hello. welcome to "worldwide exchange." in the headlines today, here in asia, china says it will restrict fund-raising with struggling with overcapacity. >> in europe, banks lead the way. stock markets head higher on the last full day of pre-christmas trade. >> in the u.s., the consumer is in focus. what they're saving, how much they're spending and whether they're buying new homes. >> hello. good morning, good afternoon and good evening. wherever you are, this is "worldwide exchange" on cnbc. i'm chloe cho in asia where it's just past 5:00 p.m. in singapore. let's check on where the asian markets are trading or have closed today. we have a lot of green arrows for a change, as you can see. the nikkei is out to celebrate the emperor's birthday. but the shanghai composite, the south korean composite, are all in the green. just after the markets closed in the greater china region, we're getting comments out from the pboc that china is going to restrict equities in sectors down by overcapacity. we're going to talk more about what is in store for the stock markets year-end. let's check on the ftse cnbc ftse 300 at this moment. higher by 0.3%. >> chloe, good to see you once again. we're an hour into the trade here in europe. we hit closing highs yesterday for both the french and the german markets. scott will detail us on how we're looking on the back of that. the ftse 100 is trying to get to a new closing high. at the moment, about 20 points below the closing high. the german and the french markets have managed that. banks, insurance, technology are the firm sectors right now. hi, scott. >> hey, ross. good to see you. i'm scott wapner in the united states. a few minutes past 4:00 a.m. in the east. and the s&p 500 is going to begin this day at a 14-month high. gdp came in a bit disappointing yesterday. bit below expectations, but some of the housing data out was much better than expectations. so the market ran with that and here is where we're looking right now. above fair value across the board, dow futures about 34 points above fair value and the s&p and the nasdaq following suit. from the nasdaq, it will be interesting to see where shares of research in motion trade on yet another outage of its blackberry. there's a lot of data out today, personal income and spending. meantime, treasury secretary timothy geithner says he's confident that the u.s. economy is on a solid path to recovery. in an interview on national public radio, geithner says the obama administration is determined not to withdraw support from the financial system too early. he says treasury will, quote, do what is necessary to prevent another severe downturn. geithner says banks must earn back the public's trust. joining us now and for the next hour is arjuna mahendran. sir, it's good to have you here this morning. >> hello. >> let's begin. i mean, there's so many different areas we could take here, but let's begin with what was a disappointing read on gdp. that was offset by at least the housing area continues to see a recovery. have you changed your outlook on the u.s.? which it seems to me that you're fairly bullish heading into 2010. do you change your outlook at all based on that disappointing gdp report yesterday? >> not really. i think what we're waiting for is the inventory numbers which will come out tomorrow, which will particularly on petroleum and, you know, the crude oil sector, which i think is very important. because that could potentially be a one headwind for the u.s. economic recovery going forward. if we suddenly saw a significant depletion in crude oil inventories, that would mean that prices would be heading higher. opec has basically determined that they will maintain production at the previously agreed level. and we could see a tightening oil market if the winter were to turn quite bad. so that i think is one thing that we have to watch. >> but what level of crude oil would worry you to the point of changing your outlook for growth? i mean, what number is in your head now saying, if crude oil gets to x level, we could have a problem? >> well i mean, basically, we look at the 75 handle on the price. that's critical. we've reached that once before. you know, we've come off auto bit. but if we, for instance, surge ahead on a techat basis, definitely we are heading technically into a preach of the 80 resistance. that is critical because it means that the oil market would definitely -- the tightening going forward, anything above $80 a barrel does hit some point because gasoline would start to head higher. >> that is interesting because china is working to revamp its fuel price game is one of a series of comments coming out from the pboc just a short time ago. they're going to restrict financing for polluting sectors or sectors that are seen being dogged down by overcapacity. they're going to step up u.n. transactions for companies. certainly, a lot to tackle here. but do you think this is the start of a flood gate of tightening that the markets have been spooked for the past two weeks or is this the big one that we've been waiting for? >> we've already seen the chinese saying they're not too worried about the general type of activity but on the other hand, they want to preempt what's happening in the future. i think a lot of this is to somehow manage this whole process in a way by intervening in the pieces. i'm not too sure i'm very comfortable with that. how can you, for instance, prevent some sectors of the economy from -- >> the policy, is it going to work china's comments, or appropriately loose policies, is that going to work? >> that's a code speak for saying, we may tighten. and, in fact, they are. when you look at the numbers, you find china is actually absorbing a lot of liquidity from the markets the last few months, which is significant because they've been expanding the availability of drit through 2009 through october and that seems to have changed. all that excess liquidity will probably at some point in the future see an inflexion. that is what we probably have to fear. i suspect the first quarter of 2010 is very pretty trendy because a lot of that plus liquidity, which we were using for leverage, for the carry trade, a lot of that is going to be seeped away by the central banks that are now trying to put a sponge in there. but the objective is the same. they want to see that there's not too much money flooding into sectors that are not terribly profitable. >> arjuna, we'll have to leave it there. but we have you around for the hour, so we'll get back to that discussion there in just a few. let's get you the big stories we're following from around the world now. the head of the options board exchanged says the government's is flawed. he cite tess s.e.c. proposed ban on flash orders, saying it was only introduced after the agency received a very voe sip russ letter from new york senator chuck schumer. he says the bigger issue of systemic risk isn't being adequately addressed. the senate has scheduled a vote on final passage for health care reform for thursday morning so lawmakers and staffers, like many of you watching here, can get home to their christmas. the bill needs a simple majority to pass. if your blackberry has been slow, it's not just you. users in america are experiencing outages and delays. this is the second outage in the past week for the blackberry network. take a look at where research in motion shares which fell 3% in the u.s. yesterday are trading here, down -- there you see it, 357%. ross. >> 7:36, scott, that's when it came back online. froozing weather is causing disruption across germany, italy and europe. more than 100 people have died with temperatures plummeting and snow causing chaos. for millions of others across the continent, there's been flight cancellations and traffic jams causing chaos just ahead of christmas. the bank of england cites a committee member saying that the program is working well and that extending it would help ensure a sustained economic recovery. we'll get more clue owes this in around 20 minutes time with the minutes released from the last bank of england meeting earlier in the month. >> in a joint statement with the securities regulator and other agencies, the pboc says it will restrict bonds and equity for firms and polluting sectors along with those weighed down by excess production. it will ban banks from lending to unauthorized projects. the state will add that the government will work towards boosting financial support for clean sectors, including the alternative energy and electric automobile industries, among others. >> and we had a pretty tepid debut from china pacific insurance today. that is the one's third largest life insurer. take a look at the closing price, 28.30 as opposed to the closing price of 28. that's just about 1% higher from its debut price, the company, of course, raising $3 billion in its hong kong ipo making it the world's seventh largest this year. brokers say investors are probably holding out for general listings, but remain upbeat by the prospects of china's insurance sector. the head of china pacific shares the same sentiment. take a listen. >> translator: looking into the future, we'll concentrate on our main insurance business, strive for increases in our value and work hard to build a first class group with global business. >> that was g aoi guofu, chairman of china pacific. ross. >> we'll take a look at the war in iraq as we continue our decade in review series. you're watching cnbc's "worldwide exchange." that's the silhouette we have here in london. the 10-year cash guild just hit a 10-year high. stocks in germany have hit a fresh year high, closed up at the highest levels in germany last night. and the 10-year treasury, the yield on that 3.75%. we've still got the steep curve at a record steep level, chloe. >> in terms of the action on the currency markets, take a look at the dollar strength. still very much a theme, as you can see. and take a look at cable now below that is .60 level. the dollar strength is still very much at play in the currency markets. scott. >> chloe, thank you. it is a busy day for data in the u.s. despite it being christmas week. personal income and spending figures out at 8:30 a.m. new york time. spending by 0.6%. at 10:00 a.m., november new home sales will be released and they're expecting to drop by 1.2% to an annual rate of $425,000 homes. at 10:00 a.m., tufrt of michigan is out with the final report on consumer sentiment this month with analysts looking for a reading of 73.5, up from about 6 points or so from november. the weekly u.s. inventory data is out at 10:30 a.m. new york time and the dow jones survey calls for oil to fall by 1 million barrels, gasoline to rise by 800,000 barrels and distillates to drop by 2.3 million barrels. ross. >> european stock markets, as we say, are edging up into fresh year territory if you're in germany and france and here in the uk, we're trying to get to our fresh yearly high. let's kick off with what's happening in the uk. pecky has the latest on that. >> we're getting very close to the end of the trading year and we are seeing gains, obviously, overall for the year pushing those year-to-date highs. just a shortened day of trading tomorrow ahead of christmas, so this is the last full day of trading before the long holiday weekend. therefore, we are obviously putting slim volumes for the next couple of weeks or so. on the up side, stocks helping us with those gains that we're seeing at the moment, miners are looking fairly strong today. eurasi eurasian, ka kazmys falling into that category. barclays is looking not too bad. but we also see the likes of standard chartered putting in reasonable performances today, too. >> we've got the minutes come out. what are we going to look for there from the bank of england inspect. >> bank of blnd minutes, the monetary committee decided to leave rates at record lows where they are and to keep the quantitative easing program unchanged at 200 billion pounds. we had relatively weak data yesterday. we're looking ahead to try to get any clues about what the bank of england will be doing next, if they do anything next. >> thanks very much, indeed, for that. the xetra dax closed out at a fresh year high yesterday. patricia is in frankfurt and vw is very much in focus. >> absolutely. for now, we have the preferred shares trading on our index. the market capitalization was falling below 10% with another 17% stake in volkswagen. so volkswagen, the preferred shares now quoted at 64.70, down about 1.2%. there is upside potential simply because of all those index trackers needing to adjust to their portfolios right now. kns, down about 1.7% and m.a.n. marginally down 2%. but the big gainers yesterday, perhaps today over the next few trading sessions is chipmaker infineon continuing to rise. almost at 4 euros, a huge rally today, up about 2.3% yesterday because they increased their own guidance for the first quarter compared to the fourth quarter in terms of their revenue targets as well as their margins. we've had good data coming through from micron in the u.s. and that is good news for the entire chip and tech sector. deutsche bores sa, holding up nicely. apart from that, of course we shall we're still watching the situation from lufthansa and all the travel and weather situation at the moment. it seems everything is back to normal. ice is an issue going forward because it's been raining substantially out here. in february after wage deals and wage negotiations did fail yesterday evening. >> thanks very much indeed for that, patricia. the other thing is michael shoemaker is coming back to formula one. that is big news if you're an f1 fan. in paris, we had a closing high yesterday. stephane has the latest on what's moving up up this morning. hi, stephane. >> it looks like everyone has left already because the volumes are weak on the market. it's nothing compared to the usual volumes we have on the french market. on a positive note, however, the french market is still at a record level for 2009. now, clearly above 3,900 points for the cac 40. but it's mostly because of the usual window dressing we have at the end of the year. there are no fundamental reasons for the gains and that means that the gains we had over the next couple of days may not be very solid. if you look at the individual stocks, the top gainers are all big exposers on the french market. loreal, este micro, they are the top gainers on the cac 40. viola is reporting higher today after reporting that the company could team up with another company to open the high speed market in france. thanks very much, indeed, for that, stephane. how will that be contemplated by the central bank as they look at what they're going to do with their rates? blazej is with us now. what are they going to do today? >> well, they're wisely expected to keep the rates unchanged today at 375% and doing so for the sixth straight month. and the expectations are for 2010 are that we're going to see those record rates at lows for the next six months. these are the expectations for the moment. as for the market, the index is a little off today, losing 0.4%. the losses are flat against the euro and the dollar, not reacting much to the retail sales. the wires just 20 minutes ago, they were better than expected, rising above 6% year on year. the expectations were around 4.is %. the mpc, the current mpc is going to announce its decision today around noon central european time. it's very much on its way out. the term of the current members finishes in january and february next year and the new mpc will meet on its first meeting in february next year. the analysts are now expecting that the new mpc will have a more dove jish sense than the mpc, maybe trying to keep rates lower for a little longer. probably somewhere around 2% for 2010 the gdp growth here in poland or maybe above 2% if you listen to the ministry of finance, the deputy finance minister saying that it should exceed 2%. but for now, the rates unchanged. the markets in western europe, very thin holiday trading at the moment. >> blazej, thank you very much for that. now we continue our series of the decade in review. the first battleground for america's war on terror was afghanistan. but by the end of 2002, the president began to shift the focus away from afghanistan towards iraq. then in march 2003, the announcement came. >> my fellow citizens, at this hour, american and coalition forces are in the early stages of military operations to disarm iraq, to free its people and to defend the world from grave danger. >> that was the 19th of march, 2003. it came after president obama had spent months convincing the nation and the hesitant global community that military action in iraq was required. support dramatically increased when in early february collin powell presented america'scation to the united nations. he detailed a number of satellite images that he claimed proved the existence of weapons of mass destruction. when president obama announced the first waves of attacks in baghdad, his approval rating spiked to 71%. and his popularity remained high just a month later when he claimed major military operations had ceased. >> the tyrant has fallen. >> but by the end of july, bush's approval rating was on a clear downward trend. in britain, the prime minister, tony blair, was experiencing political fallout. blair was the strongest ally of president obama and second to the united states, britain sent more troops than any other coalition force, 46,000 in all initially deployed. elsewhere in europe, leaders were vehemently opposed to the invasion. the french chancellor was some of the most critics of the war. it wasn't until the 14th of december that the u.s. military announced that he had been captured. >> ladies and gentlemen, we got him. >> america's military presence continues even as other nations continue support. spain was one of the earlier. and other nations followed throughout 2005 and '6. in the u.s., the financial crisis hit hard. the economic cost of the war became a key campaign issue in the 2008 presidential election. it remain owes president become been's agenda to withdrawal forces from iraq by august 2010. >> we'll taking a break. coming up, we've got bank of england minutes. we have minutes out from the bank of england. they voted as expected, 9-0 to keep bank of england rates at 9%. they voted unanimously to keep the 200 billion buy target. two members say different bond buying scale is justified. most felt there's some positive near term available markets. a further shakeout is possible. the decline in investment may be stabilizing. still disappointing, but is a cause of concern and the impact of qe would be felt with a lack. no significant cpi impact and there's greater uncertainty over the size and nature of fiscal tightening. guild, fairly stable after the bank of england minutes. we have seen the ten-year gld higher this morning. let's get some reaction to that, goingel jenkins senior strategist is with us, as well. can we gather anything about whether they extend qe come february, or not? >> in our opinion, it's pretty much 50/50 whether they extend qe or not. maybe another 25 billion or so in february would be a reasonable expectation. it's still probably a little more on balance that they don't extend qe. i think the evolution of economic data between now and then, if the labor market data in particular holds up well, and some of the consumer confidence and business confidence surveys hold up, as well. i think they'll probably hold off all things equal. they would prefer not to have to do it. >> what's interesting, sterling has gone back to the low of 1.26. and we don't know whether that's end of year status or potentially maybe the rates in the u.s. are going to go first in the oecd countries & in terms of