Transcripts For CNBC Worldwide Exchange 20131016

Formula is going to hurt its Third Quarter revenue. Plus, apple has reportedly sold two suppliers. Its cutting orders for the new model of its iphone and upping orders on its high end 5s. Hello and welcome to this wednesday on Worldwide Exchange. Plenty to talk through on todays show with the clock running down on debt ceiling. Well hear from one guest who says markets are still unfaced by the risk of default. Clearly if you take a look at the price action, john kenalli joins us. Never mind the debt ceiling threat, one of the biggest ipos join us. Japans softbank had a boost after securing a majority stake in the finish gamemaker supersoft. Could this be a sign of more m a in the pipeline . And here in london, we get the latest unEmployment Data 23430 minutes. Has the rate dropped closer to the knockout for forward guide yaps . If thats not enough, the London Stock Exchange is playing host to russian Business Leaders. Thats a first on cnbc at 10 40. But first, as you might expect, u. S. Senate leaders are preparing for a last ditch effort to reach a deal to avoid a senate default. Harry reid and Mitch Mcconnell have essentially finalized their plan. The Senate Reconvenes at noon and both men will brief their respective caucuses. House republicans fought for their two separate bills. The conservative Group Heritage action opposed the plan because at the didnt do enough to roll back obama care. Now its suggested that under the Senate Proposal, the government will be funded through january 15th, debt ceiling extended until february 7th and a committee would have until december 13th to welcome a new round of spending cuts. While this is all going on, fitch has put the credit watch on negative warning. Its citing the political brinkmanship. The u. S. Treasury Department Spokesman says fitchs announcement reflects the urgency for congress to act. China and japan, the biggest debt holders of u. S. Debt, state news agency shinwah says its time for a deamericanized world. Joining us for the first part of the program today, fred normal from hsbc. Fred, what has this episode done for lets say we cobble this deal together. We might be back here in the new year, but what has this deal done to longterm damage for u. S. Investors on debt or not . Longterm damage is the way to look at debt. In the shortterm, there is no alternative. The Asian Central bank is sitting on debt mountains of reserves. What do you do with that in the shortterm . Thats the real problem. But i think in the longterm, clearly in reserve managers, investments in asia are looking at getting away from the u. S. Dollar. And it could potentially, for example, set the tape current liberalization and china to set the Chinese Renminbi as a possible alternative. Its a two, three, fouryear process. Yesterday, you can now invest into Mainland China from london as of yesterday. Is there all part of the same strategy . Its all part of the same process. But the stalemate in washington is essential ly dealing with tht process. The japanese yen is an alternative. The euro is a little bit, but you have issues in the periphery. One thing that surprises, me, though, in all of this, why has gold not rallied more . Why not . I think because potentially you see a secular selling of retail money out of etfs, for example, that is weighing on gold. But i think that reserve managers will have to look more closely at gold over the next two or three years. Gold rise, because when we launch qe, everybody thought it was some kind of hedge against the impact of qe and they realized qe didnt kraelz the inflation they thought. And if youre going to start tapering, yields go up and you get paid nothing for holding gold. I think that the. We had the gold rally and now were moving closer to global deflationary worries than inflationary worries. For example, across asia, you see core goods inflation continue to slow despite fairly strong Economic Growth. But at the same time, if you cant buy gold, isnt treasury an alternative . I dont know. You dont get paid money and i know youre not getting very much on the treasury bills at the moment or jjbs, but you get absolutely zip on cold. Its still better than the underlying default. Nobody will default on gold holdings. So at some point we discover the benefits of having a risk free asset. How much dislocation have we got because of the dislocation of assets in the u. S. Market . Im fought going to sell, im not going to buy, im going to do very little. I think theres a lot of cash forwarding, actually. Across asia, we see the dollar demand going up, we see people putting money aside into cash where theres very little investment right now. In fx, for example, is marketing gear in london talking to investors. Theres very little positioning, for example, in fx markets because people are just awaiting the oak in d. C. So what is likely to be the outcome in asia if we cobble together this deal . How much relief do you think there will be or not . I think there will be a snapback risk on were going to see some strength in the currencies. Potentially were going to see strengthening in risk assets. But fundamentally, because were just pushing off the fiscal deal, were not resolving anything, a shortterm rally. Yeah, exactly and the underlying assumption has always been that we would get the deal so theyve priced in that. Lets bring you up to speed with where we are on asset prices. Were about an hour and eight minutes into the trading day here in europe. We are around about 7 to 2 decliners outpacing advancers at the moment. Down 22 at the moment on the ftse. The xetra dax is pretty flat, cac 40 down about 0. 6 . The ftse mib up around 0. 4 , as well. Sector breakdown looks like this. Yesterday, there were no sectors next to territories to begin with. Telecoms are a little firmer. Best performers yesterday were down despite that uptick in car registrations although its a fairy weak january. Lets just show you apple, first of all, trading in frankfurt. In is where it goes, down about 1 . The cheaper version of its iphone. It has raised orders apparently for the 5s, the high end. Lvmh down 6 today posting a Third Quarter sales in its fashion and leather business. And danone, down 3. 5 . Its cutting its 2013 targets after baby formula sales failed to repound in asia following a food scare. Stephane is in paris. Ross, do you buy leather or fashion goods . Do i buy leather or fashion goods . Do you . What about leather fashion . Well, you might not be the only one because, actually, the performance of that sector of lvmh was extremely weak in the Third Quarter. And thats a problem because its the main activity of the brand, according to a luxury analyst. Revenue from that division dropped around 4 in the Third Quarter. Its Louis Vuitton brand, such a repositioning of the brand would lead to shortterm losses in sales. The management of lvmh has predicted that the transformation would take president obama a year and a half. But in terms of other businesses, the retailing division was really good in the quarter, up 13 . Its driven by the very Strong Performance of stores, wine and Spirits Division doing well, up nearly 3 thanks to strong shopping sales, especially in asia and north america. But as i was saying, the man division is low. Danone recalled some baby Food Products in asia and that had a Significant Impact of that division in the Third Quarter. Sales decline by nearly 9 , which is below the average forecast of a 3 contraction. As a result, danone missed the Sales Forecast for the First Quarter and lowered its guidance for the full year. And practice most importantly, the company is secretarying a significant drop in operating margin. The new target, the cfo tried to step in and cool down the market saying danone should do well for the second half of the year. But as for now, the stock is 3. 5 lower. Ross. Lets show you where we stand with bond yields at the moment, particularly u. S. Treasury yields. 2. 72 , the yield is where we stand at the moment. Down to 2. 59 when the fed came out with that no tapering decision. 2. 81 on the gilt. Data coming out in about 18 minutes or so. As far as the currency markets are concerned, there was Much Movement on a 24hour basis yesterday and there still is in dollar yen. 98. 33, almost exactly the same print at this time yet. Euro dollar, 1. 3540, now 1. 3529, so barely budged. The aussie dollar still around the 95 mark. Not huge moves over 24 hours. What about the Asian Session today . Sixuan is with us out of singapore, as ever. Hi, sixuan. Thank you, ross. The nikkei 225 finished higher by 0. 2 . China markets under pressure today with real estate stocks leading the losses on fears of fresh property curves and the shanghai composite ended down by almost 2 . Elsewhere, hong kong and taiwan both lost about 0. 4 in south korea. The kospi ended lower by 0. 3 . Despite the foreign buyer frenzy for the session. Being the longest buying streak in kospis history. As for some individual movers, over in hong kong, lots of movement for the free tv license. Pccw and fantastic tv, they both obtained initial tables and shares of icable more than doubled today. Pccw gained almost 5 . On the other hand, Congress Long tv was rejected and the company will lay off more than 300 employees. So how important that tv license is, ross. Sixuan, thanks very much indeed for that. Now, were only two games to super sales name, is softbank taking a gamble on the Gaming Company . Well talk about that still to come. Plus, with the debt ceiling just a little bit more real today, well take the chance to look back at what some of the key players had to say about the prospe prospect. Here is a reminder of the morning made by the imf christine legarde. If there is that degree of disruption, that lack of certainty, the lack of trust in the u. S. Signature, it would mean massive disruption the world over and we would be at risk of tipping yet again into recession. Third quarter profits fill slightly, there are signs demand is rising in some regions acourting to intel. The firm aerps forth quarter outlook is short of analyst estimates. Its delaying its new chips until the Third Quarter of next year due to technical setbacks. Intel stock in frankfurt down nearly 2 . Yahoo s Third Quarter profit fell 13 , excludeing the big gains in the sales of alibaba. The ceo says changes aimed at new devices will take time. Yahoo is trying a deal to cut the number of shares it must sell in connection with alibabas ibo. Stock up 0. 5 in frankfurt. Twitter says it will list shares on the new york stock exchange. The nyse says this is a decisive win, but it shows twitter is no closer to being profitable. Twitter lots tripling the 65 billion. Softbank buying a stake in supercell for 1. 5 billion. 20 of the investment will come from softbanks own mobile banking unit in online entertainment. The deal values themakers of clashes of clans, thats 3 billion, and comes three months after softbank closed its acquisition of sprint. Shares of softbank are concerned. Softbank up 2. 2 today. Amir, good to see you today. What does this deal mean for softbank . Well, they have been diversifying. I dont see any synergy between the online bank quality. But i think relative to the big purchase of sprint, this you can regard as relatively low risk Purchase Price of softbank. I think softbank has its role cut out for it given the tremendous task of integrating the spectrums from clear wire and building out the lt network in the u. S. , which is a gargantuan task. Are you clear about the strategy . Obviously, they failed the Vivendi Universal music and then that bid for sprint and now theyre buying the gamesmaker. What is the strategy . I dont think there is one, to be honest with you. I dont see a clear cut strategy where all these purchases will mesh together to build this ecosystem that might rival Something Like apple, maybe. But i dont really see i think what they tend to do is tends to dabble in different parts of the market, very successfully, i might add. But i dont see the a big strategy behind these relatively big premiums that its paying for for these acquisitions. I really dont see a big, big picture push behind it. Youve had a short on the stock, but youve taken that off. Yeah. Theres a lot of individual interest in there. A deal like today got a lot of people excited about gungho, as you saw. Its now trading around 1 trillion yen in market cap. Thats based on one game. At least in this case in super cell. You could argue that theres two games involved. If you look at it relative to game valuations, nintendo is trading at two to three times cells versus supercell at three times, i think the valuation is paid for even though its in vary high growth segment of mobile gaming. He think the valuations are ridiculous. Do you think week going to get more consolidation in the seconder . I think the issue with mobile game sg you have thousands and thousands of games being kind of released for free in hope that they will get online sorry, ingame ads and ingame content sales going. Obviously, theres so many number of games now available, its difficult to monetize that with in game contents sales. This is a really, really big hit which isnt the case for super cell, the two titles have been. Its a very, very tough market. Its an unknown quantity given that its still at its embryonic stage. Its growing at a certainly low base. We dont know what the big outcome is going to be. We can see some of the players in the gaming world, maybe not so much softbank be our Game Developers trying to get into that market by buying game lost or glue, some of the listed ones and unlisted ones coming to the market next year. Thanks for joining us. Still to come on the show, the bank of england expects it will take until 2014 before british unemployment dips to 7. 6 , but our next guest says it could reach that level today. Find out whos right. Well look at the jobs report straight after the break. Before that, as dday begins stateside, well take a look back at some of the main sectors in the debt drama. If we run out of cash to pay our bills, there is no option that permits us to pay all of our bills on time which means a failure of congress to act would for the first time put us in a place where were defaulting on our obligations as a gcht. Government. And the headlines from around the globe, were on the brink. U. S. Senate is still trying to come up with a bill to avoid a potential default. Investors are europe are also cautious. Despite an uptick in european car registrations for september. Two french stocks also on the down side, lvmh hit by multiple downgrades after an unexpected slowdown in sales. Danones baby recall on formula is going to hurt revenue. Apple said its cutting orders for the cheaper model of its iphone, at the same time upping orders on its iphone 5s. If youre just joining us, the ftsdz if it is 100 is down 0. 4 , xetra dax down 0. 1 , cac 40 down 0. 7 . Bond yields, tenyear bund, 1. 91 . 2. 72 treasuries. Dollar yen as we were, with 598. 30 handle. Euro dollar, 1. 35 handle. Sterling dollar, just above 1. 60. It is indeed to the pound as we will now turn our attention to the layest data out of employment. Allen clark is with us. 30 seconds to go. What are you expecting . We see another tick down in the Unemployment Rate from 7. 7 to 7. 6 . If it doesnt happen today, it will happen next month. Its been a good start for forward guidance. And the key reason we look at unemployment is its now become a key knockout ratio for their forward guidance. It is. But we need to keep it in context. If we get to 7 in rather late 2015 versus 2016, its still very early. Were in a weak spot right now. We have the data out and lets bring that to you. The claimant camp, thats people claiming unemployment, september jobless claims, down 41,700, 4 of the workforce. That fall is the biggest since june 1997. The claimant jobless rate, the lowest since january 2009. We were looking for a fall of 25,000. The unemployment three months to august unemployment down 18,000. The rate, 7. 7 . It was forecast, as allen just said, to 7. 6 . The average earnings equals the lowest on record. The uks threemonth august average earning just up 0. 8 . There you go. Big fall in claimant count. We have a fall in the ilo. But no drop in the Unemployment Rate, allen. I get employment probably didnt pick up as much as it should have done. Given that the claimant count comes out one month ahead of the imo and its been falling for the last well, more than 30k for the ilo. It didnt happen today, it will happen next month. Its a big drop in the claimant count today. Its firing on al cylinders. We are in the sweet spot. Gdp growth in the region at 1 quarter on quarter. Its very reasonable. Its interesting, of course, we did see unemployment staying higher than at 2. 7 earlier this week. But average earnings, very weak. There is no theres still no wage growth to concern us. Its a bizarre thing. Theres nothing else quite like it. Youve got real disposable Income Growth. The Housing Market is on fire. People go out and spend money that they dont really have. Thats the real thing. Earnings below 1 . Inflation is 0. 5 or more above it. We shouldnt be growing too well. But thats one of the bizarre things about this economy. Where is the growth coming from at the moment, then . Are being loading down on savings or loading up on credit again . I think thats on borrowed time. The help to buy scheme has boosted, a bit of spending this year, but ppi payout, cash that people have this year, they wont have forever. I think theyll cool off into next year. Banks have put money into poems pocket buying and selling. Ironically, yes. But even with that, real disposable Income Growth is negative. When we revert into that next year, if we dont get the wage inflation. Are we back to boom and bust . Not bust. People are worried about the Housing Market, arent they . Yes. Normally, the housing bubble would be ricked by Interest Rates. I dont think thats off. I dont think its an imminent threat. The pent up demand is losing some momentum. And stay there. Italy, mean wile, has unveiled a budget with less austerity and more boosting growth. Theyve decided not to go ahead with cuts to health care. The package which ames to reduce the countrys deficit, the Prime Minister calling it the first budget without tax hikes or on social cuts in years. Portugal proposed cuts of up to 12 of Public Sector pay as well as cuts to pensions. This as the country struggles to pull through its worst economic crisis since the 7ons. The deficit goal for this year as it did in 2012 and plans to return to Capital Markets in the coming quarters. And irelands budget meanwhile for the country to exit its eighth program next year. The finance minister Michael Noonan says the 2. 5 billion euros in tax hikes and spending cuts means dublin with better deficit targets next year, as well. Two u. S. Senators have praised ire after it announced it would shut the loophole. It would now be illegal for countries to have no tax on the staff anywhere else. And while thats all going on, allen, we try and look towards some kind of Banking Union as well in europe. Were still going to work out the Single Market resolution fund. Look, what what is your assessment right now . Investors now clearly say, its not a breakup of the eurozone, theres not any default and theyre quite happy. The survey of data have done very well. So what we could i was going to say, im thinking of that point, how to get there, the longterm implications of the u. S. Debt debacle at the moment is that people may be reduce their re reliance. We maybe have a bit of a pain threshold at the moment in europe. Inflation is incredibly low. Well get the next prints at 10 00, 1. 1 . It could go below 1 in the coming months. So in that environment, maybe the ecb takes some pressure off the euro. 11 is a psychological level. Some countries are below that and a very good reason for it to go down. It may come on the radar screen. Very much harder to reduce your debt level, doesnt it . Yes. Like in the uk, higher inflation conveniently does erode away to some extent. Allen clark, thanks for that, joining us from scotiabank. A third record for the Third Straight day as the u. S. Dollar is under pressure. Could you imagine a world where the u. N. Becomes the global reserve currency . Allen, do you think thats going happen . Shenanigans in the u. S. Isnt going to boost that. Okay. So what do you think . Thats allens view. Join the conversation here. Get in touch with us. Email us, worldwide at cnbc. Com, tweet as cnbc wex or direct to me rosswestgate. Two u. S. Senators have praised ireland after it said it would shut a tax loophole after shutting the loophole. This is as Angela Merkels party is under fire after a large donation from bmw. Lets get more from annette in frankfurt. Annette, as i understand it, there was a deal done here between the uk and germany. This is a report i read where britain would back germanys stance on easing up on co2 regulations in return for germany easing up on britain not being covered by Banking Union. What do you think of that . Yeah. Actually, that was the deal i was hearing as well about. Nothing is official, but it seems logical because germany with its big car industry has a natural tendency to shelter that industry in the uk with its big banking scene has a natural tendency to shelter its banks. Back we are nationalistic agenda. This donation from the quan family who is controlling bmw, it is legal, but it comes at a time that is not really good for Angela Merkel and her cdu because, of course, just after they postponed and pushed about a that tougher stance of the eu regarding co2 emissions for cars away, of course, the move is beneficial to bmw and daimler, i. E. The german industry, it is a little bit of a bad taste moment here. The kwan family said they didnt want to give the donation before the election because they didnt want to interfere with the election campaign. It looks a big strange, but currently, its just there always had been a big know nated to the cdu. Yeah. And Everybody Knows that. Theyre not going to be influenced by it, though. Annette, the greens i understand are not going to be part of any coalition. What have they they been saying . Actually, they have been saying the greens yesterday night when they stepped out from that talk which lasted more than seven hours with the cdu that the bridges which they thought wouldnt be Strong Enough to last for four years which is, of course, the legislation period here in germany, so the greens said no thank you, no Coalition Talks with us. Now, what is left on the table for the cdu for Angela Merkels party is, of course, to get a Coalition Done with the sbd. Tomorrow, there will be a third round of talks with the social democrats in order to convince them to get a common position. Then on the weekend on sunday, the social democrats will have a party convent during which they will decide whether they go into formal Coalition Talks with Angela Merkels party and then, ross, only mid november, there will about a big Party Convention by the social democrats where they eventually say yes to a grand coalition. Though theres still a lot of smile stones ahead which makes it a little bit of a thing having not a German Government in place. But we have care takers element, of course, which will be the large one. Ross, back to you with that. Annette, thanks for that. Still to come on todays program, as well, its russia day over at the London Stock Exchange. Were going to be joined by the ceo with the investment arm of russias Second Biggest Bank. Plus, as dday begins stateside, we have been looking back at some of the main actors in the debt drama pp. Here is what john boehner has been saying about the prospect. When it comes to the debt limit, i agree with the president. We should certainly pay our bills. I didnt come here to shut down the government. I certainly didnt come here to default on our debt. Im only in my 60s. Ive got a nice long life ahead. Big plans. So when i found out medicare doesnt pay all my medical expenses, i got a Medicare Supplement insurance plan. [ male announcer ] if youre eligible for medicare, you may know it only covers about 80 of your part b medical expenses. The rest is up to you. Call now and find out about an aarp Medicare Supplement insurance plan, insured by unitedhealthcare insurance company. Like all standardized Medicare Supplement insurance plans, it could save you in outofpocket medical costs. Call now to request your free decision guide. Ive been with my doctor for 12 years. Now i know ill be able to stick with him. [ male announcer ] youll be able to visit any doctor or hospital that accepts medicare patients. Plus, there are no networks, and virtually no referrals needed. See why millions of people have already enrolled in the only Medicare Supplement insurance plans endorsed by aarp. Dont wait. Call now. The chinese white retailer gome has been getting optimistic. It sees revenue in the Third Quarter up by eight. The Hong Kong Listed firm now expects to return to the black after looking at losses a year ago. Also in hong kong, the Hong Kong Television network shares are falling today, sort of a tanking really down 33 after its application for domestic free to add tv license was rejected. As a result, the network says it will have to let go of around 300 staff, although two other existing paces with Cable Communications were granted the licenses on principal. Shares of stocks plunged over 20 after Short Research raised questions about the companys sales figures. Its issued a strong accelerating on the Hong Kong Listed firm. The chinese skilled caremaker sends shares be suspended pending an announcement. And swiss re is buying a 12 stake in hong kong insurance swd group. The deal is expected to femp up to 425 million. Swde is owned by hong kong businessman richard lee. Swiss re will help fund fwds Expansion Plan in asia. Typhoon wipha has been described as the strongest in a decade. Kitadaisan has more for us. Typhoon wipha left at least 14 people dead. 13 of the victims are on an island in the pacific about 120 kilometers south of tokyo where authorities evacuated 20,000 residents. Many other people remain unaccounted for in the region centering on tokyo. Realways and highways were disrupted. This is rein water that had accumulated between tanks holing contaminated water and barriers productive stop any leaks flowing into the sea. Tenco added that while drain water will reach the sea, its radiation readings remain within safety limits and that there were no damages to the power stations. Back to you, ross. Kitadaisan, thanks for what. Japan is looking to ignite talks with the nation. The nikkei with japans Prime Minister may visit iran in november in hopes of acting as a mediator between tehran and western nations. Dallas fed president rimp ard fisher says it will be hard to argue for tapering because of the budget showdown in washington. Fisher, one of the staunchest opponents of the feds Bond Buying Program answering on cnbcs closing bell with maria bartiromo, he says its made it difficult to gauge how the economy is doing. A the some point, you have to act and you have to lead. This isnt our job at the United States. At some point, theyre going to have to ablth. I assume were getting closer and closer and closer because the markets are about to give us the back of their hand. Meanwhile, fisher says the fed will work to maintain stability, but the central bank cant do it alone. And while stable markets continue to look at the potential Ripple Effect of the u. S. Default, russian Business Leaders have been discussing the issue over the London Stock Exchange. Joining us for more, the ceo at vtb capital. Thanks for joining us. As you sit here talking about, you know, vtb and the russian economy, how concerned are you . Youre saying youre concerned about whats going on in the United States. Thank you. Thank you, ross. Look, obviously, whats happening in the United States is the fed in emerging markets. But we believe this is only shortterm volatility. Looking at the picture globally in the end its still very strong. Its projected to grow at 4. 5 last year, 5 next year compared to 1 growth in developing economies. So looking at the market picture, although we see some volatility being brought by tapering talk early in the summer and now by the budget showdown at the u. S. , you see this as an interesting level for the longterm buyers. At the London Stock Exchange today and its a russia day, the story about russia is still very constructive. As you know, russia shows one of the most interesting and stro strongest macro fundamentals out of all emerging market countries. Russia has very tight and very good fiscal situation. I mean, budget deficit is close to zero or close to slightly below zero. The currency reserve, the third biggest in the world, and thats why actually the russia sovereign and corporate grade markets have performed extremely well, although the equity markets in russia have somewhat underperformed. The perspective for russia, that was telling investors that is still there and that mainly driven by new initiatives by the government to stimulate the growth main by by investing in local infrastructure projects. The government has realized that commodity is not the only game in town. Our commodity ex sports. But now they have started to promote big Investment Infrastructure projects. And thats where we come in as the investment bank, the Second Biggest Bank in russia to help those projects materialize and to bring Foreign Investors into the company. How long will it be before russia moves away from you talk about commodities in infrastructure. Developing a much Bigger Service economy . Well, it is definitely on the agenda. How long is it going to take . Its one of those initiatives that takes many years to accomplish. But the process is starting. There is, again, a very substantial government backing and initiative for to drive the economy by investment into the country. And russia from a fiscal perspective can afford that. Just outside of russia, you operate in europe, you operate in europe, as well. How did you see emerging markets in europe and in Central Europe playing out at the moment . Where are the ricks . Where are the opportunities . Thank you for that. Dwre, we are playing actually in the global end. Our main focus is obviously russia and we have started to invest and broaden our reach into central and eastern europe, africa in particular and Southeast Europe and asia. We see a lot of demand from international and equity to invest and mainly because of the macro fundamentals, they are the strongest. Its very difficult to see such growth rates elsewhere in the world, and we at vtb are playing a very Important Role in intermediating this flow between western money flowing to those regions and local corporates and local governments lose to raise capital and foreign investment. So africa is a key region for us and southeast asia. I understand angola is of particular interest. Yes. Angola, we have had a bank there for the last seven years. So we are already in the country. And angola is the largest economy in africa with a very strong and very impressive Growth Potential and historical growth. Angola is about to grow up 9 this year and gdp is about to surpass to reach 170 billion by 2017, almost as big as hungary and as big as new zealand. There, the potential is big. In Natural Resource sector in oil, but also in other industries, as well. And were very well positioned, obviously, to investors there and to benefit from that Economic Growth in the country. The longterm impact of whats going on in the u. S. Has caused people to question whether the dollar will remain as the worlds reserve currency. If people diversify away from the doshl, where will they go . I dont think its actually at this stage its possible to diversify away from the dollar simply by the is sheer size of the market. I think obviously whats happening in the u. S. Is causing shortterm volatility. For the longer term fundamental investors, you need to chase growth, you need to change the growth fundamentals and, again, em as an asset class and to the region is still the driver of global growth. And i think thats the place for people to diversify. It comes, k, just a few days after theyve floated. According to bbt, its following a dispute over workers terms and conditions. It is after the first day of unconditional trading on the London Stock Exchange for royal mail. It closed up nearly 3 . Its the first day of coming back. 4 pounds 73 is where we trade at the moment. Ita italys martin wolshak, in a statement, its accused the lender of gross negligence and says it delayed releasing information on who the subscribers were as a hybrid instrument known as fresh 2008. Shares of monte paschi are up 2. 9 . A foundation which owns 33. 5 is preparing to shed part of its stake to raise cash to repay the bank debt. So invery fasters like that rather than a little bit more than the fine. And cnbc has learned jpmorgan is going to pay some of that fine, 1100 million to settle with the cfpc over the london wall trading case. Its expected to be analyzized at early as today. The cftc is expected to fine the bankss use of socalled manipulative devices. Last month, jpmorgan paid 920 million to resolve the probe related to the trading loss. Jpmorgan. Jpmorgan stocks in frankfurt any moment now, im assured we will have it, 1. 2 . Still to come, will rumors of a debt ceiling deal break rumors . Spending will rise once the Political Uncertainty is removed. More after that in the second hour of Worldwide Exchange continues after this. I love having a free checked bag with my united mileageplus explorer card. Ive saved 75 in checked bag fees. [ delavane ] priority boarding is really important to us. You can just get on the plane and relax. [ julian ] having a card that doesnt charge you foreign transaction fees saves me a ton of money. [ delavane ] we can go to any country and spend money the way we would in the u. S. When i spend money on this card, i can see brazil in my future. [ anthony ] i use the explorer card to earn miles in order to go visit my family, which means a lot to me. Hello. Youre watching Worldwide Exchange. Hours to go, Senate Leaders are trying to craft an acceptable deal to raise the debt ceiling and avoid a potential default. Investors in europe are cautious as that deadline looms. Among the worst performers despite an uptick in european car registrations in september. Stocks are leading the declines, multiple downgrades has posted an unexpected decline in sales. And danone has warned a recall on baby formula will hurt its Third Quarter revenues. Apple has reported its cutting orders for the cheaper 5c model and at the same time, the companys ordered up on its highend 5s. A warm welcome to the start of your Global Trading day. The s p down 12. Right now, futures are indicating an upward start. Are we craft ago deal that everybody is going to be able to sign . Thats the question this morning. Maybe. The dow is up 63 points above fair value. The nasdaq at the moment is around 10 points above fair value. The s p 500 is just over 7 points above fair value. And this is where european equities are trading. Currently down 0. 5 . Flat xetra dak. Cac 40 down 0. 7 . The ftse mib is up 0. 5 . A couple of stocks that were looking at, i mentioned them in the headlines, lvmh, down 6. 4 at the moment. This is after posting a fall in Third Quarter sales in its fashion and leather business. And danone is down 3. 2 at the moment. Its out cut its 2013 targets after baby formula sales failed to rebound following a food scare. Wa about treasury yields . More elevated this morning. 2. 72 is where we stand. Italian yields, okay. Bunch, 1. 9 . The pound going up, as well. We saw quite a bit of fall in the claimant count in september. This is the number of people claiming unemployment benefits. The ilo unemployment total dropped, but the Unemployment Rate did not. As the claimant count comes ahead from the ilo, people think there will be a fall next month. Unemployment rate is now a key knockout for the bank of englands forward guidance. On the currency markets, again, we havent done an awful lot in the last 24 hours. Euro dollar, still at 1. 35 handle. 1. 3530. Dollar yen, 98. 30. Aussie dollar held on to the gains from 95. 72 after it appears the rba isnt in any rush to cut rates further. Sterling reclaimed that mark despite the unEmployment Data i was just talking about. Thats where we stand during the session right now in europe. Lets recap that Asian Session. Sixuan joins us out of singapore. Sixuan. Thank you for that, ross. Its a mixed bag for asian markets. While investors are hoping for an 11th hour deal in washington. The nikkei 225 ended higher by just a modest 0. 2 with a slightly weaker yen lending support. Meanwhile, china markets under pressure with leading losses on fresh property curves. The shanghai composite lost almost 2 . South korea, kospi ended lower by 0. 3 despite a foreign buyers frenzy for the 34th straight session being the longest buying streak in kospis history. Now for some big movers, softbanks acquisition continues, this on hopes that the potential bright star acquisition will give the company more Bargaining Power with hand setmakers. In a separate move, soft bank and its part of subsidiary golf entertainment are teaming up to buy a 1 stake in shares of supercell and gungho online soared around 15 . Pccw gained 4. 6 . Other than the, hong kong tv was rejected and a third of its market cap was wiped out in todays session. Back to you, ross. Thank you very much, indeed. Meanwhile, u. S. Senate leaders are preparing for a last dirch effort to real the debt ceiling, avoiding a potential default. Harry reid and Mitch Mcconnell have essentially finalized their plan. The senate is reconvening at noon and both men will brief their respective caucuses. The house started to get support for two separate bills. The conservative group, Heritage Action opposed the plans because they didnt do enough to roll back obama care. Now its suggested that under the Senate Proposal the government would be funded through january the 15th, the debt ceiling would be extended until february 7th and the xt will have until december 13th to work on a new round of spending cuts. Fitch has put the u. S. On credit watch negative, warning that it might downgrade the countrys sovereign rateding from aaa. Its citing the political brinkmanship. A Treasury Department says fitch announced its reflecting the urgency of congress to act. Joining us with his thoughts today, Patrick Spencer, md and head of institutional equity sales at beard. Patrick, nice to see you. In fact, equities will be remarkably sang win. Here we are with the final day to get the deal done and nobody seems that look forward. Brinkmanship, politicians are pretty good at that. You know, weve seen quite a few occasions the last few years, a rerun of the fiscal cliff i was on the tv earlier in the year talking about fiscal cliff, or last year. You know, six occasions since 2011 and the market as you quite rightly say is 11 of its highs. They talk about the potential downgrading of debt. You know, the tenyear hasnt even moved. So our clients, i mean, what we do, we take institutional orders and u. S. Equities and our clients have just moved to the sidelines. Theyre fully invested. Theyve moved to the sidelines. So trading has stopped a bit, but we think that basic lir politicians will come to their senses. And that essentially, we have priced in yeah. We have priced in that they will do a deal. We have, correct. And thats wa youre saying, isnt it . It is. Even if we avert them, it doesnt necessarily mean were going to get an enormous rally. And i think people will get back to business. We know then were going to be back here at the end of the year and january and february. And its all very weary. Yes, but this is about the main crux of all of this and why the tea party brought this in the first place was its about deficit reduction. Its about deficit reduction. Now, youve got to give the politicians credit for whats happened in sequestration. Theres 250 billion of cuts. Theyre cutting 80 billion a year in the states and the deficit has gone from 15 five years ago to 4 this year, 3 next year, 2 by 2015. So, you know, a lot of people criticize the politicians, but theyve done a pretty effective job by cutting to deficit. So the actual you know, the finances of the u. S. Are in pretty good shape. And big debt is what happens with government. If you look from the early 90s through to the end of the 90s, which was a good time for the stock market, you have very high debt. Youve got the same debt now but with lower coupons. The key to all of this is can they afford to repay their debts . And the fact is, of 1 to 2 of gdp is interest payments. They can easily do that. Its what governments do. An agreement will happen and certainly the government can continue, obviously, to operate. And it reasonably helps the financial way. I get all that. Meanwhi meanwhile, it has big indications for what happens with taper. The dallas fed president Richard Fisher says it will be hard to argue for tapering at this months fomc meeting because of the budget showdown in washington. It has been one of the staunchest opponents of the fed upon buying program, appearing on cnbcs closing bell. He says not only has the fiscal fight hurt growth, its complicated the federal reserves ability to gauge just how the economy is doing. At some point, you have to act and you have to lead. Again, this isnt our job at the central bank. We elect to guide the purse of the United States. And at some point, theyre just going to have to act. And i assume were getting closer and closer and closer because the markets are will to give us the back of their happened. And he said the fed will work to maintain stability, but the central bank cant do it alone. At the same time, the peoples bank of china, the Chinese Central Bank says it will continue with Monetary Policy and appropriate fine tuning. Of course, we had some comments this morning with regard to whats going on in the states. Theres a rise of foreign inflows reflect the feds delayed qe exit. The yuan is currently at fresh record highs against the dollar. The interesting thing is, is that visit going to be effective or not if the fed cant judge whats going on in the economy . It doesnt look like its going to taper this year. In fact, as were back discussing politics again in january or february, they might not be tapering again until march. Which will be good. It will be good for the market. If you look at the fed Balance Sheet its, what, 3. 5 trillion. And as the feds Balance Sheet has grown, if you overlay the s p to the feds Balance Sheet, basically, theyre going in lot step. So while they continue to ease, which theyre going to continue to do, theyre data dependant, yell sn a dove, so youre going to continue to see, obviously. Jobs is a problem. I personally think 6. 5 is the benchmark. I think theyll go even lower. Maybe they go to five. Maybe they go to 5 1 2, maybe they go to 5 in terms of the unemployment. But you will not get tapering until the Economic Data is found. And at that point, the economy will be recovering. And you must remember, when Interest Rates go up for banks, you know, which were a big part of the s p, they benefit that because, you know, certainly they borrow short, lend long. So its a Good Environment for banks. And it will just, i think, indicate that its business as normal, the economy is actually on a firm footing and recovering again. So i think the environment for equities is good. Its the asset of choice at the moment and i had been talking earlier about the money flows that we see. We see that coming out of europe and the u. S. Because of valuation. I think europe last week was the 11th of flows into europe. But we continue to see good asset flows and youve had a generational fright in equities. Theyre still dramatically underowned in the world. Phenomenally under owns. Everywhere i go, people are worried about investing. Stay with us. More to come from you. Weve been asking is china seizing on the u. S. Crisis deflects its currency muscle, can you imagine a world where the u. N. Becomes the global reserve currency . Pinto tweeted they certainly have the opportunity to do so, all they have to do is start spelling their 1. 3 trillion of u. S. Treasuries. Which is a bit of a task in itself. If you want to join the conversation with us, tweet cnbcwex or direct to me rosswestgate. Still to come is that debt debate continues, its probably overshadowing bank of americas earnings. More from him on that in a few moments. Knew all about a bike a, just by talking to a helmet. It grabbed the patients record before we even picked him up. It found out the doctor we needed was at st. Annes. Wiggle your toes. [ driver ] and it got his okay on treatment from miles away. It even pulled strings with the stoplights. My ambulance talks with smoke alarms and pilots and stadiums. But, of course, its a good listener too. [ female announcer ] today cisco is connecting the internet of everything. So everything works like never before. The clock is ticking on the debt ceiling deadline. U. S. Lawmaker res taking america to the brink of default. European stocks mostly down today. But apples reportedly trying to cut orders as well for the cheaper 5c model raising doubts about its smartphone strategy. Well get into apple fairly shortly. Meanwhile, other Tech Companies have been speaking. Yahoo reported a mixed bag results, Third Quarter earnings beat but the companys Fourth Quarter outlook disappointed. Josh has more from silicone valley. Yahoo reported. Met expectations for the Third Quarter. The internet giant earned 34 cents a share on revenue, excludeing traffic, acquisition costs and 1. 08 billion. That was in line with what the street had forecast. Marissa mayer suggested there are 1 million users on yahoo up 20 or so over the past 15 months. Still, display revenue was down 1. 7 . The number of ads was up. As for search revenue, minus traffic abdomen sigz costs, it was up 3 . Paid clicks rose 21 . But price perk clicks dropped 41 . Guidance from q4 below estimates, guidance for the year is lower and below conscienceus and potentially better news, yahoo is now saying it does not have to sell as much of its stake in alibaba as it had to if and when alibaba goes public. We have more insight into how that is performing right now. From april to june, we learned alibaba reported income of 707 million, up 159 from the year ago period. Josh lipton, cnbc, silicone valley. S it was a bit of good and bad news from intel. Cnbcs jon fortt has been breaking down the chipmakers numbers. Intel reported results last night that came in slightly better than analysts expected, at least for q3. Revenue came in at 13. 48 billion and earnings per share at 58 cents, slightly better than the 55 cents that the street was looking for. But the guidance in a few other items, those post a little bit of a problem. Wall street wanted revenue for q4 just a hair under 14 billion and intel guided to 13. 7 billion plus or minus a half a billion dollars. And the stock was down about 2 after hours by the time dorchbs call ended. Now, four q3, a few bright spots. Pcs came in better than expected at 8. 38 billion. Data center group, a hair short of the 3 billion specation. But growth margins overall in at 62. 4 , better than the 611 expected. Intel said that pcs overall appeared to be bottoming out as far as the market was concerned. They had some defect density issues with their process which caused them to push out the launch of that to q1. If you but now that theyve got that launched out, they expect Everything Else to pretty much be on schedule. The other Intel Architecture Group had an operating loss. Stacey smith said thats something that we want to fix. The embedded portion of that is doing well, but its issues like net book that is causing problems there. That market has shrunk significantly. Also a modem customer that they had been working with is apparently not ordering as much. As intel talked about those issue and their mobile Growth Continues to develop, not quite there yet. Some of that is wa sent the stock down a bit after hours. For cnbc, im jon fortt. Back to you. So theres the latest report on intel and yahoo as well. Patrick, wa do you make of the tech sector . We like the value. You mentioned intel. Intel has quite a bit of cash on its Balance Sheet. It has a 4 yield. If you take the cash off the Balance Sheet, its trading at 9. 5 times. This bay trial chip, its got 50 awards. As long as those get deeper in the mobile sector, which i think over time they will. We like technology, we like expensive technology, as well. Things like salesforce. Com. If you look at the way the market has been trading this year, any stock thats had a reasonably high dividend like intel has been trading badly, high Growth Stocks like salesforce. Com continues to do well. So things with the shrouded round storage, the cloud, those types of names which are higher multiple but have assured growth. So we like both edz ends, but, you know, the growth yearend has been improving. Were going to talk about apple in the next leg. So ill leave that one alone for now. Lets get into banks here. We talked about how in the break you like banks. I do. Jpmorgan, wells fargo. Clearly, if jpmorgan has its own issues with its fines and things like that. But look, refinance sg drying up. Clearly a little bit. Absolutely. Weve made a lot of money. Banks do better in that environment. Retail finances get knocked out. Sure. The concerns about banks at the moment is that people arent borrowing money. Loan growth is low. That is why the stokts have been rolling over. And the valuation for banks, youve had that once in a generation eblths, if you like. People have thrown equities indiscriminantly. And youve got these banks trading a quarter to a half potential value a year ago. Theyre now one times tangible books. These are stocks that used to trade three, four times tangible books. That is a stock that should trade about ten times. Youve got a 20 upside on bank of america. These stocks are very, very cheap. Youve got record levels of capital. Youve got debt. For the bad situation debt at jpmorgan, its been a lot of banks. Okay. Shortterm. But shortterm because of that loan growth and concerns about higher rates and tapering, theyre causing mortgages to roll over a little. All right. Good. Got that message. Stay tuned, well get your view on apple as reporting it plans to cut orders of the cheaper 5c iphone. Was going on . Well find out. Mine was earned orbiting the moon in 1971. Afghanistan in 2009. On the u. S. S. Saratoga in 1982. [ male announcer ] once its earned, usaa Auto Insurance is often handed down from generation to generation because it offers a superior level of protection and because usaas commitment to serve current and former military members and their families is without equal. Begin your legacy. Get an Auto Insurance quote. Usaa. We know what it means to serve. [ male announcer ] united is rolling out global, satellitefed wifi to connect you even 35,000 feet over the ocean. Thats. Wifi friendly. Apple has reportedly cut orders for the 5c phone. Apple released its latest offering to 11 markets in september. Orders had increased for the more expensive 5s version. Apple stock is down 1. 25 in frankfurt. Ian is joining us now. Patrick spece is still with us, as well. What do you make of these reports and how much of a question mark does it throw against the cheaper iphone strategy . Firstly, the iphone 5c isnt a cheaper iphone. It launched essentially at the same price as the previous model 4s. It is a model with better support, which makes it more attractive to operators driving up networks. As far as the reported cut, its all rumor. It may still be significantly up on large years performance. Well know the truth when apple error their results and well know what the revenue is and what the average starting price is of the iphone hand set. And that will give us a pretty good steer to the mix of the 5s and the brightly colored 5c. About we saw the announcement last month and it was essentially at the price point of the old price, we left our guidance unchanged. Weve got another sort of presentation today, i think its only 22nd if the date is right. What do we think might get announced then . The new version has just gone into gold master, which is usually the immediate forerunner. Ian, good to speak to you. What do you make of apple . Apple continues to struggle. Its cheap, but it needs more product. Im sure it will do well, but its earning hes driven. Good value, but i think time is the issue. Talking about earnings, so far in the Third Quarter, last year profits were up 10 . Revenues up about 2 . It weak bed it. Yes. With every quarter, we get concerns about earnings and every year since 08 wove seen if market continuing, in fact, to rise. And its hardly surprising that people are cutting back cap ex and being cautious this quartzer. Its Third Quarter. Its the first up quarter. Theyve got to throw everything into the sink. On a three to one negative ratio, i suspect what youre going to get is companies will beat their preannounced numbers and will as long as we get over this issue with washington, their earnings season will actually, once you look at the opt iblgly, i think will look good even though the numbers are quite bad. Always good to see you, patrick. Thanks for joining us, Patrick Spencer from buried. Still to come, its the biggest ipo to sit this year, but with more on that and the latest out of washington, as well. As we do so, futures are pointing higher right now. The s p 7 points above fair value, the dow at 65 plus fair value. This is Worldwide Exchange. On the brink with hours to go, u. S. Senate leaders are now trying to draft an acceptable deal to avoid a potential default. Investors in europe are cautious as that deadline looms. One year u. S. Credit default hitting the highs of 2011. Thats the cost of ensuring the u. S. Is going to default. French stocks on the use abroad, they will be launched after multiple downgrades after posting an unexpected slowdown in sales. Danone announcing a recall of baby formula sales will hut its q3 revenue. And apple is cutting to cheaper version of its iphone at the same time upping orders of its high end 5s. All right. Here we go. One day left before the u. S. Will not be able to pay its bills in more theoretically. After the fall we saw yesterday, the dow down 130. The s p down 12. This morning, we are higher and it looks like theyre putting out another plan. The key question is, will it get support in the house . Maybe it will. Thats what the hope will be. The s p at the moment is nearly 8 points above fair value. The nasdaq at the moment is 8 points above fair value, as well. And the dow right now some 64 points above fair value. The cnbc global trend has been more muted than the u. S. Futures. As you can see, down 3 points at the moment. European equities have been sort of flat to negative. The ftse 100 currently down 28 points. The xetra dax down 11. Can cac 40 weighed down by the likes of lvmh and danone down 31 points. The ftse mib is up 85 points. What are investors to do . Here is another recap. The last time about being a short sale in indonesia, the rue pea kra, weve closed that and split our position. Now were long, for example, long dollar 30, as well. So those are sort of our hedges. Because of the lack of data coming out, the shutdown, qe expectations get pushed back. It is Asset Classes on the back of that. Second quarter is stiffer. Companies like Travis Parkins here in the uk who have done a huge number of measures, you get the relatively small move in the pipeline can translate into a significant move in the profit number pure by because of the strong implemental margin that it would generate. Were going to get the latest on was going on with investors. Before that, Plains Gp Holdings is set to speculate today on the stock exchange. Biggest u. S. Ipo of the career. The houston oil group raising more than 2. 8 billion. The listing comes at a potentially difficult time when investor serchbtment waned, but the debt deadline in washington. Joining us from toronto, theran fingerel and also with us joseph schuster. Darren and joseph, welcome to you both. Joseph, get a view from you, first of all. What is the opportunity here . You talk about a window of opportunities from u. S. Energy ipos. Was going on . Theres a lot of structural rise in the market. Obviously, the company took advantage of this window of opportunity and ill give and put it 2. 7 yield on the market today. Why is there a window of opportunity . Whats going on . Well, first of all, riske appetite in the market is very strong, which has to do with the high equity markets in general. Second, the performance of ipo has been very good year over year if you measure by some indexes which we license and create. The average ipo is up 45 . Which is driven by the market by very strong fundamentals. Underpinning of a positive momentum and certainly in the mlp space itself is just a lot of flows into this space given by the driven by the high yield of steel. Not just from the resale community, but by public institutional investors, including u. S. Pension funds. Darren, mlts, of which plain gp is one of a high paying dividend vehicles. What do you think is going to happen . What is general part ners have to offer . General partners is the gp. They have a couple of things to offer above lps. Number one is Significant Growth and distribution. This partnership is coming out. Management is forecasting distribution growth. Cash on Cash Distribution growth of 20 per annum. If you compare that to the asset class overall, thats 2. 5 times greater distribution growth. Generally what you find is gp is a group and theres only seven of them right now. This will make the eighth gp thats publicly tradeded. They grow faster than mlps overall. Its part of a bigger trend that were seeing here in the mlp marketplace, which is growth overall of the Asset Classes. 425 billion. This is u. S. Energy Infrastructure Investments right now. This is the largest ipo of the year. This is one of the ways that were seeing growth in the asset class continuing to expand on the back of u. S. Energy independence and the unconventional shell revolution going on in the use today. Where are they how are they generating their growth . What is their play on that . Sure. So a lot of its pipelines. Gathering and processing. Really, the big play here, if you look at the u. S. From 2008 through 2013, the Energy Production has increased natural gas and oil by 40 . At 70 Million Barrels per day, the u. S. Is set to overtake saudi arabia well, it already is. Its a Larger Energy producer, but russia there this year in 2013, its the Largest Energy producing nation in the world. So really, the safe play on this boom is transportation of energy. Volumes are increasing five years, 7 Million Barrels per day. Were going to need to increase at least another 7 Million Barrels to achieve energy independence. A little more than that, actually. So play the pipelines. Their longterm contracts, 10 to 30 years, theres no exposure to commodity prices. Youre getting good yield. Youre getting a monopoly because its infrastructure, so theres no price competitions. You have stability of distributions. And that is the play you really want to look at and thats why Pension Funds are moving into it. Were offering funds in europe now that are giving european investors exposure to thatsette class. Its an asset growth that enables investors, Pension Funds are moving into it, exposure to this really safe asset class that picks up and gives investors exposure to the u. S. Energy revolution taking place today. Darren, to get exposure to that, could you get into a plain Energy Infrastructure fund . Would that seem to be if thats where you want to be, are there funds like that . Well, i think you want to focus on limited partnerships. If you look at lps, theres pure exposure to the asset class. If its not focusing on the u. S. , its not focusing on growth. And the big play in the asset class, yield everyone focuses on first is growth in distribution. Growth in distribution gives you a hedge against rising Interest Rates, protection against inflation. The distribution growth, theres an asset class by 8 . Plains is going to grow on the gp at 20 . 8 growth, youre doubling your money every, what, nine years . So its an incredible amount of power. Joseph, final word from you . You wanted to jump in . Well, obviously, but one needs to consider the respective ipo only, you know, priced at 2. 71 expected dividends. So, obviously, you know, the fed has to be considered and, i mean, you need a diversified vehicle into the into mlps as an etf for diversified portfolio. Kmi, one of the big nlps here coming down sharply in the market due to some concerns about this structure. So one needs to be very careful but not just go blindsided into investing in any sector. So diversification is the best and what we would recommend. Okay. Thank you, joseph and dan for joining us this morning. Still to come, ipos, twitter is one step closer to reality. Well tell you when to mark your calendars, after this. [ horn honks ] [ passenger ] airport, please. What airline . United. [ indian accent ] which airline, sir . [ passenger ] united. Whoa taxi [ british accent ] what airline, then . [ passenger ] united. All right. [ spanish ] what airline . [ passenger ] united. [ mandarin ] which airline . [ passenger ] united. [ arabic ] which airline . [ passenger ] united. [ italian ] where are we going . [ passenger ] united. [ male announcer ] more destinations than any other airline. [ thai ] which airline do you fly . [ passenger ] united. [ male announcer ] thats great, big world friendly. [ male announcer ] thats great, big world friendly. Stick with innovation. Stick with power. Stick with technology. Get the flexcare platinum. New from philips sonicare. [ male announcer ] the parking lot helps by letting us know whos coming. The carts keep everyone on the right track. The power tools introduce themselves. All the bits and bulbs keep themselves stocked. And the doors even handle the checkout so we can work on that thing thats stuck in the thing. [ female announcer ] today, cisco is connecting the internet of everything. So everyone goes home happy. A reminder of whats going on today, get your calendars out. Ipo from twitter. Meanwhile, as far as the headlines are concerned this morning, were on the brink of default. Weve got senate talks continuing in the United States. Lawmakers taking america to the brink. European debt jitters keeping equities here in check. European stocks mostly in the red. And apple reportedly planning to cut orders for the cheaper 5c model raising doubts about its smartphone strategy. Twilter is also in focus today. One step closer to reality of an ipo. Bertha is with us in the states. Hi, bertha. Hey, ross. Thats right. Mark your calendars. Cnbc has learned twitters ipo is set to price on november 14th. And it will start trading on november 15th. Although the date could change. The company will reportedly begin its investor road show october 25th. Thats next friday, Holding Meetings with its top wall street advisers. Goldman sachs, Morgan Stanley and jpmorgan. Thats when management will discuss how best to sell shares to those banks clients. On the following week, tilt twitter will head to the Midatlantic States likely meeting with investors such as t. Row price before visiting new york and boston. The company will be in San Francisco on november 4th and los angeles on november 5th before head to go the midwest on november 6th. The company disclosed in a filing that it has picked the new york stock exchange. Traditionally we know fourletter ticker stock ves listed on the nasdaq, but theres been fierce competition between the exchanges. And over the last year, some of the big ones like pandora and linkedin have listed on the big board. Certainly it didnt help given what we saw last year with the facebook ipo on the nasdaq. In a statement, the nyse says this is a decisive win. Its clear they would definitely crow. However, twitter, when it comes to their fundamentals, still far from profitable. The considers aemed s1 is filing shows losses tripled in the Third Quarter, although revenue double dollars to 168 million. The losses were driven in part by a 158 surge in spending on sales and marketing as the company is ramping up its sales force around the world to try to push its ad platform. But, ross, this is a very big win. Certainly psychologically for the new york stock exchange. And a sense to kind of rub salt in the window given what happened with the facebook debut back in may of 2012. When it comes to the nasdaq. Yeah. Theyre still pay for it, arent they, bertha . And profits, as we all know, profits dont really matter in the tech world. Its all about the promise of jam tomorrow, isnt it, as long as tomorrow never comes. It does seem that way, although it seems as though were in a new area where well wanted to see a exchange of profitability. They didnt give a road map as to when it would be popular. They have gotten profitable at this stage. Thanks for that. Well take a short break. Still tom co, dday is beginning stateside. Well look back at some of the comments in the debt drama. Here is a reminder of what the u. S. Treasury had to see about the prospect of hitting the debt ceiling. Credit markets could freeze, the dollar could plummet, u. S. Interest rates could skyrocket. I love having a free checked bag with my united mileageplus explorer card. Ive saved 75 in checked bag fees. [ delavane ] priority boarding is really important to us. You can just get on the plane and relax. [ julian ] having a card that doesnt charge you foreign transaction fees saves me a ton of money. [ delavane ] we can go to any country and spend money the way we would in the u. S. When i spend money on this card, i can see brazil in my future. [ anthony ] i use the explorer card to earn miles in order to go visit my family, which means a lot to me. U. S. Senate leaders are preparing for a last ditch effort to reach a deal to raise the debt ceiling, avoiding a potential default. Reporting today the majority leader harry reid and Mitch Mcconnell has essentially finalized their plan. The senate is reconvening at noon and both men are going to brief their respective caucuses after House Republicans failed to get support for two separate bills. Conservative Group Heritage action has opposed the plan because they didnt do enough toel back obama care. Now its suggested that under the Senate Proposal, the government would be funded through january the 15th and the debt ceiling extended to february the 7th. They would have until december the 13th to work on a new round of spending cuts. Fitch has put the u. S. On credit watch negative. Its warning it could down gried the countrys Sovereign Rating from aaa. Fitch cited the political brinkmanship over raising the debt ceiling. Now, this morning, u. S. Futures despite the falls yesterday well, we saw the down do down, 130 points. U. S. Futures are pointing up. Were currently about 58 points above fair value for the dow. The nasdaq is around 7 points above fair value and the s p 500 is 7 points above fair value. Were not quite at the highs weve been for features futures during Worldwide Exchange. And european equities have been slightly more mixed. They are down over 0. 5 for the ftse, just over 0. 1 for the xetra dak. Cac 40 down 0. 7. 5 . The ftse mib is up 0. 5 . As far as treasuries are concerned, 2. 72 is the yield on the treasury. Gilt yields are higher this morning. We saw Employment Data in the uk coming in better than expected, although the Unemployment Rate did not necessarily decline. So it is a good day to be all about events in washington, d. C. So weve been asking is china seizing on the u. S. Crisis and to talk about needing less reliance on the dollar as the reserve currency. Could you imagine a world where the u. N. , the chinese yuan becomes the global reserve currency . Weve been asking that. Keep those comments coming in, as well. Otherwise, theres only one place to keep it here on cnbc. Squawk box is picking up the reigns. Theyre going to bring you the latest from washington and count down to the opening of markets stateside. Whatever happens, we hope you have a profitable day. From all of us here on Worldwide Exchange, good day. Afghanistan in 2009. On the u. S. S. Saratoga in 1982. [ male announcer ] once its earned, usaa Auto Insurance is often handed down from generation to generation because it offers a superior level of protection and because usaas commitment to serve current and former military members and their families is without equal. Begin your legacy. Get an Auto Insurance quote. Usaa. We know what it means to serve. Good morning. Its dday in washington. Theres still no deal. Relax, today i think theres going be one. It will be fine. Wednesday, october 16th, 2013 and squawk box begins right now. Good morning, everybody. Welcome to squawk box here on cnbc. Im becky quick reporting live from washington, d. C. Joe kernen and Andrew Ross Sorkin are back at headquarters. Our special guest this morning is Berkshire Hathways ceo warren buffett. He is here with us right now ready to take on his situation, what he thinks is happening right now and the situation with washington. Before we get to that, andrew is going to bring us up to speed on the latest headlines. Thank you, becky. You guys are in the Perfect Place and we all want to hear what warren has to say about whats going on in washington. Meanwhile, is senate is working hard to come up with a deal. While Senate Leaders are reportedly close toon agreement, the fate of the house remains uncertain. The senate is scheduled to meet at noon eastern time today, the house at 10 00. Meantime, president obama is meeting with treasury secretary jack lew at the white house this afternoon. Lew sad has said that the United States will run out of Borrowing Authority tomorrow if congress does not raise the debt limit. Fitch now has put the u. S. Credit rating on negative watch, citing an impasse in washington. This is