Transcripts For CNBC Worldwide Exchange 20140116

Hire in a big way. Machine orders blowing past expectations after a fiveyear high. And a shakeup in why look, Marissa Mayer out a little after a year after taking her from google. Youre watching Worldwide Exchange, bringing you Business News from around the globe. Warm welcome to thursdays edition of Worldwide Exchange. I wouldnt mind walking away with 60 million. A 60 million pay package. Does that include bonus, as well. No, i dont think it is. But anyway you could be punished for that. That was a bad call. Wow. Have you seen the stock price . Theyre going with her for now. Theres a love affair with her for now, but will it continue . Also on todays show, egypts central bank is expected to hold Interest Rates, but will the on outcome of that decision alter that decision . Then, with the worlds biggest money manager black room earnings before the bell today, well look at the firmsco lassal portfolio and ask, is it too big to fail . Its a not so theory for the yahoo ceo. Citigroup is revealing Fourth Quarter numbers ahead of the bell. Well discuss the crucial numbers at 11 45 cet. And finally, from billboards so bell bottoms, on her 40th birthday, happy birthday, kate, well speak to a pr girl about the celebrity endorsements in general. Are they worth the money . Is this a face that could launch a thousand ships . The economy is the top challenge facing the global economy. I spoke with one of the contributors, john drick, president of the specialties at marsh and he suggested fiscal issues and uncertainty were among the issues in 2014. I think some of the new risks that more prominent this year were technologybased issues like cyber attack, societal risks like youth unemployment and quite prominently this year rising geopolitical risks. Also shale gas development, changing supply and demand factors with rising demand from asia. And we can see a lot of shifting gop politics which could create a more severe environment which include business challenges ahead in the sector. One of the things you highlight this year is incoming equality. Is it the strengthening that doesnt seem to be addressing issues like this . Global governance is the issue in particular. Its hard to address the issues you raised, but to face other services. You talk about a persistent dead lock in global government. But we have the wto. Whats going on, here . Are these a complete waste of time as far as youre concern . I think geopolitical risk could rise and companies needs to adapt their strategy necessary light of the fact that they may face a environment. Fiscal improvement of some governments has improved but were still not at a point of resilience. It could create rising stabltd in some source ones. We see youth unemployment as an amplifier. Without jobs, obviously, theres less and less stability. This is a growing part of the population. What do institutions particularly in europe need to do to address issues like youth unemployment. We talk about it a lot. There needs to be coordinated discussion around how to improve the economic environment, but also jobs training and coordinated programs to be able to create, address skill shortages which do exist in some injuries which do need workers. Now, one of the most damaging risks that you can see are obviously tied in together. Banks are repatriating billions of dollars because of the regulatory environment. If that continues and persists, its a dampener on longterm development. So thats probably more news worthy these days, but really a critical issue and with one where, again, it could make a difference. But there continues to be more power on the offensive Cyber Attacks than there is on the defense. And ill be joining the cnbc team live in davos next week. Well be speaking to some of the leaders about what they perceive as the biggest issues in 2014. Ive got any coat ready. Here we are, just an hour and seven minutes into the trading day in europe. Weighted to the downside, not by much. Initially 5 to 4, but pretty much even stevens. In fact, only around 11 is 00 points from the alltime high. Ill show you where we stand at the moment. Nudging up four points today, so 6. 824 is where we stand. The dow, of course, closing at fresh record highs, as well. The cac 40 down 0. 2 and the ftse mib is fairly flat at the moment. Home retail says it expects profit for the fvt full year to the end of march to be at the upper eptd of expectations. Aberdeen asset management, that is loun 4 after it withdrew monies in the final quarter of 2013. Rio tinto is up 1. 6 today. The stocks that were looking at today, shares trading down at richemont. France has sold 1 of the european sales company. 451 million euros, stock fairly flat. Lets get more on those two stocks. Stephane has the details for us in paris. Good morning, ross. There are two Different Reasons why carrefour is trading lower this day. The growth in the Fourth Quarter was weaker than the growth that carrefour predicted in the Third Quarter of this year. Least yeefr, it was demented, there is a question mark about the sustainability of this recovery. Now, the second reason is the price of the stock. Carrefour already trading at 17 times the estimated earnings for the full year. Thats to compare with 14 sometimes forecasts. Its smaller rival and less than 1 1 points. Its british rival, so the stock might be big nor from an investor point of view. For that, it explains why they have to think of the reaction. Car four, 2. 3 for the forty quarter and 2. 35 increase in its revenue for the full year. You mentioned abbott. They sold part of their stake of 1 . Thats roughly 8 million shares. She said its not going to put up. Its not going to reduce the public deficit. And everybody thinks about peugeot. Francois hollande said this week that the government didnt receive any formal request to invest in peugeot citron, but he made clear that stocks would not increase the public deficit because it would be financed by selling other stakes. This is exactly what the government did yesterday. Thanks for that. The dollar reclaimed most of the losses. Euro dollar, 1. 36. Dollar yen, not far away from the 1 is. 4505 year low. The aussie, 0. 8782. We thought they would create some jobs, and sterling, 1. 63. Meanwhile, in asia, weve had another shot in the army for abenomics. Core machinery orders up 9. 3 handily beati ining fullyear forecasts. Meantime, the bank of japan has lifted a view, the governor says he still expects a moderate recovery, despite the likely pain from a sales tax hike which is coming in in april. How has that impacted japanese prices and the rest of asia . Joining us is li sixuan. Thank you, ross. Overall, its a modestly positive session in asia. Chinas 2013 fdi is declining for the first time in three years thanks to an dmkt recovery in the u. S. And europe. And china markets steaded in todays trade. The shanghai composite ended about flat. Orders came in better than expect issed, but the nikkei 225 lost 0. 3 4 and real estate stocks hold back after yesterdays rally. Elsewhere, the kospi ended higher by 0. 2 . Were watching stocks. Reportedly china mobiles iphone preorders already hit 1. 2 million. Some apple related stocks in the region also got a lift. Meanwhile, china life announcing some social networking strategies. And remember that we were already seeing alibaba trying to piece in the looming interface market. Lets have a quick look at how bond markets are trading today. U. S. Treasury yields, just shy of the 2. 90 level. Off of that solid beige book yield. Lets stick to peripherals here. 423 heading into that. So, things like week on were raising its debt at multi euro era loans. Do you expect the same as we head into these auctions today . Yeah the. One of the reasons theyre doing the longer issuance today, it went so well. Theyre striking while the iron was hot. Clearly theres demand we missed out on the last time. You were getting excited at the end of last year about the amount of Japanese Investment we were seeing in peripheral bonds, particularly in italy and spain. Do we expect that to continue . Yeah, for the time being. Theres clearly decent demand for these issues. Spreads are continuing to come in. From the way these auctions were unfolding, theres no reason to think that is about to end. I think the promise was made by the ecb in the summer of 2012 initially. Still carrying a lot of weight. As long as the ecbs prejudice holds firm, and as long as the data is albeit moving in the right direction in eurozone countries, i think investorses will probably hold. I wonder what influence fed policy is going to have on european rates. Its interesting that Charles Evans has come out. There is the possibility of tapering faster than we thought. They want to anchor the short end and how are they going to do that . Theyre obviously very concerned with how the u. S. Economies react. But a lot of the emerging markets has clearly been influenced, as well. I think, you know, the fed would love to get tapering over and done with. But they want to finish it and they want to focus on Monetary Policy in a more conventional sense. We think the guidance they have in place remains very strok. But what about the backup concerns its gone more from mortgage sector to the back u. S. It was. The move in december, we saw a sharp rise in the u. S. And the uk. It was more significant than the uk, even though the data was within the u. S. Theres plenty coming up in minutes, the fed reflation report. We think they may try and alleviate some of the selloff. The data does still strong in the uk. The recovery seems to be on track. The uk has finally got back to targets and as long as it stays around here, that will be a comfort for the bank of england. Which they should be more concerned about india getting stronger. I think to a degree they are. We had inflation up at 4 , 5 . That was something that they wanted to see. Its a challenge to exporters. I think what will you have proven over the last five years than a need to jet rur sources. The uk economy needs all the help it could get. John, we have to leave it there. Still to come on the show, many happy returns. Kate moss is 40. Hard to believe. Were going to ask her former publicist if shes the zeeb of do they work . Are they working . Chinese internet giant ten cent is making more investment as it takes on alibaba. Its buying a 10 stake logistics in china south city holdings. The tencent president martin rou says it will help China Businesses online. Chinasouthcity up 79. 89 . More than expected. Tsmc expected q1 sales to slow by about 7 to arrange just above 4. 5 billion. 157 billion Beat Estimates. And Goldman Sachs and citi both return key numbers ahead of the bell. Analysts expect a rise in citis profits with the pressure of fixed income trading would probably weigh on its revenue. Goldman, meanwhile, is expected to report in both profits and revenue, with reuters forecasting a 24 fall in earnings per share. Wells fargo and bank of america both Beat Estimates in the week. It was a good number from bank of america. 3 billion jump in revenues. So that has everybody a little more excited. Yeah. The reserve release, patting the bottom line on these banks. To me, thats not fundamental growth. It comes back to you later on. But thats not growth. You dont want padding of the bottom line. We dont. No, absolutely not. Meanwhile, theres only one thing more predictable than the Quarterly Earnings report. Mark carney has rejected the cap for a cap on the annual payout. We want to know do you still care about banker bonuses inspect i dont know what her view is. I do. I think were going to have to have an argument about this. Okay. Do you think we should be over it or not . Get to us worldwide cnbc. Com, tweet directly to us rosswestgate rosswestgate, cnbcwex. The word from icbc trying to mend rumors it might be on the hook, the product in question raised money and loaned it to an unlisted coal company. But instead of being paid back, investors get the shock, thats what it says there. It took on different americanings take that on. Anyway, she was found in jfk airport when she was just 4 years old and went on to become one of the most photographed women. Kate moss has turned 40. Although the episode code the model millions, model mosss comeback has included top shots. Cnbc sat down with the head of hot shot. He revealed his plan to use kate mosss equity in the retail market. What about china, do you think theyll go a good tool in your arsenal . Im going to give you the information on china with this exception. Have a meeting with somebody there. The plan will be if we do, well open london and ply the same night to china and well open china. So what does kate mosss roller coaster teacher us . It teaches us about value. Why, despite all the candles and unnotoriety, why has she still retained her position as somebody that brands want to tie up with . Shes a rooedz thin super model. Her survive that. Thats the point. She has a powerful business. She doesnt have to attract herself in any way. As long as shes getting the highends modeling jobs, shes going to sail through. Can we measure, b if a brand, you deserve a clothes source, can you measure the impact of that . Do we know . You could say youll be paid 2 billion pounds to be the face of this, how do you know its good money to be spent . She generates headlines. Her private life is an ongoing soap oprah. In a by, theyre interesting in what she wears and how she basis because on some level, shes a bit of an investment. How do we sale, i goes. If you look at the peaks certainly has. When the cocaine allegations rounded her, she is off many of those high street brands and some of them didnt recovery in the way they would. Then she wrebt into higher end, high couture from tiegss that did shoot up. She has two companies of her own. She does fashion. I do believe she has a court ship. There was very quiet. Shes something that people can identify with and i think as a friend thats incredibly important. 18 million in earnings last year. A very, very that allows you to buy very powerful team to maintain. With that, 7. 6, it would have been 23i8 yip 22. Do you have something that would sure. Mark, thank you. Nice to see you. Still to come on the show, rio tinto continued to hammer it home. And president obama has troubles. Into the ear reliance on the xhr coming thats writ was. Move here, expand here, or start a new business here and pay no taxes for ten years. Were new york. If theres something that creates more jobs, and grows more businesses. Were open to it. Start a taxfree business at startupny. Com. I nethats my geico Digital Insurance id card were open to it. Gots all my pertinents on it and such. Works for me. Turn to the camera. Ah, actually i think my eyes might ha. Next Digital Insurance id cards. Just a tap away on the geico app. Could save you fifteen percent or more on car insurance. Everybody knows that. Well, did you know that when a tree falls in the forest and no ones around, it does make a sound . Ohhh. Ugh. Geico. Little help here. Basic resources bublg the trend and post record production fingers. Retailers in the giants see retail fall. Japanese companies signal they may be ready to spend and hire in a pretty big way. Expectations are up at a fiveyear high. And a shakeup at yahoo asthma ris sa mayer is out as Top Executive after poaching her from her former employer, google. European equities an hour and a half into the trading day, a little bit mixed this morning up marginally for the ftse. But only about 100 points away from the alltime high. The ftse 100, up 0. 1 is . The xetra dax is fairly flat. U. S. Treasury is aheading just high of the 2. 90 figure. Tenyear bunch at 1. 82 . Spanish yields today, we have issuance of the three, the five and the 15 year are coming out in about half an hours time. On the currency markets, the dollar has pretty much crawled back all the losses. Dollar yen 104. 73. Euro dollar, 1. 36. And cable, 1. 6347. A jump in machinery orders and the Industrial Bank today is helping underscore that japanese economic rove. Ewe caco uno has the story live from tokyo. Good morning. Hi. Japans private sector core machinery orders in november jump 9. 3 from the previous month to 882 billion yen. This came in way above Market Expectations and marks the highest level since july 2008. Orders of nonmanufacturers shop. Machinery orders are regarded as a leading indicator of capital spending. So these strok figures are likely to be positive signs for the nations upcoming quarterly gdp. Meanwhile, the bank of japan raised assessments of the nations five regional economy necessary a corporate report released. The economy is recovering for the First Time Since april 2005 when the reporters first put together. Governor kuroda stressed that the nations economy is steadily heading towards a 2 inflation target he set at the beginning of his tenure last year. Thats all from nikkei business report. Back to you. Ewe caco, thank you and good evening. Shares of rio tinto trading higher. Iron ore output to a record of 266 million tons. And rio expects to keep churning out higher levels of orders. Ethan joins us now. It surprises me to see a big jump in production prices. Clearly, theyre betting on a fairly strong chinese demand. Are they betting right . We think they are. Steel production was a bit in the 0. 5 . Our riches slightly lower than the pref years growth rate, but still, it is a very important number. So that extent, if they cant sell iron ore, no place can. But what about the supply side to this story . Rio themselves is pushing their business towards iron ore. This is a limit, isnt it, for this business. Yes. Thats why the equity is playing a lower margin compared to some of the other miners. Clearly, nine for nine orders is not a desire 7b8ble aspect, but from work. Every where a many ial, thats e best available to them right now. Can i ask you about nickel prices . They have been very much in focus given the export ban from indones indonesia. How do you see this market playing out . Is there still opportunity here inspect. Yeah. Roughly half slsh half. Now that indonesia has banned this pure default option to force the nickel orr, philippines is probably 20 higher. But the nickel back, this could go up 20 . That said, we expect this to play out over a medium term. So the impact may not be immediate, but if its enforced rigorously for one year, its up 20 . How best should investors play the commodities markets and which stocks in particular do you like here . Al. You want to buy the commodities and the capacity utilization. To that extent, we prefer basement versus commodities. In get 2014 and the demand. Some of the utilization rates in steel are improving. To that extent, the possibility will go up from an extremely low level. Theres a huge amount of supplying coming into the market. Globally, our topics in the space are predominantly the basement as oriented producers like glencore and bhp. In asia, we like some of the steel names. Yeah. The resource sector is such a big underperformer last year. We had got, you know, clearly, the world bank talking about stronger global great, just will recallpy. Im talking about on air, we know. Demand was not the problem last year. Last year, demands growth rate was quite strong. The problem was, there was a lot of overcapacity in the market. So we are advising people to do the work, but not enter the sector yet. Ethan, good to see you. Thanks for joining us from barclays. Gloen core estrata says a chinese conform yen. The projects is scheduled to start production in the second had a of this year. China had a 5. 3 rise from 2012. The nation 5es commence my str is likely to her full state. It moved more jobs to china since the states and its the first time the uk started keeping track of this until 2006. In asia tomorrow, the Worlds Largest wireless carrier grins selling apples iphone in china. Plus, a couple of keybank reports, Thailands Bank of ayudhya and indias hdfc. Check the pronunciation on that one. The central bank meanwhile has raised its Interest Rates by 50 basis points to 10. 5 . The seventh consecutive rate hike as the bank of strl china turned his lines in. Theyve got much lower growth than they would like. Clearly, the weakness of the real contributed to inflation. But theyre trading at a rather fine difficult past. Elections for the end of the year. Its good for credibility. They need to do this. Theyve got a problem with the weak currency, but theyre not seeing or hit their inflation target 4. 5 over three years. The last time they did, their real rates were at 6 . Were talking about another 150 paves points of tightening without the structural changes in the come patience. We taum more about the program, will forgot. This is brazil interested. Nice return, just stand out sore thumbs yesterday from the world banks ceo. Its the only real downgrade. Meanwhile, were going to talk about the uk house Price Expectations for britain have hit fourmonth highs. Is there any end in sight or the costume of a loan . Stay with us tuned. Sfwhoo welcome back to the show. It seems ocado climbed more than 21 thanks to a jump in esales in the seven days leading up to christmas. Sales though, today, down by around 1. 3 in trading. But for more, were joined by helia. Key word there, esales. Yeah. I think were seeing a huge divergen divergence. We saw very poor numbers out from the likes of m s, sainsbury, and ocado has been one of the winners. The share price has gone up five fold over 2013 and in the last month, nearly up t25 . Today, though, they came out with good news. They said, look, looking forward, we would like to say this is a tough competitors market and we will perform in line slightly ahead of market. So a little bit of a cautious sounding from him. Maybe thats why shares have gone down. Profit taking, as you said, theyll have full year results in two weeks. So well get more detail. But theres nothing to complain about. 5 million in everybody thought this was a business that was going nowhere. Oh, yeah, because of the lack of profits. But apparently not any more. They did this deal with morrisons, 2 hunl Million Pounds. Morrisons, just last week, did their first online order. What was the order on that . I dont know. But i do do or cardio orders. Do you to ricardo . Their average basket actually grew this year from 1110 pounds to 111 pounds and 60 p. Mine is a bit higher than that. You still thats the cheap ft. I know youre only like when youre buying organic, its more than that. It is a big. But as you said, this shows the divergence of super markets. You better be in online or in that discount vehicle like aldy and olivia. Just reading through these, spain selling 1. 4 billion euros at the 2028 bond. Maximum yield there at 1. 2 . Weve got the 2026 bonds. Cover ratio, 1. 4. Actually, its quite interesting. The last that bid to cover ratio was at 2. 4. So a significant draw back in the bid to cover ratio here. Final word there, 2026 bonds selling euro. Maximum yield of 4 . Threeyear rates again, just checking that, that is right, yes. So as expected. Okay. Thats right. Ticking along all right. Now, fears of another european property bubble are growing. Investors are back fighting for real estate assets in markets such as ireland or spain. Separate data showed commercial property up 21 last year to hit 154 billion euros. A uk house build up says its in the best position in years. In a Trading Statement this morning, the company said its forward sales are 77 higher than at this time last year. It expects a significant rise in profits for 2013 as the market was boosted by low Interest Rates and government lending schemes. Meanwhile, the rise in the price of the british homeless sector continue. 61 of survey ed indicate the prices are expected to go higher. The Housing Survey published today, the actual reading, what, 56 did it come in at . Yeah. Some were expecting a number of 60. I wouldnt put too much emphasis on a monthly data point. Theres a lot of volatility month to month. Ultimately, its indicating, you know, the market is gaining momentum. What is the single biggest driver . I think there are a combination of on drivers. Theres no single driver. Theres a laughable stock on the market. Theres a return of consumer confidence. Mortgage rates have fallen above 1. 5 Interest Rates. Yield to value has increased significantly over the last month. You guys gave a very stark warning about the supply side of the market today. We had the governor of the bank of england yesterday and the Treasury Select Committee saying, look, we have a problem. Not enough houses are being build the government or labor party policy. This is a problem thats been cited since the barker report yet we havent matched the level of household formation. I dont see any solution anytime soon. What sort of homes should be built . Theres a lot of one and twobedroom paermts being built, but are those the right thing . Single family homes. Where . Where people want to work. Lobbed and the southeast in particular. Youre a green belt, arent you . Im not saying that. I have an idea when i see the red firm warning against an suspension of health to buy. How about health to build . In their numbers, china breaks out ouch of the health sales blame the you to could buy sell out that out. But of the key measures were talking about next is can we stem this . If were talking about how much and you guys said 8 this year, the governor yesterday said that he expects house prices to continue accelerating to the middle of this year. Then slightly slower. But if you want to put the brakes on this bubble, its not just enough to get rid of the is it a bubble . Fantastic rv saying this is not a bubble. We do not see any kind of imminent pullback at any point during 2014. Having said that, if Market Development continues if they continue along their current trajectory, its common sense to assume that the risks of getting into destabilizing should pick up. Which met rec do you use to decide that . Theres no one metric. If you look at crude metric, price to value vacations, its in line of the lower Interest Rates. Exactly. Thank to she low earlier. Morning rates could go up. If they do that, how is that going to impact i think thats a risk. But at the same time, bank of england is cognizant of that risk and theyre not going to raise Interest Rates in a rush. No, but market rates might get up. But one of the tools that the bank is incest cysting on this year is the effects of mortgage rafts. Even if market rates did go up on the back of we mentioned the market success. The economy is not being fair all the time. Stop. Jose, thank you for putting up with us. The growing gap between the worlds wealthiest and poorest citizens is the biggest risk to caught global damage. A full report is Available Online on cnbc. Com. Highlights extreme weather, unemployment and Cyber Attacks asterisks to be aware of this year. Meanwhile, speaking in england, Christine Lagarde says Central Banks must fight deflation. Clearly, we are seeing brightening risk of deflation. Which could prove disastrous for the recovery. If inflation is the jeanie, certainly deflation is the ogre. That must be fought decidedly. We have core rates up 0. 7 . 0. 8 is the annual rate at the moment. We didnt get that, though. Theres a little too much there to marry a draghi. What about inflation supply in the u. S. . A buyers potential . Its wages that we really care about. Still to come, the 16 days into the year and weve seen some block bur blo blockbuster. The second hour of Worldwide Exchange, coming up. Welcome to Worldwide Exchange. Im julia klatterly. And im ross westgate. A mixed day for european stocks following yesterdays high as retail giants like carrefour and michelin drag. But basic resources back the trend as the worlds second biggest iron ore miner posts record production numbers. A day after bank of america reported better than expected Fourth Quarter results, Goldman Sachs and citi will report. Japanese companies signal they may be ready to send them higher in a big way. Machinery orders blow past expectations. And Marissa Mayer is out from yahoo . A warm welcome to the show. We have the latest inflation printout of the eurozone. And eurozone december cpi up 0. 8 on the year. Thats where we had about a week ago so that hasnt changed pt and the core cpi up 0. 7 on the year. But it is worth pointing out that those numbers are record lows and it is what has people like Christine Legarde talking about that being real deflation risks. The dow gained 0. 7 in yesterdays trading session, indicating lower by around 25 points so far this morning. The nasdaq futures bucking that trend higher by around 5 points this morning on number three level high yesterday at the close. For the s p 500, the first record close of the year there indicating lower today by just over 3. 5 points. Let me give you a look at the ftse cnbc global 300 stocks. Taking back some of the gains that theyve had over the past few sessions. The ftse, relatively unchanged in the session today. The german markets moving around 0. 1 is . The French Market is lower by around 0. 25 . And the italian market down 0. 3 . Ross. Yeah. Not far away, are we, from the alltime highs. Those elevated levels, it follows a pretty good session on the euro. Sort of a bond market today. Treasury yields edge back up from the lows that we hit. The latest, these are doves saying maybe theres a case of tapering faster if we need to. Adding on to those comments, as well, fisher and mr. Plosser, as well. On the currency market, the dollar has reclaimed all the losses. Euro dollar, back to around 1. 36. Fairly flat this morning. Euro dollar, 105. 411. The aussie dollar is back to fresh three and a half year loans. Really disappointing jobless data. We had expected them to create jobs and serlg back below 1. 6347. Meanwhi meanwhile, in japan, a core machinery record orders. The bank of japan listed its view on five of japans nine regions. Kuroda says he still expects a modest recovery despite the pain coming from the sales tax hike in april. So for more on whats happening in tokyo and the rest of the asian markets, sixuan is with us out of singapore. Thank you, ross. Most asian markets ended the day in the mean with the exception for the japanese market. China markets steaded in todays trade. The hang seng index in hong kong gained 0. 4 . Over in japan, the nikkei 225 lost 0. 4 despite strong machinery data. Financials and real estate rose. Production numbers lifted australian miners, sending the s asx 200 higher by 1. 2 . Shares of the Worlds Largest carrier gained 0. Of today. Some apple related stocks in the region got a boost. Meanwhile, chinese insurers held a conference this morning announcing a new internet based social financing strategy. The stock gained almost 4 today and weve seen alibaba and tencent trying to become the first movers in a internet market and it seems everyone else is looking to grab a piece of the big pie. Thank you for that. Henry decastro is leaving a little more after joining the company. Decastro game from google and was one of Marissa Mayers first hire he when she became ceo in 2012. An s. E. C. Firing doesnt give a reason for his departure. Its suggested he was fired. During my own reflection, i made a decision that our coo henry decasto should leave the company. Decastro is owed a big receive rang pamg, big being the operative word. Slightly lower in the german he was given a fouryear 62 million annual pay package. Its kind of interesting what the strategy might be. From the key highs, pure content operator in europe and the fact that shes now reporting to Marissa Mayer. Shes basically saying i want and developing a brand, this is what he was seen to have done at google and theres reports about him not being able to handle the big ad agencies, tensions within the company. What are investors going to do about it . I dont know. The stock look, annette, in a way, if shes got a strategy this is all supposition. Shes the ceo. He wanted something different. What other conclusion can you withdraw with that . Shes getting to decide if she want more control of her stock price. Theyre buying and you can see the results. Content play, that was one of the strategies before she came in sxp shes implementing that. In the united states, weekly jobless claims are out at 8 30 eastern. Theyre forecast to rise 2,000 to a total of 232,000. At 8 30, we have disease cpi. Consumer prices are expected to rise by 0. 3 and by 0. 1 when you exclude food and energy. At 10 00 a. M. , nhab Housing Surveys are out. Fed chairman ben bernanke will be speaking in washington today and financial earnings keep coming. Youve got blackrock, citigroup, Goldman Sachs all reporting before the opening bell. Well talk about some of those, as well, in around 40 minutes. And investors will be taking a closer look at that. Banking fees is a key driver of those earnings. Value dipped sharply in q4, making 2013 the slowest for transactions in thee years. But 2014 is kicking off with a bang. Just this week, chartered went went its 7 billion offer for cab cable. Kessie, good morning. Good morning. Youre optimistic about the pipeline. When does it turn into deals . What are you speccing this year . This year, already were seeing these big deals being announced. Whereas last year we had to wait before those transformation fields are happening. It is happening a lot quicker. From q4, there will be a drop in the overflow. What are some of the reasons youre looking at at the likes that were seeing in the last few days . It seems that the activity involved might be the turn around in outbound yield, particular already for asia. Last year, it was up 50 for asia and that was targeted deals and outbountd wag stagnant. Thavkd be the turn around for the year. The main increase, how much are we helped here by the fact that they have come so far fairly cheap . And what is the mix going to be between the cash deals and deals funded by debt and leverage . I think its still too early to tell for this year. There are a few nicknaknickknac well, that come into play. So 2014 is still relying on the continuing or there will be a turn around. We were talking about brazil earlier. Obviously, a significant dropoff in m a. The fed up to 5 in particular. Where do you expect that to go . Do you expect to see any kind of recovery . For brazil . For the latin american region in particular. For latin america, i think the traditional emerging market are quite flat. Were going to see more coming out of the market sites. That is across the board. Yes, look, and who do you think is going to top the lead tables . The table of last year. Yeah. Youre allowed to say that. Good to see you, kessie wellson joining us from mergermarkets. The parent of chuck e. Cheese has reportedly been sold to Apollo Global for nearly 1 billion. Apollo will pay 54 a share for the chain, roughly 11 premium to wednesdays closing price. Expecting to see an announcement today. And theres only one thing more predictable than Quarterly Earnings reports. Not a year goes by with bank of england bonuses arguments. We want to know do you still care about the bank of bonus or do you consider the issue to be something of a closed shop . Well get your comments in. Hell use, well have more on this, here. Worldwide cnbc. Com, tweet us, rosswestgate, krnsz wex. juliaeasterly. The polls are closed and it looks like it may be a landslide victory for egypts new constitution. What does this mean for Foreign Investment that fled after 2011 . We head to cairo to address after the break. [ male announc] this is the story of the dusty basement at 1406 35th street the old dining table at 25th and hoffman. And the little room above the strip mall off roble avenue. This magic moment it is the story of where every great idea begins. And of those who believed they had the power to do more. Dell is honored to be part of some of the worlds great stories. That began much the same way ours did. In a little dorm room 2713. This magic moment [ telephone rings ] [ shirley ] edward jones. This is shirley speaking. How may i help you . Oh hey, neill, how are you . How was the trip . [ male announcer ] with nearly 7 million investors. [ shirley ] hes right here. Hold on one sec. [ male announcer ]. Youd expect us to have a highly skilled call center. Kevin, neill holleys on line one. Ok, great. [ male announcer ] and we do. Its how edward jones makes sense of investing. Mixed equities in europe. Earnings season continues, can goldman and citi follow bank of america and beat expectations . And a boost for abenomics. Japanese machinery orders soar to a fiveyear high. Polls are closed and official sources are calling for over a 90 landslide victory in favor of the referendum. Further cuts cant by ruled out for the official black market. The central bank may stick tight for now. We are joined by the director at the cib. Hisham, this is referendum effectively ushers in a new era of military rules for egypt. Do you believe this is the best way forward for the country . As i said, when the majority talks, the global xhishans have to listen. This happened over a couple of days. The uae Prime Minister said he would prefer general ct tour to remain in the military. Do you think he said does decide to become president or if hes voted as the president , do you think that could affect gold state funding for the country . Egypt in a rich country, by all means, over the last three years, its proven under all theoretical models, the company should have gone bankrupt by tend of on 2011. And if you want to look at the economic condition in egypt, practically, what you see is about 240 billion of gdp physically announced. What i mean, its a gray economy that kept the company going. So the to measure the sources will be the major challenge for the next Prime Minister, not the president. What im trying to say here, either as the head of the army, the biggest challenge economically for the country will be the portfolio of the Prime Minister. And can i just ask you, clearly the political instability has driven away a lot of the tourists so vital to the egyptian economy. Do you see the chance of them coming back and he curving that part . Well, if you talk about the hot spots in cairo, yes, it was impacted by some of the first sacks or some of the partiers. But the numbers have coming up. As soon as you come off the news, you will see nebs going higher again. And by the way im so sorry, were out of time so well have to go. But thank you so much for joining us. Could have done can a couple more minutes. Still to come on the show, should state banks be allowed to pay bonuses to employees . Well have the information coming up right after the break. [ male announcer ] the new new york is open. Open to innovation. Open to ambition. Open to bold ideas. Thats why new york has a new plan dozens of tax free zones all across the state. Move here, expand here, or start a new business here and pay no taxes for ten years. Were new york. If theres something that creates more jobs, and grows more businesses. Were open to it. Start a taxfree business at startupny. Com. Were open to it. Fifteen minutes could save you fifteen percent or more on car insurance. Everybody knows that parker. Well, did you know auctioneers make bad Grocery Store clerks . Thatll be 23. 50. Now. 75, 23. 75, hold em. Hey now do i hear 23. 75 . 24 hey 24 dollar, 24 and a quarter, quarter, now half, 24 and a half and. 75 25 now a quarter, hey 26 and a quarter, do you wanna pay now, you wanna do it, 25 and a quarter sold to the man in the khaki jacket geico. Fifteen minutes could save you. Well, you know earnings season coincides with the bank of bonuses. Labor says the state bank lender should not be allowed to pay out to an ordinary family facing a cost of living crisis. Joining us is helia. Where is the moral pulse of the population . Well, ill tell you what, the labor party got a bit of a slapdown from the bank of england governor yesterday, mark carney, up in front of the Treasury Select Committee and agreed that these caps on bonuses were crude and regressive. His point is actually this is not the way to just youre raising the costs. If you create a fixed draw, people sharper and more dedicated will find a way around it. That would be rising fixed costs. He was talking about the pra looking to extend those kind of deferred bonuses making that even more long gated and making the clawback situation even more cadraconia draconian. But i think with the Prime Minister, beyond 2000 pounds, he said nothing about as a shareholder for rbs allowing them to take two times their salary. But im not sure labor has it right on this. Yeah. Look, the interesting thing is, you know, clearly, bonuses tied to youve got positions that are open for four or five years, actually, you dont get paid that bonus for four or five years. On the other hand, i never saw a problem. When they slapped on big tax on bonuses in the first place, 50 of anything booel being paid going straight to the government, who would have a problem with that . Who would have a problem with saying, here is a Million Pounds. Now 3500,000 pounds straight to her majestys government. Isnt that what everybody wants . Even the population would have a problem with that. Think of the headlines. People dont want them to be paid a Million Pounds. Even if the net is what youre saying, 50 tax rate, it doesnt work and the headline is painful. Yeah, i know. But its a bonus as opposed to a Million Pound salary, of which they dont have to give anything. And i think what youre talking about is the mixture of intelligent regulation in the world of banking versus mitts. What we saw yesterday from the labor party is clear politicking. But breaking up the banks has been looked at time and time again. Im sure yesterdays answer from the government didnt look. Thats what i want to make it hard as possible. Anyway, do you still care . Is the issue sort of you just want to move on from it . Let us no. Worldwide cnbc. Com, rosswestgate or cnbcwex. Still to come on the show, blackrock may be as solid as it imply wes expectations of going onissues in 200 4. Should the growth be coming . A fresh record close with u. S. Equities yesterday. 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 julia chatterley. And im ross westgate. Here are your headlines from around the globe. Carrefour and richemont post higher retail sales. Goldman sachs and citi are set to report a day after bank of america reported better than expected Fourth Quarter figures. Japanese companies suggesting they may be ready to send in a big way. And a shakeup at yahoo asthma ris sa mayer ousts the Top Executive a little more than a year after poaching her from her former employer, googlforme. Thank you for joining us here on the show. Let me give you a look at how the u. S. Markets are trading ahead of the u. S. Open. And bucking some of the trend that we saw, the gains in yesterdays session. We have the dow futures here indicating lower by around 19 points. Weve got lower, too, for the nasdaq. Yesterday, the markets are so far indicating by around 2 points. Let me give you a look at the largest 300 stocks across europe. A relatively boyant session, in fact, in asia. But to the downside for the european markets here, let me show you the individual performances here. Its been changed. Gaining a bit of ground just lower by 0. 1 today. German markets down by 0. 2 . The French Markets are losing 0. 25 . Italian markets, just 0. 2 lower, too. Ross. Thanks for that, jules. Lets get more on earnings today weve got coming out. Joining us, finance correspondent at the economist. Hes authored the magazines lead story in december, which is about blackrock. Give us an expectation, this is the worlds biggest investor of Money Managers is extraordinary typical as they have been been, how are they performing . What people are expecting to see today is another data point in what has been an extraordinary story on wall street. This is a company that is 25 years old. It manages 4 trillion in assets. They might announce more today. The expectations are for solid financial results. Blackrock doesnt have an expectation for surprising either much on the up side or the town side. It would not be a volatile institution, riske management. Its worth dwelling on this number. 4 trillion is its difficult to beat the market. Twothirds of Assets Investments are in Exchange Traded funds. And weve got blackrock figures out. Theyve raised their dividend to 1. 92. Thats from 1. 62. Their Fourth Quarter revenues, 2. 87 billion dollars, too. Net profits coming in at the Fourth Quarter earnings per share 485. Im not sure what the expectation was for that. Longterm, another 40 billion. So theyre finishing up with 4. 3 trillion in assets. If you think about a very large bank or a rival asset manager, it would be maybe 1 trillion in assets. The norwegian fund. So blackrock is a spectacularly huge impact on the market. Talk to us about the aladin platform, too. They have 10,000 portfolios. But as well as helping them manager their monies, theres an additional 11 million worth of assets and thats what we raised in her is story. Everybody is looking at the markets through the same lens. That sort of harkens back to 2008 when credit agencies were being used much too widely, in retro spe retrospecs opinion if ever weve heard from the same analytics, when that analytics is wrong, thats thats right. Everybody is looking at the same thing. Our sense is if theres a crisis and everybody is trying to figure out what is my book value, they would probably turn to aladin. They would use a lot. That is untested today. On the other hand, we at the same time have to commend blackrocks management, right . Absolutely. It clearly has worked. Absolutely. There are not many Financial Institutions have come out with their reputations and their size enhanced by the financial crisis. It is extraordinary how something that started only 25 years ago can glow to fast . Its a mix of i mean, they merge b with auto did she theres a lot of bank that needed to offload its core assets. But as well within theres been some organic growth. Their funds have done fine. What about regulators here, though . Theyre talking about making them a systemically important portion of the business. What kind of impact would that have 12347. Its still an unknown. Our argument is that Asset Managers are very different to banks. If a bank loses some money, its in trouble. Even a small amount of money. If the funds of an asset manager loses that, that pass those losses on. In bad time or private investigator this is really important money. In you scope of one 14. 3 trillion, thats negligible. So if their funds are going to struggle, their investors might be upset. But blackrock isnt going to be in a position where they have to move things quickly. He built a company over 25 years that manages 4. 3 trillion. Can you argue with that . No, not really. Good to see you. Thanks very much indeed for joining us. Barry will be joining our friends on squawk box and talk about all the issues, im sure, that youve been talking about. I want to recap some of these numbers for you. Blackrock seeing a 50 decrease in their quarter live dividend. Were seeing operating income coming in at 1. 3 billion 1 is. 0 is. 01 . Nesn comes in at 8 1 . So larry on squawk box, as i said. Still to come Marissa Mayer is the internets presentation. Passenger road trip buddy. Lets put some music on. Woman welcome to learning spanish in the car. Passenger youve got to be kidding me. Driver this is good. Woman vamanos. Driver passenger vamanos. Woman gracias. Driver passenger gracias. Passenger trece horas en el carro sin parar y no traes musica. Driver mira entra y comprame unas papitas. Vo get up to 795 miles per tank in the tdi clean diesel. The volkswagen passat. Recipient of the j. D. Power appeal award, two years in a row. Welcome back to the slow. Lets give you some headlines. Mixed markets in europe, rio tinto busts the trend and posts record earnings numbers. Earnings season continues as bank of america beats expectations. And japanese material has soared to a fiveyear high. Marissa mayer is shaping up the ranks, parting ways with her right hand man, a move that could end up being pretty costly. Courtney reagan is live at cnbc hq with more. Good morning to you. Alesa castro is leaving the company a little more after a year. An s. E. C. Filing doesnt give us specific reason for his departu departure, but a memo, which was attained by the rico. By the way, Nbc Universal is a minority stakeholder in rico and has a partnership. When he was hired, mayer cited her expertise. But reports say he failed to convince advertisers to send more money. As was reported last september, decastro and mayer didnt get along. Yahoo had just 5. 8 of digital ad revenue last year, according the bow ever your. De castro got a big pay package when he was hired. About 5 2 million. And the journal says mayer waited until now to ask de castro partly because they paid him so much to pry him away from google. Yahoo sharts didnt move much in the afterhours, so well have to see what they can do during the day today. Yahoo shares are down a little more than 11 . Back you go. Thanks, courtney. Great to chat with you. Jcpenney plans to close stores in 20 u. S. States and cut 2,000 jobs. Ae she picked up and where . Deliver racing concerns to expect this thp. A group last night, earn u. S. Government rules, there cant be another union vote at the same site for a year. Stock is up 0. 5 . The National Labor Relations Board is filing complaints against walmart, alleging the retailer violated laws in 14 states. He also alleges the company disciplined in spied employees together. Walmart shares down 0. 6 in trading today. Still to come, as investors turn their attention to goldman andsy. Were talking about expectations. Well brill intil interest that, when Worldwide Exchange returns right after this. Nue. This magic moment it is the story of where every great idea begins. And of those who believed they had the power to do more. Dell is honored to be part of some of the worlds great stories. That began much the same way ours did. In a little dorm room 2713. This magic moment welcome back to the show. Microsoft is expected to be speak to go ericsson. The candidates are expected to include mark herd and microsofts own employees. Ericsson has been at microsoft since 2009. European equity res softer, not by much. The ftse 100 just about 1100 points from its alltime high. The cac 40 down 0. 1 is and the ftse mib is absolutely down flat, as well. Actually, the situation is improving. Right now, weve got the dow futures down by around 11 points. And the s p 500 by just one point now, so the situation is improving. Goldman sachs and city revealed Fourth Quarter numbers ahead of the bell today. Analysts expect a rise in citis povts for the pressure of fixed income trading is likely to weigh on revenue, which is predicted to come in flat. Goldman, meanwhile, is expected to see a slide in profit and revenue with reuters forecasting a 24 fall in earnings per share. Investors will be seen to see if the trend can continue. Matthew mccormick from barlen gainer Investment Council joins us now from cincinnati. Thanks for joining us. If we extrapolate the information we have so far, the take away is that the fixed income revenues generally will be better than expected and we are getting the kind of weakness feeding through for the mortgages. Is that what were expecting for the two of these to fall in together . Theyre two different animals. When you look at Goldman Sachs or citi, many people expect the fixed income trading to be especially weak. I think many analysts will be focusing on that in their outlook. I think its something that in my case, i think goldman has a chance to beat on earnings substantially, in my opinion. Basically because of bank of america. Bank of america had a strong release yesterday. Part of their success was due to their Investment Banking results and i think goldman is as good if not better than bac on Investment Banking. I expect that to be a way for them to repel on earnings. I think citi is going to probably match, but theyre more in a restructuring phase. And i think when you look at what i think will be as likely a pop and bow stock, i think investors should look at this as a catalyst to sell into strength. And can i ask you, given what we saw from jpmorgan in terms of relief and reserves to some some pad out there are 3w078 here . Youre absolutely correct, whether it be jpmorgan or citigroup in this case. When you take from loan loss reserves, it helps them now, but eventually that will run out. When you look at the money centered banks, many have had returns since the beginning of 2012. Valuations are trading below market multiples. I cant wrap around it how their multiples are low, but theyre outperforming in a growth environment. And i believe taking some loan loss reserves is the main reason why the earnings have been successful. Eventually, this will run out and that is part of the reason im jaundice on these stocks. What ask your correspondent concern about the fixed income trading, youre seeing volume title moves the rates. You look at equities have been weak. One of the areas that have been successful is the wealth management, morgan standly, i think that could be a positive, but its not enough to move the needle. I think this market is going to be more volatile. That will impact their trading revenues. My thoughts are, if volatility is not going to pick up, its not going to help these names. Take some profits and go something a little bit more conservative. Do you think there will be a there will be a corrective phase . Which way would be good for them . I think the market appears to me a little bit toppy. I think the market appears frothy especially in yaerts without dividends where people are paying excess i have premiums. Wh look at what happened in to 11, it beloves you to take some prot now. I would be more conservative than aggressive, ross. What other sectors here do you think investors should be looking out for, attractive opportunities. Sure. Intel comes is out to trade. The Second Lowest payout ratio. We think there will be strongdy depend growth from these names. Intel, trading at runly 13. 5 times with nearly 3 the. 5 yield. I think youre going to see if you do see volatility, people are going to move away from the 87 names that and what is like lick to be a volatile problem. Share buybacks, math utah, wouldnt you have outperformed everything . Oh, its been great. You know, our logic is can you find a stock thats buying back eishares and giving youncrease purchasing power and maintain your lifestyle. When you look at last year, ross, people didnt really care about dividends. They didnt really care about buybacks because did market had a before . When you look at what we have from 2012 and 2013, i think the market may be positive towards the end of the year, but i think its going to be a bumpy ride. And i would rather have something that pays me along the way. Matthew, good to see you this morning. Thanks for joining up. Net income, 22 higher, 840 million. Thats seeing aadjusted eps there of 4. 92 dollars. Eps at 4. 86. Net profits coming in at 840 Million Dollars and thats on revenue all the middle east. Larry fink will be on squawk box at 6 00, gmt. Thats it for ats show. Im julia chatterley. And im ross westgate. Coming up next, the countdown to the opening markets stateside. Whatever happens, we wish you have a profitable day. [ male announcer ] youre watching one of the biggest Financial Services companies in the country at work. Hey. Thanks for coming over. Hey. [ male announcer ] how did it come to be . Yours . Ah. Not anymore. Its a very short story. Come on in. [ male announcer ] by meeting you more than halfway. Its how edward jones makes sense of investing. Good morning and welcome to squawk box. The s p closes at a new high or alltime high or do you want me to prefer . Its now flat for the year. And yahoo s chief operating officer is leaving the company. Ceo Marissa Mayer giving no reason for his departure. And Congress Avoids another should down including tuesd. Its thursday, january 16th, 2014. Squawk box begins right now. Good morning, everybody. Im becky quick along with joe kernen and andrew ross sorkin. Blackrock reporting betterthanexpected earnings this morning. The company raising its Quarterly Dividend by about 15 . Blackrocks chairman and ceo blairry kimp king is whichever thattette gob on. What a megs al ya should. The ceo Marissa Mayer said she fired enruqui de castro. He was her first major hire. Made 632 milli million. The Financial Times reporting