Transcripts For CNBC Worldwide Exchange 20131024

So far. And the weak economy, eurozones biggest bank post ago near 80 jump in nine months profit thanks to lower provisions. A bad call for erikson hitting Third Quarter profits. We speak to the ceo first here on cnbc on an extended edition of this show and that happens at 12 00 cet. Plus, manufacturing in china if a hitting a sevenmonth high. The country still on track for its slowest growth now seen in 23 years. He, everybody. Welcome. Yes, you are watching Worldwide Exchange here on cnbc. We have a lot to get through today. Theres a lot to talk about. First on the agenda, we have had the eurozone Business Growth easing for the month of october as by the looks of things demand has slowed substantially. Were looking at the eurozone pmi point to go 0. 1 to 0. 2 of Fourth Quarter growth. It fell to 51. 5 from septembers twoyear high of 52. 2. But what you need to take away from this 51. 5 print is that its way below the polls that have been out by reuters for an uptick to 52. 5. Were looking at quite a bit weaker than anticipated pmi print. Missing all forecasts, as well. Composite pmi missing from on 0. 1 to 0. 2 Fourth Quarter, private sector growth slowing unexpectedly here in the eurozone. Rob doddson is a senior economist at market. Hell be joining us shortly. But the euro dollar here on screen, slightly lower at the moment, just coming off from where we were, just a fourth of the pmi data. Of course, we have seen quite a bit of strength in the euro happening on the back of a much better than anticipated print coming through from nonfarm payroll data stateside. Also worth mentioning, the chinese data is important. Hitting a sevenmonth high, the hsbc flash pmi data. That october figure hitting sevenmonth high as mentioned, 50. 9 was that level, a tad higher than the 50. 2, which was recorded in september. Whats encouraging is that new orders looked healthy spiking to 51. 6. But its important because china is, of course, the worlds top metals consumer. The data could mean, as many guests have told me, that we are seeing a bottoming out in the softness of the chinese data. We have seen that as of late. So thats whats taking place on the data front. Lets talk about this, though, because rob doddson is a doctor economist at market. Hes with us in the studio. Hi, ross. Hi. How are you . Im not too bad. How are you . Fine. Trying to find whats coming out of markets. And we have had such frothy levels as of late. Business growth easing. The services pmi missing. Manufacturing data missing, as well. What do you make when you see a figure like this . Id say the particular headlines figure is disappointing in itself. A lot of people expecting that to continue to rise. However, i wouldnt place too much emphasis on one months worth of data. The real issue is the eurozone recovery and after extended decline, that in itself is a positive. But also what were seeing is were seeing broad based growth across. Germany continued to grow. Fronts continued to stabilize. Periphery, it was taking a bit more halt. Its so much in line with what the ecb characterized it as, it will be on even. Thats what were seeing here. You see, i feel that over the past two weeks, the interesting shift thats happened is that weve gone from almost overnight from not liking spain to loving spain. Weather youre looking at the growth figure that came through yesterday, it still was earlier than anticipated that were seeing this figure. Weve seen the bond upticks being healthy out of spain, as well. Do you feel things are start to go turn procedurally for the periphery . I think they are. Wa weve seen some some of the gdp numbers. So there is some signs the periphery is starting to show some strength. What we need to remember is these are coming from extended and deep decline. Were not seeing these coming back to where they were post the crisis. This is a pleasing surprise, a seven 46 month high since october. Do you feel that we are seeing a bottoming out in the chinese slowdown . I think we are. Were not going to see those massive growth double digit gdp growth that were seeing a few years back. But, again, the Chinese Government doesnt want that. It wants to focus on solid growth while restructuring. These numbers are suggesting growth should pick up in the Fourth Quarter were looking at and that would give the Chinese Government wiggle room to do restructural reformes and do some rebalancing. Im a big fan of wiggle room. Always good to have a couple of extra centimeters. Rob, thank you very much, rob doddson, senior economist at market. Earnings season is upon us. The Investment Banks profits surprised on the downside. In an interview with cnbc a bit earlier, ceo brady dugan looked at the companys strength, insisting its Capital Position was solid. If you look, for instance, our capital progress that weve made over the past year or so, its been very strong. We ended up this quarter 11. 3, 10. 2 auto a bureau basul basis. We brought down leverage a lot. We completed the issuance of a fair amount of both high trigger and low trigger contention convertible bonds. We have a very Strong Capital structure. So i think clearly from a which is point of view, we feel like were in very good shape. Now, coming up, of course, well have more of that Credit Suisse interview. Carolin roth joins us at 10 30 Central European time. For now, though, lets take a look at how Credit Suisse has been fairing among the other key corporates that have been recording this morning. We have a whole bunch of them just here on the wall next to me. Credit suisse trading lower by 2. 25 on the back of those earnings. Striking a more positive note, youve got spains Bango Santander rising. Profits for the full nine months have jumped by 77 over this past june. Stephane pedrazzi joins us from madrid for a look at those results in about 20 minutes. This maybe goes hand in hand with what i was saying a few minutes ago about a proper turn around for the spanish economy. Shares in ericsson fell after falling shy of forecasts. The company warned sales were coming under pressure in japan and over maturing projects in the u. S. We will be speaking to hans bispa on a cnbc interview and that happens here a little bit later on, 12 00 cet, as well. Lets talk about abb getting a boost after power and Automation Company. This company reporting earnings above forecasts, fighting improved conditions in europe and a solid demand also seen from the u. S. Last but not least, wpp, the advertising giant and Consulting Group citing Stronger Economic conditions, especially in the uk and the americas for its solid results, topping estimates with 5 organic revenue growth. Speaking to cnbc earlier, first on cnbc even, the ceo, sir Martin Sorrell warned us that the debt ceiling debacle in washington could hurt business Going Forward. Theyve kicked the can down the road for another three months. And we could expect quite reasonably or our clients could more political serb ewe lens as we get into january and february next year with congress. So that is likely to make clients extremely cautious, particularly in an american context, not just on spending, but auto hiring, too. Now, scb has been trading higher following an earnings beat this morning that came through, which looked slightly better than anticipated. The company seeing profits rising 1 billion kuna higher than what it saw last year. Smaller loan losses and a gradually improving Global Economy were all factors in the quarter. Joining me on the phone is eric buck, the cfo of seb. Eric, thanks for being with us. First of all, just talk us through some of the highlights from the figures. Sure, good morning. Well, i think the results are pretty clean. There are no one ups, but, of course, were impacted by normal seasonality. But its holding up as a pretty good quarter and a particularly strong q3. I think the highlights are that its good quality. Weve got an increase in Net Interest Income of 5 , 9 higher on fee and commission, which is also quite strong. Were learn to go contain costs in a good way and were holding our cost caps and well continue to do that. So i think, you know, the discipline on those lines have been working well. If theres any weakness, its on the trading line where not dissimilar to many other banks internationally. Locally up here in sweden. We are weaker on the back of low activity levels. But overall, a pretty good result. Jan erik, i always assume one doesnt know until one knows pn. So for the benefit of viewers out there who maybe dont know a lot about the Banking System and the swedish economy at the moment, what are your thoughts on the General Health of swedens Banking Sector and of the swedish economy . I think the swedish economy is doing very well. Over the past three or four years, we have. I think the kingdom is in good shape. The corporate sector is in good shape, very cash rich, strong Balance Sheets. Exports markets still, even though were feeling this slowing economy is in parts of europe and elsewhere. But overall, in good shape, and the Banking Sector is in good shape, as well. Weve all been spending the last few years building buffers in terms of funding and liquidity today, we are in the top quarter along any measure you want in terms of stability. I think the whats rewarding is that the profitability ratios are starting to come up, as well, which is good. I think weve all learned to become more sort of fuel efficient. Were using less capital, less funding to generate a nice return, which is the way we wanted and the way regulators wanted. Your q1 ratio and your capital y58 ratios in general are very healthy. How do you view whats taking place at the moment in broad europe . And here im thinking of the ecbs measures that were announced yesterday where we heard of the assessment plan for the top 128 banks laid out by the ecb. You have a threestep process where initially its a risk assessment. They go closer into the asset Quality Assessment and then you have a stress test coming in approximately a years time. This type of regulation and these type of criteria, is it going help europes banks to become stronger . Well, lets hope so. I think the i think whats i think its good that its being done. Overall, we all want a reasonably level Playing Field and competition to be fair. And as long as were moving towards that, then its all fine. And i think the fact that regulators want to go through and make sure that things like risk assets and the way we do internal modeling, if its broadly consistent, i think its difficult to argue against Something Like that. I think where we are issues is where swedish regulators post swedish finish on many of these measures to the extent that we start to deviate a lot from what this conventional wisdom in europe. And thats where we have a little bit of debate. Were not arguing against the ratios. It all makes sense. We all need more capital liquidity, but it has to be a level Playing Field. Jan erik, thank you very much, cfo of seb. Lets talk to somebody else who knows a thing or two about strategy and equity markets. Robert quinn. Hi, robert. Good morning. Hello. We were flirt, fiveyear highs. Weve come off a little bit in trade yesterday this morning. Were flattish. We continue to weigh in on equities. We continue to buy into our equities portfolios. I think equities again for different chapters and some different styles outperform. Third quarter earnings season is largely an inflexion point. All of the fiveyear highs youre talking about are normalizing valuation levels. So you have to get to this stage now. Theres a potential that the key for its obvious that Credit Suisse and the likes of do you have ya bank and perhaps barclays is still too broad. Particularly theyre going to have more equities. But what youre seeing is now, 2013, 2014 earnings, youre at fair value. What you need to see now is an early turn around. With the pmi, that was always going to come up a little bit. What you saw from most of the economic surprise, rolling over. So you often see that pullback a little bit. You normally see earnings accelerate from european corporate earnings, anyway, when pmis get about 52 in a bump. You were just hitting 52. 5 and you come back again. Q3, we were hold for would be that moment. It may turn out to be a q4 event. Well, youve made some calls. Joour youre upgrading the auto parts sector. Youre upgrading media and youre downgrading food and beverage and underweights. Explain your dealings. For the auto first, youve got broad based earnings, relative earnings momentum within the times and parts space, as well as the mass market players. Theyve been out this week. Renault is out in the next couple of days. And youre starting to see, you know, early 2012 second half earnings terrible. So even on relatively flat earnings, flat revenues, you can get an earnings rebound there. You still see cash bonus, but by. Large, you already know the monthly earnings on the autos. The turn around now is quite reliable in my view. For food and beverages, the organic growth rates flowed in hedge one. Kind of a mixed bag from what youre expecting from heineken. Theyre very, very expensive. So thats more of a style move. Its probably not really worth the money youre paying for that. And we were just mentioning wpps numbers. The media upgrade that youve made or the upgrade to the media sector, does this hinge very much on global ads than what happens over the next 24 months or so with global assets . Its probably about 2 1 2 times details with global gdp rates. Youre seeing global gdp accelerate to nearly 4 at the start of next year. At the same time, as well, especially the advertising agencies, wpp or publicists, in terms of their marmgin story, the football well cup, the midterm elections. So they have a biannual event support, as well. Im very excited about the world cup. So am i. Were there. Definitely, yeah. Robert, thank you very much, robert quinn, European Equity strategist from s p capital iq. Now, our european markets here this morning, just to recap what were seeing, relatively flattish strayed. Stoxx europe 600, flat if anything. Yesterday on the close we were looking at all red screens across the board with a little bit of money coming out from our european markets. Were still right around the fiveyear highs give or take a bit, right . So our main European Equity markets today, trading higher. The ftse higher by 0. 2 . The xetra dax up by a couple of points. The cac, the color tells you were high her. Were ready flat on the cac. The ftse mib higher, too. The fixed income markets, tenyear gilt now yielding 2. 6 . The yield on the tenyear bund, 1. 7 . Commodities, we saw a bit of a fooling off in the price of oil as of late with oil trading below the 100 per barrel level. An interesting or important level for nymex. But currently, were still around that level coming up from where we saw a trade settling yesterday. Brent, flat to a little bit higher. And just moving on to the currency markets here, were now looking at a flippy floppy dollar yen. Over here, the euro dollar flat to higher, as well. Very unmoved, though. 1. 3780. All things considered, though. We were talking about this yesterday, as well. Lets talk about the markets in asia. Li sixuan joins us live to talk about whats been taking place in the asian session. Sixuan. Thank you for that, louisa. Not too much reaction to chinas sevenmonth high. On the other hand, the pboc refrained from bumping liquidity into the system, reminding us of the tight liquidity conditions. The shenzhen down 0. 6 . The hang seng index in hong kong lower by 0. 7 . Chinas liquidity concerns and weak u. S. Earnings weighed on the japanese market in the earnings session, but the nikkei 225 managed to turn higher in late day trade ending up 0. 4 . Hitachi jumped over 8 earnings. Meanwhile, kospi finish higher. And australias i is asx 200 was the big beneficiary of the china pmi data. Banking measures broadly higher. Take a look at chinese banking shares. So a shares on the first row and h shares on the bottom row there. Were seeing that ping an bank gained 3. 3 after yesterdays 4 surge after yesterdays strong earnings results. But other banking majors, they came under pressure. This on concerns of increasing nonperforming loans and also the tight liquidity conditions. Back to you. Sixuan, thank you very much. Good to see you. Well talk soon again. On todays show, a lot coming up. Spains larger bank, santander, is now saying its in a good position to meet rules after posting good results. Stephane pedrazzi will be bringing us the details of that. Earnings central heading to the motor city where ford is expected to all right a slight dip in profits as they look for an update on allen mulallys future. And as if that wasnt enough, were live in brussels for the heads of state summit after the ecb president mario draghi tells cnbc that stress tests are just the beginning to restore confidence in banks. Julia chatterley joins news a couple on of minutes. And well be crossing to washington where president obama is reassuring Angela Merkel that the u. S. Did not snoop on her mobile phone call peps well get the latest on that at 11 20. There is more because were bringing you a first on cnbc interview with the ceo of erikson after the mobile television equipmentmaker misses Third Quarter results. So stay tuned for an extended edition of Worldwide Exchange on cnbc. Now, in news, ben jerrys have now released a new flavor called i havent seen it yet. But the limited Edition Ice Cream will be hitting shelves in just a couple of shelves just in time for the premier of apgorman 2. Scotchy scotch scotch. If you were going to invent a new ice cream flavor to celebrate the cnbc team, what flavor suits us best . You can see some of the other guys sitting back there behind me. If you want to get involved in the conversation, write in email exchange worldwide cnbc. Com, find us on twitter, cnbcwex or direct to me. Well see you very soon. 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. You are, indeed, good morning, everybody. Hello, im Louisa Bojesen. Spains Unemployment Rate has fallen to 26 in the Third Quarter. Thats down from 23. 6 in the second quarter. The countrys economy now has exited recession during the past few months. Stephane was in madrid. Stephane, good to see you. Listen, it sounds like its no big dealing if were falling by 0. 3 Percentage Points in the overall Unemployment Rate. But its put together with Everything Else going on in spaen, it seems like were headed potentially in the right direction. We are, indeed, but its not a big surprise because we knew, thanks to the monthly reports from the Spanish Labor Ministry that the market has been improving in the last couple of months. Thanks to seasonal jobs and especially in the sector which was extremely dynamic this summer in spain. But because of this seasonal affect, there is a question mark about the sustainability of this improvement. Is it going to last . Well, here on the ground, economists are a bit skeptical. Theyre concerned that the job creations remain elusive. First of all because the spanish economy will not grow enough to create some jobs. The forecast for the next year from the government is a 0. The 7 growth and to create some jobs we need at least a 1 or even 1. 5 . The second reason why economists are a bit skeptical about this evolution is that the Economic Growth not welcome from sectors which are labor intensive than the construction sector, if you remember. The spanish economy was driven by the construction sector with many, many workers. Now, the new sectors which are driving the growth, which will drive the growth are not employing so many people and thats the reason why we may have some disappointment in the next coming quarters. Thats the news here on the ground. Stephane, thank you very much. Our question today is if you had the name ice cream after cnbc anchormen and women, what would they be called . So we want to know what you would call louisa ice cream. Too easy, too easy, stephane. But im sure people are going to write in with suggestions about you. I see a number coming in already about various people in here and well read out some of them a little later on. Good to see you, stephane. Good to see pup. Still to come, sand tanders earnings impress investors as they see profits rising. We will be heading back out to madrid in a bit. Much more to come here on Worldwide Exchange. A beautiful morning, a lot going on. Glad youre with us. Hi, everybody. Welcome back. Im Louisa Bojesen. Earnings bonanza in europe, Credit Suisse missing expectations in the Third Quarter on the back of a disappointeding performance in its Investment Banking business. The ceo telling cnbc that adverse conditions were to blame. Certainly some of the macro conditions have made particularly fixed income client activity a little more subdued so far. Now, the weak economy also weighing on santanders lending business, but they posted a nearly 800 jump in ninemonth profits thanks to lower pro vision peps. And a bad call for ericsson, unfavorable fx rates. We speak to the ceo first on cnbc on the extended version of this show, that happens at 12 00 Central European time. Manufacturing in china hitting a sevenmonth high. The country is still on track for its slowest growth in 23 years. Now, mario draghi says that the ecbs Bank Assessment plan is quote unquote just the beginning of a process to restore confidence in europes bank. The ecb president told cnbc that the aim of the health check was to get the sector functioning well again. Draghi also stressed that lenders, that leaders have committed to providing national backstops if banks failed the health check. But he said that the aim of the exercise was to get private money back into the banking industry. Transparency, the strength of the design of this exercise, the coverage of this exercise should, by itself, make the leaders. We assured that taxpayers money, if needed, and we all hope its not going to be needed, is going to be properly used. Now, julia is in brussels with more. Julia, good to see you, first of all. We were talking yesterday about the assessment plan laid out by ecb and the type of impact it could have in the Banking Sector over the longer term. What else is taking place out of brussels . Wa do viewers need to know for today . Actually, lieu swees sa, its jam packed for innovation, is it likely to be hijacked by a flying scandal weve seen in the likes of Angela Merkels mobile being potentially regulated or listened into by the u. S. , given what weve heard from mario draghi over the last 24 hours, the idea of whats going to happen in the banks stress tests are going to be very much a part of whats happening with the eu leaders. Mario draghi is going to sit down at the dinner table and talk through the idea of greater transparency. We keep carrying around this idea of backstops for whatever comes out of these stress tests. Thats not part of the discussion with regards to was being discussed with regard to the resolution mechanism and what happens in the future. And draghi said it. Yesterday, he said as far as hes concerned, the leaders have already promised at a National Level to backstop these banks. We have the rules in place. We have the idea that these banks would go out and get cash from the borrow money from the private sector. They would see a bailin situation. Then ultimately if theres still a problem, maybe its a case of building a dam as far as this resolution mechanism is concerned once the floods already happened. But i think as far as issues in the Banking Sector is concerned, theres plenty of rain perhaps to come. On that note, louisa, back to you. Julia, thank you very much. People watching, they might not realize that when they go out and we do these outside broadcasts, they think we wallets over to a camera point, switch it on, you have 10,000 bruce producers there, you talk a bit and thats it. Not so. Ive just been informed that you climbed a ladder to get to the point youre standing at . We had a few technical issues this morning and i had to come to the rooftop of a building and it did involve climbing a precarious ladder, almost like a fire escape. I think there was a picture taken of me doing it, so i was momentarily distracted that you were going to show that picture. But since you havent, everything is fine. Im a trooper, get the job done. Jules, be careful of the ladder climbing on the way down again, then, as well. We want everybody safe and sound, right . Well talk to you soon again, jules. Well talk to you soon again. Now, european banks are very much in focus today as earnings season continues. Both Credit Suisse and santander, theyve revealed Third Quarter performance. We are live in zurich and in madrid again to talk about what weve seen so far. Carolin roth joins us live out of zurich. We have stephane pedrazzi rejoining us from spain again. Carolin, lets start with you and talk about Credit Suisse. For viewers just gisting us on, what did we hear . Numbers from the Third Quarter are definitely a disappointme disappointment. Last i checked, shares were down by around 2. 5 . The main culprit for the underperformance is the performance of the Investment Bank or revenues year on year were down 20 . But the fixed income sides of the business saw revenues decline by 43 . We knew the fixed income side of the bits, that was challenging in the Third Quarter because of the jitters around fed tapering. The expectation is that the equity side would at least make up for part of that weakness in a fixed income. But that just didnt materialize. Not for Credit Suisse. As city points out, revenues and equities only rose in 8 versus 21 for some of its u. S. Peers. I spoke to brady dugan of Credit Suisse this morning. Here is how he felt about the performance in the Third Quarter. Overall, it was, i think, a solid performance. Somewhat has been a more challenging quarter for the whole industry. Private Banking Wealth management was a good result. Around 840 million of pretax. Certainly the Investment Bank was impactsed by the fixed income conditions during the quarter. Actually, our equities in Investment Banking businesses performed quite well and actually our credit business was quite good. But certainly, i think the overall environment in the Third Quarter, it did impact the fixed income business which impacted the overall results. This morning, you announced that youre streamlining your rates business. I wonder, its been underperforming in the last couple of quarters. Why always make that announcement now . And what is it going to mean in terms of restructuring costs and rwe . Well, first of all, that business has had a Significant Impact from a lot of the changes, both regulatory changes with a focus on leverage hits the rates business and second of all, market structure. So a lot more of that business has gone into the cleared parts of the business. The changes were making will make us more effective in terms of being able to serve our customeres and to perform in that business in this new environment Going Forward. We think that the changes were making will be pci positive. So were going on to be able to reduce capital, reduce Balance Sheet, but also reduce costs and we dont think well lose that much in terms of revenue. We think this puts us in a position to performance really well. We think a lot of the industry is going to have to go in this direction. You were setting up noncore units for the Private Banking side. These regularsy units, do you think that you will be able to siphoning off more on the fixed income side . Is that a vision for the future . No. What this is about is really about focus. This will allow us to, in our ongoing business to focus on the growth there, and you see these are really good businesses doing extremely well. But its about focus in terms of working down the resources in this business very, very quickly. Weve done a good job of that. If you look at the fixed income businesses we exited years ago, we went from 56 billion weighted assets to 9 billion over the course of that period. It will allow us to be focused on, wog those down. But most importantly on focusing on growing our ongoing businesses. So its really good growth. Can you tell me how the Fourth Quarter has been performing so far in many of your main businesses . I mean, in the u. S. , it would certainly impacted by the shutdown. Do you have any visibility for all the rest of the quarter is going to pan out . Well, its obviously pretty early in the quarter, so itses usual difficult to predict. I think weve said basically the Fourth Quarter has been a continuation of where the Third Quarter ended off. Weve had resilient performances in private Banking Wealth management, equities Investment Banking. The pipeline res very strong so we have a lot of business out there to be executed. But as you say, certainly some of the macro conditions have made particularly fixed income client activity a little more subdued so far. Yesterday, the ecb outlined 2 details for how its going to be conducting the stress tests. Is swiss banks theyre not affected. Youre regularly stress tested by your own authorities. Do you think this could have a positive knock on effect in confidence in swiss banks overall . And do you think that the risk premium could attach overall to that . I think it could be something that does instill more confidence in the Banking System generally. For instance, our capital progress that weve made over the past year or so, its been actually very strong. So we ended up this quarter 111. 4 as our cet one from swiss point of view, 10. 2 on a pure basul basis. Weve brought down leverage a lot. We completed the issuance of a fair amount of both high trigger and low trigger convention convertible bonds. We have a Strong Capital structure. Clearly from a swiss point of view, we feel like were in pretty good shape. Do you feel that youre going to be more confidence in dealing with other eurozone banks as a result of the stress tests and the heightened transparency . Well, i think obviously weve had, you know, a lot of confidence in dealing with our particular usually counterbank peps weve been very comfortable in dealing with, anyway. But i think increased transparency is certainly going to be helpful to the markets as a whole. That was brady dugan, the ceo of Credit Suisse swaying in on the eurozone which will happen next year. Lets talk about the positives, as well. It wasnt all that for Credit Suisse. The analysts focused on the positive capital levels. 10. 2 is the basul 3 level there. That is a strong number. But weve also got info into the Wealth Management business which were quite encouraging, as well. Carolin, thank you very much. A lot going on out of zurich. Meanwhile, in spain, the largest bank there, santander, saying that its in a good position to meet capital rules after post ago ninemonth net profit of 3. 3 billion euros. The banks is saying its putting less money aside now to cover losses in its home market and smaller Spanish Banks, intel seeing profits to september rising. Stephane, this is an interesting one to me. Especially when you look at santander and you look at how much theyve outperformed hsbc by over the last three months alone, Something Like 43 when you compare the two. Many viewers might not be aware of that. Yes. We needed more information about the outlook for santander. I wouldnt say that the numbers for the Third Quarter were disappointing. But santander failed to convince the market above the base of the recovery. Especially for its business in spain. This morning, the bank announced a sharp increase of its net profit on the Third Quarter, but there were lower provisions on that period, provisions to cover potential losses on its property portfolio. If you look at how the business is doing here on the ground, and not only the top line, its a business disappointing. First of all, the Net Interest Income, which is the key measure of earnings on loans, it dropped to 14 on the quarter. It was below the average forecast, 19. 7 billion euros. The bad loan ratio. So it is very important for the Spanish Banks. This bad loan ratio increased again in the Third Quarter. 5. 33 at the end of the Third Quarter up from 5. 2 at the end of the second quarter. In spain, its a good 6 , that, of course, remains well below the average of the spanish Banking Sector. But the trend is definitely not the good one. Now, in terms of sovereigncy, the bank says its confident that it will miss the new Capital Requirements under basul 3. This morning, santander gave its capital ratio under basul 2. 11. 56 . Thats the full ratio. But under basul 3, perhaps the bank is not even there yet. So the lack of information on that solvency ratio is part of the wider stock is nearly flat and theres actually a sharp contrast if you compare with another bank that was reporting here this morning, louislouisa. Its ninemonth net profit was above expectationes and most importantly, this Net Interest Income that i was mentioning, down 4. 6 and down 14 for sabadell. Over to you. Stephane, good to see you again. Thank you very much for that. Of course, we are going to be speaking to the cfo of bankinter coming up at 17 15 fwlor ya ortiz. Simon joins us in the studio now from olive tree. We were just hearing from carolin and stephane about some of the weak spots in the various banking stories at the moment. Whats your take, first of all, on Credit Suisse and on santander . Well, you know, it is quite a sharp contrast between whats going on generally. Weve had decent results with rising revenues and falling costs in the nordic zone. But no one cares about that because its all about kind of the financial asset bubble and rushing into the recovery stories. But if you look at whats actually happening at these banks, they are still under tremendous pressure upon the capital ratios. The Credit Suisse release reads as if the first person they want to read it is the swiss regulator, not the shareholder. Its all about boosting capital. Both of those banks have shri shrinking balance is sheets, shrinking top lines. They cant cut costs fast enough to compensate and theyre not making an adequate return on equity. Credit suisse did look like it was going to be making a decent return on equity, but its right back down at 4 for q3, which is not enough for where the stock currently trades. Santander is making just over 5 on equity with a shrinking top ryan and its trading at one times book. Only someone who is really optimistic about recovery prospects in europe, and i dont know many of those people, would say that that is the right price for santander. A lot of people saying, well, you have to look at it in a slightly different manner,. Swiss banks than some of the other banks because the swiss authorities themselves, they have the swiss authorities record to them, theyve been stringent on making sure they boost their capital ratios significantly compared to elsewhere. Do you think its fair to say, well, switzerland is maybe a couple steps ahead in terms of regulation that theyve gone through . Well, if im an investor, all i care about is the result im going to get. If its more difficult for switzerland, ive backed that into my price. Its true, it is a different environment. But it doesnt actually make any difference for International Investors the way they look at these things. You know, you make a critical point there. Its that Credit Suisse is trying to operate this now deficient or foul type Business Model in an environment where we know that the swiss regulator really doesnt want them to be as much in Investment Banking as they are. Ubs has made that break. Credit suisse has made noises all year about moving towards that type on of model and has been very well rewarded by that by shareholders. Now, that model is shown to be not working. Its been let down. I used a stat which was from you from earlier on to stephane. I was quoting. And talking about how santander had outperformed hsbc by 43 over the last three months. Quite a significant performance. I mean, and this goes back to one of the earlier points i was making to another guest about how it seems that almost overnight, i mean, in the course of a couple of weeks that people suddenly are looking towards spain again and saying is there value to be found here . Yeah, absolutely. And, you know, after youve outperformed hsbc by 43 in three months, the answer is there is no value. Its no surprise that its stalled at that level. And i suspect now people will kind of look and say, well, hang on a mip. At what point are we going to get a double digit return from equity from saab tander . We know provisions have been coming down. Theres been a huge leap in percentage terms in the bottom line. Guess what . Profits will go up next year, as well, because provisions will come down. Really, what i need to see here is revenue growth. And for a bank, its very, very difficult to grow revenues if your Balance Sheet isnt growing. And yet, if all the time youre fighting to raise those capital ratios and you have shown us interviews, we drag each other, hes goes to raise the Capital Requirements even further. Its going to be very, very difficult to grow the Balance Sheet in that environment. How are you going to grow revenues . How are you going to justify that valuation . Simon, thank you very much. Simon maughan. Head of research at olive tree. The European Union has said it may allow bankers to receive up to 250 of their salary as much as much of it is deferred for five years. The move has been proposed as a tough provision to limit bonuses of senior staff to twice their fixed pay. The japanese markets, overnight, weve seen weakening in some spots on top of that. Also japan weve heard has downgraded its monthly export assessment, as well. So just be aware that we are looking at this just coming through on the wires. Japan has downgraded its monthly export assessment. Japan being set to reduce subsidies, we will be talking much more on this and much more after the break. 0 thats a good thing, but it doesnt cover everything. Only about 80 of your part b medical expenses. The rest is up to you. So consider an aarp Medicare Supplement insurance plan, insured by unitedhealthcare insurance company. Like all standardized Medicare Supplement insurance plans, they could save you in outofpocket medical costs. Call today to request a free decision guide. With these types of plans, youll be able to visit any doctor or hospital that accepts medicare patients. Plus, there are no networks, and virtually no referrals needed. Join the millions who have already enrolled in the only Medicare Supplement insurance plans endorsed by aarp. And provided by unitedhealthcare insurance company, which has over 30 years of experience behind it. With all the good years ahead, look for the experience and commitment to go the distance with you. Call now to request your free decision guide. Hello, everybody. Im Louisa Bojesen. Japan is set to reduce subsidied paid out to farmers who curb their rice production. We have the story live from tokyo. Update us on what this means. Hi. Yes, instead of the subsidies, japans government will encourage large Scale Production to enhance the price competitiveness of the neighs pri rice. This is all part of shinzo abes economic reform with a keeb eye on the partnership trade program currently under negotiation. Right now, the pays an annual 15,000 yen that farmers agree not to pay rice on. The nikkei is reporting this number is expected to be cut by around 30 in 2014. Actually, there are voices that the subsidy itself should be scrapped. But while the Agricultural Ministry and lawmakers who have a large support base of farmers remain cautious, its not clear that this will come to an agreement. Discussions are due to kick off tomorrow. Thats all from nikkei business report. Back over to you, louisa. Thank you very much. Well see you very soon again. Now, weve been asking today, if you were inventing an ice cream flavor to celebrate the cnbc team, the anchormen and the anchor women coming in conjunction with anchorman 2, now due to hit the movie screens, were asking which ice cream flavors would be best . Jeff j treats ice cream for mandy, in the states, mandy drury has to include gold flakes like gold schlager europe. Joe kernen stateside moose track sess a flavor he would call joe kernens ice cream. Jeff writing in saying, good morning, im stuck in big Traffic Accident listening to you on xm radio. Hello, jeff. I hope the traffic flows smooth. Just be patient. Be patient. Its okay. John tweets and he says spain is bankrupt. If we want to get in touch with me, world would it az cnbc. Com, or cnbcwex or tweet me directionally. Welcome to Worldwide Exchange. This is hour two now. Im Louisa Bojesen. Earnings bonanza Credit Suisse telling cnbc fixed income was weak. Now, the weak economy weighing on santanders lending business, but the eurozones biggest bank posting an almost 80 just in nine months profit thanks to lower provision peps. And a bad call for ericsson, unfavorable weakness hitting japan in Third Quarter profits. Well be speaking to the ceo first here on cnbc in an extended version of this show at 112 00 noon cet. Manufacturing in china hit ago sevenmonth high. The country is still on track for its slowest growth in 23 years. Youre watching Worldwide Exchange, bringing us Business News from around the globe. Hello, everybody. Good morning. Welcome to the show. Very glad that youre with us. Weve had a busy morning so far in europe. A lot more to get through. And just gearing up for the u. S. Coming back on to tape here in a couple hours time. Youve got the u. S. Futures right here indicating that we are looking at a pretty neutral open. A flattish open to a couple of points higher across the board for the dow. The nasdaq and the s p 500. Here in europe, though, weve been seeing a negative close in yesterdays session. Not translated through to this mornings session. The ftse cnbc global 300 index flat to a little bit higher. Its a very flattish picture thats emerging out of europe right now. Mixed bag of earnings. Ill get on to that in a second time. I want to show you our main european understand deckses. Youve got the xetra dax up by shy of 0. 5 . Ftse 100 up 0. 3 . The cac slightly higher and the ftse mib adding 15 points or so. On the markets, youre seeing a bit of selling across the board. Were now looking at tapering potential by being pushed even further out. The weekly nonfarm payroll prints, somebody was saying to me last night that that underlines that the fed got it right in terms of waiting on the tapering, right . So the tenyear gilt yielding 2. 6 . Tenyear bund 1. 77 right now. Commodities, well, oil having dip below the crucial 100 per barrel level. And were holding on to that level, 97 and a bit, higher, though, in trade at the moment and brent flat to higher. Spot gold, 1,335. Slightly higher in trade. Copper id call very flat. The currency markets, speaking of flat, you have the euro dollar trade, flattish rates are here across the board. Flattish cross trades. We need to talk more about whats been taking place in asia. Now overnight and just checking in on the overnight session, li sixuan joins us out of singapore. For viewers just joining us, give us the rundown of what happens in your session. Good to see you, too, louise. China ins october flash pmi hit a sevenmonth high, mostly driven by the strong new orders. But this only gave asian markets a modest boot. On the other hand, China Central bank refrained from injecting liquidity into the Banking System for the Third Straight session, prompting a search in the countrys shortterm money market rates. And mainly china and hong kong markets all slipped less than 1 in todays trade. Meanwhile, chinas liquidity concerns weighed on the japanese market in the morning session, but the nikkei 225 managed to turn higher in the afternoon session, ending up 0. 4 . Hitachi was one of top gainers, juveniling over 8 on an earnings beat. Kospi ended higher by 0. 5 with Companies Taking domestic earnings cues and australias asx 200 was a big beneficiary of that positive pmi data. Pushing the index up to its fiveyear high. Well take a look at chinese banking shares. Pang an bank continued its gain of 3. 3 . Other banks were lower on typening and liquidity conditions. Louisa, back to you. Thank you very much. Busy session out of asia. Busy session in earnings, as well. Credit suisse saying jobs will be lost as it restructures its Interest Rate trading business following a surprise slide in Third Quarter revenue. That dropped to 5. 4 billion swiss francs. Carolin roth was speaking to brady dugan earlier. Trading lower by 23. 3 or so. Banco santander dropping 0. 67 . Stephane will be joining us out of madrid in a bit. Ericsson shares, though, over here in the upper corner. Off by 6 . Third quarter profits fell shy of forecasts. The company warned sales were coming under pressure in japan. It warned over maturing progress in the u. S. Were going to be speaking to the ceo of ericsson in a first on cnbc interview. Thats coming up in around an hours time or so. And then the consumer giant having fueled weakness and emerging markets. The company says it expects earnings to improve in the Fourth Quarter, boosted by new products. It doesnt stop there because switzerlands abb is getting a boost after the power and Automation Company reported earnings above forecasts citing improved conditions in europe, solid demand from the u. S. , as well. And last but not least, wpp citing strong results. It was topping estimates with 5 organic revenue growth. Speak to go cnbc earlier, sir Martin Sorrell, the ceo, warned that the debt debacle in washington could hurt business Going Forward. Theyve kicked the can down the road for another three months. We could expect reasonably or our clients could more political turbulence as we get into january and february of next year with congress. I think that is the most serious issues. So that is leeshgly to make clients extremely cautious, particularly in an american contest. Not just on spending, but auto hiring, too. And we need to give you a look at whats on todays agenda out of the United States. A ton of earnings, basically. Weve got ford, 3m, dow chemical, xerox all before the opening bell. As for the close, amazon, microsoft and zynga all report, too. It will be a big day for earnings. Joining us from boston is jason oh connell. Jason, good morning. Thank you for being up so early to be with us. What are you anticipating from the earnings today . Do you think well be able to take any more direction from them . I do. I think earnings today will be a directional positive, as we expect, and hope for most of this earnings season with a watershed event, the Federal Reserve basically saying that theyll stay in the game for a while and now and i see this somewhat tongue and cheek, that our government has gotten the house in order. We can start to really focus on earnings and, really, were going to rely on corporate earnings now to buttres the move higher in the market. Its always interesting to me when my guests pick out something of interest to you that we then can share with our viewers. You picked out a couple of companies that you think are interesting. Franklin resources. Who are they. Why are they interesting . So ill say it and you can call me bias, rightly so. But i think asset management, first of all, is just a tremendous Business Model. Specifically within Financial Services now. And you have very little Balance Sheet risk. You have a relatively muted affect of increasing regulation on the earnings engines of these companies. You have terrific free cash flow. You have relatively strong Balance Sheets overall. Franklin resources is perhaps an exception to the rule these days that after the significant run weve had, franklin has suffered from what i call the perfect storm in that, you know, their highest Profile Products have been in fixed income. Theyve been in international. And theyve been in other currency related or currency affected income or other income oriented products. So, you know, in essence, when you have nondollar denominated assets as a major porth of your uam, and one of Interest Rate sensitive aum, investors nowhere else put frankly resources so the sideline. Also to a decent slow picture out of franklin resource peps. A couple of my guests have been saying recently that we should be getting out of Consumer Staples. Youve got Colgate Palmolive on there. What are your thoughts surrounding this company . Certainly emerging market oriented Consumer Staples stocks has been beaten up recently. Unilever is a big impetus to that with their guide down in emerging markets. I look at colgate and i see a company perhaps more leveraged to the emerging markets with an estimated 55 of operating income coming from those regions. We happy to be on the mind that colgate is relatively expensive. Theres less of a trade down risk. And as a result of that, a little bit lower private label penetration. What were looking for today out of colgate is evidence of that thesis that their categories are going to be a bit more defensive. Were looking for them to really strike a nice balance between where theyve been very successful in cost cutting, but also making sure that ad spends stays at a reasonable level. There is a very high correlation to their revenue growth. Their category market share growth with ad spend. Finally, colgate has been tremendously shareholder friendly, if you will. So we like to see a nice growing divide dividend. We like to see the extent to which dare i say theyll use their underleveraged Balance Sheet to support the premium valuation in a very expensive sector. Jason, youre with us here for a while on the show. Just hang on for a second. We really appreciate it. Weve come back and talk a little bit more. Jason joining us very live and very early there out of boston. Staying in the states, americans may get more time to sign up for president obamas health care law. Currently it says they have until march 1st to enroll. There may be new guidance saying individuals only need to start the enrollment process by that date. The Obama Administration met with top health ceos to discuss the problems theyve been having with the health care. Gov website. The two primary contractors are both set to testify. A letter went to apples ceo tim cook making a pledge. The letter makes a strong case for a big stock buyback. Icahn tweeted about the letter on tuesday. He said, quote, just sent a letter to tim cook. Full letter will be disclosed on my website. The shareholders square table, which will be launched tomorrow. Its all very miss serious, isnt it . Nothing has been posted on the website. We will keep you updated today on cnbc. Apple shares still higher in trade in germany over the last three months, up billion approximately 20 on this specific listing. Despite shedding assets, return on equity has been hard to improve for Credit Suisse. After the break, well cross back out to zurich for the fallout on the Third Quarter results. Well see you very soon. Credit suisse in this morning. Keep your emails coming in, keep your tweets coming through. Just by talking to a helmet. It grabbed the patients record before we even picked him up. It found out the doctor we needed was at st. Annes. Wiggle your toes. [ driver ] and it got his okay on treatment from miles away. It even pulled strings with the stoplights. My ambulance talks with smoke alarms and pilots and stadiums. But, of course, its a good listener too. [ female announcer ] today cisco is connecting the internet of everything. So everything works like never before. What do you do when you can no longer get around like you used to . When you fear losing your independence . Who do you call . Call hoveround now, to see if you qualify for americas premier power chair. Hi, im tom kruse, inventor and founder of hoveround. Now you can do more, see more, enjoy life more. Heres why hoveround makes it easier than any other power chair. Hoveround is more maneuverable to get you through the tightest doors and hallways. More reliable. Hoveround employees build your chair, deliver your chair, and will service your chair for as long as you own your chair. And most importantly, 9 out of 10 people got their hoveround for little or no cost. Call now for your free dvd and information kit. And now every hoveround comes with this tote bag and cup holder for handy access to your favorite items. You dont really have to give up living because you dont have your legs. Call now for your free consultation. And right now, get this limited edition hoveround America Travel mug free with your hoveround delivery. Call or log onto hoveround. Com right now hi, everybody. Im Louisa Bojesen. This is Worldwide Exchange. German chancellor merkel calling obama over suspicions that her phone was tapped by the u. S. More pressure for the president as the house energy and Commerce Committee holds a hearing on the rollout of his Signature Health care scheme. And slash pmi figures reveal that chinas Manufacturing Sector is growing at the fastest rate in seven months. Now, as weve been saying this morning, european banks are very much in focus today as earnings season continues. Credit suisse and santander have both revealed that their Third Quarter performance, what it was. We heard about that a little bit earlier. Were live in zurich. And madrid. Carolin roth joins us. Stephane practice drazy joins us, as well. Lets start with Credit Suisse, carolin. Theyre saying jobs are going to be lost as a restructuring, their Interest Rate trading business after the surprise slide in Third Quarter revenues. What more can you tell us . The restructuring their rates business and this is something some analysts had been expecting. Ubs and city had been saying this would be a good idea and after the result, city came out with a note saying, yes, this restructuring is a step in the right direction. It does warrant the rerating of the stock over time, even though the shortterm challenges are still here. That is decline activity and difficulty in the bond trading market. That over time, city sees shares in Credit Suisse going up to some 35 francs. Apart from that, numbers were a disappointment. And the main reason being a weakness in the fixed income business where revenues year on year fell 43 . Overall, Investment Banking revenues were down 20 . And look, louisa, everyone knows that this past quarter was a difficult one because of jitters around the fed tapering. So to some extent, that weakness had been factored in. But what analysts didnt see was that the equities business, that was weaker than forecast. It didnt make up for some of the weakness that we saw on the fixed income business. So this is why shares are trading to the downside today. Last i checked, down by 2. 3 . But lets get away from all the negatives. There is one specific factor that analysts are pointing out was definitely a bright spot in the set of results and that is the capital level. If you look at, for instance, our capital progress that we made over the past, you know, year or so, its been very strong. So we ended up this quarter 11. 4 as our cet went from a swiss point of view, 10. 2 on a pure basul basis. We brought down leverage a lot. We completed the issuance of a fair amount of both high trigger and low trigger convertible bonds. We have a Strong Capital structure. So i think clearly, from as you say, a swiss point of view, we feel like were in very good shape. Louisa, just to put the share price reaction this morning into perspective, shares in the company have had a really good run, up almost 40 yeartodate. What were seeing today may also be profit taking. Back over to you. Carolin, thank you for that. Coming there out of zurich. Now, as said, santander also very much in focus. Weve had santander outperformance in some areas. It is spains largest bank. Theyre saying theyre in a good position to meet capital rules after post ago ninemonth net profit of 3. 3 billion euros. They also said they were putting less money aside to cover losses in their home market and smaller Spanish Banks also saw profits to september rising. Straight back out to stephane pedrazzi, joining us live from madrid. Stephane, just talking to one of my previous guests about the outperformance thats been seen in some of the Spanish Banks versus some of the mainland european banks, santander most notably. Yes. Were expecting more, actually, from santander because, yes, the net profit increased sharply in the Third Quarter, nearly ten times the net profit that the Bank Reported a year ago. But the business on the ground, the Business Conditions are not really improving. There are two indicators, louisa. The first one is Net Interest Income, which is a key measure on earnings on loans and a decline by 14 . On the quarter and was a touch below expectations. 19. 7 billion euros. And the bad loan ratio continues to deteriorate in the Third Quarter. It was a 5. 43 at the end of the Third Quarter. Thats to compare with nearly 5. 2 at the end of the previous quarter. Still, it is way below the average of the nonperforming loan ratio of the spanish Banking Sector, but it doesnt go into the right direction. There is also a question about the solvency of santander. The bank claims that its confident that it will miss the new solvency ratio under basul 3 which will come into force at the beginning of the next year. But it only announced this morning its core capital ratio under basul 2 and it was at 11. 66 . So here again, it is perhaps a lack of information. And if you compare with the two smaller lenders that have been reporting this morning, sabadell on banking terms, they actually bolstered stronger numbers than santander when it comes to the Net Interest Income and that is the reason why they are performing well. One of the two banks is bankinter. Gloria ortiz will comment on these Third Quarter earnings. Stephane, lovely seeing you, as usual. Stephane pedrazzi holding the fort down in madrid like a properer anchorman. Speaking of which, its news in another kind of way. Ben jerrys have released a new flavor called scotchy scotch scotch in honor of the anchorman himself, ron burgundy and his favorite drink. The limited Edition Ice Cream will be hitting the shelves in a couple of weeks in time for the premier of anchorman 2. The legend continues. Scotchy scotch scotch being that flavor. We want to know, if you were inventing an ice cream flavor to celebrate the cnbc team, the anchor men and the anchor women, which ice cream flavors would you like best . You can see a couple of guys behind me. Suzi walker treats the ice cream flavor for Rick Santelli would be boston tea flavor with a healthy sprinkle of nuts. Cadi says jim cramer, pistachio nut. Mcgill tweets in and says for Steve Liesman would be siesta cruise. Rocky road. Emails, as well. Lawrence writes in and he says, the ice cream flavor for the economy would be double dip crisis credit crunch. Thats actually a pretty good one. Maybe the ben jerrys people are watching to get some ideas. If you want to join the conversation, find us on email, worldwide cnbc. Com or on twitter cnbcwex or directly to me. Ill see you very soon good. Good morning. [ male announcer ] more room in economy plus. More comfort, more of what you need. Thats. Built around you friendly. Thats. Built around you friendly. Sometimes they just drop in. Always obvious. 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, everybody. Now, Angela Merkel has thrown president obama following reports that the u. S. Has been spying on her mobile phone calls. According to the german chancellor spokesperson, she told obama such surveillance would represent, quote, a grave breach of trust. Julia chatterley is live in brussels with the latest on this. Julia, do we know that theyve spoken about this . Do we think theyre going to be talking about this at the meeting today . Well, you know, one of the key reasons of being here is to talk about digital innovation, how can we compete with the likes of the u. S. And china Going Forward . So they are talking about digital security, data protection, so im sure its actually going to be hijacked by whats happened, not just for the german example, but, of course, we have Francois Hollande ringing a bomber earlier about surveying french mobile conversations and texts, too. Listen to what the german example prompted the press secretary of the white house to say yesterday about this issue. The president assured the chancellor that the United States is not monitoring and will not monitor the communications of the chancellor. The its greatly values or close cooperation with germany on a broad range of shared security challenges. So there are broader implications here. Were talking about members of the g7 potentially spying on each other, their close convergence over the issues of, like, iran and syria in particular, too. But, you know, it wasnt said in that statement more jumped out at me is the fact that they didnt suggest that they hadnt surveyed Angela Merkels conversations in the past. And i think if you look at this on a broader perspective of whats happened in the eurozone over the last few years, understanding germanys angle going into some of these meetings makes sense. Is germany going to be willing to give greece more cash . Are there other systemic issues . So actually, lets look at the Silver Linings here. Theyre not currently surveying whats going on as far as the german angle here in europe is concerned. Does that mean that they dont see europe as systemic any more . I think its an interesting question, louisa. No, it is. It definitely is. I think theres a lot to talk about here during the session. Julia, we were just talking last hour, that it isnt always easy to be reporting on these live events that you travel out and you do. And people dont know. You had to climb a ladder to get to the camera point where youre at now. I think theres a still, theres a picture we can show. Youre climbing this ladder to get up to the roof position that your on. It looks very glamorous from our side. The tv is all but glamorous, right . I have to say it is very little glamour. I generally get rained on. Im being blasted by lights. Even though its 5 degrees, ill boiling hot. And that fire escape, in fact, thats probably the pinnacle of my activities here in brussels. As long as you know how to get off the roof, you know, once youre done. Thats a good thing, then, jules. Its the down thats the problem. Jules, thank you very much. Well talk very soon again. Still to come on the program, ford is set to report lower Third Quarter profits over the last year with solid sales in recent months. Phil lebeau from the states joins us after the break. See new aekd. 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. Hi, everybody. Welcome. Youre now watching Worldwide Exchange. Youre still watching, even. Im Louisa Bojesen and these are your headlines from around the world. Earnings bonanza in europe, chris swit missing expectations in the Third Quarter on the back of a disappointing performance in its Investment Banking business. The ceo telling cnbc adverse conditions were flamed. Certainly some of the macro conditions have made particularly fixed income client activity more subdued so far. And obama care is in Critical Condition as u. S. Laemakers hold a hearing on the rollout of the president appears Signature Health insurance scheme. And the manufacturing data in china hit ago sevenno high. The country, though, is still on track for its slowest growth in some 23 years. Announcer youre watching Worldwide Exchange, bringing you Business News from around the globe. Yes, hello, everybody. Were a couple of hours away from u. S. Markets starting trade, equity trade. Were looking at a relatively flattish start coming through from the states. A couple of points higher, if anything. Thats what were seeing stateside. In europe, weve had slightly mixed bag of earnings this morning. Weve got slightly mixed markets, as well. The ftse, the xetra dax and the cac all higher. The ftse mib off by around 0. 2 . Weve stalled this rally that we otherwise were in the midst of with european incident indices hitting multi year highs. But this is what were looking at now. Its a little bit of flattish trade. Good news, though, out of china. The agency sees flash pmi data for october hitting a sevenmonth high of 50. 9. Thats a tad higher than the 50. 2, which was recorded back in september. Whats encouraging is that new orders also looked healthy, speaking to 51. 6. Eunice yoon is live out of beijing. Eunice, good to see you. The data looking okay, but were still looking at a multi year low. Yeah, thats right. Its great to see you, too. Weve seen a broad improvement of the numbers, the new orders as well as the new export orders, the bag log res being worked through at the factory. And the employment figure was down just a touch but, really, nothing to write home about. Thats one of the reasons why a lot of people are starting to say, hey, wait a minute, maybe were having a bit of momentum going intooth Fourth Quarter of the year. However, then theres the whole host of other investors who were very cautious and not quite convinced. And the reason for that is because we generally see a bump, a seasonal bump in october this time of year. Also, the september figures were really all over the place. The flash pmi versus the official pmi, there was a difference of a point. So because of that as well as the fact that the government has come in and started to tighten liquidity and reign in the property market, still, theres a lot of people who are concerned that this is going to have an impact on growth. Louisa. And whats your sense, eunice, heading into next year . What type of a year next year is going to be . Have we seen the worst of the chinese growth story so far . And are we going to start to see gains or are we going to be flat lining . Well, its very difficult to say. A lot of people are that ive been talking to think that we are going to continue to see Slower Growth going into the next year. At this point, a lot of people have been focusing on the money markets. Like i said, the government has been tightening some liquidity. Theres been a lot of concern about that in the market. You probably saw a lot of that today. But at the same time, there has been a lot of discussion about how concerned should we really be . And one of the reasons people are saying maybe we dont have to be so concerned is because seasonally in october we do see Corporate Tax payments. Thats one of the reasons why people are saying maybe this isnt going to be as bad as the restock in the summer. Another reason. A huge reason is a political factor. That is that theres a Major Political event thats going to happen in november. So because of that, because of this big Party Conference thats going to happen, most people here believe that the government will not want to see a lot of instability in a money market is for the next several weeks. Eunice, thank you very much. Well see you very soon again. Eunice yoon joining us live out of china. Now, Ford Motor Company is set to all right a slight dip in Third Quarter profits with revenues rising by 13 . The solid sales over recent months, Analysts Expect the u. S. Auto giant surprise to happen to the upside. What weve seen, though, in general is a slight recovery taking place and many pockets. Phil lebeau jans us on the phone from chicago. Phil, what else should we be anticipating out of the figures . I think the main thing that people will be looking for, louisa, is two things. One, are we starting to see any signs of potential weakness in the United States . And i know that might sound strange to say, given the fact that auto sales have continued to move higher. But the mix might be shifting more towards lower profit cars as opposed to your trucks and suvs which have carried the way for ford or the last year, year and a half. And, really, for all of the automakers. Thats not a huge concern, but it is something that wall street will be looking at. Whether or not we start to see a bit of a plateau in the u. S. Markets in terms of profits and mix. The other issue is whats happening with europe . Now, ford has been gradually improving its operations, moving towards break even and then turning a slight profit. Were seeing some encouraging signs over the last, oh, couple of quarters when it comes to europe. And i think the question for a lot of analysts is we see that next step towards break even happening in europe. And most believe well probably get some pretty good indication ooh that today when the earnings come out before the bell here in the u. S. Phil, good talking to you. Thank you very much. Cnbcs phil lebeau on the phone from chicago. Now, still with us live, of course, is Jason Oconnell Research Director from boston private bank. Hes been with us out of boston for the last half hour sore on listening in. Jason, coming back to some of the trends that weve been talking about here on the channel, what do you think that investors should be looking out for heading into the last bit of this year and into 2014 in terms of tradeable trends or issues that take place where we know how we should be positioning ourselves . Well, louisa, i think one interesting take away from earnings season that well be looking for as an indicator for the rest of the year and next year will shape up is really not so much whats happening in terms of earnings, but whats happening on the revenue line. So in prior quarters, weve been growing a bit concerned about the fact that we had a kind of a historical norm in terms of the percentage of s p 500 companies that were beating earnings. But at times, there were fewer than 50 of Companies Beating revenue expectations. So in an environment where weve seen a tremendous amount of operating leverage created through cost cutting over the last several years, in an environment also where earnings multiples have expanded rapidly, we really need to start seeing some revenue line cooperation to be able to justify keeping those multiples where they are or even expanding them further. So so far, with more than a third of s p 500 companies having reported, were encouraged by the fact that roughly 70 of companies have beaten revenue expectations and thats ex financial companies. Jason, good to see you. Have a good day once daylight starts to brighten your horizon. Thank you very much. Jason oconnell, Research Director from boston private bank. Now, brand america has been hurt by spying allegations and a failure to resolve the debt ceiling. Is he right . Stay tuned. Well be listen to go what sir Martin Sorrell has to say. 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All the bits and bulbs keep themselves stocked. And the doors even handle the checkout so we can work on that thing thats stuck in the thing. [ female announcer ] today, cisco is connecting the internet of everything. So everyone goes home happy. Shares in wpp to the upside this morning. The Worlds Largest advertiser taking advantage of the demand recovery in the u. S. And the uk and latin america to beat in the Third Quarter. Likeforlike sales grew by 5 . The firm maintained its full year outlook, as well, coming up a little bit from the initial highs. Alex is a media analyst and he joins us here on set. Hi, alex. Good morning. We actually just came from the analyst. Straight from the analyst meeting, so strike ago positive tone. Shares up initially as you indicate and revenue growth, as your previous guest talked about, accelerating in the q3 from h1. So were feeling pretty good about the stock. What do you think the focus is now for the company . I think the focus is how they will benefit from an upswing in the economy. Sorrell is talking about revenue next year 5 from 3 this year. The question is how much does that translate into earnings. And the Global Economy, if it doesnt heal the way we hope it will heal, then what . Are we going to see Companies Like wpp rethinking their strategy or are they going the try to muddle through . What were seeing in the revny make up at the moment interestingly is a pick up in the uk, a pick up in western europe and a pick up in north america. Its the american markets which are showing mild deceleration. So i think investors will be pleased to have the shape of the growth. Its more even, its more balanced. And the question for next year is, for example, what benefits do we get from the world cup in brazil, from the u. S. Congressionals and from the other really big events taking place which ordinarily can add a few bits to the market. So i think its the Growth Potential of a group like wpp im trying to think when we havent seen the direct correlation from an event like that. I cant think quickly enough. I think ordinarily you would expect the olympics or the world cup to add a layer of growth. These guys are extremely large, very well positioned, so they should benefit to some extent in that pick up. Alex, twitter is set to kick off its road show to drum up interest. One published estimates calculates twitters advertisement revenue for all of 2013 will be around 585 million. But would the investors, they might be keep to press the Company Management on future planes and when a profit is expected. And it is really all about ad sales. How do you make the most out of ad sales as they exist . I think investors will be very wary of what happened with facebook in terms of the ipo. Subsequently, the stocks performed very, very well. But initially, there was some concern and some confusion about the pricing of the ipo together with some of the upside, as you say, from advertising. But i think, you know, lets get real. Twitter is everybody where and everybody is using it and its becoming force. Do you think you have to change your model now if you are a social Media Company in order to make money that you have to change it towards becoming more of an advertising company, essentially . All of the companies that pretend to be Technology Companies deep down are really advertising companies. Thats the case with google, for example. They are big media owners. So i think investors have to accept that, frankly, lets look beyond the technology, look at how they make money and how they make money is advertising. But it is targeted in a way the old media wasnt. Its interesting. Its an ever changing landscape, right . Ever changing landscape. Tv is proving very complimentary to new media. To social media. Twitter and facebook coexist happily. Fantastic to hear that. Well, you never know. Maybe the robots will be doing my job in five years time. People will be tweeting about you on the very snans instant on the back of this interview. It shows theyre very complimentary. Thank you very much, alex. Now, two big black eyes for some of americas largest banks. Kayla tausche is at cnbcs headquarters with the story. Kayla, lets kick off with bank of america. Whats going on there . Well, louisa, yesterday a jury found bank of america liable on claims related to defective mortgages sold by its countrywide unit. The civil suit claims countrywide sold toxic home loans to fannie mae and freddie max in a process called hustle. Prosecutors are asking for 848 million. Thats what the government claims it lost on those loans. But the judge will determine the fine. The case follows jpmorgans earlier this week to face 13 billion in fines and payments to federal and local authorities related to the mortgage crisis. Bank of america fell 2 yesterday. And today its down just slightly. Speaking of jpmorgan, louisa, it could have more trouble on the way. It seems like were getting one of these stories every single day. Now the New York Times is reporting the federal authorities may take action against the bank for allegedly looking the other way on Bernie Madoffs ponzi scheme. Jpmorgan was madoffs primary bank for more than two decades. Suggesting the company continued to work with madoff as questions mounted about his business. Prosecutors say they rather reports say prosecutors may strike a deal with jpmorgan to defer charges in exchange for a fine. Other conditions. The news keeps coming, louisa, it seems every single day. Kayla, thank you very much. Kayla tausche joining us with the latest there. Still to come on the show, could shangs be coming 20 americas Controversial Health care law . That story after the break. Stay with us here on Worldwide Exchange. 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. Hi, everybody. Welcome back. Americans may get extra time now to sign up for insurance as required by president obamas new health care law. Currently, the you la says that people have until march 31st to enroll or to face a penalty. The white house, though, may now announce new guidance that says that individuals only need to start the enrollment process by that date. The Obama Administration met with top Health Insurance ceos yesterday, wednesday, to discuss the tech problems with the healthcare. Gov website. Today the house energy and Commerce Committee hold a hearing at 9 00 a. M. Eastern time on issues with the rollout of the site, the two primary contractors are both set to testify. Cnbcs Bertha Coombs is live in washington with more. Bertha, just for our european viewers, the global viewers who may not be up to speed with this story, update us and tell us whats been happening. Well, initially, we saw the beginning of open enrollment. Thats the time when you can sign up. It runs for six months. And, actually, you really had to have your duck necessary a row in terms of signing up for insurance by mid february in order not to be without insurance for three months in a row. Thats when the penalty that is part of the Affordable Care act kicks in. Now the administration has said sign up by march 311th. So in a sense, they slide an extra six weeks for br people to be able to sign up before incurring a penalty. The reason is because of a lot of glitches on the enrollment site, the electronic enrollment process which is key to be able to get the large numbers that they want. They want to enroll some 7 million uninsured over six months on that website. But it has been plagued with problems since the Enrollment Period began october 1st. Today, the house energy and Commerce Committee is bringing in Key Contractors involved, four of them, to say what went wrong and talk about what the problems have. Its a little bit like when your mom asks you, hey, whos responsible . Everybody points in another direction. The key contractor, cgi federal, is saying that they actually built a good website. They built the medicare. Gov website, they said, which works very well. The problems, they say, are with software. Its a different vendor. One of the software vendorses, Quality Services which is a division of optima, a division of United Health says our part of the software for Identity Management and account creation is working pretty well. Its another vendor. They also blame part of the bottlenecks that we have seen on a late decision requiring people to register first when they come on to the site. Thats been a very big problem. So it will be very interesting to hear what they say further with regard to that. One of the interesting notes that weve gotten, circo, this is the company doing the processing of all the paper applications, so far in the first three weeks, theyve gotten 16,000 applications that have come through. But those take time, louisa, because those have to be processed by hand. We will not be hearing from secretary Kathleen Sebelius today. She will be at a call center in phoenix. That was already on her schedule. But she will be coming to testify in washington on the 30th up on capitol hill. And certainly todays hearing will set the stage for more tough questioning of her next week. Bertha, thank you very much for that. Yeah, i know how it goes when everybody is pointing at somebody else being the most responsible. We all need to take responsibility. Bertha, thanks a lot. Well see you soon. Now, in other news as weve been updating you on this morning, ben jerry have released a new flavor. I know a lot of you are interested in your ice cream flavors. Scotchy scotch scotch is the name of this one. In honor of the angorman himself, rob burgundy. His favorite drink. The limited Edition Ice Cream will be hitting shelves in a couple of weeks just in time for the premier of the anchorman 2 movie. Earlier, we were asking if you were inventing annuities cream flavor to celebrate the cnbc team, which ice cream flavors suits us best . Thomas tweets, easy for krn anchor flavors. Boysen berry. Thank you for that one. Weve got more of you tweeting through. Jon fortt would be tech crunch with silicone swirlies. Good morning. The top story, Andrew Ross Sorkin is back. Quarterly results in focus. Well hear from 3m, dow chemical and many others before the bell. The white house admitting a key flaw in the obama care website and it may adjust the date by when americans are required to purchase insurance. Thats another way of saying, may delay the individual mandate. Plus, in corporate news, bank of america has lost the fraud trial over mortgages. Today is thursday, october 24th, 2013. Did i mention andrew is back . Squawk box begins right now. Morning, everybody. Im becky quick along with joe kernen and Andrew Ross Sorkin who is back from asia today. Were going to start things out with earnings central. Quarterly results are set to hit the taim tape from ford, 3m, cow chemical, sweet row and United Continental among others. Well be joined by many of the news making ceos southwest boss gary kelly. Andrew liveris, auto nations ceo mike jackson. It is an important day on the economic front, too. Well be getting weekly jobless claims. Later in the morning, theres october flash pmi. The latest job openings and Labor Turnover survey, t