The takata recall widens internationally, sending takata shares sharply lower. And a very warm welcome to the show. We are awaiting a speech by Vladimir Putin in moscow. Youre looking at live pictures of the kremlin palace where hes due to start speaking. The nation addresses to the duma any minute now. We will bring you pictures of that and the headlines of the speech if and when it comes. The speech comes as relations between the u. S. And russia remain strained. The u. S. President barack obama has laid the blame firmly at the door of the kremlin. Im less optimistic about russia. I have a very direct and blunt businesslike relationship with putin. We had a very productive relationship when medicine very was approximat medev was president. Partly because he was been integrating himself into a nationalist backwardlooking approach to russian politics. Its scaring the heck out of his neighbors and badly damaging his economy. Sanctions are having a big bite on their economy. Chris is joining us now. Great to have you here this morning. Thank you. Lets talk about what putin is likely to say. Does the fact that the ruble has weakened significantly, that the russian economy is going to be declining next year, does that strengthen the wests Bargaining Power against him or does it make him even more resolute . Well, i think that the sanctions will work in the sense that there will be more determined peacemaking efforts on the ground in ukraine. Thats an ambitious thing to say. The russians would deny it. You can see there are more constructive things going on on the ground which is not, by the way, being widely reported. But that is a detail. The russian view will be that were pursuing our interest and were not going to be browbeaten by any sanctions. But i think that president obama has a point there in your clip just now. It is concentrating minds, no question. And this speech could come at a critical time in russias economy. A number of challenges facing the russian economy right now, the drop in the price of oil, the weakening ruble and those imposed sanctions. Do you think putin will address all of these challenges in todays speech . Its the annual state of the nation address to the parliament. Its designed to set out the broad lines of foreign and domestic policy. The speech will, at a rhetorical level, fought be a response to the crisis. This will be the leader just laying out the plan for the country, not giving the impression that the country, everything is in the grip of the geopolitical crisis or the shortterm drop by the oil price. Underneath, everyone knows the reality. Its not things that count. Do you think youll be able to ease any of the fears right now . I think there will be strong signals that theyre going to go for a settlement in ukraine, that they want a new strategic accommodation, that theyre going to have responsible policies in the face of the external shock from oil, etcetera. All right, chris, thank you so much. And youre staying with us to talk about broader europe in just a second. Speaking of europe, take a look at the euro slip to go a twoyear low ahead of the ecb meeting which could lay the groundwork for a sovereign Bond Buying Program next year. The central bank is set to release the latest round of a staff projection later this afternoon. Its been suggested that further cuts could build a stronger case for qe. Annette is in frankfurt with the latest. Yes. That is very much the case. Also, we get for the First Time Ever staff projection for the First Time Ever. We get gdp growth for 2017. Those projections at the later end of the curve, so say for 2016 or 2017, they deviate strongly from the target of the ecb to have an inflation rate of close to but below 2 . That might be actually laying the groundwork for more action in the First Quarter. Also, you needs to explain how he is going to boost the Balance Sheet to levels last seen in march 20112 with its current policy to buy covered bonds in abs. Its because both programs have not really started with a big bang. So i think mario draghi is increasingly under pressure to do more, but at the same time, he also needs to wait until those measure, taking leak the teltro wsh will actually bear fruit and show some effect on the market. So recent comments from the governing counsel are suggesting that the governing council will not decide bold measures today. They will rather wait until the First Quarter that the taken or implemented instruments will have time to render some effects on inflation rate. We talked to constancio, who was saying clearly last week that the ecb will wait until the First Quarter of 2015, will look at how things look like ie inflation, the inflation outlook and then also would react and would consider buying sovereign bonds. He mentioned some details on how the ecb might actually buy those bonds. That would be according to their capital ratio. That is triggering analysts saying that even german bunch must have lower yields next year. With that, back to you. Annette, thank you very much for that. You can see russian president putin is delivering his annual state of the nation address to parliament. The speech is expected to address ongoing tensions with the west. Investors will be looking for any reaction from the ruble and the headlines. Well bring you reaction as the morning goes on. We heard from president obama earlier and we know kerry has been in brussels over the last couple of days, particularly to talk about this topic. But is this a problem with any further development between the west and russia as a whole . U. S. And european interests are very, very different. I think, wilfred, that that is going to become the most important question in the next few months. This is not widely recognized at the moment, certainly not by financial markets. Namely, should the west address the root causes of this confrontation or should you just left russia rough, teach it a good lesson, oil price res continuing to fall and that can come to their senses. I think its going to be different views on that in europe. The United States is probably less inclined, less at stake. That is probably more than anything the russian president can do, it could be the decisive driver. And its more than and nato specifically than ukraines desire to join the european union, for example . Im personally absolutely convinced of that. You can argue until the cows come home. Its the enlaurnlgment of nato is my view. Another big event is the ecb policy meeting. Joining us now is peter to help us about what to expect today from the ecb. What do you think mario will deliver . Im not 100 sure market is expecting sovereign bond buying today. What is very clear to me is that the market expects sovereign bond buying at some point in the future, likely in q1. For today, i dont think that is the most likely expectation or more likely outcome. What do we expect for today . I think that would be premature. Secondly, strong statements, however, in that Something Like this might be coming out going into next year. Its probably contingent on some of the outcomes and the operations that theyve rolled out such as the abss. So in a nutshell, hes going to tell us if the Current Program will deliver what the ecb will expect, they will do more. If youre not expecting him to announce any type of sovereign bond buying today, when do you think that announcement will come . Whats the timeline . We have some very strong indications. Take all the data we have available and wivens thats available, take it forward from there. I think that is a perfectly reasonable timeline for any increases of the bond purchase. Should they include sovereigns or should they not . If we look at the sovereigns across europe, they are record low levels. Surely that suggests if mario draghi in q1 or whenever it will be, it should be focused more to the corporate sector rather than the sovereign sector, these yields are already so, so low. I guess you could extend that very same argument. If you look at the Corporate Bond sector or the Corporate Bond market, most of the companies that come to the Corporate Bond market tend to be the highly rated blue chiptype Stocks Companies coming to the market. And those yields levels are also low. But i think youre raising a very good point. Its not necessarily about driving the yields significantly lower. Its about increasing the size of the Balance Sheet. So its a very different approach then with the credit easing that it has been. Whats your recommendation to investors ahead of both todays meeting and potential bond buying in q1 . For today, going into the shortterm, there is a potential of a small disappointment given the expectation that something will be happening is certainly to some degree priced in. Having said that, if that comes, be it on the corporate side or be it on the corporate side should continue to perform. The question is whether those are to the short maturity bonds. If you believe the flip side will be coming and if it dont move and the Interest Rate is set higher, as has been suggested by some in the market, surely that would mean even the spanish bonds have room to perform, no doubt. Peter, from rbc capital yap markets, thank you for that. President putin delivering his annual state of the Union Address. Russias president said he will respect ukraine of a Brotherly Company and crimea is a Second Brother for russia forever. He said russia has become a stronger country because of its people, so a nationalistic speech thus far from president putin. We will get you more from that state of the Union Address as they come out. Lets have a look at european markets. Weve kicked off december with a couple of small up days in european markets. It looks like we might have another one of those today. We did open about 4. 3 down on the stoxx 600. Weve gathered a little bit of momentum since then. We are up 0. 1 . Lets have a look at the individual markets. Where is that strength coming from . The ftse 100 is the laggard against what has been so far in december. Some people pointing to the fact that its heavily weighted towards commodities. And weve got the mpc, the uk bank of england meeting today, as well. The ftse 100 flat today. Germany is up 0. 3 . France 0. 16 and italy 0. 17 . Overall, markets are muted ahead of Mario Draghis coming later today. Tui travel reported an annual underlying profit of 54 Million Pounds beating expectations. The British Travel group which is in the process of merging with tui in germany said pricing was strong relative to last year. Its up 3. 1 so far. Speaking first to cnbc earlier, the ceo peter long highlighted weakness in the french market. I think in terms of the for us, theres two aspects in terms of france. One, the destinations that most customers go to which is predominantly north africa locations which is where the demand has been weak and secondly the overall weakness of the economy and that translates in terms of weak consumer confidence. Ryan air, big move up, 9. 2 has raised its full year guidance on the back of strong passenger numbers. And the eu is set to approve the merger between wholesome and lafarge. In order to clear competition rules, the two firms have sold assets worth around 12 of revenue. Sky is up about 1 . Its selling its controlling stake. The group will keep a position of about 20 in the gambling business and retain a position on the companys board. Now, the story, the back end of last month, the story so far in december has been a little bit of movement the other way, a little bit of profit taking. But nonetheless, the move over the last month as a whole has been one of yield compression. In europe, we have seen very low yields. People now expecting at some point well see bond buying and the yields coming down off the back of that. Italy just below 2 . The uk and italy, similar yields from a tenyear Government Bond run. That does highlight the expectation of more easing in europe than were likely to get in the uk. Lets look at forex. The u. S. Dollar continuing on an upward trend in december. Paused a bit in december, but thats not the case any more. The broader index has hit a fresh fiveyear high. It will hit a fresh twoyear low earlier in trade but it has recovered. Its back above 1. 23. The yen did hit a fresh sevenyear low and is teetering on the 120 mark. 1 19. 96 right now. The aussie dollar weakening, 0. 36 . What is crude doing today . Well, its up and that is why the ruble is up, as well. Crude, 67. 75. Brent is back above 70. Its a bull market for oil. Of course, that doesnt tell the whole story. Now lets get an update on markets in asia. Sri jegarajah is standing by in singapore, as ever. Sri. Thank you, will. The main nd side of the market just continues unabated. 2,900 on the knows on the shanghai comp. So youre looking at the biggest percentage days, its biggest daily percentage gain since 2012. This is the strongest close since 2011, mid 201 1. Why the catalyst seems to be the market continuing to front run the idea that we are going to see more stimulus, possibly in the form of a cut by the pboc sooner rather than later. A lot of people are saying its not a question of if, its a question of when. The property developers, the banks, the brokerages did very well, as well. You can see the gains on the hang accepting. The benchmark composite down by almost 1 , down by 0. 8 . That is because the eastern philippines is bracing for yet another super price the year after typhoon yolan devastated the eastern provinces. This time we are hearing may strengthen to a category 5 store and is expected to make landfall today before noon. Thats one of the seasons why the markets in the philippine res down sharply. Underperforming overall a very strong session in asia led by the Mainland China markets. Will, back to you. Sri, thank you very much. Vladimir putin has said he blames the west for pure cynicism in its approach. Well bring you more headlines in a few minutes. Coming up on the show, boris becker gets in the financial game. The tennis hall of famer teams up with top investors to promote funding for sports and entertainment startups. He joins us at 11 30 cet. Dont miss it. And theres no gold at the end of this bridge as San Francisco says no so hedge funds. We ask if your pension money should be allocated to alternative investment. Is there life on mars . Nasa is due to launch a space capsule called orion in less than three hours. Were live to previe the flight. Russian president putin is delivering his annual state of the Union Address to parliament. Lets recap, he says russia has become a stronger nation because of its people. With respect to ukraine, he described it as a, quote, brotherly country. He blames the west for, quote, pure cynicism in its approach to the ukraine and he says sanctions are harmful for all countries. He says its meaningless to talk to russia from the position of force. The ruble did open around 1. 5 . It is now flat, the ruble. Its off the back of some of putins comments. Lets bring in chris granville, and talk about the ruble. Its all being blamed on the oil price, but the ruble needs to increase rates to protect the ruble, as well. That is the bottom line, wilfred. The financial sanctions are i think a lot massive giant. The rubls had a huge fall already. Why . Because russian banks and Companies Need to horde foreign exchange. Theyve got external loans which are maturing. So that plaque hole of uncertainty created by sanctions is a powerful driver. These circumstances with inflation going up, as well, central bank, 150 basis points end of october. The ruble has to be more worthwhile holding. Its that spread between ruble and i think that, you know, with the nationalist rhetoric coming out of putins speech, clearly thats some sentiment effect, but it underlines drivers which i would draw to. Do you think the nationalistic statements will reaffirm the forces in supporting further sanctions on russia and what does that do to its economy in 2013 . Well, i certainly agree that that would be yet another negative factor for russian markets. I dont think rhetoric and decorations are going to be the driver. The criterion will be whats happening on the ground in ukraine. And the theres not enough additional bad stuff happening, i think, to persuade certainly germany and the other european governments that now is the time to increase sanctions further. Theyre not ready to lift it, either. On a trade basis, if we see hikened rates again, would that say that the ruble is a buying opportunity, even if the micex might want be . Absolutely. I think this becomes more. More interesting. I mentioned earlier on the show that the situation on the ground in southeastern ukraine is actually improving, relative. Obviously, in humanitarian terms, its still desperate. But there are steps to resolve the conflict. Meanwhile, oil has had its fall. Who is to say that there would be further action. But clearly, some kind of market derivative seems to be found. Meanwhile, the central bank in europe is pumping out liquidity. The european union, especially turkey, but russia is waiting there with a fantastic rates trade if the drivers allow it. Chris thanks very much for joining us, as ever. Lets have a quick look at the micex and the ruble. Micex up 0. 5 . Ruble strengthened 0. 2 having been up more than that earlier in trade. The euro hovers near a twoyear low. Vladimir putin strikes out at the west for cynicism over ukraine saying harmful to his annual address to parliament. It sends the ruble lower, reversing gains. The takata recall widens internationally over faulty air bags, sending takata shares once again lower. And a catalyst that could likely move stocks is the is the ecb meeting. Will mario draghi suggest further commentary that could push stocks higher and the euro lower . That, of course, will be the question. Right now, we are looking at stocks higher ahead of the ecb announcement. Taking a look at bonds, we are seeing them move lower. Yields could move lower on the expectation that we will get some action from the ecb. A little bit of profit taking in bonds over the last two or three trading sessions. Nonetheless, very low bond yields across europe. Forex, the euro has been hovering around a twoyear low. It did dip below 1. 23 earlier in trade. Sterling is at 1. 566, down a little bit today having strengthened a little bit off the back of the autumn statement. The yen is hovering around 1. 20. Its a fresh sevenyear low for the yen against the dollar. It hasnt quite crossed 1. 20 yet in todays trade, but it has been flirting with it throughout the session. Moving on, uk home buyers has topped headlines after George Osborne presented his husband all statement. The multi nationals were hit with a tax. But its the banks that will bear the brunt of the new tax firms allowing uk lenders to use losses made since the financial crisis. Through the storm, we have stayed the course. Now britain is on course for surplus, on course for lower taxes, on course for more jobs, on course for higher growth, on course for a truly national recovery, a longterm economic plan, on course to prosperity. There was a lot in the mini budget for all collars to get worked up about. Public spending is set to shrink to levels not seen since the 1930s. Here is a round up of views from politicians helia spoke to on college green. I think hes playing people for fools and he in turn is foolish for doing so. The blunt truth is the deficit is going to be much higher in the current year, yet he claims to have halved the deficit on an Economic Forecasting for the next year. Economic forecasters can with a reasonable degree of reliability tell you whats happening in a current financial year, deficits getting worse. Its like predicting the weather next spring. The point is that the deficit is now halved this year. So whereas we inherited a deficit over 10 of gdp in 2010, its now going to be at 5 at the end of this year. So that is making enormous inroads. So i think that is something to be very pleased with. In particular, when you look at what else is happening in the economy, which is putting on a real growth splurt. We have the most rapidly growing economy in the western world and it will continue over 2 . That is extremely healthy. And direction is very good. A lot of people are still getting into the market, into higher paying jobs. Its a positive story. George osborne thinks the way to solve is deficit is lopping off a bit. Its linked with the health of the economy and in particular the earnings, the Living Standards of those on lower and middle incomes. If you dont see that connection, youll never solve it and he hasnt. With us is anna clark and Helia Ebrahimi. If we talk about the economy, essentially what the chancellor was doing, just six months before an election day, is raid banks and multi nationals and give that to people who are at the lower end of the economic spectrum. Although the obr was able to upgrade growth in the uk, we have felt it in our pockets. So making a big difference in terms of futures. So the taxation now makes it a lot cheaper for people on the average uk house price, which is about 250,000 pounds. Theyre going to get a nice 4,5 h 4,500 boost to the person glued right to the top, as you said. Now over a Million Pounds, it will start to get more expensive. But you really need it to be looked at. Unlike income tax, you fell off a cliff. It was one tax across the board and now thats changed. Really, hes gone off to the banks and hes gone off to tax evasion. And now, of course, one of the big debates continues to be the deficit ahead of the election. To meet the projections you made Going Forward, there needs to be a lot of cuts. Is it credible that they made those cuts . The real challenge for the rest of this keer. Theyre really being ambitious to hit the target. What they think is that the tax receipts will be back loaded, that this time a year or so ago when theyre talking about the income tax came down, people would delay their own specific sector. So theyre banking on that given a last minute windfall. Its tricky. In terms of guilt issuance, theres a lot of exemptions, 70 to 100 billion per year. If they dont get the deficit down, theyll be issuing an awful lot of debt per year. Tax receipts have really fallen off a cliff, down over 20 billion pounds. Thats not just because were not getting paid more, but actually it was really sloppy at the beginning of the year failed to materialize in a way that really added to the covers of the treasury. Theyre very difficult. But what he essentially gave himself was a year of austerity. So were going to have a decade of austerity in the uk. Quite frankly, we are looking at a situation where youre only able to maintain this by cutting government departments. Year after year after year. Thats very difficult for the uk economy. But public spending shrinking to levels not seen since the 1930s. What is the likelihood of that happening and what is the impact to the uk . It may not be as painful over six years. Thus far, they have been successful in making those spending cuts. The income tax receipts havent been quite as high as they hoped. It may not even be George Osbornes problem if he doesnt win the next level. We come to think that low bond yields will be here for a long time. Is the bigger threat about these redemptions coming up, could we see much higher bond yields in the uk . Quite possibly. In the near term, you could get hikes if we start to price in those sooner rather than later. So you and i, its tax cuts, more money in your pocket, more known to boost growth. Allen, thank you very much for joining us. Helia, thank you, also. Allen clark, director of fixed income strategy and Global Banking markets at scotia bank. Tune into decision time this afternoon to the full ecb and boe coverage with our own Helia Ebrahimi as well as carolin roth at 1200 to 1400 cet. The crisis into ukraine could post the biggest risk going into the new year. Before we do that, lets recap what president putin has been saying here to the duma in russia. He says russia has become stronger due to its people and says crimea is a sacred meeting. He blames the west for pure cynicism in proept approach to the ukraine. Hes basically saying the events taking place in the ukraine says that russias policy was right. So some bull comments coming from Vladimir Putin, the president of russia. Well keep you updated on the headlines coming from that National Address taking place right now. In fact, we are joined now from frankfurt by morris cramer. Thank you very much for joining us this morning. A lot of headlines coming out of russia at the moment. I suppose the wig question is will this change anything in either the short or longterm. It sounds like president putin is strengthening his resolve. I think it looks increase interesting like this conflict isnt going towards any resolution. Clearly, it is taking a toll on the ukrainian economy, but we also think its taking a toll on the russian economy. That is starting to have some knock on effects, as well. The european wider economy is slowing down already. We think in terms of systemic risk, whats going on in russia is the largest ghee your Political Risk and now sovereign ratings. Interestingly enough, yesterday we did a survey with investors and it doesnt seem to think the major risks are actually in the middle east, which is something that we dont quite share. But wherever the risks lie, i think we agree with investors that 63 of them, that they think geoPolitical Risks are only going to increase. Russias putin says the tragedy we see in the middle east shows russian policy is right. What does that mean for russias Credit Rating Going Forward . We have, we have the rating of russia as triple d minus with the outlook. We think the economy is slowing down. We have, of course, seen huge pressure on the currency in the last couple of days. All of this is ex axer baited by oil prices. A little less than half of all revenue is coming from oil and gas related revenues. Through the devaluation, the budge is somewhat protected from the oil price decline, but on the balance of payment, we surely will see more pressure and this will only by heightened if and when we would be seeing sort of increasing capital leaving the country. We need to remember that between now and the end of next year, payment amortization by companies will have to pay back 130 billion. Some of them are on the sanctions list so they refinance it. So we think the drain on the central bank of europe is likely to continue. Lets move on from russia. In relation to islamic states, there is a variety of spillover risks. Which of thoughts countries Credit Rating sess most under threat . I should say we dont have a rating on iraq or syria. These are the countries that are most impacted. We think particularly vulnerable might be lebanon, which is now housing refugees. This is a huge burden on the economy. It is increasing the pressure and potentially the tension between the socioeconomic and religious groups inside the country. We see jordan as having a similar sort of strain, not quite as bad and turkey much less so. The question is much more interesting regarding what does all this mean for the resolution and progress on the kurdish situation in turkey itself. But the most impacted countries europe itself. Which countries are under the biggest geopolitical threat for 2013 . I think ewe crepe, russia is the key event to watch. Thank you very much for joining us. And as more pensions leave the hedge funds in the u. S. , were going to talk to Cambridge Associates on whether that trend will continue here on the other side of the bond. Thats coming up. The Largest Public Pension Fund in the u. S. Decided to divest out of the hedge fund space back in september and now San Francisco pension is considering reducing its allocation, as well. The positive comes as slipping returns across the u. S. Are questioning their certain investment holdings. Alex joins us live in studio to talk about this. Alex, thank you for joining us. The pepgs that youre advising, are they looking at doing the same given that the average hedge fund is topping markets this year . Its interesting. Over the long run, they have deliver equitylike returns. Not every hedge fund will deliver that. You have to be mindful that theyll deliver difference returns and different points in the cycle. The last five years, hedge funds will lag in a massive bull market. So i think at this point in the cycle, i dont think that would be a very smart decision and they play an Important Role in portfolios. Do you think hedge funds should meet a certain benchmark before charging 2 . I think the Fee Structure is interesting and you have to look at it on a casebycase basis. I think you have to be completely open about that. It requires a lot of skill and a good return for the investor to overcome that hurdle. And some very good funds achieve that very well. For others, you have to question the fee model. You have to advise your clients quite carefully. To what extent are low bond yields structural based on rules around pension and matching liekts . I think one of the key factors has been gdp around the globe. For Pension Funds, low bond yields have been hurting. A lot of funds havent been perfectly matched and are facing deficits. What were seeing, a lot of strategies to match our bid are being set up, but with triggers in place. The triggers are in place with certain yields and when they go up, money will flow into the bond markets. And surrounding the Pension Fund Industry back in the 90s and the uk enforced that type of liability matching investment. Are there signs that the u. S. Is moving towards that kind of legislation, as well . Not necessarily driven by legislation. But we are seeing across the pond in the u. S. A bigger trend to its liability matching. I think youve seen an aggregate or a long bond fund. Its definitely a trend. Alex, we have time for one more . I want to know if there are any implications to the pension fund world ahead of that election. I think the statement was pretty uneventful for Pension Funds yesterday. What will be interesting to see is how the elections play out and what would be the risk for European Unions . And the question is how will that its a lot of time for Market Participants to get away with that. And take advantage of some tundz. Thank you very much for joining us. Much appreciated. Lets get some more flashes out of president putins speech to the duma. He said says hes asked the central bank and government to implement strict measures to get rid of forex in the national market. He said money in the National Wealth fund should be used to support banks. Suggesting that speculation has been one of the reasons hurting the ruble and the central bank will act for currency. And lets take a look at some of the other currency. Ford is expanding a u. S. Recall of vehicles with takata air bags, the latest automaker to do so at the request of regulators. Takata says it does not know whats causing the air bag explosions which has led to the recall of 16 million vehicles worldwide and has been linked to at least five deaths. Drivers in oklahoma can now fill up their cars for less than 2 per gallon. Gas buddy. Com says certain statements such as texas and missouri could see gas fall below 2 a gallon very soon. In this weeks trader poll, we have been asking you, how low will oil go . Do get online to give us your views on that. Cast your vote and straightaway youll see the trend. Have your say on twitter using trader poll. I was at a dinner last night and at some point, opec will step in they say. There doesnt seem to be consensus in the markets at this point. Europe and the uk are higher than that. David beckham said he would step back from putting his name directly on products. Ooifk with adidas for 19 years. I have, obviously, the whiskey, i have h m. These are longterm deals that will continue. They will continue even though youre now kind of a competitor to h m. It will continue. Obviously, were going to be very hands on with who we actually bring on and what brands we kind of go into. And it will be about improving those brands. Its not about competing. Miss, bruce, global brands, competing with someone that im already involved in, theres no sense with that. When you mentioned electronics, people were thinking, is there going to be a David Beckham phone or watch . We have to clarify. This is, like i said, about me stepping away tr those kind of things. That meb the odd thing, but its about me, bruce, global brands, creating something for other brands and for other icons. And thats what its about. Its not about David Beckham going to do watches, socks, candles . Its about a bigger picture. All right. Still to come, tennis hall of Famer Boris Becker joins us live for an exclusive interview on set. That is coming up. And get in touch with us. Submit your questions for boris. Hi, everyone. Welcome to worldwide exchange. We have a big day and great hour coming up. Im seema mody. And im wilfred frost. Inching closer to full below qe, the euro hovering around a twoyear low as investors wait to see how dovish mario draghi will be. The other man in focus, Vladimir Putin strikes out against the west saying sanctions are harmful for all during his address to parliament. Ford becomes the latest automaker to increase recalls by takata. Youre watching worldwide exchange, bringing you Business News from around the globe. And another record closing day for the s p 500, wilfred, the 48th time the s p 500 has closed at a record high. So at this point, it seems like we are going to get that santa claus rally. Absolutely. Particularly for november, we were hitting these new highs, as you were saying. This is very small gains each day. No specific reason for it. As youre saying, it just seems like people cant decide where else to put their money and u. S. Equities are as good a place as anywhere. That is perhaps adding another catalyst for why you should be bullish. And gas has dropped below 2 a gallon in a couple of place in the u. S. The average price is 2. 75. It hasnt taken a big effect yet. As we move through, it should. Take a look at u. S. Futures. How are they trading in premarket . Green arrows across the screen. The dow joins industrial indicating a higher move by around 8 points. The nasdaq up about 2 points. Its only 300 points away now from breaking 5,000, a level it has not hit since march 200. Can the rally continue . Lets take a look at the global index. Right now, we are looking up index, up 6 points. European stocks are moving higher. Take a look at the screen right now. The ftse 100 now trading lower, but the xetra tax up 25 points. The italian markets up about 35 points. Renzi did gabe on confidence reform. Mario draghi, some type of indication is what the market is expecting. Exactly, seema. Its more of a when not if we may see more bond buying. Thats the expectation, at least, and that is what the bond market is telling us, as well. Low yields remain in place across europe, but not enough to suggestion were going to see outright qe. The tenyear in italy below 2 . The outlook is very different. Dperm fee, 0. 75 . The u. S. Picking up the last couple of trading sessions towards 2. 3 again at 2. 27 at the moment. Lets look at forex and the broader index hit a fiveyear high. In particular, the yen is flirting with the 120 high. 119. 92. The euro has, in fact, most back to flat at the moment. But it had flipped to a twoyear low overnight which could lay the groundwork for sovereign bond buying. You can see significant weakness down over the last couple of months. Basically flat today, having weakened earlier in trade. Its been suggestion further cuts could big a stronger case for qe. With more ahead of the meeting, lets join annette live in frapg further. Also let to get for the First Time Ever projections for inflation and gdp growth from the ecb staff for 2017. So that will be very interesting to see, as well, whether the ecb itself is thinking that by then inflation is back at its target of close but below 2 . So any deviation from that target in their forecast will give the markets more ground to believe that we are really going to see full on qe as soon as the First Quarter next year. At the same time, they were saying the b needs more time to assess the effectiveness of those measures taken, and is, of course, importantly, the next action is set to happen middecember. That will be consider shally stronger than the last one, there might be some hope that those existing are bearing some fruit. But mario draghi is known to be a man of price. Joining us now as Nomura International securities, george, before we come on to the u. S. , can we discuss what were going to see from the ecb today. In particular, do the mofts weve seen, two or three weeks in european bond yields. Do they suggest to you its not when but if we will see that from mario draghi . It will be critical to see what they say and hint at. Our view is that theres going to be the need to assess the current credit easing measures. That really takes more important, you know, there is a risk of credit easing expanding through corporate qe. But sovereign qe next year. However, markets have a tendency to start to price in these sort of expectations well in advance. We do think the move in core rates as well as whats been happening globally where all rates have been coming down together have been a function of more for the ceb. Dpornlg, you said the ecb is masters at sang theyre going to do something and then not doing it. Nobody delivers the magic better than mario draghi. However, he is now on the hook to actually expand the Balance Sheet. Our view is it will not be in position to get the Balance Sheet enough where it starts to address the inflationary concerns. There is that potential for letdown. However, i think we will expect some sort of dovish assurance that more is coming. And what are the trades youre recommending to your cliendz ahead of todays meeting and for euro rates . Our European Team does believe that the tight. Ing of spreads versus the core will continue until we get an announcement effect. Currently, were seeing the u. S. And global rates staying low, anchor to this european move. So we think that and although fundamentals suggest rates could be higher. But people are going to have some deflation hedges on it. That is going to be in the form of lower break evens, on inflation markets and being out long duration. And i think that those trades still hold water. And we also have the fed this month and, you know, the fed is trying to drive the market higher in rates in hopes that its Global Partners can provide some easing so the fed can do some tightening. Yeah. That die verge yins in monetary polled, does it continue into next year . So many investors got that trade wrong. Were sitting at right now 2. 82 . Where are does the yield head into 2015, especially if the fed is likely to hike rates in mid year . At some oipt, the fed regains the narrative and takes control of the market again. However, these external forces are very powerful. The bog is printing a ton of money and displacing investors. So i think the combination of those two central banks, the fed has passed the baton, its going to be hard for rates to ride up in the long end. If continues are right and economies can sustain it, the fed will start to raise rates and start making its way to 275. Given that Global Growth is questionable, we could see rates lower in the ten year before we go higher. We will leave it there. And lets get you a rundown of what to watch this trading day. Its a big day for the markets. Weekly jobless claims are out at 8 30 eastern. New Employment Benefits are expected to drop back below the 300,000 mark after jumping sharply the previous week. Dollar general, barnes noble, sears holdings, report before the opening bell. And after the close, American Eagle, and gunmaker smith wesson. Stateside, ford is recalling vehicles due to takata air bags. Ford will recall an older range of pickups and gd sports cars in states with high humiditity conditions. Takata says it still doesnt know whats causing the air bag explosion which has led to the recall of 60 million vehicles worldwide. Drivers, in oklahoma you can now fill up your car for less than 2 a gallon. This station in Oklahoma City dropped its price by 12 cents to 1. 99 making it the cheapest in the country. Bad buddy. Com says certain states such as texas and missouri could see gas fall below 2 a gallon soon. Sixtime gland slam whipping legend boris becker takes a break from the court to join us on the set. Find out why hes getting into the game of financing in just a couple of minutes. And these are your headlines. Russias Vladimir Putin blame tess west over ukraine striking out against sanctions in his annual address. The euro hovering to a new year low as the European Central banks mario draghi. And ford expands its vehicle recall in the u. S. While takata tells the committee it still does not know what is causing its air bags to explode. Lets recap, Vladimir Putin hat his out against the west. During his address to the doom ma, he said sanctions were harmful for all countries. Lets have a quick look at the ruble, whats it done so far today . At the moment, the ruble has strengthened about 0. 23 against the dollar. Earlier in trade, it has strengthened as much as 1. 5 against the dollar. That was before he started speaking off the back of a slightly stronger oil price. Nonetheless, still strength. Enned 0. 23 in todays trade. Mr. Putin is still speaking. He said recently, he blamed the west for, quote, pure cynicism in its approach to the ukraine and says the sanctions are harmful for all countries. He said he will not stop cooperation with the europe and u. S. Now, equality and fairness for all. Our next guest says it is crucial to keep the internet free from restrained. We will talk knew translate, a big topic in the u. S. , coming up next. Washingtons gridlock on internet regulation is slowing Capital Spending according to at ts ceo randall stephenson. He said president obama and Congress Need to push ahead with reform to boost investments in the u. S. Economy. Here is the internet, which has been a if a nonnom by any definition, right . Millions of dollars are are being poured into this system, into the ecology. There are concerns about how this will be treated in the future. And the president articulated that we need to guard against these things. We all got that. What has creates the noise and the problem is the president has said he wants to put the internet into regulations that were written in 1934. Think about that for a moment, the im mications of that. Adrian join us now live from mountain view, california. The s. E. C. Is expected to make a final decision around net nigh ralty very soon. Help us understand how that could impact your business. Of course. As the founder of a start up, we are extremely concerned about, you know, this debate on net neutral till. Why . Because we believe that the of the future are being created right now and all the traffic should be treated equally so what can be rewarded by the market can be the innovation. And all these start ups like watch up are creating. All the traffic should be treated equally so there could be a great level of competition. How big of a threat is this to your business . I think it rather as an opportunity. If you look at what tom wheeler, the fcc chairman announced a little over a month ago, its actually a pretty good proposal. What he has in mind is to give act tess to digital video providers to give them access to cable. Very much like what some Cable Companies are having access, of course, to internet to make sure to better distranscript programs on digital. We believe digital video providers, as well, should be given access to cable programming. That would mean, for instance, with your cable subscription, you could Access Internet for your movies, hulu or access tv news. To deliver video content to your consumers, you want to deliver it to the fastest possible route. And for not being able to charge using the highest amounts of broadband space. In the long run, the consumer is being worse off. Of course. I think that the problem is really at the level of the Cable Companies and the Internet Service providers. I originally come from italy and i can tell you that im paying for my Internet Connection twice as much as i was paying in paris for ten times less in terms of internet speed. So that means there is a problem in the u. S. In terms of infrastructure, r d investments, and i dont think the user should be the one paying for that lack of innovation. And lets move on and talk about your own company, watch ups. Do you think Companies Like that, myself and seema are working for should be looking over their shoulder . I think that what is happening out there is that there is a new generation of viewers who do not understand why they should be paying over 1 hup to have access to all this great content that is being created. There is a golden age for billionaires. What watch up is doing is give you content to all this content from a variety of channels in one place. This is what we call innovation. It is a Great Service to smartphone cab let and now xbox 360 users because we Just Launched there. Beyond that, it is changing the habits of how people are consuming digital tv. If you look at the latest data, there is a 400 growth year the year in online tv consumption. There is a resolve lugz going on. Thank you very much for joining us, we appreciate it. Now, hundreds of people protested in new york wednesday night following a decision by a grand jury to career r clear a white Police Officer in a choke hold. Were joined now by tracie potts in washington with more of the details. Whats interesting is how quickly they announced that federal cervical rights investigation and its going to be headed not out of d. C. , but out of new york by Loretta Lynch who was the nominee to take over the Justice Department from eric holder. Weve heard from president obama on this talking about some of the efforts hes been trying to do after ferguson to try and bring the community. We heard from him, we heard from eric holder, we heard from a lot of democrats in new york who are concerned about this grand jury decision. Theyre asking to have some of the grand jury trimts released d this Police Officer has spoken out for the first time saying that he feels very bad about this choke hold death. Thank you very much. Lets get you a quick look at the u. S. Futures and how were shaping up ahead of the open. Weekly jobless claims could be a market mover. But right now, the dow joins industrial indicating a higher move by around 15 points. The nasdaq up just about four. Still to come, tennis hall of fame boris becker coming up next on worldwide exchange. 5 30 a. M. In new york. Thank you for joining us. Youre watching worldwide exchange. And these are your headlines from around the world. Ecb in focus, inching closer to full blown joint quantitative easing. That is a big one, the euro hovering around its two year low as investors wait to see how dovish mario draghi will be. The other man in focus, Vladimir Putin strikes out in the west with cynicism over ukraine saying sanctions are harmful for all. Protests spread across new york, los angeles and the washington after a grand jury decides not to indict a Police Officer for the death of a man restrained by a choke hold. Ford becomes the latest automaker to expand a recall of takata air bags as the Japanese Company comes under fire once again in washington. Announcer youre watching worldwide exchange, bringing you Business News from around the globe. And if you missed yesterdays market action, it was another record trading day. The s p 500 closing at a record high for the 48 time this year. The dow for the 33rd time. U. S. Markets on pace for their best quarterly gain this year, thanks to better than expected economic data. The fe wont rate rates until mid 2015. Mario draghi will leave the door open for sovereign quantitative easing. European markets are expecting the same. Were right now looking at the ftse 1100 trade. The xetra dax, the german markets in focus up just about 48 points. France and italy in the green. On italy, we should oipt out matteo renzi did win a confidence vote on labor market reform. That has been the focus on whether matteo renzi can deliver. Right now, youth unemployment near 40 . Thats a big concern when looking at italys economy. Autoing big talker has to be oil. Take a look at spot gold. Brent crude showing a rebound today. 70 a barrel, up about 0. 5 . Wti crude, up 0. 4 at 67 a barrel. How do you make money in these markets . U. S. Markets trading at record highs. Here is what some experts have been telling us this morning. I think the bank should outperform. Its, again, not so much on the fundamentals. Youre not getting loan growth in the eurozone and the prospects for that is still not very good. But the cost of funding is coming down with a single supervisory framework in the ecb. You think you could get more positive positioning. Specifically with the m a. What really is the point in getting involved in european sovereign bonds when countries like france are now yielding a fractional bid over germany close to 1 for tenyear debt . This can ohm go so far higher, but it can go an awful lot lower. Our European Team does believe that the tightening spreads and the periphery versus the core will have an announcement effect. Similarly, were seeing the u. S. And global rates taking lower anchor to this european move. Lets give you a rundown of what to watch this trading day. Up Employment Benefits are expected to drop. Dollar general, barnes noble report results before the opening bell. So a lot for the market to focus on. We should point out that the nasdaq has been on fire. Its outperforming the major indices, its now about three points away from hitting its alltime high. Questions about whether were in another tech bubble, that continues to be a big concern for investors. And its looking at the u. S. Markets as a whole. Were talking about whether well see another further santa rally. Its are the situation ever else in the world with situation bond markets so low they want to stop people from taking money out of investors. At the same time, ghee your political tensions is a big concern. Russias Vladimir Putin making bold statements about their intentions in ukraine and how if russia should support what hes doing in ukraine and rust hick that he is making the rice choices. Interesting to see how the price of Oil Continues to move lower. Now, some other news outside of markets, something that weve been getting some news on, the wait is almost over. Eon productions, mgm are preparing to put 007 lovers out of their misery and announce the cast and nape of the movie. If rumors are to be believed, the film will see the return of legendary bond nemesis ernts. I wonder who will be the bond girl. I am so excited. One of the dreams was to become james bond, didnt happen, or to become a tv anchor. Okay. These have action, drama, love, as well. Its november been the 007 agent as created by americans. Those chajters, they havent got the same wherewithal as james bond. So true. Eem excited to see how they respond. Now, nasa is launching a spaceship designed to carry astronauts far beyond earth. Jane joins us live from cape canaveral. Good morning, guys. I am live here at cape canaveral. We are about an hour and 28 minutes from liftoff, if everything goes according to planned. If you look at nasa tv, we are supposed to lift off at about 7 05 eastern time in the United States. The orion is behind me on launchpad 37. We have been seeing some closeup pictures of it from nasa tv earlier. They have completed fueling with the liquid hydrogen and oxygen, which will provide the rocket with over 600,000 pounds of thrust on liftoff. Now, this particular mission is 370 million. But so far, nasa has spent well over 5 billion on orion adevelopments. The point of this unmanned flight is to test the systems, the heat shield, the parachutes. It will be sent 15 times higher than the space stage in order to hurdle back at reentry at speeds similar to an apollo return. The new heat shield will have to survive temperatures of 4,000 degrees. It should happen about 4 1 2 hours after liftoff. Now, the Orion Program has survived budget cuts, add machine administrators. There is still a lot of work that needs to be done and tests before it can sent astronaut toes mars. This today is the first important step. And in a twist, Lockheed Martin is going to be the lead on this test. Not nasa. Then the next test flight, there will be a service module. People are here on what they call the space coast are very excited. This is the biggest thing to happen here in a long time. And all fingers are crossed that at 7 05 eastern this morning, this rock will lift off, orion will get into its orbit, all things will be tested and they can move forward to the next test. In 2025, theyre going to put people on board. A successful orion, could that lead to human on the grounds in mars . And when . Theyre still in the mid 2030s. 2032, 2033, we may put people on mars. That is if nasa continues to have the budget, the support, the money to make this happen. This is a very expensive enterprise. Seema, if you think about it, right now, some 10yearold could end up being the first human being the walk on mars. Still to come, boris becker joins us here on set. Find out why hes getting into the game of financing. Ford is the latest automaker to recall vehicles due to air bags. Good morning, wilfred. Ford says it will expand its recall of passenger side air bags which could explode at a crash and spray metal shrapnel inside the car. Ford will recall older model pickup truckes and gd sports cars sold in florida, hawaii, puerto rico and the u. S. Virgin islands. It includes certain areas with high humidity conditions in several gulf coast states. Ram trucks in seven u. S. States and territories. That false short of the demand for nationwide action. Honda hold the control the company will recall parts with takata air bags in all 50 states. He says the Company Still doesnt know what is causing the air bags to explode. Takata continues to believe that the Public Safety is best served if the area of high absolute humidity remains a priority for the replacement of suspect inflaters. But make no mistake, we will take all action necessary to advance the Global Safety for the driving public. Some of the u. S. Lawmakers at the hearing say theyre concerned about recalls are confusing to consumers. Shares of takata fell more than 3 today and are down 40 in the past three months. Thank you very much. Will lower gas prices help discounter Dollar General . Thats what analysts will be watching when the Company Reports earnings today. Another factor to watch is m a. Its competing bid for smaller rival family dollar. Lets get you up to speed on whats taking place. Dollar general has made an allcash offer. Family dollar has turned up its nose at this deal in favor of dollar trees cash and stock offer of 76. Meanwhile, Dollar General says it remains committed to its takeover approach but has indicated it will raise its 80 offer. So the m a drama continues over there. Lets bring in patrick mckeaver from mkm partners. Pat, how big of a deal is this acquisition for these companies, for Dollar General . Yeah. I mean, its certainly a big, big deal. It would be if Dollar General were to acquire family dollar, it would be north of 9 billion merger. It would be a company with 20,000 stores and about 30 billion in revenue. So it would be a pretty big deal in the retail space. And its certainly what investors are looking toward more so than this mornings Third Quarter results. They will certainly be important, but the other thing is more important, of course, the potential merger here. Gas prices below 2 in Oklahoma City. Thats a big win for the consumer. The question is when can we expect money being saved at the pump to translate into higher sales for these Discount Retailers . Yeah. I mean, i think were seeing a little bit already, seema. Probably saw some in october. Well see more over the holidays. Its important for the low end consumer. If you look at the dollar store average ticket, what the customer spends at the register on average, its 9 to 10. So in that context, if the consumer is saving 5 or 10 per week on gas, it can be meaningful for the average ticket for the dollar stores. I think, you know, walmart comps positively for the first time in some time in the Third Quarter. It was a slight increase. But it probably was a little bit of impact in there from lower gas prices. It is very important for the lower income consumer. The lower income consumer spends, you know, maybe 10 to 20 of their disposable income on energy, all told. Including gas. Patrick, is that how youre positioning yourself for 2015 . Do you like the low end consumer rather than the high end consumer . I mean, i cover the low end consumer. I cover Discount Retail. So an off price retail. So i wouldnt say im making a big investment call just on lower gas prices. Im looking much more at Company Specifics and Company Specific drivers and those sorts of things. But i will say that just in general, im more constructive on my group, my Discount Retail group with gas where it is right now. Especially given the fact that lower gas prices are expected to help the low end consumer. That could translate into higher sales for these Discount Retailers. Thats the big question. Patrick mccan he aver, managing director, thank you for your time. Now, here are your other headlines, russias Vladimir Putin blames the west for, get this, pure cynicism over ukraine striking out against sanctions in his annual address. The euro hovering near a twoyear low as investors wait for a road map of quantitative easing from ecbs mario draghi. And ford expands its recall in the u. S. While takata tells a House Committee it still does not know whats causing its air bag to explode. Welcome back. Markets have found a little bit of strength during todays trading session ahead of todays ecb meeting. Were in the green, not significantly, but in the green nonetheless. Lets get out to annette ta ahead of the ecb meeting. Thank you very much. We are expecting mario draghi to lay the groundwork for potential full scale qe as soon as the First Quarter of next year. So what is expected that we wont get any from the governing council and mario draghi today, but more talk about potential further unconventional measures in order to spur inflation. Remember, the recent inflation reading came in really disappointingly low. Another decline to 0. 3 only and Mario Draghis mandate is to push inflation back to levels close to but below 2 . Also, we get an update on their inflation forecast for next year, 2016, and perhaps also for 2017 which gives us more of an idea how pessimistic the central bank itself is when it comes to their inflation outlook. And that downward revision which is expected coming to their forecast, talking about their forecast also gives us might give us more reason to believe the ecb might venture into full on qe as soon as next year. At the same time, they have Board Members speaking in various locations and they were the likes of lautenschlager who were calling for a little bit of time to wait and see how those measures already taken by the ecb will actually be will actually come to the market and also might have some effectiveness in spurring inflation, again, higher. So you see the governing council is far away from being unanimous on buying sovereign debt. Something mario draghi will be grilled on during the press conference which starts here at 2 30 cet. With that, im sending it back to you. Annette, thank you very much for that. I suppose the question, of course, seema, is will mario draghi factor in the Lower Oil Price . And should he, really . Oil prices in general, even though on the headline they lower the inflation number . Right now, five countries in the eurozone are dealing with deflation, which is a big threat to europes economic recovery. So a lot of focus on what mario draghi will say. Hes been hinting at the prospect of full blown quantitative easing. Will he actually deliver that . Thats the question. Taking a look at u. S. Futures, right now, arrows are pointing to the upside after the s p 500 closed at that at another record high. On that note, take a look at the rundown of what to watch this trading day. Its not just the ecb. Were getting weekly claims out at 8 30 eastern. The inflation mark is expected to drop below 300,000. Dollar general, barnes noble, the parent of sears came out reporting results before the opening bell. We have American Eagle outfitters. Their results due, as well. And we always care so much about bonds here on worldwide exchange. One bond in particular, james bond, the bond decision is here. Were looking at live pictures where aeon productions, mgm and sony are revealing the title and cast of the next james bond film. At the moment, its called bond 24. As you can see, the teaser is playing at this event where they will be announcing who will be the villain, who will be the bond girl alongside daniel craig for bond 24, which starts filming on monday and is due to be released later. Would you like to be a bond girl, seema . I think im better off as a journalist commentating on these films. Some of the best bond girls, we have halle berry. Who else have we had . Oh, weve been plenty. Sophie marsaeu was one of my favorites. Well know more about that in the next couple of minutes. We have about a minute left. European markets in the green so far today. They found a bit of strength throughout the trading session. They started the day fractionally down. This is ahead of the ecb meeting later today. Were up about 0. 3 so far. Boris becker, as we said, sixtime grand slam winning tennis legend sadly didnt quite make it in time to join us on worldwide exchange. But he will be joining us on the followup show here in europe. He wont be making in the u. S. If youre watching there. Coming up on decision time in the next couple of minutes will be boris becker. Thanks for joining us, guys. Next up is squawk box with the latest on market action. Of course that ecb policy meeting due very soon. You can bring back a lot of things from a trip around the world. But you cant always bring back customer data. Because many customers dont like it when their data moves around. Can i go now . If youre going to do business globally, you need a cloud that can keep your data where it needs to be. Today, theres a new way to work and its made with ibm. Good morning. Let the good times roll. More record highs. Overnight, asia is growing the rally with the nikkei to a 7 1 2 year high. And we are seeing serious relief at the bumps. Consumers in one area saw gasoline prices dip below a gallon for the First Time Since 2010. And ready for liftoff, happening now, nasa is set to launch a spacecraft this morning that eventually takes humans further than weve ever gone before. It is thursday, december 4th, 2014, and squawk box begins right now. Good morning and welcome to squawk box here on cnbc. Im becky quick along with joe kernen and andrew ross sorkin. Take a look at this live picture from nasas cape canaveral. About an hour from now, the unmanned deep space capsule orion is expected to launch. It is a 4 1 2 hour flight. Our jane wells is there and well be joining us live in just a few minutes. But first, here are the on her three big stories on our radar this morning. Ecb policymakers are meeting in frankfurt. A decision is due at about 7 45 eastern time. President mario draghi will be speaking less than an hour later on the banks updated forecasts. He is expected to outline a dismal picture of the eurozone. No big additional stimulus measure res expected, at least not at this point. Here at home, one key economic release to watch today is going to be the
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