Pimcos bill gross saying hes a buyer. Ice thursday, october 10th. Thats how i figured that out. October 17th, 2013. Squawk box begins right now. Morning, everybody. Welcome to squawk box here on cnbc. Im becky quick along with joe kernen and andrew ross sorkin. In washington, house gop leaders will be meeting with the president at the white house today. There have been some hints of a brief truce. Both sides are said to be open to the possibility of a shortterm extension of a 16. 7 borrowing limit. Well have more from john harwood in just a few minutes. Treasury secretary jack lew will be testifying on the debt limit before the Senate Finance committee this morning. We will have complete coverage. U. S. Equities are indicated sharply higher. This has to be because every newspaper in the country is run, these headlines that say there is the suggestion of a potential truce. Right now, the dow futures up by triple digits, up by about 107 point. S p futures up by about