Transcripts For CNBC Worldwide Exchange 20140409

Manuel wins a confidence vote. And the fed wondering if the market will be rocked today again. Its releasing minutes from last months meeting. Youre watching worldwide exchange, bringing you Business News from around the globe. Well talk about toyota in just a second. Before that, we have news coming out from angela merkel, the german chancellor that is not clear that russias help to deescalate the ukraine situation will help ukraine to decide about its own future. And well keep our eyes on whats going on with the latest in ukraine. Meanwhile, another major car recall, this time from toyota. The japanese automaker is recalling 6. 4 million cars worldwide. It makes it one of the biggest recalls to date in the car industry. Toyota needs to fix faults in the steering column and seats. Though its unknown if this is a design or manufacturing issue. The recall came out just before the market closed in tokyo. And sent shares lower by more than 3 in that time. We are joined on the phone from tokyo. How does this compare to the recall we had big recall we had last time from toyota . Well, it is large. And this is the second largest recall on a single day that toyota has made. The largest since october 2012. So the scale of the recall is extremely large. But you also have to remember that since then, most manufacturers have been extremely diligent, conservative almost in the pace of their recalls. The scale of the recalls have tended to be larger arather than smaller. Having said that, this is a wideranging recall that seems to cover many, many issues, including as you mention, steering, the seats, 27 models are included as part of the recall. And not only are they toyota brand recalls but the cars that they have built for General Motors and Fuji Heavy Industries is also part of the recall. So the scope of the recall is extremely large. Having said that, the company has not issued a statement saying estimating the cost of the recall. Theyre also not specifying whether or not the recalls stem from a supplier problem or something in the manufacturing process. But regardless of that, i think this of course reminds everyone of the massive recall that the company faced several years ago that culminated in the head of the company testifying before congress. Theyve settled a record 1. 2 billion on this case just about a month ago. They certainly have. Which is at the end of the day, which is what shareholders will be concerned about. Greece is planning to issue a longterm bond as early as today, after the Greek Finance Ministry confirmed it is going up to test the markets. It says a gradual return of new medium return loans is being prepared methodically and carefully. They are expected to issue a three or fiveyear bond with an aim at raising 5 billion euros. They think the market has priced in greeces return to the bond market. Yannick noah is a bond manager. The first time, a newborn, we did participate. It was a better value than the existing bond and it could be the case again. I think it will probably be around fiveyear and 1 billion. What are the risks . The risks so far, in greece, is it under control . Is it not under control . Theres surplus. The economy is getting slightly better. You have to keep in mind we have seen inflow into the eurozone since the beginning of the year. Maybe thats the risk. Maybe the risk is a lot of money is coming to peripheral debt. Theres a complicit the markets are lenient, visavis most of the peripheral country. Were seen it in spain, ireland, Government Bond shrinking fast. The same happened to greece. The how much on the pricing of this will depend what happens with ecb . I think, you know, obviously, the fact that the longtime is smaller today is a consequence of ecb policy, you know, the fact that they are willing to do everything to the euro. Obviously the future easing policy. In terms of future, we have to i mean, i still think the ecb will be the most accommodative central bank in the world. We didnt see qe yet. So far we have not seen it, nevertheless, i think during 2014 we should see some easing of conditions, smaller Interest Rate or negative deposit rate. Yannick, stick around. Joining us from sturgeon capital. Other things were watching today. Well pick up on that. Would you buy greek bonds . Cast your vote on cnbc. Com. Meanwhile, lets bring you up to speed with where we stand with the markets in the Global Markets report. And take a look at the dow jones 600. We are weighted to the upside, ftse yesterday, down some 32 points. Right now we are up at the session high. We snapped threeday losing streak. We were flirting with four days losses but managed to eke out some gains towards the end. This is where we stand at the moment, ftse 100 up 0. 5 , dax is up 0. 25. Cac current is up 0. 4 and russia, up 0. 2 . Speaking of whats going on in the ukraine at the moment, lets remind exactly whats happening. The u. S. Has accused russia of using special agents to stir trouble in the east of the country. This is ukraine, to cause a repeat of a situation in crimea. Armed promoscow reporters still occupy two cities. John kerry, the u. S. Secretary of state, sent a stark warning. Russias clear and unmistakable involvement in destabilizing and engaging in separatist activities in the east of ukraine is more than deeply disturbing. No one should be fooled, and believe me, no one is fooled, by what could potentially be a contrived pretext for military intervention just as we saw in crimea. A night law brawl broke out in the European Parliament. Male and female mps traded punches after a speech by the communist leader provoked nationalists accused of destabilizing ukraine. That makes the house of Parliament Look very tame, yannick. Risks from ukraine at the moment . Well, all in all, back two weeks ago, the situation was much more stable. And since then, the ruble is stronger. What we have done in our fund, we did purchase some russian assets three weeks ago and we have been selling it as of yesterday. I see the risk reward could have been in the favor of russian asset before the when they started some sanctions. But today was the certainty that we have the renewed certainty in ukraine. I think the situation is a bit different. Yes. The risk reward profile has changed a little bit. Yes. Stay there, yannick. Plenty more to come. Breaking up is hard to do. After the break, who came up with the awardwinning idea of how britain could leave the eu and how he thinks it should happen. These days, everything your business does is done on the internet. And tomorrow youll do even more. Thats what comcast business was built for. Slow dsl from the phone company was built for stuff like this. Switch to comcast business internet. Then add voice and tv for just 34. 90 more per month. And youll be ready for tomorrow today. Comcast business. Built for business. Youre watching worldwide exchange. The british Prime Minister David Cameron has promised a referendum on eu membership by 2017 if his party is reelected. But what exactly would a british exit from the eu look like. The institute of Economic Affairs which is a free market think tank invited people to submit proposals for these scenarios with a 100,000 euro price up for grabs. Ian mansfield was announced the winner. Hes the director of trade advancement in the philippines. He said britain would have to join the association. Many asked whether he supports the uk leaving the bloc. This is inevitably a process that would have a lot of uncertain t uncertainty. In my entry i had a best case and worst Case Scenario which varied quite considerably. If anyone tells you an exact number, they cant do that. Now, lord lawson, a former british chancellor judged the awards, igniting controversy in his party by arguing that britain should leave the eu. We caught up with him and asked him if britain could enjoy open trade without being a full part of the Single Market . The Single Market, in fact, is something which its better to be out of. The Single Market doesnt mean the european market. The Single Market means the european regulatory system. And the european regulatory system is maybe a good idea but in practice, it is damaging. No. As for access, there is plenty of access to the european market, after all, american companies, canadian companies, chinese companies, all export heavily to the european market. There is no lock of access. Helio is with us in the studio. Why were they offering 100,000 euro as opposed to 100,000 pounds . It doesnt make philosophical sense. It should have been a pound price for an independent britain. We still are part of europe as we know. I think its interesting. We have a referendum coming up. We havent really got into how would a separated uk actually behave. Are we trying to renegotiate terms of the deal with europe or are we actually trying to exit . Weve had a lot of kind of commentary from Business Leaders in the uk saying the exit would be very damaging. Its one of the key problems at the moment facing companies when theyre talking about the recovery in the uk which, as the imf said yesterday, was growing at a faster pace than any other country around the world. The key problem businesses are having is the uncertainty, Political Uncertainty at the moment is the number one risk, thats whether its scotland or the eu. I agree. We were a small assess management company, french, italian, our client is within europe. We rely on the eu regulation, passport regulation. Would that matter if we were part of the european trade area . As opposed to the full eu . I think the main fact is the fact that the uk will remain the gateway into europe. Its far from certain if uk is not part of the European Economic carrier and just part of the free trade association. Switzerland, for example, is not part of eea but its part of which uk is not. Its pardon of the free trade organization. It will make the position of uk visavis switzerland for the eu business. We could see, for example, a lot of company and industry going to switzerland. In fact its easier to do business within the eu in switzerland than the uk. The problem is the unknown basically. We dont know how much it would cost. How well wed be able to form these more global trade agreements and how damaging it would be to companies who have to change systems in order to meet different regulatory demands. At the end of the day, if you want to sell into the eu market, you still have to meet eu demands on goods and services. That would change, would it . It wouldnt. The point would be ditching various regulations from brussels that you dont need, whether its Agricultural Policy or whatever have you. That is an advantage. Thats the upside. That is an advantage. At the end, there were 1. 55. The worst Case Scenario, 2. 6 gdp. 40 billion pounds i think it says. The worst case, 0. 1 . Even if the best, the winner expects such a minimum impact, i think the case for europe well continue the successionist theme and talk about scotland. More than 300 years, this september People Living there will vote on whether the country should become independent from the rest of the united kingdom. Several businesses with interest in scotland and the uk have publicly stated what they feel about scottish independence. Those businesses who support the concept of an independent scotland appear to be in a minority. Promises made by the Scottish Government reduced taxes on airfares, have won the backing of billy walsh and ryanairs michael oleary. Retailer next said independence not a business issue. Aviva said it is not an issue for our company and jupiter said Financial Services sector to remain vie bran the in either scenario. The worlds biggest fund manager claimed independence would bring major uncertainties. Bae believes the existing union offers greater stability and Standard Life says a yes vote would relocate its headquarters away. A little more cautious in turn suggesting the bank would adapt to independence but amidst uncertainty was not good for business. Its interesting. People want independence but we are supposed to be staying part of the eu at the same time. Successionist fever is everywhere. Uncertainty, its less than six months. Critically, at the moment, the yes vote and the no vote are tied which is the first time. The risk that scotland actually does become independent has suddenly presented itself as a very real threat, despite the fact weve had, you know, talk about the currency, talk about the banking industry. Theres a lot of Political Support in scotland for leaving the union. I wonder what they would vote in scotland for staying in or out of the eu. Is anyone doing a separate referendum where scotland wanted to stay in or out of the eu. There was talk about scotland taking on the euro rather than the pound. That seems to have diminished. Theres interestingly a tiny remark in the imfs report yesterday about pegging currencies and the potential risk that that could have for an economy, not the Banking Sector but for jobs and the wider economy. Whether that was a veiled warning to scotland. If you were worried about an independent scotland running up huge debt and blowing the economy up, they would be pegged. Theyd have fiscal discipline imposed on them. Now, well continue this theme of succession. Catalonias bid has been rejected for a referendum. The successionist movement, the leader has said hell seek other legal means to try and achieve a referendum. At the same time, italys new Prime Minister says his cabinet approved a threeyear budget plan which will lead to slower Economic Growth in the short term but will enhance the countrys potential down the road. Renzi says his economic blueprint complies with the budget rules and includes italys biggest tax cuts in two decades. The french Prime Minister, the new one, survived his first parliamentary confidence vote, passing a policy package. Stephan is joined by a guest. The first bit of his job is done. The first part of the job is done and he managed to get more votes at the National Assembly than the former Prime Minister, 306 votes in favor of the new government. Thats to compare with 302 for the previous government. This is something well discuss with our next guest, head of political studies. Is it surprising that manuel in the end got more votes than the previous Prime Minister who was appointed just before the president ial election. Its a good result for the new Prime Minister. Hes seen much more on the right of the socialist party. There was some concern from him about the fact that some people left of the socialist party and in the parliament wouldnt vote for him. There was also the concern about another party and the vote. So, yes, its a bit surprising to see that so many people supported him yesterday. Hes a reformist. Is it that french people are ready to take important reforms . Its always difficult to say in this country. Its not the first time a Prime Minister says hes going to reform the country. But its clear that manuel wells is clearly on this side. The real question is how much the president will be able to foil this Prime Minister. The only, maybe, weakness of manuel valls is the fact that the president may stop reform sometimes because he will be concerned about demonstrations or about the opposition against them. It feels like its a significant uturn compared to the former Prime Minister, manuel valls announced tax reduction to boost the economic recovery. Do you think its a uturn or just a bit of communication . I think its both. Its clear that the policy that will be followed will be the same, because the president said there will be a following of the action of the government. But its clearly so different tone, a different way to explain it, to talk about it. Thats a real important turn. I think also theyre going to accelerate their reforms and thats also a big change comparing to the former government. Manuel valls, the new Prime Minister, also made comments against the European Central bank. Hes blaming the ecb for being partly responsible for the weak recovery. Why such a comment . Is it to blame the crowd in france, blame the ecb or does he think we need to discuss the role of the ecb . I think its a way to make pressure on the european commissi commission, if they want the commission to accept the new deal for the reduction of the french deficit. I think also we have to remember that in less than two months we have a European Parliament action in the country as in every european country. I think that the socialists are divided on this issue and its a way for manuel valls to give a boost to the socialist party in this election. Thank you for being with us, live in front of the french National Assembly. Ross, i send it back to you on these comments from the Prime Minister yesterday who wants to discuss the role of the European Central bank. That was surprising coming from manuel valls. Maybe not. Stephan, for now, thank you. Yannick . They want to discuss the role of the ecb. Well, i mean, its very easy to blame ecb or the Eu Commission for any french problem, which are mainly domestic problem. In fact, the lack of structural reform, fiscal conditions. Theres nothing new there. Coming from manuel valls, yes, it is new. People in power usually tend to blame europe for domestic problem. So french demand or paper for demand for french paper, Pretty Healthy . Yes, yes, yes. What i took away from the speech yesterday is the fact that there will be a tax cut and it will be financed by some other that seems right, Cutting Corporation payroll tax. Its more tax cut than expected. Its vague how they will be able to achieve it. The main consequence is that it is today very unlikely for france to reach a 3 deficit target. So we will have some very, very difficult negotiation with the Eu Commission. We know that the new finance minister went to berlin. There was no argument with germany. We had the dutch finance minister, the head of the beundis bank. Well be back, right after this. Youre watching worldwide exchange, bringing you Business News from around the globe. Toyota launches one of the industrys biggest recalls to date, saying nearly 6. 5 million cars need to be checked for steering and seat problems. Is greece ready to dip its toe back in the water . Reports suggest the country is eyeing a return to the debt markets as soon as today with its first longterm issue since being bailed out. Ratcheting up reforms, italian Prime Minister ren did is budget gets the goahead from his cabinet. Manuel valls wins a confidence vote on tax cuts. And the fed wondering if the market will be rocked today again. Its releasing minutes from last months meeting. The latest trade data out of the uk. The global goods trade balance minus 9. 094 billion. A bit more than the a bit less than the poll of 9. 2 billion. It was januarys deficit of 9. 46, the noneu goods trade balance, deficit of 2. 9, less than the poll for a deficit of 3. 4 billion. Total goods and Services Trade balance 2. 058 billion. January was 2. 25. Lets get a response to that. Sterling, 167. 45 against the dollar. We have a strong economy. Trying to look down. Im trying to see what the exports component of that is. Exports, three months and three months in february, down 0. 1 . Up 0. 1 in january. Imports, three months and three months, 3. 5 minus 3. 5, mean us in 2. 3. Uk columnist at ubs is joining us now. Hamit, the overall trade balance, 2. 058 billion, the deficit. Okay . Its a little bit better than expectations but the monthly data tends to be fairly volatile. I think the main point to make here is that the goods trade balance remains fairly wide, although its probably. The Services Balance has been improving for some time now. The big news, over the past year or so, the current account remains very wide because the income balance, particularly the income we get from our Investments Overseas hasnt been doing that well. Amit, why has that Income Investment absolutely, you know, been decimated in recent times . Nobody seems to have a plausible explanation for this. I mean, in part its probably got to do with the fact that the currency sterling has been fairly resilient, fairly strong. Also to the extent that a lot of our investments are in the eurozone and europe and the region has been suffering quite a tumultuous time, i think were sort of losing out on that. Of course, the uk economy has done fairly well. So profitability in the uk has been relatively better in that sense. Are you expecting there to be some improvement in what British Companies earn abroad essentially . I mean, i think as we we like most other people expect the Global Economy to recover and with that we should expect corporate profitability to improve for earnings to recover. I think that should help narrow the current account deficit for us. But either way, i think at this point it is very wide and theres little sign of rebalancing, especially after the large 25 , 30 depreciation we had in 2006, 2007. I presume as the economy gets healthier, even if we export more, we are going to import more than we export. Thats probably right. Because one reason for that is, a lot of the recovery that were expecting to see this year is likely to come from investment spending. Investment spending tends to be more import intensive. So we should see imports pick up as well. But as we see the data today, particularly on the goods side, both services sorry, both imports and exports are roughly going in tandem. Although we might see imports slightly faster, i dont think it will be materially different. The key point is we need to refocus, rebalance and get exports higher. Amit, theres a bank meeting tomorrow. What is your forecast for when rates might move . You put forward this proposal when they do go up, they could only do five or ten basis points. Right. Youre right. Its a proposal. Its a prescription rather than a prediction. The thought here is that, you know, if you go back 20 years or so when Interest Rates were 12 , 13 , 15 , it was common for the central bank to be raising or cutting Interest Rates by 1 Percentage Points or a percentage and a half. As the level of Interest Rates has fallen, the change, the delta has fallen to the more familiar 25 or 50 basis points. All im saying now is that given that we now had five years of near rock bottom, 0. 5 Interest Rate, it seems only logical at a time when households are highly indebted, when data is telling us that nearly a third of mortgage debt in the uk is held by people that have less than 300 pounds to spare at the end of the month, it might be wise for the central bank to tiptoe out of this and perhaps consider a rate hike thats smaller than the usual 25 basis points. Thats an interesting idea. We will talk about it endlessly between now and q1 of 2015, which is when i think your view is, the consensus view is. Thats correct, yes. Thanks for that, amit. In britain, the governments culture secretary Miriam Miller has resigned. She had been accused of using taxpayer money for paying for her parents home, although she was acquitted. That decision sparked a political backlash which David Cameron was set to answer for in todays parliamentary session. Shareholders in europe have the right to vote down executive pay packages at publicly traded firms. Europes internal market commissioner is expected to introduce those plans later today. Hes going to call for shareholders throughout the eu to vote on executive remuneration at least every three years. Ahead of the u. S. Open, european equities, the tooftse 0. 8. On the bond markets, we took down Pretty Healthy auction yesterday we have 21 billion of tenyear notes in the u. S. Today. And european yields were lower again. Theyve nudged slightly higher, gilts and bunt. On the currency market, the dollar yen, just below 1. 02 after hitting 1. 0155. Ua dollar, 138. 12 on tuesday after being at 137. 2 on friday. We have more on the nikkei from toyota. The vehicles being included in the recall include rav 4 and other models. The faults have been found in various parts, including the steering columns, cables and seat railings. According to the automaker, the model which has a starter that could spin excessively and spark fire. Rav 4s have cables that could snap and cause the air bag not to deploy in the event of a crash. And yaris seats have a faulty spring. Toyota shares were down nearly 5 during the trading day, hitting a fresh year low. It also became the second most traded stock on the board in terms of value. Thats all from the uk business report. Back to you, ross. Thank you for that. Theres been another sound of hope in the hunt for air mate 370. Two more pings have been picked up by vessels on tuesday, raising hopes the search is narrowing in on the missing plane. Still to come, do your favorite chocolate bars seem to be getting smaller . Its not just nostalgia playing tricks on you. Well discuss the shrinkflation phenomenon after the break. Youre watching worldwide exchange. If youre concerned your hands are growing in size, well, well done but you can relax. Snacks are getting smaller. Dairy milk, mars bars and snickers have shrunk but the prices have stayed the same. There are several explanations behind this, the socalled shrinkflation phenomenon, from rising food Commodity Prices to governments controlling Portion Sizes to cash strapped consumers unwilling to pay higher prices. With food inflation on the up, how much smaller can our favorite treats go . Head to cnbc. Com, watch our special report on shrinkflation as well as the impact its having on your shopping basket. The shopping baskets are getting lighter by definition. One would imagine. Inflation remains a stubborn problem for indian authorities, despite dipping to its lowest level in nine months in march, the opposition partys plan to get it under control, was is realistic . The story from mumbai. Reporter inflation is down but not out. Good news for the Embattled Congress party led government ahead of elections but little relief for these consumers at south mumbais largest fresh market. The fair prices could spike just as quickly if prolonged drought or heavy monsoon rain cuts agricultural output. Everything is expensive. Its difficult to manage. Middle class people can manage anyhow. The people who are very poor are like, you know its like they go without food. The basic needs are also not fulfilled. Reporter the price of a humble onion, a staple of indian cooking has stabilized to abo dr times normal in january. It is an election issue. But the way the prices have increased, now they have stabilized a little. I do hope whoever comes to the power in the coming elections, they bring down prices in such a manner one should give a sigh of relief. Economists say Central Bank Governors strategy to control inflation by tightening Monetary Policy has paid off. But major structural work still needs to be done. Parts of indias sprawling rail network date back from the colonial era. And those infrastructure bottle necks have kept inflation high. An ambitious Infrastructure Renewal Program is a center piece of bjps manifesto. If implemented decisively could reduce inflation materially over the longer term. The whole process of inflation, theres an element of infrastructure upliftment but at the same time, if there is very strong and able administrative measures also that can also help a lot. Indias central bank has done its part to bring inflation down. Now its over to the next government. Plenty more to come, of course, on india over the course of the next month. Not just india going to the polls. Indonesia is going to the polls today as war, to elect for parliament. We have an asia equity strategist, daphne, thanks very much indeed for joining us. Thanks for having me. No problem. Look, how is this election going to weigh on your views of investing in indonesia . So far, the market has done really well. You know, the rupee has gained year to date. There are two elections, first we have the parliamentary election today and then this will be followed by the president ial election in july, july 9th. Only parties that win more than 20 of the 560 seats can nominate the president ial candidate. And since the pdips announced the president ial candidate. If they can win more than 30 , it means that the coalition will have a smaller number of parties and pdip and jacovi will be in control. That means this rally could ten for a longer time and of course the big caps will benefit as more foreign flows come back to indonesia. Because what we are seeing is that year to date, only 2. 3 billion have gone back into the equity market. Where else 5 billion have gone out of the market last year. So theres still a lot of potential. Okay. The better they do, the better asset markets do as well. Lets say that does happen and you get this flow going into the big caps. Which sectors are again to benefit . Oh, i the banks and infrastructure, the banks have done really well, you know, in line results, Net Interest Margin continue to be resilient, nonperforming loans are benign. Despite downgrades being seen in the Indonesian Market generally, weve seen upgrades of the Banking Sectors. Thats my top sector pick. My top stocks would be banks. The other sectors that come into play is, of course, infrastructure, if you just heard from india, which is also a problem in indonesia. That could be jacovis focus. That will continue to benefit if it comes into power. The top picks is the cement sector which should continue to do well. Our top picks in that secretary is cement and a construction company. What happens meanwhile. Our view is that the rupiah will weaken despite the fact that its strengthened year to date by 7 . We expect with the fed tapering and with bond use going up perhaps in the second half due to better global Economic Growth our yearend forecast is for it will appear to weaken to 12,500. Daphne, good to see you. Daphne roth joining us today. Thank you. Pleasure. On the agenda in asia tomorrow, keep your eye out on japan. We get machinery orders at 7 50. Thats singapore, hong kong time. Also, fullyear results from retailer lawson. Chinas march trade figures are due as is a decision from the bank of korea. At 9 30, Australian Labor force data. Pretty crucial in determining the mood of the consumer as well as future spending behavior. Also the aussie dollar is closing in on 94 cents. Its up at the best levels of the year so far. Now, i know this is Sensitive Data is at risk. The problem was found in open ssl which is used by the most widely used web service software. Many websites could have the security flaw. A fix is available. Websites and Service Providers must install the update. Now, this comes as the amount of online data in the world is expected to multiply tenfold by 2020. The massive increase being propelled by objects being connected to the internet. The source for the estimates is the Emc Corporation who today released their annual study. The coo is simon walsh. Hes with me in studio. Thanks for joining us. You say the digital universe is doubling in size every two years. Yes, historically. Good morning. Historically its been doubling every two years. As we look ahead in the next six years, we expect it to grow tenfold. We have 4. 4 trillion gigabytes. We expect over the next six years according to the analysis down by idc, this will increase to 44 trillion gigabytes. Whats generating this . Is this all the stuff were doing on our smartphones . Smartphones is definitely a contributor. Theres about 200 billion devices. Were calling it the its being touted as the internet of things. Theres about 200 billion devices out there that could be connected. Today about 7 , 14 billion actually are connected. And idcs prediction is that by 2020 about 32 billion will be. What does all of this mean for business . For business its significant opportunity. In that its reinventing, radical rethinking will go on in terms of the way in which we analyze and take on board that data and turn it from being data bytes into meaningful information we can use to generate opportunities to serve our customers. When you talk about data, i suppose youre talking about what sort of data is it . Sure. Theres plenty of examples. Theres sportswear Apparel Companies who have fit bands and sensors in your shoes these days, they attach to your application via smartphone. That goes up to the web. It gives you a report to say, you are increasingly healthy or your fitness regime is not adequate today. Same is true in the automobile industry. We have black boxes in cars for telemetry around driving performance. That data is being analyzed to say this person is a good driver, decrease their premium, this person is a less good driver, perhaps increase their premium. It will be interesting, youre saying were not analyzing hardly any of it. This report says that only 22 of the information we have is regarded as useful. Thats a quarter or fifth really. And of that fifth, were analyzing a tiny proportion. Absolutely. And this is, i think, so our press release is entitled invaded by census. I dont think the citizen and the consumer is being invaded. I think the people that are being invaded are the i. T. Departments and the businesses who are are now having to work extraordinarily hard to analyze how this data can be turned into meaningful, useful information as opposed to just becoming a repository. You have to discard 80 of it but you dont know which 80 you have to discard. Exactly. Data analytics and the systems required to do Data Analytics is a tough topic. Theres Software Tools being developed. This is a whole new skill set requirement for the i. T. Organization. Are we going to see that . I think you hear a lot of people referring to data scientists as sort of the future organization and then we have job titled in the i. T. Organization called the cio and increasingly companies are creating the cdo, the chief data officer, somebody whos absolutely looking at the analytics of this information. You are storing it as well. You have to store it and increasingly make sure you protect it, data privacy laws across europe in particular and make sure you can transmit it in a secure fashion across wireless networks. Privacy, security, storage, these are all significant topics to underpin this. Thanks so much for coming. There seems to be a lot going on. Still to come on the show, another bump in the road for toyota. Its recalling 6. 4 million cars. Well be in tokyo for the latest on that. Plenty more to come. Meanwhile, a reminder of where we stand as far as equities are. Ahead of the u. S. Open today, weve been ticking a little bit higher. The u. S. Futures are currently up 3. 3. The dow has caught up, 41 points and the nasdaq currently up 10 points. European equities ahead of that, ftse 100 currently up 0. 75, the xetra dax and the cac current up 0. 8 . Dont forget, squawk box will be speaking to u. S. Treasury secretary jack lew. Catch that at 8 15 eastern. On a programming note well hear exclusively tomorrow from the president of the bundesbank, jens weidmann. Meanwhile, still to come, the second hour of worldwide exchange, right after of this. Geico motorcycle. See how much you could save. Youre watching worldwide exchange. The headlines today, toyota launches one of the auto industrys biggest recalls to date. 6. 5 million cars need to be checked for steering and seat problems. Ratcheting up reforms, the italian Prime Minister, renzis budget gets the goahead while french counterpart manuel valls wins his confidence vote on tax and spending. Shares of alcoa trade higher as better sales help the metals giant. And traders are wondering whether the fed might rock the markets again today taking on a more hawkish tone with the release of minutes from last months meeting. Youre watching worldwide exchange, bringing you Business News from around the globe. And a very good morning to you. If you just joined us state side, focus on another major recall in the car industry, this time from toyota. The Japanese Firm is recalling 6. 4 million cars worldwide which makes it one of the biggest to date in the industry. Toyota needs to fix faults in the steering column and seats, though its unknown if this is a design or manufacturing issue. The recall came out just before the market closed in tokyo today. But it managed to still send shares lower by more than 3 . Karen joji is with us in tokyo. Are there safety issues . The company said today as part of the recall they have reported seeing no accidents or injuries as a result of the recalls but it is a very wideranging recall. As you pointed out, the largest single day recall since 2012 affecting many cars in many countries across many continents. Youre talking 27 models, theyre also affecting cars that toyota made for General Motors. The faults are also widespread. They range from everything from steering to the seats and in some cases, there are faults in multiple places of one model car. The company is not saying how much this is going to cost. But i talked to a number of analysts and the general rule of thumb seems to be that for one car, a company like toyota would spend about 100 u. S. Dollars per car on a recall. When youre talking about, say what were talking about now is 6. 5 or 6. 6 million cars, youre looking at an impact of 60 to 70 billion yen. For a company thats headed for record profits in the Business Year that just ended, that may not seem like much. We dont know if this is a problem at the supplier level or whether this is a problem at the manufacturing level at toyota per se. Thats one question that remains to be answered. Theres also an issue that because of the recalls that toyota faced in 2010, the big recalls that culminated, toyota has put in place a number of layers of Quality Control checks. It is possible these newer Quality Control checks may have increased the number of recalls than they would have normally done before the system was put in place in 2010. That is a possibility. So there are two ways to really read this. The negative part of this, according to some analysts ive spoken to, is that if youre talking about 6. 5 million cars right now, they recalled close to 2 million of the hybrid car earlier on this year, youre looking at a tally of 8. 5 million. This is a car Company Selling close to 10 million. That difference is not that large. Given the scope of the recall encompasses almost nearly the total amount of cars that toyota is selling in one year, this is potentially a problem. But as i say, it is still early days. We dont really know the extent of the problem and the depth of the problem and why the recalls are occurring in the first place. Ross . It is extraordinary, isnt it . You can produce millions of cars before you realize theres a fault. But as you say, we might only realize theres a fault because of the new procedures theyve put in place. Just from a laymans point of view, it is amazing you can make that many products and then you have to fon out thereind out th issue. I dont know how that happens. If we find out, tell us. Thanks very much. Lets move you on. We snapped three days of losses for the u. S. Markets at the close yesterday, just turning up towards the end of the session, we are trading 39 points above fair value this morning. The s p 500 was up 0. 4 yesterday. Currently we are 2. 75 points above fair value. The nasdaq currently trading up 9 points above fair value. European equities have been up. The ftse been up nearly a percent, nearly threequarters. The xetra dax, cac current are up as well for the italian markets as well. Focusing in on peripheral debt once again, greece expects to announce a fiveyear bond auction today. You can see where the yield is. Its come back down to around 6 . Guilt yields higher. Trade data today was okay. Tenyear treasury yields, the yield we got down to 2. 68 yesterday. Pretty good takedown. 30 billion of threeyear notes during the tuesday session. Today were looking at 21 billion issue of tenyear paper. On the currency markets, the u. S. Reclaiming lost ground which it had on tuesday. Now, we saw dollar yen got down to 101. 55. About the lowest since march 19th. Back over the 102 level this morning. And euro dollar just back below 138. We got up to 138. 12 on tuesday after being at 136. 72 on friday. Were focusing in on alcoa today. Its swung to a First Quarter loss on the cost related to closing plants due to a global glut of aluminum. Offsetting growth in the companys auto and aerospace businesses. Revenues came up show. Alcoa continues to deal with stubbornly low metal prices and is focusing on more profitable finish products. You have to look at where do you want to have the growth. And the good news is we have a gigantically attractive photo in products in hot markets coming from aerospace, automotive, building and construction, packaging. In every one of the businesses we are growing and at the same time were growing the profitability. They expect the aerospace to gross 8 to 9 , up from 7 to 8 . February wholesale trade numbers. They are due out at 10 00 eastern. We get the minutes from last months fed meeting. Beer and wine distributor Constellation Brands reports results before the open. Bed, bath and beyond and ruby tuesday are out after the close. The feds march referendum city meeting could be even more closely to the news. Janet yellen surprised investors in her first press briefing. They could start rising six months after tapering. Investors will be looking for a little bit of clarity today and traders will also be watching for financial dissent from last months change of language on forward guidance. Ahead of this release, Federal Reserve members have been having their say about the future of the Central Banks Monetary Policy. Charles evans raised concerns about the fed withdrawing qe early. He says the fomc needs to be more specific about its plans to hike rates. Joining us with his thoughts, chief International Economist at ing. Rob, good to see you. I know you like to see the minutes before you comment on what they might say. What are we looking for . If the fed was doing a good job, the press briefing should have left the minutes completely redundant. We should know everything but they didnt. We had the comment from yellen, that sixmonth comment. Was it a gaffe or wasnt it . Since she made that comment, any number of the fed members have been out giving speeches. We havent got the sense that it definitely was a gaffe. Perhaps we have to see something which will reconcile that comment. Youve got to express the consensual view, have you . Or do you express your view . It should be the view of the fed. You just mentioned a whole bunch of fed members, holding completely different views. Its hard to push the consensual view, thats the point, isnt it . Therefore you do need the minutes to know what the range of views are. Except theyre heavily cooked. Its not a transcript. Its not a transcript, unlike the bank of england. Exactly. Its not a transcript. Its a managed document to give some kind of view across. You dont get the sense of how deep the defense is. Its a difficult document to read. Most of it is pretty dull. Theres the talk at the end about fed action, what they discussed, what they thought was right or wrong about a statement. Are they feeling more hawkish or are they not very good at forecasting, so a couple more pushed up this time. It was six months, rates are up six months at the end of qe. Were not really going to know that until six months after well, at least until qe is finished. You might know it in april of next year. One way you can reconcile these comments with what theyre forecasting for rates is that maybe the very first move is to take the 0. 25 banned andty it to 25 as a first move. Most forecasters are assuming it would be later. Maybe its very small. Maybe they adopt a much more bank of england style approach where they move to press briefings. We had this view from amit kara saying when we had rates at 13 and very high inflation we moved in big chunks. We could do 1 or 2 moves. Now that rates are at alltime lows, maybe we should only move at 10 basis points. Sure. The implication is maybe the first move would be Something Like 17 basis points. Effective fund rate is about 8 right now. You move to that and you dont move every meeting greenspan style. You pause, you give information, assess the economy. Thats how you can get these things to move along. Stay with us. More to come from you. Also, dont forget today, tomorrow well hear exclusively from the president of the bundesbank. Catch that interview from 7 00 cet. And today, squawk box is speaking to the u. S. Treasury secretary, jack lew. That exclusive kicks off from 8 15 eastern. Also still to come on this program, the new Prime Minister of france has survived his first big test but his focus moves from confidence votes to economic policies. Can manuel valls really succeed . Well have the latest from paris. Mine was earned in korea in 1953. Afghanistan, in 2009. Orbiting the moon in 1971. [ 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. A short word thats a tall order. Up your game. Up the ante. And if you stumble, you get back up. Up isnt easy, and we ought to know. Were in the business of up. Everyday delta flies a quarter of Million People while investing billions improving everything from booking to baggage claim. Were raising the bar on flying and tomorrow we will up it yet again. Youre watching worldwide exchange. Recap of the headlines, toyota is set to recall 6. 5 million cars over steering and seat issues. Investors eagerly await last months fed minutes, looking for guidance after yellens comments on raising rates. And alcoa posts a First Quarter loss on plant closures but beats on the bottom line. Greece is planning to announce a new longterm bond as early as today according to sources cited by dow jones. This is after the Greek Finance Ministry confirmed it is gearing up to test the markets by saying a gradual return of new medium turn loans is being prepared methodically and carefully. They are expected to issue a three or fiveyear bond. Morgan stanley says greek yields are close to where portuguese and irish yields were. The analysts think the market is priced in. Elsewhere in europe, italys new Prime Minister, renzi, says his cabinet has approved a threeyear budget plan, which will enhance the countrys potential further down the road. His economic blueprint complies with the eurozones budget rules and includes its biggest tax cuts in two decades. The new Prime Minister of france survived his first parliamentary confidence vote passing a package aimed at restoring growth to the eurozones second biggest economy. Stephan has been analyzing the new Prime Ministers performance and is with us in paris. Stephan, what sort of proposals are we seeing . Reporter thats an interesting term, ross. After raising taxes in the last two years, the french government is going to lower taxes in order to boost the economic recovery, this is what manuel valls, the new Prime Minister says before the National Assembly says yesterday afternoon. It was already announced by Francois Hollande three months ago. Clearly the priority will be on boosting the economy. At the same time, france is going to cut its spending to lower the public deficit, 50 billion euros in cost reduction. 20 billion almost will come from the central state. The rest will come from the Social Security and from the french regions which by the way, the number of the french regions will be divided by two in the next couple of years. This is what manuel valls said yesterday. Their interesting comments rest on the European Central bank. Manuel valls openly criticized yesterday to ecb which he claims as less expansion than the american one or the british or the Japanese Central bank. He basically blames the ecb for the strength of the euro which is damaging the exports from the eurozone. As a result he would like to discuss openly the role of the ecb and he believes it will be at the center of the european elections that will take place, as you know, at the end of may. Stephan, thanks. Interesting comments there. Rob, blaming the ecb for the strength of the euro . Yes, im not entirely strength of the euro is because of the success, isnt it, of shoring up peripheral debt and all the flow coming into italian, portuguese, spanish yields. You can track it in terms of the compression and peripheral bond spreads. It looks like a one for one move. The fact that the ecb hasnt embarked on a large scale, the euro relative to those has been strong. Is that the right thing to do . Should you blame them for that . Im not sure thats really fair. Talking about debt, we just got this source being quoted on the wires. Saying that greece will raise 2. 5 billion euros from a fiveyear bond on thursday. Apparently greeces big interest for investors will be successful, theyre hoping the coupon could get somewhere down towards 5. 3 , if it goes below 5 , that will be seen as a big sign of success. This is being quoted on reuters. Who do you make of that . Depending on who you ask, its all about yields. There will probably be takers. They might be at the same point in terms of bond yield. Awere not in a market where people care about sentiment. Unemployment is peaking. We dont care or at least we get the impression the market doesnt care. Thank you. Always good to see you, rob. You always make me feel better. Thats my job. Thank you so much. Well take a short break. Still to come, could this new app, wherever it is, be a game changer from the biotech industry . There it is. Find out how it might save you thousands over the counter at your local pharmacist. Cant wait to hear about that. As we do so, were healthier today, healthier if youre long the market, that is. Gain is outpacing round about eight to one. [ male announcer ] when fixed income experts. Work with equity experts. Who work with regional experts. Who work with Portfolio Management experts, thats when expertise happens. Mfs. Because there is no expertise without collaboration. Rx review, a new app. Joining us, the ceo of rx review. Good morning to you. Youre there, you say to help patients and payers lower drug costs. How do you do that . Well, were solving one of biggest problems in health care today. Theres about 150 billion of waste. So what we do is take anybodys individual drug and dosage and try to optimize it around cost and quality. Which means we can do simple things like saying go to a different place to get fulfillment, go to a different pharmacy. It could be more complex things in that there might be another medication that will have the same effectiveness but cost a lot less money. The majority of patients just dont know their options. They dont know ways to save money and 67 dont know the cost of their medications until they reach the pharmacy. So thats what were trying to do. Yes, basically youre creating a massive prescription database, right . And presenting that information in a way that helps in an efficient way. Yes, absolutely. Our solution today has over 6,000 unique medication recommendations. We pulled together 12 different costsaving strategies. We back everything up by pure reviewed evidence based medicine. Its a major, major data set that were managing and helping to optimize anybodys individual prescriptions. Say a doctor has prescribed a certain drug for certain condition. Is your are you going to say rather than that drug, use this generic. Might you say theres a treatment that might be different completely from what the doctor suggested . There are times, its not completely different, were looking for potentially maybe another medication that costs a lot less money that will have the same effectiveness. And for us its really about driving the conversation and empowering the patient to have an open dialogue with their doctor. Affordability is a major issue. 4 of insured individuals in the u. S. Are having affordability issues with their prescriptions. Were out there, trying to bring more transparency to the market and allow patients to have that open discussion with their physician. Good to see you, sorry we havent got more time. Thank you. Youre becoming the google of prescriptions. Thank you so much. The ceo of rxrevu. Futures are indicating well get a tick higher this morning in u. S. Equities. Salesperson 1 the real deal is the passat tdi clean diesel gets up to 795 highway miles per tank. Salesperson 2 actually, were throwing in a 1,000 fuel reward card. Weve never done that. Thats why theres never been a better time to buy a passat tdi clean diesel. Husband so its like two deals in one . Salesperson 2 exactly. Avo during the first ever volkswagen tdi clean diesel event, get a great deal on a passat tdi, that gets up to 795 highway miles per tank. And get a 1,000 fuel reward card. Its like two deals in one. Hurry in and get a 1,000 fuel reward card and 0. 9 apr for 60 months on tdi models. This is worldwide exchange. The headlines today, toyota launches one of the auto industrys biggest recalls to date. Nearly 6. 5 million cars need to be checked for steering and seat problems. Shares of alcoa are higher, higher sales of finished products helping the metals giant beat earnings forecast. Investors wondering whether the fed might rock the markets again today, taking on a more hawkish tone when it releases minutes from last months meeting. Plus, is greece ready to dip its toe back in the water . There are reports that suggest the country is going to announce a return to the debt markets as soon as today with its first longterm issue since being bailed out. Youre watching worldwide exchange, bringing you Business News from around the globe. If you just joined us in north america, a very good morning to you. We snapped a threeday losing streak by the close of play on tuesday. And futures this morning are indicating we are going to tick higher once again here on wednesday. Not by a whole lot. The nasdaq at the moment is currently around 8. 5 points above fair value, up 0. 8 yesterday. The s p closed up 0. 4 . Currently trading three points above fair value. The futures currently trading 36 points above fair value after ticking up a tenth of 1 . The ftse cnbc global 300, not quite on the session high, up 4 points. Ftse 100 down 32 points at tuesdays trade, currently up 46. Trade out of uk was okay, xetra dax, cac up up 0. 4 . Plenty focus on alcoa. It swung to a First Quarter loss on costs related to closing plants due to a global glut of a aalumin aaluminum. Excluding items, profit beat forecasts although revenues came up shy. Alcoa continues to deal with stubbornly low prices and is focusing on more profitable finished products. You have to look at where do you want to have the growth . The good news is we have a gigantically attractive portfolio at value add products. Its coming from building and construction, packaging, automotive. We are innovating, putting new products out and at the same time we are growing the profitability. Klaus kleinfeld speaking there. Alcoa up 3 after hours and in frankfurt is up another 2. 4 . Constellation brands is set to report its Fourth Quarter earnings. Our next guest thinks the maker of corona could surprise to the upside, doesnt think the stocks moumentum has run out just yet. Thanks for joining us. The stock is up more than 100 over the last 12 months. You think theres more upside. Why . Yes, i sure do. If you think about the beer business, this company, we believe still has a lot of momentum. In fact, last week we raised our threeyear beer buying forecast from 10 to 6 . The consensus is still sitting at 6 . We still think theres a lot more upside here. Yes. Break this down between beer and wine. Yes, half the business is beer, the brands are corona, corona light, madella and madella light. You talked about madello. The growth, will it continue . Yes, i believe it will. We think the number will be closer to 12 for this particular quarter. When we think out the next couple of years we think they can do 10 . Thats just volume. It doesnt include pricing and the margin opportunities we think they have over the next few years. Where does that take them . You say they can get gains in the u. S. Beer category. Is that for the spanish market . Yes. So the madella portfolio is heavily hispanic. If you think of the demographic growth with that particular group, its going to be pretty significant over the next decade or so. So we think they are favorably levered to the right demographics, theyre stepping up their advertising spend. The good thing here is their velocity per point of distribution across the portfolio is getting better, which means that more shelf space is likely to come. If youre raising the valuation for the beer business, what does that mean for the wine business . Yes. Thats the great point. We think the beer business deserves a low 20s times p e. That would imply in todays stock price that the wine business is trading closer to seven times earnings. We think wine is more of a 15 times p e type business. Thats way we raised our valuation a week ago. The most important comments for you today with the earnings will be what . Yes, i think really just seeing further momentum in the beer business and confirmation that they are seeing further tailwinds in terms of that business. On wine were looking for and improving profit picture or at least the supposition that profits can improve over the next couple of quarters. Thats been an area struggling for them over the past few quarters. Nick mody, thanks for joining us. Pleasure. The Senate Judiciary committee is holding a hearing today on the proposed merger of comcast and time warner cable. Comcast, the parent of cnbc, of course. The democratic senator, patrick lee says this merger touches on important policy questions about how americans access pay tv and the internet. Comcast executive david kern will testify. Hes expected to argue the deal combines two companies that dont directly compete. Sothebys is going on the defense again in its battle with dan lope. The auction house published a 53page slide presentation. Lope, who runs the point, owns 9. 6 of sothebys and is trying to force his way on the board. Sothebys says lobe wont add anything to the company. They are attacking lope, saying companies in which he served on the board have underperformed, specifically pointing out yahoo . Laquinta priced its ipo at 17 a share, below the expected range of 18 to 21. The offering values the firm at 2. 1 billion. Laquinta was taken private by blackstone several years ago, the third hotel chain the private equity firm is bringing back to market following extended stay and hilton. Laquinta operates over 800 hotels and it will trade on the nyse under the ticker lq. The Greek Finance Ministry confirmed it is gearing up to test the markets. It says a gradual return of n medium term loans is being brought forth methodically and carefully. And still to come, its another bump in the road for toyota. Its recalling now 6. 5 million cars. Whats behind this one . Well get the details, after this. Plus, find out why it was the pits for the cme yesterday. As brokers had to abandon their computer screens for the chaos of oldfashioned floor trading. I know a thing about an ira and i got the tools to do it my way i got a lock on equities thats why im type e thats why im tyyyyype eeeee, i can do it all from my mobile phone thats why im tyyyyype eeeee, if i need some help im not alone were all tyyyyype eeeee, weve got a place that we call home were all type e afghanistan, in 2009. Orbiting the moon in 1971. [ 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. Youre watching worldwide exchange. And the headlines, toyota set to recall 6. 5 million cars over steering and seat issues. Investors wait for the minutes from last months fed meeting, looking for guidance. And after yellens comments on raising rates. And alcoa posts a First Quarter loss an plant closures but beats on the bottom line. Another day, another major recall from an automaker, this time its toyota, again. The japanese automaker recalling 6. 4 million cars globally. One of of the biggest to date in the industry. It needs to fix faults in the steering column and seats. Thats unknown if this is a design or manufacturing issue. The recall came out just before the market closed in tokyo today. But it did still manage to send shares lower by more than 3 . We have the director at mizhu international. Its amazing to me you can make 6 million vehicles before you realize theres a problem. What youre seeing overall in the industry is standardization or unification of parts in order to cut costs. When there is a recall it tends to get bigger because all the manufacturers are trying to utilize the same parts. Theres another way of looking at this. After their big safety recall issue a year or two ago, they said they were going to put in more Quality Control. You might, i suppose, suggest weve discovered this because of the new Quality Controls weve put in. I have no idea whether that has veracity or not. Yes, i mean, youre quite right. I think everybody agrees that toyota is becoming adamant and excessively aggressive in Quality Control. According to our analysts, he basically comments that the recall that youre seeing this time around is due to products that were made around 2005, which is before the incident happened in 2010. So it could well be the case that we might be seeing more progress of this, especially parts that was due to wear and tear after ten years or so. Yes. Maybe theyve only just as you say, theyve only just discovered it. Do we know if there are safety issues concerned with this . At this point, no. And as you reported earlier, he was telling me if its a design fault, it tends to be the case for toyota to bear the heavier burden. Trend of the Japanese Companies or conglomerate in this case, they do it together, tend to share the cost. In a lot of cases, the Automotive Parts companies tend to basically raise their hand in taking the hit. As for the damage itself, they have high provisions. It shouldnt be that much of a burden to result in, for example, that 3 decline per share price that was reported. It shouldnt be that much of an effect. Do we know the total financial implication as far as toyotas bottom line is concerned . No. At this point, no. Because as you reported earlier, the real details of the recall and consequences of that has not been calculated. Of course the negotiation of whos going to take what percentage of the burden has not been decided. But it is, according to him, it seems like its well in the provision of what happened already as we speak. Good to see you, or speak to you at least. Director of mizuho international. Gm is being fined 7,000 a day by missing an april 3rd deadline to answer the request about the ignition recall. Gm has been fined 28,000 so far and is subject to further penalties until it answers all 107 questions that it has been asked. Gm says it is fully cooperating. The company is planning to sell a lower priced version of the redesigned 2016 chevy volt has it tries to jump start sales of the electric car. It will have a smaller battery pack and a shorter driving range. Meanwhile, we had a trading glitch at the cme, the worlds biggest Futures Exchange sent business back to the pits on tuesday. Bertha has the details for us from the cmc hq in the states. Good to see if they still had the skills. Right its a little bit of back to the future. Literally back to the futures. The cme had to shut down electronic trading of several agricultural contracts because of a rare glitch that sent traders scrambling back to the floor. Futures and options trading in corn, wheat, live cattle, ethanol and other contracts were halted just before 2 00 p. M. Eastern just as traders were trying to square their positions ahead of todays release of the usda monthly crop report. Oil, metals and soy beans were not affected. The problem was fixed after the market closed but the cme still hasnt explained what caused the outage. Traders used to handle orders by computers had to flock back to the old pit, shouting orders and using the oldfashioned hand signals to communicate. Brokers say they were unable to handle all of the incoming orders and the cme says it will cancel some trades but some of them will have to stand. Tuesdays outage which was the longest in recent memory at the cme meant farmers, Grain Elevators and Investment Managers were unable to electrically buy or sell. The cme recently won a court case giving it the right to use both electronic and open outcry trading to calculate end of day prices. The Electronic System handles about 95 of the volume these days. The cme says only about 8 of all contracts, agriculture or otherwise are handled via open outcry. The technical issues are the latest in a spade of problems that have snarled a number of exchanges in u. S. Markets here in recent years. Recall about a year ago, the cboe had to shut down half a day because of issues with expanding its trading hours. In august, the nasdaq suffered a threehour disruption there. A couple times, there were ripple effects of that same sort of Software Glitch that made it difficult to trade. Its really interesting. When you go down to the nymex here in new york, its the same. The pits are virtually empty. If they couldnt trade electronically on some days, i dont know how many people would be able to make it down there and do the trading physically. Only a few people hang out in the pits anymore when you talk about things like gasoline or nat gas. Eventually well lose the skills of the people who know how to trade physically. I guess. The futures pits at the nymex, they still are physically shoulder to shoulder trading there. Bertha, thanks for that. Good to see you. Now, some of the other news, the fed, the fdic and occ have approved new rule which is require the eight biggest u. S. Banks to add as much as 68 billion in extra capital to comply with higher leverage ratios. Firms with large credit derivative portfolios will be the most affected. They will have to keep a minimum leverage ratio of 6 which is i here than the 3 agreed under new basal 3 rules. Banks will have to calculate and report their new levels from next year. Its also day two of the duke and duchess of cambridge and baby georges First Official tour of australia, new zealand. The 8monthold commanded the play room. The duke and duchess met with other young parents. The challenges of those parents slightly different. Still to come, as investors wait for the latest fed minutes, are they going to surprise in any direction . Whos going to care . Well ask our next guest how you should be positioned right after this. After snapping a threeday losing streak yesterday, u. S. Equities are called higher this morning. Currently dow is implied about 37 points above fair value, the s p currently higher by 2 points and the nasdaq higher by 10. 5. In focus will be the minutes from the feds march fmoc meeting. Janet yellen surprises investors in her First Press Conference. Ahead of that, Charles Plosser says the fed should be more specific about rate hike plans after it took a step in the right direction last month. He says the central bank isnt close to withdrawing support prematurely. Steven, are these minutes likely to provide clarity on Janet Yellens First Press Conference or not . Well, i think theyll provide more clarity on where the center of the fed is right now. I think that her press conference followed by the by her speech raised questions in the market about exactly where the fed stands. I think if you look at the forecasts that were that came out of the last meeting, and i think that youre seeing a fed that of is more cautious on the supply side of the u. S. Economy. I think youll begin to see some debate within the fed about just how much slack is left in the u. S. Economy and how much slack there is in the labor force. It will come across as slightly more hawkish than the sentiments janet yellen expressed. Yes. The key thing is timing, isnt it, as well . Its the six months when qe finishes, rates might be going up. So i suppose its whether that was a consensual view, whether there are others who talked about a shorter time frame. Yes, indeed. I think that if it does come out that six months was discussed, thats more powerful than it being a slip of the tongue. The other issue that might come up is fed members saying, look, you know, the economy is a lot better than it was two or three years ago. Were providing more stimulus than we were doing then. Does the economy really need as much stimulus as were providing right now . I think there are many issues that are going to be debated. It will come across, i think, as slightly more hawkish. But i dont think the market is really going to pay that much attention to it. Yes. As far as the dollar is concern, of course, we had big losses yesterday, done a percent against the yen. Some of that of course down to the bank of japan, seeming more hawkish than we thought and ecb maybe not committed to qe. I dont know where this all comes out in the wash. Yes, i think that there were a number of specific issues that came out. The broader issue, i think, is that right i think vols in fixed income are extremely low. Theres no threat on the fixed income side. Investors feel comfortable in buying yield. Theyre looking at greece. Theyre looking at other peripherals. Theyre looking at the socalled fragile five that are becoming the fantastic five. I think right now thats the environment that were in. It will be hard to shake it. So, yes, basically whats still driving prices is flow and flow into yield. I think thats what the market is looking at. Especially keep in mind, in some cases, were looking at the lowest fx volatility since 2007. Thats remarkable. In terms of, you know, how the market has evolved. It makes investors more comfortable with clipping the high scoop that they can find. Steven, good to see you as always. Thanks for that. Steven england. Dont forget, squawk box will be speaking to the u. S. Treasury secretary jack lew. Catch that exclusive from 8 15 a. M. Eastern time. Dont miss out. Otherwise, thats it for todays edition of worldwide exchange. Coming up next, of course, the countdown to the opening of the markets state side with squawk box. Whatever happens, we hope you have a profitable day. I dunno, i just ah woke up today and i said i need something sportier. Annnd done. Ok maxwell, just need to ah contact your Insurance Company with the vin number. Oh, i just did it. With my geico app. Vin is up to the loaded. Ok well then jerry here will take you through all of the features then. Why dont weeeeeeeeeeee go out to the car. Ok, ill just be outside. Ok, yeah. His dad is my boss. Yeah. Vin scanning to add a car. Just a tap away on the geico app. Good morning and welcome to squawk box. The fed about to release the minutes from the last meeting and the markets will be looking for any hawkish overtone. Toyota announcing the second largest recall in that automakers history. Nearly 6. 4 million vehicles. And uconn captures the womens ncaa championship title just one night, just 24 hours after the mens team wins, inspiring basketball coming out of uconn. That happened one other time, i think only one other time, in 2004 to the same school. Wednesday, april 9th, 2014. Squawk box begins right now. Good morning, everybody. Welcome to squawk box here on cnbc, im becky quick along with joe kernen and andrew ross sorkin. We have a big guest lineup for you this morning, including barry sternlicht. Well be talking to the ceo of panera bread, ron shaick. At 8 15 a. M. Eastern, we have an exclusive interview with treasury secretary jack lew. Steve liesman will be here with that. Well be covering everything from Economic Growth to slapping sanctions on russia. We start this morning about a look at the markets and a focus on whats been happening with the fed. The Federal Reserve will be releasing the minutes of its last meeting on march 18th and 19th. That is expected at 2 00 p. M. Eastern time. Market will be looking for hawkish comments luing anything related to the discussion on changes