Transcripts For CNBC Worldwide Exchange 20140220

Mobiles messaging firm whatsapp. Its facebooks biggest deal to date as shares stay lower in frankfurt. Announcer youre watching worldwide exchange, bringing you Business News from around the globe. Youre looking at a live shot that were bringing to you from kiev, the capital of ukraine. We have breaking news for you, dow jones reporting that the eu Foreign Ministers have canceled their meeting with the ukraine leader. That is according to one official. They had set up that meeting yesterday after we saw those very violent clashes, the death toll according to the Health Ministry now above 28. All right. Lets take a look at european markets. Were a little more than an hour into the trading day and we are seeing a lot of red across the board. The stoxx europe 600 steady, down by 0. 8 . It is a triple whammy for the markets. We had the fed memberships in support of more tapering. Some members talking about an earlier than expected tightening. Then we have the china flash pmi numbers at a sevenmonth low. Then we got the round of european slash pmi numbers, especially that french number was quite disappointing. The xetra dax responding to those head winds, the cac 40 doing a little better, off by around 0. 8 and the ftse mib losing a little more than 1 , as well. I want to show you whats going on in the for ex markets where we saw the euro falling to a session low, but well talk more about that later on in the show. And weve got dollar weakness continuing. We did see a bit of up trend in the dollar after the fed minutes yesterday. We got china pmi numbers and that put pressure on the u. S. Dollar and we saw safe haven buying into the japanese yen. The dollar yen paired back down below the 100 pair. The aussie dollar taking a bit of a hit after the china pmi numbers. Keep in mind, china is australias biggest trading partner and weve seen that back below the 90 cent level, down 0. 3 . Let me bring you back that euro dollar pair. Right after the french numbers came out, we saw that big decline and euro dollar fell below 1. 37 at one point, but now has stabilized just above that level. Lets check in on how asian markets are fairing today. Lets get otto sixuan in singapore. Sixuan. Thank you for that, carolin. Let me start with japan. The nikkei 225 saw further profit taking from tuesdays while sentiment was disappointing from trade data. Exports took a beating today. Over in hong kong, the hang seng index lost 1. 2 today with financials and banking shares lagging behind after a report that china ames for 100 liquidity ratio by 2018. The mainland markets gave back some of the early gains after the pmi data. But oil majors capped some of the losses. Sinopec was the very bright spot today. While beijing promotes private investment in the largely controlled oil sector, the Largest Oil Refinery asia announced plans to restructure its retail and wholesale business and sell up to 30 of that unit to private investors. Sinopec investors surged up 10 in shanghai and gained over 9 in hong kong. Were watching shares of tencent. You can see an upward trend, but it lost ground today, down by over 3 . This on fears of greater competition for its app after the Facebook Whatsapp deal. China has been on an acquisition spree and now yesterday its buying 20 of chinas largest restaurant review and business listing site. Thank you so much for that. Meantime, we had eurozone february flash pmi numbers out and theyre missing expectations. The february composite number came in at 52. 7 versus the forecast of 53 the, so just a touch below expectations. Well look at the manufacturing pmi for the eurozone. 53. The forecast was 54. So once again, a slight miss there and just want to check in on the services pmi. We are getting a flash estimate of 51. But the forecast was slightly higher, 51. 9. All right. Frances services pmi contracting to a twomonth low in february, over 3 points below expectations and well below the ftse number which shows contraction. Manufacturing in europe underlying the fragile picture and the eurozone. Hsbcs china flash figure fell to a new low. Eunice, to what extent do we have to discount those numbers coming in in february because of the Chinese New Year lunar holiday . Well, thats exactly right and what most people are saying. Just hold judgment before the numbers officially come out in march because of the fact that there are so many seasonal factors at play here. The pmi, if you actually broke it down, didnt look very good. The new order figure came in a lot weaker than people had expected. Also the new export orders werent very good. And the one component that really surprised people was the employment number. We saw a large dip in that employment figure, which was surprising because usually at the end of the Lunar New Year holiday when things start to pick up, people start to see factories hiring workers. So that was one of the surprising factors. Overall, people not encouraged by the numbers, but people saying lets wait before we rush to judgment. Carolin. Eunice, thank you so much for that. Meantime, japan has recorded its largest trade deficit ever in january. The data highlights weak demand for japanese goods as growth surged more than expected. Joining us in the studio in a short while is christian schultz, senior economist. Christian, what do you make of the figures out of europe this morning . It seems as though we lost some of the momentum we had in the Fourth Quarter. For the eurozone as a whole, its pretty much unchanged. Its one country pulling them up. Thats germany which is the services component. So german domestic demand was a factor here. An interesting side show here is the manufacturing pmi because both germany and france actually fell while the eurozone didnt, which could suggest that the crisis countries, italy and spain, performed quite well in that export oriented figure. So overall, i would say the eurozone recovery remains moderate, halting, but it is still on track. A lot of people have been accusing the ecb of being too passive. But then we got the very good Fourth Quarter gdp numbers and that to some extent vindicated that passive stance by the ecb. Do you think that the pressure on the ecb will now be increasing again . I dont think so. I dont think these figures give any reason to panic. Growth was better than expected in the Fourth Quarter. It is shaping up to be a decent quarter in the First Quarter of 2014, as well. The ecb is, of course, concerned about inflation and in march we will see when they plush the 2016 inflation forecast where that is approaching its 2 target. If it isnt, then, of course, many people in the governing council will demand more action. But i dont think it would be anything dramatic even if they do do something. We are seeing a slightly weaker euro pair this morning, but still, it is very high if you look at it from a longer term basis at 1. 37 or around about that level. Is the stronger euro not really an issue for all these exporters . It doesnt seem so. Theres no real weakness coming through in exports, despite the emerging market turbulences to which some European Countries are notably exposed. Germany with its exports might. Exports dont seem to be weakening despite the strong euro. In any case, the ecb is, of course, not targeting the exchange rate. It does have a modest negative impact on inflation, so it will have an eye on this. But, again, no reason to panic at this stage. The question is interesting. The markets moved away from the emerging market turmoil over the last two or three weeks or so. But could we still be seeing a bad hangover for the eurozone because of those strong trade ties . I think we have to look at it in detail here. If we go back to 1997 when we had the last major emerging crisis, they were hardly impacted. If countries which are very important for the eurozone, like russia, like potentially china would get into trouble, then the impact could be large. But as long as its confined to countries which are not as important as maybe some others, i think the eurozone will sail through this relatively smoothly. Christian, thank you so much for your time this morning. Appreciate it. A meeting between Foreign Ministers and the ukrainian president have been postponed. Reuters eyewitnesss suggest at least 15 bodies are covered up in the square. Speaking ahead of the visit, german chancellor Angela Merkel said the eu would not accept continuing violence in the ukraine. Translator when the Foreign Affairs ministers meet, it will be necessary to discuss, if needed, specific sanctions that need to be enacted to show that the political process started again and we can accept what is happening. Joining us now to discuss this fluid situation is the Vice President at atilia announcement. Indeed. It is always questionable whether or not that is going to hold. Also because the opposition does not necessarily have that much control over the crowd at the moment. There are radicals in the main square. Which are essentially posed not to give up until the president is resigned. Thats the problem because the opposition is becoming a lot more radical. They burn all the bridges with the government to find a resolution. Well, the bridge is still there. The problem is that we have desperate groups in the protesters and elsewhere in ukraine which are not necessarily linked to the opposition leaders. Should the opposition leaders be able to establish the link between the protesters and themselves, there would be obvious a good background for negotiations. What do you make of the new start, the Foreign Ministers meeting being postponed, do you think the sanctions will be imposed by the eu and potentially by the u. S. . Well, if there is a time that sanctions could be imposed, it is right now. It is not surprising that the meeting was postponed if we dont see it canceled later on today. What form would the sanctions taking . Many in the u. S. As well as in the eu understand that a blanket sanction wouldnt do much good. It is not likely to limit the sanctions. Im trying to understand just how popular this uprising is, if we can call it that. How much backing does the opposition really have . It seems to me as though large parts of the country and the capital are still support iing yanakovic. Right. There is a section of society that supports yanukovych. On the other hand, we have a Large Population that does not support that. Its tough to find the right terminology for on this. Is it a civil war . Is it clashes . I would probably describe it as civil unrest rather than a civil war. How long before it mernls into a civil war . Of course, the crackdown of the Security Forces could work and compromises could still be found. All right. Thank you so much for your time. Up next, facebook slashes out, spending 6 billion on a mobile messaging firm whatsapp. Is it worth the money . Details, coming up next. Welcome back to the show. Facebook is buying whatsapp for 16 billion. The deal includes 3 billion in restricted stock for what founders and employees got back over four years. This is facebooks largest acquisition. It lets people chat with their smartphone contacts and send text messages, phone and video over the webb. Whatsapp is free for the first year and only 1 a year after that. Facebook may have targeted whatsapp for its key audience, teenagers and young adults. Facebook shares in frankfurt are coming under selling pressure down by 2. 6 . Marine time, blackberry rose 6 after hours on speculation it could spin off its mess aenger service in germany off by almost 6 . What do the analysts think . Analyst say when you look at how many active users whatsapp has, the deal is not so expensive. It equates to 42 per monthly user which compares favorably to other firms like facebook and twitter. There are significant opportunities to grow revenues in areas like games, stickers, mobile payments and the whatsapp could achieve up to 2 billion in revenue. Ubs, meanwhile, says third Party Messaging Applications like whatsapp pose a threat to facebooks approach. Ubs says whatsapp is a growth and could approach revenues over 11 billion plus. Many, though, have thought that the 16 billion price tag, what else could you buy for that amount . If youre looking for something in retail, how about victorias secret . On our l brands, its worth about that if you throw in the 3 billion in restricted stock, you could afford gap or macys. You could also buy beam for over 13. 7 billion. If you want to keep it at tech, what about sandisk . Some interesting choices there. Weve just received view that the presidency defended the Central Bank Governor here. Cnbc africa Group President on, we spoke to the president s special adviser of media and publicity. He told us that the presidency has received some report from the Financial Report and console and other investigating bodies which revealed that the tenure has been characterized by various acts of recklessness and misconduct. He also said he has been investigating the governor since 2013 and now has evidence to suspend him from office. In the meantime, hes suspected to happened over the most Senior Deputy governor to evan. I tried to get that out of him. What he did say was they have sufficient evidence to show the governor has not been a transparent one and he has broken a couple of rules. So they are saying this is not political and that he has the tenure has not been a transparent one. What will his legacy be . On a whole, hes going to be looking at this. He has many supporters, many people, analysts served outside the country believe that he has done a good job. He did comment to them, he came up bank and industry. We did have some banks about to fail in 2009, 2010. He did comment, pump in a lot of money and the financial distance. It depend on what point of view if you want to take it from. I do think perhaps that is the view that many will hold for now. Esther, thank you so much for your assessment of this very important story this morning and, of course, cnbc africa breaking this for you. Esther from cnbc africa. Meantime, shares of Tokyo Electric Power are under water again. The fukushima plant says 100 tonnes of contaminated water has leaked out of the plant. This is the latest in a string of mishaps at the Fukushima Daiichi plant which has seen a huge build up of radioactive water. Shares of thai Property Developer sci Asset Management continue to slide after a 5 drop yesterday. Its 60 owned by the Prime Ministers family. Protesters are rallying to disrupt operations. Relative calm has returned to the streets as Thai Police Say there are no active plans to clear up protest sites. And expresso is taking a bigger shot at the u. S. Market. Nestle is famous for its sxreto machines. But the firm is launching a new machine that makes a larger cup of coffee for the u. S. Market. We will be speaking to the ceo of nespresso later on. We want to know from you, how do you take your coffee in the morning . I dont know about you, but i quite like a good cappuccino with frothy milk. If you want to join the conversation here, get in touch with us by email, worldwide cnbc. Com, cnbcwex. Still to come on the show, on the back of a tax impairment charge, are there blue skies ahead . Well get the outlook from air france after the break. Investors get the weekly data out of china and europe push the market into the red across the board after more hawkish hints against the fed. The euro is lower against the dollar after a pour round of numbers out of france. Emerging market currency upper pressure again as the situation in ukraine intensifies. Eu finance ministers or Foreign Ministers, rather, reportedly canceled their meeting with you auto cranes president over security concerns. And facebook slashes the cash, spending 16 billion on mobile messaging firm whatsapp. Shares trade lower in frankfurt. Youre looking at live pictures unfolding on the situation in ukraine. Well keep you up to date with the latest developments on the show. Well cross over live to moscow later on this morning. We know a truce was negotiated overnight. But the latest were hearing, we heard gunshots on the ground in kiev. That means the truce didnt last very long. We are seeing a lot of red across the board. The ftse 100 off by 0. 5 . The xetra dax seeing even bigger gains, down by 1. 2 . Really hit by triple whammy. We got chinese pmi numbers, the flash pmi at a sevenmonth low. Weve got hawkish fed minutes and on top of that, weve got european pmi numbers, they were weak, especially for france. Lets take a look at the france market. The cac 40 is off by 0. 6 . Moving on to the bond markets, we are seeing a yield for the treasuries, picking up slightly yesterday at 2. 711 is . They were as high at 2. 73 on the back of the fed minutes. Tenyear gilt yield at 2. 72 . A tenyear italian yield still hovering at those lows at 8711 . Weve got dollar weakness coming into the market, back below that 102 level. 101. 80. Euro dollar, got hit by those french pmi numbers, falling to a session low and it is just hovering around that 1. 37 level and sterling dollar is at 1. 6650, down by 0. 2 . Lets get a look at the european earnings picture now. Stephane joins us now from paris with the latest. Hey, carolin. Nearly 600 Million Euros in 2012, the growth operating profits for acore rose by 2 . The new ceo is confident about the year to come, although it declined to give proper guidance. No, i wont give you my i will share with you my guidance. We should be able to get stronger results, margins and revenues for the year ahead. Were just cautious. We are doing very well with the notable exception of china, which is still suffering. Were rebounding nicely in australia. Were having Great Results in south america. And very comfortable results in the middle east. So, no, in terms of the emerging markets, yeah, we have a currency, in fact. But in terms of operations on the ground, were very comfortable. And the lack of precise guidance is having a negative impact on the share price. Also in focus, dey none, the french maker of dairy product posted a decline of full year profit below expectations because of the restructuring costs in europe and the cost of recalling some of its baby Food Products in asia last year. Revenue shrunk by 3 towards tend of the year because of a negative impact from Currency Exchange rates and negative inflation. Thanks to the recovery of the french dairy business in europe and despite the challenge to rebuild its baby food business in china. Over to you. Stephane, thank you so much for that. You are one busy man today. Air france klm has reported a full year net loss of 1. 8 billion euros. Stephane also sat down with the ceo and asked how the Global Economic environment has affected the group. The expectations were higher, so in terms of revenue, it was a difficult situation. Especially on the French Market and on the european market. Despite the difficulty conditions, we are back to the black figures. And now our ibit is positive in 2013, which is very satisfactory and which means that the recovery is perfectly type. How do you think Air France Klm will perform . We maintain our guidance in terms of ebda. We are committed to reach around 2. 5 billion euros in 2014 and we maintain this commitment. And secondly, that we will reduce our debt down to 4. 5 billion euros in 2015. So these two commitments are perfectly maintained. In terms of the economic environment, you know, we see that the Economic Situation is probably slightly better. The recession at least in the eurozone is over. There is an economic color in the u. S. As a whole, i would like to say that the economic environment should be more positive than it was in to 12 and 2013. Joining us now is the front manager associate at montan capital. Thank you so much for taking the time to speak to us this morning. By the share Price Performance this morning, its very hard to judge how these companies have performed over the last quarter just because were seeing so much selling pressure across europe. But which of these companies stands out to you . Well, back to a net profit to 1126 million whereas one year ago it was a loss of 600 Million Euros. And all the turnover and revenues have grown up in both segments like the premier and medium brands, such as the low cost brands of 2. 4 . Upgrade of on 80 cents per shares and it consists in separating Hotel Services which consistent of brands and consolidating the market shares. It is a new strategy concerning owning and this is a the added value for this year because this new activity may need a 2 billion euro to buy back a trend in order to reach a target operating in the margin to 75 . In august, the Company Announcing a new ceo. Since then, shares have risen by more than 30 . Its now trading on a 25 pe. Is that justified . Yes, i can its justified. I think we can come back on this stock with a decline of 3 or 5 . Because the new strategy could get the company to from a twoyear period of 45 share price. We saw the pmi numbers once again disappointing the numbers. To what extent can they decouple from the underlying weak Economic Trend . Well, it depends on which company. In france, there is two different kind of pmi. Contrary to germany, there is a lot of company in services and very few in industry. And so on a pmi services, more important is the industrial contrary to germany. And so if the Companies Like accor are in services and not concern a company like schneider, and lafarge and so on, we have to focus on pmi services out of france and not on industry. Arnaud, thank you so much for your time. Elsewhere in earnings news, ba fell thanks to the continuing u. S. Budget pressures. Meantime, petrofac has been awarded a contract by bp worth 1 is. 2 billion. Shares up more than 3 . And henkel posting earnings in line with expectations, but the Consumer Goods Company said weak foreign currencies will continue to weigh on business in the first half of the year. More breaking news for you coming out of ukraine, according to dow jones, the russian Prime Minister has said that the ukraine government shouldnt allow itself to be, quote, walked on like a rag. He also says russia is willing to cooperate with ukraine if the government is, quote, legitimate. Facebook is buying whatsapp for 16 billion, 12 billion in stock and 4 billion in cash. The deal includes 12 billion in restricted stock for whatsapp founders and employees. This is facebooks largest acquisition. Whatsapp has 450 million users and says its adding 1 million registered users a day. It lets people chat with smartphone contacts. Whatsapp has no ads, its free for the first year and 1 a year after that. Facebook may have targeted whatsapp for its key audience, teen agers and young adults. Facebook in germany is off by a little more than 3 . Meantime, blackberry shares rose 6 in after hours on speculation it could spin off its Messenger Service and shares in germany out by almost 6 . Meantime, britain and china are in talks to form a Yuan Clearing Bank in london. The move would allow traders to rely less on hong kong as a hub for offshore renminbi services. The imf is warning by the u. S. And developed economies need to be careful not to wind back stimulus too quickly given weak growth and emerging market volatility. Australias treasurerer will have to carefully balance the needs of both developed and emerging economies. The economic recoveries is not yet sufficiently strong or broadly based to create enough jobs and to continue to lift people out of poverty. Key Downside Risks remain. And, again, we find that we need to manage periods of increased volatility in Financial Markets and in capital flows. Japan posted a record trade loss in january as exports plunged despite the weaker yen and imports surged on the back of increased fuel demand. Yukako ono has the story live from japan. Hi. The loss of 27 billion, the largest since the government started compiling data in 1979 and beating the previous record marked by more than 10 billion. Imports increased by 25 on the year to a record high. Lng and all imports grew as thermal Power Generation rose. The nations new clip Power Generation remains suspended. Demand for electronic supplies and other import goods were strong as consumerers rushed for last minute shopping. Export data increased, but were not Strong Enough to cover the jump on imports. The weaker yen isnt helping much. The disappointing data released this morning sent investors to take some money off the table, pushing the nikkei 225 down by more than 2 from the day before. Japans trade deficit is likely to continue for a while, but some analysts say that the loss will steadily shrink as the u. S. Economy starts to pick up. Thats all from nikkei business report. Back to you. Thank you so much for that. Meantime, lets give you a look at whats on the agenda for tomorrow. Deputies will hold g20 talks. National australia bank, iag and santos will get financial updates along with results from esprit and aia. Still to come on the show, emotional reunions as families are brought back together. 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. 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Rowe price, we understand the connections of a complex, global economy. Its just one reason over 75 of our mutual funds beat their 10year lipper average. T. Rowe price. Invest with confidence. Request a prospectus or summary prospectus with investment information, risks, fees and expenses to read and consider carefully before investing. Youre looking at live pictures of the situation unfolding in ukraine. In the last few minutes, the russian government has been talking, the russian Prime Minister saying that the Ukrainian Government shouldnt be allowed to be, quote, walked on like a rag. Meantime, eu Foreign Ministers have reportedly canceled their meeting with ukraines leader over securities. Though im seeing flashes on the wires right now saying that three eu Foreign Ministers have not left kiev and are now meeting with the ukraine president yanukovych. Well keep you up to speed with the latest developments. Families torn apart by the korean war six decades ago will the about to be reunited. The first family meeting is to be held since 2010. The reunions come as tensions continue to thaw between pyongyang and seoul. The last time these meetings were scheduled, they were canceled last minute. What is the chance of this happening again . Hopefully were more advanced than last year. But i have to say, it could still happen. However, i think the circumstances may be different. There is obviously some reason why pyongyang has decided to let things go this far. Certainly now that weve reached the point of the south korean relatives making the border crossing, im becoming optimistic that we may see these families reunited. Its a very small group of families out of a very large number of north and south korean number of families that have been divided for 60 years here. But it will be a step forward both emotionally and in terms of a slight thawing of regulations between the north and the south if this does, in fact, happen. Whats north koreas main motivation behind allowing these reunions . Is it because theyre hoping for more foreign aid because theyre facing such incredible Economic Hardship . Is it all about that . I dont think so. Normally north korea doesnt behave in their best economic interests. They look for bargaining chips. They used this subject as a bargaining chip last year. These family exchanges started back in 2000 with the sunshine policy and they have proceeded happily for quite a while until there was essentially a change of attitude in north korea. Since then, weve had a change of leadership in north korea, which everybody is still trying to read what the intentions of that leadership will be. Its manifested itself in a number of ways. If i had to express an opinion on this a week ago, i would have said that north korea had put this out as a bargaining chip to be used in the context of the military exercises that happen around this time each year between north korea and south korea. But the fact that theyve let it go to this point where we seem to be about to have these reunions suggest that they have a more profound agenda. You may be aware that the United Nations just published a report heavily criticizing north korea and particularly its leadership for human rights abuses. Maybe they would like to show a kinder, gentler side to north korea to offset some of that negative impression that has gone out around the world which they would like to push back on. Or maybe their agenda is different. Maybe they have Something Else going on behind the scenes and using this positive event, this sort of human tragedy as a way to distract everybodys opinion from it. Unfortunately, were not through the woods yet. The military exercises between north and south korea will be starting very quickly and its quite possible that we should expect tun expected. Whats the risk that this Charm Offensive is a prelude to another round of military provocation . That is also been one of my thoughts that, you know, in the midst of this, we may see some action by north korea in the military sphere that is intended to show to an audience at home is that the big boss is in charmg. They have these military exercises that the u. S. And south korea have every year that, you know, to some degree from their point of view are a very salary lid thing to react against. Thats going to happen during the next one month and it could allow north korea to take some action. But i think the reality has been for 60 years that while there is provocation, there has never been anything thats gone back to the 1950s. And i think with the leadership in beijing, they dont need north korea to be the loose cannon in the neighborhood and quite likely we should imagine that the new chinese leadership has been doing what they can to try and bring the temperature down, bring down the dynamic, the stress in the region, and hopefully well see Movement Towards the kind of Six Party Talks and other things that have been helpful in the past. James, there are some interesting rumors making the rounds in south korea, talking about the fact that the Unification Ministry is once again thinking about unification. This is a concept thats been unheard of over the last three years when the shelling began. Do you think were moving closer to that once again . No, not at all. I dont think thats on the cards for many, many decades to come. However, i may be the lone voice on that subject. Theres a lot of people who emotionally would like to see that happen. But i think politically its very difficult to imagine and practically speaking its a very challenging thing to do. And i dont expect personally to see very much change in the dynamic between north korea and south korea and the existence of north korea in its current form. I dont expect to see very much of that change to change over the next many decades to come yet. Thank you so much for your thoughts, jay. Lets hope this reunion actually goes through this time around, james rooney, chairman at advanced capital partners. Lets bring you the latest on the situation in ewe crepe. Writers reporting that the ukraine president ial administration is blaming protesters for starting the violence and ukraine president saying that dozens of dead and injured policemen are in clashes. Meantime, wall street is heading out to the wild west. Theres a new way to invest in ranch land in the u. S. And one property even comes with dividends. We sent cnbcs Morgan Brennen to the undiscovered country in utah to find out more. Who says investing has to be about stocks and bonds . This all around me, the great outdoors, theres a private equity fund just for this. Its called sporting ranch capital. The strategy by run down ranches in the u. S. , fix up the properties and resell the properties for double. Its attracted investors like t. Boone pickens. The funds manager jay ellis left his job at Morgan Stanley to pick up this opportunity. Were still in 02 valuations here in the Rocky Mountain west. I can still make the great buys, still find the undervalued assets, the denigrated cattle ranches. Its key and its very difficult. So because our issue has never been access to capital, its capital deployment. The funds listing its first three ranches for sale this spring, so theres nothing solid to report yet. But ellis is projecting annualized returns in the low to mid teens. This ranch where we are just outside of park city, utah, is expecting to list this for 10 million. Whats even more interesting, sporting ranch isnt even alone in this niche market. There are two capitals out of montana rehabbing recreational ranches. In general, were seeing alternative Investment Funds get creative as investors look for higher yields. Some other examples, a number of funds banking on farmland right now, including ones from ferries partners. On the housing front, luxury owned housing funds like ocasio which targets resort housing. So if youve got the cash and you want to diversify into something out of the on equity markets, ranchland might be one possibility on. At the very least, the views are killer and the trout fishing is even better. Back to you. Nespresso is taking a bigger shot at the u. S. Economic. Nestles coffee is popular in europe, but the firm is launch ago new machine which makes a bigger cup of coffee to satisfy the u. S. Market. Nespresso is hoping to take on the popular kcup. Well be speaking to the ceo of nespresso later on in this show. How do you take your coffee in the morning . I dont know about you, but i like a good cappuccino. If you want to join the conversation here on worldwide exchange, get in touch with us. Worldwide cnbc. Com, twitter, cnbcwex or direct to me. Here is a quick look at the european markets this morning. We are seeing a lot of red across the board. This is after the china pmi numbers came in below expectations at a sevenmonth low. We had european pmis disappointing investors and this effect is being felt by european markets across the board. The ftse 100 is off by 0. 4 . The xetra dax is off by 1. 1 . We got numbers from had he nkel weighing on the cac 40 which is down by 0. 4 . Looking at the forex markets, were seeing the euro losing ground against the dollar on the back of disappointing french pmi numbers. Euro dollar, 1. 3705. Stay tuned for that nestpresso ceo interview. Welcome to worldwide exchange. Im carolin roth. These are your headlines from around the world. Facebook splashes the cash, spending 16 billion on mobile messaging firm whatsapp. Its facebooks biggest deal to date. Investors get the chills, weak pmi data out of china. Pushes markets into red across the board after more hawkish hints from the fed. Emerging markets under pressure as ukraines president meeting cancels over security concerns. Announcer youre watching worldwide exchange, bringing you Business News from around the globe. Youre looking at live pictures of the situation unfolding in ukraine. Well, of course, be keeping you up to speed with the developments here throughout the show. Weve had more violence and unrest overnight and we had allowed 28 or 29 people confirmed dead. Well be getting out to jim maceda in the next half hour. Out to facebook, buying whatsapp for 16 billion, 4 billion in cash and 12 billion in stock. Julia boorstin sends this report. This is facebooks biggest acquisition by far and whatsapp is the leader in mobile messaging with 450 million monthly active users and engagement is incredibly high. 70 of those monthly users use the mobile messaging Service Every single day. Its growing very quickly, adding 11 million new users daily. Clearly, this is about scale and engagement and like facebook, amid facebooks own service, theyre more focused on getting all of that engagement and all of those eyeballs up before they are the revenue. But the thing here is whats up does have a revenue model. They charge some of these users 1 a year to use the messaging service. Theres also obviously the potential to roll out fees more broadly, but to add advertising. So there is a little bit of revenue. Its unclear how much or how many of those 450 million users pay for the service. What do the analysts city . Citi analysts say when you look at how many users whatsapp has, the deal is not so expensive. It equates to 42 a month per active users. There is significant area to extend revenues with games, stickers. Ubs says third Party Messaging Applications like whatsapp poses a threat to facebook. Many, though, of course, have thought that the 16 billion price tag. Just to put it into perspective for you, what else could you potentially buy for that amount . If youre looking for a Little Something in retail, how about victorias secret . L brands is worth just about that. If you throw in the 3 billion in restricted stock, you could even afford a gap or macys. You could buy beam for just over 13. 7 billion and still have a few billion in the bank. Sounds good, doesnt it . Energy snp is your your thing . Snap up transocean. Tech, how about sandisk. Head to cnbc. Com to find out why this could be a desperate move to the networking giant. We have a great story on our website. Here is how markets are fairing ahead of the u. S. Open. Take fair value into account, the dow, nasdaq and s p 500 are seen modestly lower as the u. S. Saw a choppy session yesterday. Stocks were down for the second day in a row. The s p rode 0. 7 and the nasdaq off by similar percentage amount ending in eight session streak of gains. European markets look like this. We are seeing a lot of red arrows. The ftse 100 off by 0. 5 . The xetra dax falling by even more. Down by more than 1 . The cac 40 off by 0. 6 . We had a triple whammy for these markets. We had the fed minutes slightly more hawkish than expected. We had weak pmi out of china. European pmis werent that encouraging, either. In the forex space, were seeing a direct impact on the euro dollar pair with the weak pmi numbers coming out of on france. The euro dollar, hovering around the 1. 37 level. Do you know down by around 0. 25 . Were not too far away from those sevenweek highs. Dollar yen is coming under pressure as a result of safe haven buying into the yen and sterling dollar is down by 0. 25 , as well. Lets check in on markets in asia. Sixuan is standing by in singapore. We were talking about the dollar yen weakness. The nikkei 225 saw further profit taking. Exports in china placed heavy industrials taking a beating today. The Hong Kong Market lost 1. 2 today. Mainland markets gave back early gains after disappointing pmi data. Chinese oil majors capped some of the losses. So the search in sinopec fueled a rally. Asia announced plans to restructure and sell up to 30 of its retail oil business to president busters in order to boost the strangling downstream arm. Meantime, banking shares came under pressure today after reports that china aims for 100 Bank Liquidity coverage ratio by 2018. But bank of beijing bucked the down trend. It was, in fact, surging as much as 10 before ending higher by about 2. 8 . And this after the bank announced a cooperation plan with smartphonemaker shaomi in areas such as mobile payments and insurance products. Speaking of the tech spade, 10cent pulls back further after the strong rally earlier in the month, down by over 3 today. And this was possibly on fears of the whatsapp deal could bring greater competition for its we chat app. That is a look out at the asian markets. Back to you, carolin. Lets get more detail on that china data now. Eunice yoon joins us from beijing. We have to take it with a bench of salt, dont we . Because we saw a big holiday in the month of january. Well, thats right. A lot of people are saying that we really should wait until march when we get a better sense of exactly how the seasonality played a factor in the january to february numbers. Overall, though, people werent very happy with what they heard when it came out when hsbc flash pmi came out. The nebs, even when you broke th them down, werent very good. The export numbers looked slightly better, still werent great. And the surprise factor that people have been talking about here really has been the employment dip because the employment usually bounces up when factories at the end after the Lunar New Year holidays finish, they start to hire people back, but this really wasnt seen. Because of that, people were concerned about this number. Theyre all waiting until march to see how the january february figures together combined looked. Thank you so much for that. Lets get the latest on ukraine now. Jim maceda is in moscow. Jim, it seems as though the truce didnt last very long. Whats the latest on the ground . Well, thats right. Everyone is asking what truce, really. The day started out quiet enough, was less tense than the previous two days on Independence Square in kiev. But at one point this morning as riot police, for whatever reason, were pulling back from a position on the square, protesters then moved in to fill that space and clashes broke out. With protesters, as we have seen over the past 48 or 72 hours, throwing stones, fire bombs at the police who returned fire with stun grenades, flash bangs, as they call them. But then things quickly spun out of control. The police claimed at least 20 Police Officer in a very short period of time were wounded amid reports of snipers, firing from buildings and live rounds being fired. Eyewitnesss including my colleague Richard Engle saw several dead bodies in a hotel off the square. Volunteers were seen using the makeshift stretchers to move the wounded and perhaps the dead to other areas. And later, at least seven bodies were covered with blankets tweeted in the photo by reuters photographers. This was once again a very violent and fluid situation. Back to you. Jim, thank you so much for that. Pmi data out of europe and asia weighing on markets today. Frances services pmi contracted to a twomonth low in february coming in at 46. 9. Thats over three points below expectations and well below the ftse level. Manufacturing numbers over in germany disappointed, underlining the fragile recovery picture in the eurozone. Steve jacobson has joined me at the desk. Steve, how worried are you about those numbers . Not too nervous about it. Because it makes a lot of sense. If you think about it, the austerity we sort of forced on the peripheral countries made sure that they had a domestic devaluation. So now people are relatively optimistic. The price, however, is that certainly france and germany and Eastern Europe is becoming less competitive. And this happens to a world environment of less fwroeth as weve just seen from china and asia which, overall, is trying to achieve lower growth in order to rebalance their economies. So 2014 is very much about rebalancing and someone is gaining, someone is losing traction. Who is losing traction is very bad for europe and the euro. That is france and ultimately germany. Who will be the biggest loser as export growth slows down. German exports are still going strong, arent they . For now. But they will slow down as we get into the next quarter. Think about it, the reason why weve been some growth in the world since the crisis started is that asia has overinvested. The investment for gdp has skyrocketed. Which means who are the exporters into asia . Thats when germany and france to some extent has been switzerland. So on this country will have will slow down. More importantly on the euro, dont forget, a deflationary currency will need to increase in strength. Exactly what you see in japan. If you look at the region for the japanese strength over the last ten years, you can explain almost 100 by the fact that they have been more deflationary than inflationary. You need to revalue the currency. What does all of this mean for Asset Allocation . Do you still want to buy european equities . This is essentially what investors have been doing. Theyve been pulling money out of u. S. Assets, equity necessary particular and putting their money back into europe. Is this what youre doing . No. But thats what we saw, people took mope out of equities, put it back into europe. Then they said listen, we have a put on the equity market in europe. Now, however, you see core detear ragz in the key export numbers. So this is the third phase of the crisis, the first one being the u. S. Housing and banking crisis. And through this crisis, the commodity comes off, then you have fixed income and now you have equity come up. So for me, this is a rotation back into fixed income, to safeguard whatever preservation capital you have and that will continue into the year. Stay with us. Were going to talk about gold. The gold rush is over. Thats the warning from steve. Find out why he says its time to sell. Well be back in two. [ male announcer ] whether it takes 200,000 parts, 800,000 hours of supercomputing time, 3 million lines of code, 40,000 sets of eyes, or a million sleepless nights. Whether its building the worlds most advanced satellite, the space station, or the next leap in unmanned systems. At boeing, one thing never changes. Our passion to make it real. Our passion to make it real. Save you fifteen percent or more on car insurance. D Everybody Knows that. Well, did you know pinocchio was a bad motivational speaker . I look around this room and i see nothing but untapped potential. You have potential. You have. Oh boy. Geico. Fifteen minutes could save you fifteen percent or more on car insurance. Youre looking at a live shot of kiev where were seeing continued violent clashes between riot police and protesters. Weve got more breaking news for you. According to dow jones, eu ministers will be pressing ukraine, the ukrainian president to hold early elections, this is according to a diplomate. Also, the french, german and polish ministers are scheduled to meet the ukraine president in kiev. This is after we heard this morning that a number of eu Foreign Ministers have canceled their meeting with the ukrainian president over security concerns and the French Foreign minister is saying eu sanctions are being considered, including freezing of assets. These are your headlines this morning. Facebook set to buy whatsapp for a whooping 16 billion. Weak chinese and european pmi data give investors emerging market data and take hawkish hints from the fed. And violence in ukraine continues as the death toll continues to rise. The gold price slipped this week after fed minutes indicated a continuing support. The tapering, which reflect as recovery in the economy, up by around 0. 2 . Steve jakonson is still with us. He believes gold is right for selling. Why is that . Because it has had such a phenomenal jump since the beginning of the year and it has to come down . No. Its one of the few indicators that predicts gold and the real rates in the u. S. Has been rising, despite the lower recent interest rate. We see Inflation Expectation coming up. And then, of course, to that, you can add that the tapering process seems to be going full steam ahead, according to the fomc minutes. To me, that clearly indicates that not only is the Federal Reserve not understanding whats really going on in the world, but in the shortterm, i think gold will sell off from this level. So its partly technical. Its certainly driven by fundamentals, real rates going up, and now finally yesterday we saw a little bit to my surprise, tapering is not even being questioned among the majority of the fomc members. Steven, if you want to have a safety cushion for your investment, do you invest into cash . What are the other safe havens out there . I think cash is underestimated. Because sometimes the best and the best return youre going to have is just doing nothing. We are too predicated on trying to have active management at all times. But coming up a year where most people saw 25 , 30 , i dont think it costs you that much for being cash for two to three, five months, see what the summer brings in terms of economic development. See whether this rebalancing i talked about earlier will play out. And then there will be fundamental value. And every single day, carolin, there are fundamentals stock to be valued. So its not a matter of just sitting still and doing nothing. But overall, i think its underestimated that you should be patient. Steve, thank you so much for that. Still coming up on the show, its the land of super sized portions and that is surrounding coffee. Nespress is making a bigger cup of coffee. Will it work . Well speak to the ceo of nespresso exclusively, next. And a quick look at the heat map, were down by 0. 6 . [ male announcer ] first the cookie at checkin. Then a little time to kick back. Earn double Hilton Honors points with the 2x points package and be one step closer to a weekend break. Doubletree by hilton. Where the Little Things mean everything. Welcome back to the show. Here is how u. S. Futures are shaping up. The s p 500, the dow and the nasdaq are seen mod eftly lower which taking fair value into account. The s p 500 loses 0. 7 . Still only 1 away from that record high. Necessary nestles nespresso business holds to get a bigger rate in caffeine hit with a machine that will brew bigger coffees. Were now joined for an exclusive interview by jeanmarc duvoisin, the ceo of nestl. What makes you so confident about achieves th s those goals . Hello, carolin. We put seven to eight years of research in developing this new sedge. And we really believe that our last growth in our last years growth in u. S. Was very good, very solid, that we were, i would say, limited to premium expresso coffee ones. And now we are launching this new technology which will be able to deliver a large cup, a very large premium large cup. We have coffee lovers in the u. S. Want a large cup. It will top this enormous segment with a large cup of the new premium offering were now offering for the u. S. This is an attempt to grab market shares from the likes of green mountain, starbuckes and kraft. How much are you spending on advertising . Are you competing on price, too no, well be creating a new segment as 27 years ago we created the capsule market in coffee and we saw that everyone moved, is moving to this new segment. In the u. S. , its growing very fast. It will be focusing on premium, top quality coffee. So its top on price. We dont feel we have direct competitors. We will be creating a new market. I have an issue with availability. Some of your competitors, theyre selling their pods all around the country in many different stores, readily available to everyone. But with regards to your capsules, you have to order them online or go to the boutiques. Is this right for the u. S. Consumers where convenience is top priority, really . Yes, convenience is top priority. And we feel how we sell our products, through boutiques, we have eight boutiques and three we just opened one in San Francisco and l. A. , plus the two porchimportant ones we have new york. The digital and the crc can call centers. This is the most convenient were buying. We see with the german tendency with the market is to go and buy more on digital mode. So we have delivery in 48 hours. We are going in most places. We will be and we are already able to deliver the same day. So this is the new tendency of the markets. This is the most convenient way. This allows us for nespresso to understand better for our consumer. We understand the customer what they can expect. We can deliver exactly what these people want, what our customers want. So this is why it makes still a strong business model. And in europe, it is very successful, also based in the same markets. Im looking at prices of beans trading at a ninemonth high. To what extent is the consumer youre targeting and the premium segment dependent on the price . Do you think you can decouple from that . Well, we have decoupled and we are decoupled directly of the price of the green coffee. In fact, when the coffee goes low, when coffee goes high, we always trying to maintain the same price of the pods for the customers because we believe its the best way of establishing a longterm relationship with our customers is to maintain the top quality and maintain stability on the prices. What we also do, i must say, to make sure we have the best coffee, the best green coffee, we buy only the top coffee and pay 20 to 30 more than the coffee. Now its going up again, but it went down last year and you didnt see a change in our pricing of our pods. I want to thank you for your time this morning, jeanmarc duvoisin, at nespresso. So ive been asking, how do you take your coffee in the morning . I personally like a good cup of cappuccino. Darren says he makes his coffee at home and takes his caffeine hit and energy drinks, as well. If you want to join the conversation, get in touch with us, worldwide cnbc. Com, or tweet us cnbcwex. Its day 12 in sochi. Tom mackenzy has all the details. Another busy day in sochi saw the final of the mens giant slalom take place. Ligety finished his first run and held off the competition to take gold. Steve missillier took silver and Alexis Pinturault took bronze. In curling, sweden overthrew their last effort while David Murdoch held his stone for a victory. The u. S. Face canada in tomorrows finals. Norway has the top spod with medals followed by germany and the United States in second and third respectively. Will weather woes shut in profits . Well get your weekend preview, next. Are you still sleeping . Just wanted to check and make sure that we were on schedule. The First Technology of its kind. Mom and dad, i have great news. Is now providing answers families need. Siemens. Answers. Welcome to worldwide exchange. Im carolin roth. These are your thls from around the world. Facebook flashes the cash, spending 16 billion on whatsapp. Its facebooks biggest deal to date. Shares are lower in frankfurt. Weak pmi pushes markets into the red across the board. The situation in kiev intensifies. More people are reported killed in slashes while Foreign Ministers are said to have canceled a meeting with president yanukovych. Announcer welcome to worldwide exchange, bringing you Business News from around the globe. Did morning, everybody. Here is how markets are fairing ahead of the u. S. Open. It looks like another start to the trading day as far as u. S. Markets are concerned. Yesterday, stocks were down for a second day in a row. The dow ending at session lows after the fed minutes came out. Again, they were slightly more hawkish than expected. Today we have ppi, jobless claims and a philly fed index and numbers from walmart. Lets take a look at european markets. We are seeing european markets coming under quite a bit of selling pressure. The xetra dax down by 1 , but off the session lows. The cac 40 off by 0. 3 and the ftse 100 seeing similar percentage gains. This is markets reacting to the weak economic data. In china, the flash pmi at a sevenmonth low. European pmis for february coming in below expectations, especially for france and, of course, we have a couple of earnings reports that also disappointed investors. How do you make money in these markets . Here is what some of the experts have been telling us this morning. The thing is, china is hugely important, obviously, to the global economy. Its very important for the bond Market Outlook and certainly in the u. S. But i think theres a danger in overinterpreting any single or even a couple of monthly numbers. I think as we are starting to worry about a hand landing in china, we have to see a run of at least three or four months. Come the bond markets in europe, i reckon theyve gone about as far as they can. They would have to be a natural way for a country like italys trade over a country like germany, two very, very different economies, weve seen incredible gains because of the efforts of the ecb to keep the whole strain to do anything, the mix it was omt. When it comes to investments, tend to be a balanced approach where these gains, despite the market rallies, we see 100 equity. Some kind of balance approach. Theyve made their money and they want to kind of keep it. Thats why you are seeing demand in the bond despite relatively low yield. And weve got some flashes from luxury carmaker porsche. According to reuters, it recommends owners of the gt3 not to use these vehicles. This is all weve got from porsche right now. Shares in germany down by 1. 7 . Porsche says to check engines of its gt3 model. So all of you porsche owners, two on and check your engines. In corporate news, safeway, the number two u. S. Market chain says its in talk bes a possible sale of the company. A handful of buyout firms have been exploring a deal as servers capital is currently in talks. Safeway has been under pressure from activist investors Jana Partners to review strategic alternatives. It spun off its gift card provider in its company and is leaving the chicago market this year. Safeway shares in germany, up almost 4 . It could be a stormy Fourth Quarter for walmart. The Worlds Largest retailer issued a profit warning last month after blaming the relentless Winter Weather causing store closures and a reduction in the food program. Walmart is due to report numbers today. Lets talk about those numbers. Ken perkins joins us now from boston. Ken, essentially, walmart has taken the surprise out of the numbers by prereleasing. What else are you looking for in the release today . Yeah wsh sure. As you know, they preannounced on the 31st of january. So there should be no surprises. Estimates came down from 1. 55 to 1. 60. Were looking for commentary on how the holiday Online Business was. Thats a key component Going Forward for their growth strategy. They have this new Technology Hub out of the west coast. Were looking for commentary which we expect to be cautious. But looking for any positive nuggets that they might see going ahead here in 2014. And then also they have initiative to open up about 120 to 150 new walmart express or neighborhood express stores locally situated, looking to see if theres any expansion in those plans. We think thats a big component Going Forward for them, as well. We feel that theyre missing some tripes from low income consumers midweek, mid month because their locations tend to be in the suburbs. Do you think walmart could have potentially gained some market share from target after the card breach . They should have been able to. This was a disaster for target, you know, happening so close to the Holiday Shopping season and all the bad publicity that surrounded it. However, you know, the Sales Numbers and the negative commentary and the preannouncement doesnt look like theyve been able to do that, which is a bit worrisome for walmart. Wall mart in t walmart is comp negative. If they do so this morning, it will be four straight quarters of comp negative. Many retailers have issued profit warnings after the holiday season. The bar is pretty low, isnt it . Is the Fourth Quarter really going to confirm what we already know . Yeah, i think a lot of the bad news is already baked in the numbers. Weve counted a tally of roughly negative preannouncements through basically tend of december. Our negative deposit preannouncement is 6 to 1 negative deposit. Thats better than the third quarter, but historically, its above norms and not a particularly good thing. Earnings estimates will come down from december, 950 basis points since the start of december. Our Retail Metrics index, wee look at 122 u. S. Retailers. Earnings are expected to be down 5 . If you back out walmart, down 5. 3 . The bar, as you indicated, is set very low. And you also say that could be the worst Quarterly Earnings since the Second Quarter of 2009. Wow. Ken, thank you so much for your time this morning. Ken perkins, president of Retail Metrics. Still coming up on the show, facebook pulls off its biggest ever acquisition. We examine the nuts and bolts of the deal and look at how who may emerge as the winner. [ male announcer ] this man has an Accomplished Research and Analytical Group at his disposal. But even more impressive is how he puts it to work for his clients. Morning. Morning. Thanks for meeting so early. Oh, its not a big deal at all. Come on in. [ male announcer ] its how edward jones makes sense of investing. Then a little time to kick back. Earn double Hilton Honors points with the 2x points package and be one step closer to a weekend break. Doubletree by hilton. Where the Little Things mean everything. These are your headlines. Facebook set to buy whatsapp for a whooping 16 billion. Weak chinese and european pmi data gives investors a scare. Emerging markets take flight at hawkish hints from the fed. And violence continues to rock kiev. Europe reportedly set to press ukraine for early elections. Our top story, facebook makes a big splash, snapping up a fast growing mobile messaging app in the companys largest deal ever. Seem ma mody is at cnbcs headquarters with more. Seem ma. Good morning. Facebook is buying mobile messaging service whats app for 16 billion, 4 billion in cash and 12 billion in stock. The deal includes 3 billion in restricted stom stock for whatsapp founders and employees that vests over four years. This is facebooks largest acquisition ever equal to about 11 of its market cap. Its the biggest internet deal in the past decade. Google bought Motorola Mobility for 12 billion. Microsoft bought skype for 5 billion. Whatsapp was founded by a ukrainian immigrant and its a free download, free for the first year and 1 a year after that. Its rocketed to more than 450 million users worldwide in five years and its adding another million registered users per day. It has 50 employees, 32 of which are engineers. Sequoia capital is the only venture captain investor. Reports say sequoias stake could be worth 3 billion. Now, in a post on facebook, Ceo Mark Zuckerberg explained the rationale to the deal saying, quote, our mission is to make the world more open and connected. We do this by Building Services that let people share any type of content with any group of people they want. Whatsapp will help us do this by continue to go develop a service that people around the world love to use every day. Later on the conference call, zuckerberg revealed a proposed the deal just about ten days ago. You may remember zuckerberg proposed a deal to buy instagram in 2012. Some may say the valuation is lofty. They believe this is a good strategic deal for facebook. Checking facebook, shares in frankfurt down about 2. 8 . Now, blackberry shares rose in after hours trade by around 6 on speculation that it could spin off its messaging service. Right now, were seeing shares up by around 6 . Carolin. Seema, thank you so much for that. Joining us now is neal campling. Neal, tell me why you think this deal is not too expensive. Well, on the facebook of it, 16 billion is a lot of money. The last time there was rumors about the company being built out was a year ago. At the same time, facebook has added 5 million of market cap and theyre using mostly stock for this deal. The thing is, whatsapp has more message egg going over its network than every single mobile carrier in the world combined. That is huge. 21 billion messages, 34 billion messages are received on whatsapp every single day. It is a huge scale and a huge opportunity for facebook to integrate more and more time on social networks. But im wondering, why would you pay 16 billion if theres no advertising on whatsapp and there will be no advertising in the future. How do you monetize this . Monetization is a longterm aim. If you think of it, when they face or acquisitions, such as instagram, they are monetizing that now, slowly. Instagram, the base has increased by five fold. Now, for facebook themselves, if they start charging a small fee for that service, which they do im sorry, what does does today in emerging markets, that could add up on just even 1 a user a use. Thats an incremental 1. 2 billion of sales that isnt in there today. Its really about having the whole integrated mobile platform. Its all about messaging, isnt it . Blackberry rising 6 after hours on speculation that it would be selling its messaging service. So essentially, can we say now that facebook has a global war about messaging . I think facebook has by far literally overnight become the winner in this particular war. Whatsapp adds 1 million users a day. Thats a huge number in the marketplace. And 45 of people in emerging markets with smartphones are using whatsapp today, double most of the other competitors. I think facebook has just killed competition dead with this particular move. It looks like facebook shares are going to drop at the open today. Do you buy into that weakness or sell . Absolutely. Basically, we have a fair value of facebook around about mid 80s to be honest. We can see the stock getting up to 120 in 12 to 18 months time. Neal, thank you so much for that. Head to cnbc. Com to vote on whether you think Facebooks Whatsapp acquisition is a desperate move. In m a move, several Companies Including novartis and p g are eyeing a business such as coppertone sun tan lotion and allergy pills. Merck is meeting with potential buyers after getting preliminary bids a few weeks ago and is reportedly expected to seek a second round of offers in miles an hour march. Merck shares off just slightly. Gic and flagstone are rt rodly near a deal to buy a Minority Stake in kronos. The deal values the company at about 5. 4 billion. Reports say blackstone and cig will have a 45 stake in kronos which helps Companies Manage payroll and hiring through cloud based software. Lets keep you updated with the situation in ukraine. Youre seeing a live shot of the Independence Square in kiev, where weve seen deadly clashes between riot police and protesters. Want to bring you the latest news, dow jones reporting that the french, german and polish Foreign Ministers are scheduled to meet the ukraine president in kiev today. This is after a number of Foreign Ministers have pulled out of talks over security concerns. The French Foreign minister says eu sanctions are being considered and they include raising of assets. Coming up on the show, the fed gave investors reasons to sell yesterday. The latest minutes hinting at a more hawkish temporary. We take a look at how stocks are set to open on wall street next. [ male announcer ] how could switchgrass in argentina, change engineering in dubai, aluminum production in south africa, and the Aerospace Industry in the u. S. . At t. Rowe price, we understand the connections of a complex, global economy. Its just one reason over 75 of our mutual funds beat their 10year lipper average. T. Rowe price. Invest with confidence. Request a prospectus or summary prospectus with investment information, risks, fees and expenses to read and consider carefully before investing. With investment information, risks, fees and expenses all stations come over to mithis is for real this time. Step seven point two one two. Verify and lock. Command is locked. Five seconds. Three, two, one. Standing by for capture. The most Innovative Software on the planet. Dragon is captured. Is connecting todays leading companies to places beyond it. Siemens. Answers. Where you think youre gonna go when your times all gone . [ male announcer ] live a full life. The new lexus ct hybrid with an epa estimated 42 mpg. The further you go, the more interesting it gets. Lease the 2014 ct 200h for 299 a month for 27 months. See your lexus dealer. Weve got more breaking news for you. Former news corp. Executive rebecca brooks has been acquitted of one charge of bribery, the charges related to payments that the sun tablet newspaper allegedly made for a picture of Prince William and kate in a bikini. Miss brooks, of course, was the editor of the tablet at the time. A showdown maybe looming over the city of detroit which declared bankruptcy last year, the largest municipal filing in u. S. History. Scott cohen has the details from the motor city. The historic detroit bankruptcy enters yet another crucial phase, one that directly pits main street against wall street, and particularly anyone involved in the 4 trillion Municipal Bond market. Within the next 48 hours, detroits Emergency Managers expected to file his socalled plan of adjustment, that puts numbers on his plans to restructure the citys finances and bankruptcy. And detroits bondholders are fighting plans to treat them as unsecured critters, meaning they could take a haircut along with everybody else thats a creditor in this bankruptcy. They say that those bonds are supposed to be backed by the full faith and credit of the city and that that is supposed to mean something. Bond insurers have sued the city. Meantime, the city has tried yet again to settle a big dispute over 1. 4 billion in swaps contracts that back fired on the city. Contracts that were backed by the casino revenues that courts said may be illegal sold to the city by ubs and merrill lynch. The city now in another tentative settlement for the banks, it will be up to the judge too prove that and to approve this plan of adjustment which is the next step in getting detroit back on its feet. Here is the check on european markets for you. We are seeing a lot of red across the boards and markets really hit by Global Growth concerns, not so much about profit taking any more. Thats so yesterday, isnt it . Weve got the xetra dax down by 1 . The cac 40 is off by 0. 4 . We got disappointing pmis of china and the eurozone, of course. Looking at u. S. Futures, as well, were expecting another softer start to the trading day. A fairley choppy session yesterday, stocks down for a second day in a row. And the dow off by 0. 6 yesterday after the fed minutes were more hawkish than many people expected. U. S. Markets sold off into the close on wednesday, following the release of the january fed minutes. They didnt signal any changes on tapering. The minutes did get some attention, making the Central Banks sound more hawkish than had been before. Steve liesman sends this report. The Federal Reserve gave a hint of what it would take for them to stop releasing the bond purchases it makes. And the bar seems pretty high. A number of the members said they would ohm stop tapering, quote, if the economy deviated substantially from its expected path. Thats for stronger growth in the year ahead. Thats similar to Janet Yellens recent comments to congress that it would take a notable change in the forecast. The fed minutes showed that the bankers discussed the weather and said the weekly jobs report were the result of it. Meanwhile, the fed had a robust about its discussion to communicate lower rates for some time. But its fallen to 6. 6 and the fed doesnt seem ready to move. Some officials want to remove the 6. 6 guidance altogether and explain what it would do using other language. Others prefer sticking to numbers so markets can forecast the feds actions better. No decisions were made. There was considerable concern about low inflation with some officials suggesting that if it doesnt move up soon, the fed might consider halting the taper. Those were the doves on the committee. The hawks fired a shot of their own, with some saying they could see raising Interest Rates even before the middle of the year. But that is not the view of the consensus at this time. Back to you. And lets give you a look at whats on the jobless claims in the United States. Also at 8 30, we get the january cpi numbers, Consumer Prices are expected to rise 0. 1 and by 0. 2 when you exclude food and energy. At 10 00 a. M. , look for the february philly fed survey and january leading indicator. Walmart reporting results before the opening bell and well get numbers from directv and hormel foods. After the close, we hear from highway patrol, priceline, groupon, intuit, newmont and nordstrom. Before we wrap things up, lets show you whats happening in kiev between deadly protesters and riot police. Thats it for this show. Im carolin roth. Thank you so much for watching worldwide exchange. Well be back tomorrow. 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. Good morning and yeah, its written here. Whats up . Was that a commercial or was that mac . What was that . Anyway, i did it. They wrote it there. Facebook buying a Message Service startup in a 16 billion deal. Teslas earning power, the electric luxury carmaker gets charged up after giving a strong outlook for on 2014. And Nelson Phelps at it again. Hes calling for a pepsico breakup. Its thursday, february 20th, and squawk box begins right now. Good morning, everybody. Welcome to squawk box here on cnbc. Im glad it was joe who had to read that, not me. Im becky quick along with joe kernen and steve liesman. Andrew is off the today. Another mega deal in social media. Facebook buying whatsapp. In a 16 billion transaction. Whatsapp is a mobile messaging startup of 450 million users. The deal involved 4 billion in cash and 12 billion in stock. Theres an additional 3 billion in restricted stocks that could vest over several years. The deal moves facebook closer to younger generations. This is a service that is very big in asia and from what i hear its pretty big in europe, too. Well talk more about what this means for facebook in just a few minutes. Right now, though, facebook shares down by