Transcripts For CNBC Worldwide Exchange 20131121

Behind a drop in revenue last quarter. And the Prime Minister has replaced his long standing finance minister with a political unknown, but does it change the Investment Climate . Well hear from the former Prime Minister. Announcer youre watching Worldwide Exchange, bringing you Business News from around the globe. Hello. Welcome to the show. We kick off with the latest data out of europe. The market eurozone pmi is coming in weaker than expected. The flash number, 51. 5. It was 51. 9 in october and investors expected it to tick up slightly to 52. Divergence between germany and france. The german composite numbered ticked up to 54. 3. The french number, im afraid, ticks down. French services at a fourmonth low, manufacturing at a sixmonth low and the composite, 48. 5, 50. 5 in october. We saw in the Second Quarter. Negative growth for france and now we are getting contracting activity, as well. Chris williamson is global chief economist at market that helps compile these numbers and joins us now. Chris, how on concerned should we be about france . It is a concern that its slipping in the wrong direction. Risk of recession here after small declining gdp in the Third Quarter. Were running at a level consistent with 0. 2 contraction in french gdp. So that is a concern. Its a really difficult story, though, because the survey data is not just ours die verged from the gdp data earlier this year which shows a surprising uplift in the Second Quarter of the French Economy. We didnt get that at all. Our picture is a French Economy that has turned around alongside the periphery and its now bumping along at a stagnant level. The danger is youre going to get those headlines which is signaling this renewed recession and thats going to damage Business Confidence there. Yeah. And we come at that point when a lot of incident vesters have ridden the cyclical pickup earlier in the year. Theyve poured money into european equities now wonder wlg they got it a bit wrong. Well, i think you overplay this for two reasons. One, these are very minor down shifts. But when you look at germany, germany is doing well. Its pmi is consistent with gdp growth around 3 creating jobs. Youve got services expanding, manufacturing turning up, exports are doing well. And neighboring economies are being pulled up alongside that. So its looking like france has become almost but at the expense of others. Well, in some respects you could say that. But in other respects not because supply chains feeding german industry across europe are on the uptick. Spain is a good story so far this year, even shown by the pmi. Theyve been picking up. Were not going to break down today for spain. But spain has done well in terms of productivity and its feeding into german supply chaines and thats bringing spain up. Thats the story we want to see more of. France is looking a bit like an outliar at the moment. Okay. Chris, stick around. Youre with us for the first half hour today. Also still to come, as German Coalition talks crawl towards the end of the year, there is the possibility avenof fresh election. Were going to be in paris. Two bosses at the french unit of ikea are under allegations of spying on its employees. And with recent warnings from the luxury sector that luxury goods is on the way, well get the latest on the sector from the Southeast Asia luxury conference. Thats under way in singapore. Plus, the chinese vice premier continues her trip in america on the heels of beijings latest reform pledges. Well have a view on what it means for u. S. China relations. And well be hearing from the ecb chief mario draghi. Hes addressing a conference in berlin on industry and growth. But first, we are just over an hour and five minutes into the trading day. European equities down again today. Take a look at this shot of the Dow Jones Stoxx 600. The ftse yesterday was down some 17 points and were in the red again this morning. Currently another 24 points, 0. 3 lower. The xetra dax moving further away from the record high that weve been at, down 0. 6 . This morning, france with the pmi numbers is off 1 . The ftse mib is down 0. 3 , as well. A sharp move higher in treasury yields post the fed yesterday. 2. 78 is where we stand. Now, as far as currency markets are concerned, the dollar yen has been the big mover, a fourmonth high of 100. 63. Euro dollar, weaker this morning. Back under the 1. 35 we were trading at yet. Were about a euro below that at 1. 3419. Pound dollar, 1. 6091. But the aussie has been here once again by the hsbc low. Well get into that. 0. 9274 aussie against the greenback. Sixuan has the update for us in singapore. Thank you, ross. Asian markets are selling off with the exception of japan. The nikkei 225 outshined ending higher by almost 2 at the dorm. In china, the pmi numbers came in weaker than expected and some say we could see more down beat numbers in the months ahead. The china market still managed to end just a tad lower. And the hang seng index lost 0. 5 today, pulling back from its tenmonth high. Meanwhile, south koreas kospi tumbled 1. 2 from heavyweight Samsung Electronics down over 2 . Australian shares extended its fourday losing streak and ended lower by 0. 4 . Lets check on the stocks in china, continuing to be driven by recent reforms, those include agriculture stocks. And some stocks surged on expectation that the city will become the next one to set up a free trade zone following shanghai. Telcos got a lift on reports that 4g licenses will be issued by the yearend. But chinese property majors weigh on the index on reports that beijing may soon set up a National Network of housing information. The Registration System is one more step towards housing transparency in a property tax system so the big players tumbled some 3 to 4 today. Back to you, ross. Sixuan, thanks for that. The hsbc Market Manufacturing citi 0. 4 . A touch lower from the 50. 9 we saw back in october. What does that mean for the Economic Growth momentum . Chris, define your own tea leaves for us. Its a mixed story when you mix into these numbers further. You have an output index which rose to its highest in march. Which bodes well for gdp growth to actually accelerate in the final quarter. On the other hand, the auto book numbers have waned again. Going forward, we may be turning downwards again. Renewed export orders is a particular concern. In october, we run a survey of all these companies in china globally. Look at all these expectations. It was a down beat message. So this really substashates the story that markets are next year. And if we get tapering, it could be more . Yeah, that could lead to further outflows from the countries with investment. One thing is, this survey, some before of what weve seen in the plenum announcements and reforms. And i wonder how much potential is there for that . And its a slow burner, i understand, but how much potential is there to encourage private firms to feel better . Absolutely. Emerging markets need to do more structurally to change their economies because there was always inflow of money. When thats dried up, its revealing structural weaknesses. And the decision, as its been referred to, highlighting all these changes to take place. Maybe that will be confident to lift the outlook, the prospect of these companies from these crisis lows we saw in october. Its just beats down the chain, doesnt it . It feeds down well. It feeds down the chain across asia. Thats what i mean. Yes. So we saw in japan there, the bank of japan is worried about the outlook for the region and indeed this same survey, when we looked at japan, i was expecting Japanese Companies to be very upbeat. Weve had great pmi numbers hitting record highs in japan. Then you look at what the outlet is, its one of the weakest in the rich world. Its exceeded only about brazil. Obviously, Japanese Companies, i think whats happening domestically, but looking at whats happening around in the world, especially in asia, because where is the demand going to come from once this first stimulus rolls throw. Companies arent convinced at all, i dont think. Still to come, the merger from germanys social impasse could Coalition Talks actually crumble . Well get to berlin for the latest right after this. Stacys mom has got it goin on stacys mom has got it goin on stacys mom has got it goin on [ male announcer ] the beautifully practical and practically beautiful cadillac srx. Get the best offers of the season now. Lease this 2014 srx for around 369 a month with premium Care Maintenance included. Negotiates from iran and six world powers are lit down for a second round of talks in geneva today. Yesterdays meeting was deemed positive by the eus chief and the Iranian Foreign minister. Hopes are for an interim agreement when talks conclude tomorrow, so u. S. Secretary of state john kerry says america will not let any deal be used by iran as they ploy to buy time to increase its nuclear capability. Later in the show, well ask what each potential outcome of the talks with iran could have on the price of oil. Thats coming up in the second part of the show. Meanwhile, its been more than eight weeks since Angela Merkels election victory. So far, no deal has been struck. Talks have been put on shaky ground as the social democrats with a future alliance with the left. So what is going on . Roland berger is founder and chairman of Roland Berger strategy consultants. I see theres been some newspaper reports that we might even face the possibility of another set of elections. No, i dont think so. I think we will have the agreement between social democrats and ranking democrats. The content of the talks go to penging increase, minimum wage, about rent rage, about more expenditure and welfare, things of which will not be in the line that the voters were voting for. We have to make sure we dont roll back any of the reforms of the last decade some say. Are there worries that they might . I think the danger is there. You know, they are talking about reducing the pension age again, which will be absolutely against the further reforms and a few other things. If you look at the numbers, germany has increased its labor unit costs in the three years. If the government adds additional loads to the business and introduces less flexibility, particularly in labor markets, it will certainly lead to decreasing growth and the minimum wage will lead to an increase of the economy in germany which is not what would be in the best interest of the citizens because tax revenues would be lower and the social contributions would be lower. And you talk about the competitiveness of the german economy, but the latest pmis this morning south its doing rather well for others in europe, particularly the French Economy which appears to be flirting with recession again. We still have a political zone on how to take the eurozone forward. They cant agree on a single wind up mechanism for banking, for example. Are you concerned about what seems to be a growing economic and political divergence between the founders of the single block . Yes, we must confess there is a disagreement on the european level. There is no agreement yet on Banking Unions. There is no agreement on how to finance potential european new bailout programs. There is no agreement on potential mutualzation of debts in the eurozone and the french have totally different interests and totally different ideas about the future of the european economy than germany. On the other hand, i think if the french government is about to return to reality, and while the German Government is moving to the left, maybe they meet each other halfway. Where is halfway . Halfway is that germany increases its contributions to the bailout funds and transfer some money to the periphery and the french may be more open to some reforms, but through labor market reforms and Pension Reforms because we need, of course, a strong eurozone economy as a whole because germany cannot be the locomotive of the eurozone economy, even if this is always thought about. But germany alone is too weak and germany is increasing its exports to the eurozone significantly and decreasing its import from the eurozone. Its not germany alone which can contribute to the growth of the eurozone. And you mentioned that part about the eurozone. Are europeans wasting the time that theyve been bought by mr. Draghi . I think mr. Draghi did the right thing. He has a clear reform agenda for all european countries, germany included, of course, because germany has a responsibility given the large current account surplus. But i see them being hesitant about implementing those reforms, well as we know, ireland and sxan made some progress and even exiting the bailout fund. So i see some lights at the end of the tunnel, but its not all bright. Roland, thanks for speaking with us. Two top bosses of the french unit of ikea have been placed under formal investigation on allegations that they spied on employees. Stephane has more for us from paris. Whats been going on . This is ikea france, ross. The ceo of the companies are being questioned by the police over a spying allegations. Back in 2012, one of the Union Workers at ikea claimed that the management of the company was spying employees, especially the ones which were having linked to unions. To do so, they were granted access to police records. Such records are strictly confidential and only policemen or prosecutor could access to this document. Ikea at the time launched an investigation to find out what was going on and from that the method of the french management where against the value and the rules of the company after this investigation four managers of ikea were fired, including the head of the security. The ceo of the Company Claims that he wasnt aware of such practices at the time. And he took all the corrective measures when he learned about it. This is probably what hes going to tell the French Police again during this investigation. It could have some implication on the French Police. There was probably some complicity by the police to give ikea this document. Back to you. Now, when it comes to the luxury market, china has dominated discussions in recent years. Deidre found out more at a well healed gathering in singapore. We have been here at the International New york times luxury conference all morning speaking to some very well dressed people and. Big heavy hitters in this industry. China has been a topic, but perhaps not the way it has been in previous years. Some companies are faring better than others. All of north america is consistency growing in each term of investment. We probably are employing more in the United States than in china at the present time. I think its not a surprise because the American Economy is very good macroeconomics and you see probably more understandable stable scenario. We spoke with tom ford. As the customer becomes much more in the population large, much more sophisticated, i believe the infrastructure will expect really high quality products. You get value for the price that you pay. So we arrived at the right time. Even though their suits retail for about 4,000 to 7,000 u. S. , he says he is going to see demand pick up in china. Im Deidre Morris reporting from here in singapore. Looks like a good party. Fortune magazine is expected to unveil its top business person of the year. Who do you think is the best business person of this year . Join the conversation here on Worldwide Exchange. Email us, worldwide cnbc. Com, tweet cnbcwex or direct to me rosswestgate. There you go. Well take a short break. Still to come, change is in the air in poland. The Prime Minister has replaced several top cabinet officials, including the well respected finance minister. Well find out what the companys former pm thinks about the reshuffle and what it means for Foreign Investment into the country, as well. Well get the latest from warsaw. More to come from todays Worldwide Exchange. Im only i. 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. And these are the headlines from around the globe. The fed reignites thoughts tapering might come this year. Its a different matter in france where all sectors contracted in november activity and thats dragged the eurozone composite pmi below forecasts. Goldman sachs gets burned. Regulatory filing shows bad debts in the currency markets. Plus, were going to be live in warsaw in a bid to prop up the governments popularity. The Prime Minister has replaced his long standing Prime Minister with a political unknown. Does it change the Investment Case . Well hear from the former Prime Minister. Meanwhi meanwhile, were just getting the latest snapshot, even, of uk public finances. The uk Public Sector intervention, 8. 708 billion versus the 8. 242 billion in october 2012. 6. 83 billion versus 6. 155. We will pick up on that. The underlying of net 54. 8 billion. 8. 2 lower than the april through october period in 2012. So the they say that the net debt Financial Sector is 1 is. 2 trillion in october. 5 55. 4 tripped up by the treatment of royal mail sales. They got a benefit from the royal mail when they had to take on the pension scheme, as well. But anyway, public finances improving slightly in october is the key take away. Although some sort of thought they might improve more than what we got. Chris, your view of the uk at the moment. The pmi is at the highest . Right. Combined across the three sectors, highest in 13 years. Thats one of the high series . Absolutely, yeah. Even manufacturing, highest in the world, beating even the likes of fast growing taiwan sales korea. A very good story. That does highlight the growth were going to see in tax receipts. Their new projection webs theyll be looking healthier than they were before. So its a very good picture of public finances. Any worries about Housing Markets or is it being based on the wrong areas of the economy . Obviously, the Housing Market is a bit concerned. I think the overall message is that desperate, that but i think if anything, the bank of england is not doing much of Business Confidence at the moment. Which is causing a lot of businesses to scratch their hands and households. Interest rates start rising in 2014 2015 and three quarters of them expect a rate hike to start within the next two years and half in the next year. So very different from what the bank of england is saying. The concern is how appropriate it is to keep rates that low for that long. Chris, thank you for that. Chris williamson, global economist at chief market. We turn our attention topoland today. The Prime Minister has brought a shakeup to his cabinet. Its led some to suggest the move will give him more control over financial policy. How is it being seen . Lets get out to jeff. How much of a political upheaval is this . Very good morning, ross. The finance minister who is now leaving his post six years. One of the longer lasting ministers in any portfolio in the polish government. So somewhat of a surprise that he is now being replaced given that he has a Strong International reputation. But he is not a popular man here in poland, and there are a number of reforms attached to him that people are happy about the retirement age has been lifted and the government has taken some of these private pension assets that bolster the balance sheet, not necessarily a popular decision. So we have now a 38yearold economist who has stepped into the job, has no real political background. His name is mathias sturrich. We talked to him over many years and he is a very strong economist and he does understand the dynamics in this part of the world. But, again, those arguing that because he has no political background, maybe that means he will be influenced by mr. Stus. Very nice to see you, sir. Should the International Investment community be worried about this change in finance minister post . Mr. Rustowski has been an excellent finance minister. He knew the situation in the history of poland. In europe, you could have a finance minister for six years. But the government has to look forward. It has been second term in office. But the Prime Minister would like to serve a third term, which means that we have a sixyear term perspective. And simply Younger Generation is entering the office and hes, what, 23 years junior, so quite a lot younger. So does this mean that donald tusk takes more of the finance Ministry Portfolio for himself given that mr. Sturick has limited political experience . This is very good, as you said before, economic highly respected in the community. Not only in poland, but also in central europe. Of course, could be politically supported by Prime Minister who also reached this quite well. But we have to think about the future. He will look beyond the bunch of 2014 for the financial agenda for the next years to come because poland is building his Economic Development on continued growth. Because we have been growing for the last three years as the only country in europe. But at the same time, we have to think about austerity and youngs gentleman is perfect for that job. There are critics who argue that the polish government has actually stopped this fauxgram of reform or it seems to have stalled. Why is it off the agenda here . I think the tale of the change is sometimes underestimated by some observers in poland. When we change the retirement age, it was a big shout in opposition, but at the same time we, for example, changed retirement conditions for military service men for the police. But we increase, for example, but ten years the possible date of retirement. We change the model and with 1 Million People in opposition to the government, they call for or demand the referendum on this issue. And the big fight in the parliament, but starting from the next year, the six years will go to the school. So in each department, i would maybe for some opponents or observers it doesnt look enough tough and radical. People have complained to me here. They say in the 90s there was a real spirit of entrepreneurism. People felt that nothing was banned, they could reach for the sky. That helped poland grow and develop very quickly. Now they say there are too many regulations that the government is not consistent, the tax treatment is not consistent across the country. What we need is to return to some of that excitement and enthusiasm. How does this government, in its second term that feels a little tired, get that energy back for poland . If we look into facts, and we look, for example, very much at where the bank doing business ranking, we have been improving the conditions for the Medium Size Company from the position in the world up to 45 place this year. So every year we include it. Actually, it means that we are changing in the right direction. The difference between today and the past is in the early days, as you collectly indicated, there was no regulation at all. It was freedom to do whatever you like. Institutions sometimes are good, but sometimes could be a little bit awkward, obsolete, and improvement is conducive to the business. Sir, its been a pleasure speaking with you. Thank you very much for giving us your time. Ross, we have some important data points today. Well have a look at Industrial Production for october at about 2 00 and well get the latest minutes from the central bank. We are going to go off and talk to the central bank chief and well play some of that interview later on cnbc programming. But they have record low Interest Rates here and, depending on who you read on the economist side, some expectations that rates may even go lower. But for the time being, ill send it back to you. We look forward to that. Dont forget, you can head online as well as take part in our poll. Were asking you, which country offers the best Investment Opportunity in the region, hundred battery, romania or poland . Let us know your thoughts. Elsewhere, troika is planning to join a developed hybrid vehicle necessary china. We have the story from tokyo. Hi, ross. This is actually a very big decision for toyota. Its long been reluctant to put hybrid necessary china over concerns of technology leakages. Its been developing all of its main components from factories to motors in japan and then shipping them to china just for the final assembly. This had pushed up prices of its local prius models currently selling at double the price of gasoline cars. Through the joint development, toyota hopes to boost its market share which now stands at a mere 6 . Toyota wants to appeal to the Chinese Government which has introduced a new fuel efficiency regulation to cope with the countrys heavy air pollution. Thats all from nikkei business report. Back to you, ross. Thanks for that. Have a good evening in tokyo. We just have this news out from china state controlled bright food. They acquired weetabix cereal and now say theyre considering a hong kong listing fob weetabix food. They acquired a stake in that deal. About 1. 9 billion including debt. You could soon be able to invest in weetabix. Would you have to be encouraged to have that . Whats on the agenda tomorrow . It will be a lighter day for data. The bank of japan releases its economic report and Third Quarter Household Spending is due. Corporate report cards are due. And hong kongs next media. And the new reit begins trading in tokyo after its new ipo. Cnbc will hear exclusively from its president. Still to come, france has thrown support behind the european Banking Union. But is this the answer to the eurozone troubles once and for all . Well get into that when we come back. German Software Giant sap says it plan toes offer Cloud Services in japan. The move marks more inroads into japan. Eunice has been speaking exclusively to the coceo about the companys plans in the country as well as his views on chinas recent reforms. I think this idea of a consumption driven economy at the same time you have such an emerging middle class, the urbanization effect thats taken place in china. So our ambition has always been to innovate in china for china. The government has been indicating that theyre going to be streamlining the ipo process in shanghai. Do you see sap listing in shanghai during your tenure . Its certainly an opportunity for us. And its certainly something we have discussed. I think its entirely possible that we would do that and its entirely likely in the next year or two that we would consider this strongly. Its on the drawing board. Sab miller warned currency movements would undermine its future results. I think you said they had a bit of a currency hit. I think the market was expecting that. But the real story here is that their volumes are up and sab, for them, emerging market story hasnt taken the debt that people were worried about. There was a sensation or a fear that those sales might be declining. As were seeing from todays results, thats not the case. Weve seen declined in europe, 4 down in europe, 3 down in the u. S. , but actually, the standout story has been africa. And south america. But really, africa is a key there partnership spoke to allen clark earlier this morning about the companys global footprint and what that meant for the results. We think we have delivered a good set of results for the first six months. Its been a strain, but weve had volume growth, good growth in our net producers revenue on a basis of around 4 . Operating profit in the 7 range and, of course, an improvement in our earnings per share. And a lot of that is due to our footprint and exposure to markets. The emerging markets have, again, been good for us. The story, there seems to be a lot of grace there. Youve taken a bit on of a currency hit on the ground. The earnings are very good. Africa is a fantastic story, actually. Theres been quite a lot of coverage in the recent while about a slowdown in emerging markets, but certainly within our footprint and geographies, we dont see that coming through. So good gdp growth, improvements in disposable income and, of course, consumers aspire to products such as those that we market across the continent. We see good growth now and we believe into the future. Of course, not all emerging markets fail. It has led to impact earnings in china. The company has very little pricing power. Profitable is difficult in china. We have been quite clear over the years. I think that it is a longterm growth story. The volume there is strong. We now have a very good market share position. Weve seen good growth in the first half again in china and we see very strong growth in revenue, net producer revenue in china. So what we are seeing at the time is a premiumzation of the chinese bmi market. That is principally whats driven the stronger Revenue Growth that weve seen service the volume growth. So profitability will continue to improve in china, but it is a longterm gain that were involved in. Longterm means 10 to 15 years . It could be as long as that, yes, thats correct. The other key issue for sab is is the bear market going to return to the m a drivers that it was in about three to five years ago . And according to mr. Clark, yes, they are. In recent years, people have been talking about sab being the target. But mr. Clark did not rule out another big deal for sab leading investors to postulate that things like their African Joint venture might be on the table. All right, helia, thanks for that. Good stuff. We have some comments out from chinese premier. It says chinas economy has stabilized and improved the second half and he has full confidence that they will achieve economic targets for this year. More importantly, he says they will further deepen the comprehensive reforms that will maintain the longterm sustainable growth. So they will further deepen the reforms which they announced pretty much at the end of the last week. The third plenum reforms which people have decided are fairly comprehensive. Now, the french president , Francois Hollande and his italian counterpart have thrown their weight behind the Banking Union asking it to be top of the agenda at decembers eu summit. Speaking in rome, the french leader talked to the importance of a united approach when it comes to regular hagz. Banking union is nothing else in the capability that will be conferred on the eurozone and at the eu to avoid, prevent, impede and regulate any difficulty that could arise around the issue of credit. If we regulate the Banking Union, it will mean acting positively on the crisis. It means giving the eurozone the next weapon to prevent the crisis from reproducing. Theyve called on a full time chairman to oversee finance ministers in a bid to improvement governance of the euro group. This follows a similar agreement between france and germany last ma. Hi, elise. Hi, ross. Its all very well to sit there and say Banking Union, but it seems to be absolutely no sense of agreement or call between france and germany on how we get to full Banking Union, particularly around how we wind up banks and who should pay for it. Yeah, exactly. I think the main problem is that the germany doesnt really want to let go in the direction of a joint fund to support banks or at risk to file. And they dont want to run the risk that some banks within some countries of the eurozone that in the past have been in trouble, continued to take advantage of the fact that there is somebody going to support them in case of troubles. France and italy are in a different situation. They obviously their economy is much weaker than what germany is and weve seen like their way of facing the recession, has been very different from what weve seen for germany. So its not surprising that there is still some disagreement between the main eurozone countries. Also in the direction of the Banking Union and joint funds to support the banks. How is this going to play out . We see this divergence growing again, french pmi is contracting. The composite number going down, 8. 1 . Then theyre facing a technical recession once again. The german numbers getting better. How does this all play in . Its a gain of eye vergencesies in the way that two countries, not only those countries, but for other countries in the eurozone have managed to face the recession. Germ germany was in a very different situation. They managed to make steps before the recession hits. Italy and france have a problem as still structure problems. So theyve seen a very bad reaction of their labor market because of the weaknesses, their rigid did rigidity, theyre still there. Its not surprising that pmi in france at the moment are not gaining momentum. Theyre going down because the labor market is weak and domestic is there going to be enough structural reform to keep encourage investors who got excited about the cyclical recovery we saw earlier in the year . Well, there has been something, but not enough, i would say. Thats one of the points that they were discussing during the summit yesterday. Between italy and france. The creation or the coordination in terms of investments. They need something more coming from the eurozone as a whole to support their investment and to support investors, to actually take advantage of the recovery or the slight recovery of the economy. They cannot do that just by themselves because they still have structural weaknesses. Angela merkel speaking at the moment, shes cutting the Central Projects in the next four years. One would hope it would engineer growth, right . I mean, i would prefer that to be the Central Project rather than cutting debt. Yeah, definitely. All policymakers are at the moment working in the direction of creating supportive growth. They need to find their way out. They cannot do that by themselves. The ecb is doing its job and the fiscal policies need to get in the direction, of course. Thanks so much indeed for that. Angela merkel is speaking at a conference where well be hearing from mario draghi at 11 30 cet. Well take that in the second hour of Worldwide Exchange, which is coming up right after this. Ya know, with new fedex one rate you can fill that box and pay one flat rate. I didnt know the coal thing was real. Its very real. David rivera. Rivera, david. [ male announcer ] fedex one rate. Simple, flat rate shipping with the reliability of fedex. Stacys mom has got it goin on stacys mom has got it goin on stacys mom has got it goin on [ male announcer ] the beautifully practical and practically beautiful cadillac srx. Get the best offers of the season now. Lease this 2014 srx for around 369 a month with premium Care Maintenance included. Ya know, with new fedex one rate you can fill that box and pay one flat rate. How naughty was he . Oh boy. [ male announcer ] fedex one rate. Simple, flat rate shipping with the reliability of fedex. Youre watching Worldwide Exchange. A thursday in the red for equity market as the fed minutes reignite fears tapering could come this year. Die verging europe stronger than expected growth. But its a different matter in france. All sectors contracted in november. Thats dragging eurozone composite pmi below forecasts. Goldman sachs gets burned. Regulatory filing shows bad debt in the currency market may be in the region for the big drops in the bank fading revenue last quarter. And were in warsaw in a bid to prop up the governments popularity. The Prime Minister replaces the long standing finance minute with a political unknown. Does it change the Investment Case . Announcer youre watching Worldwide Exchange, bringing you Business News from around the globe. Its a warm welcome to you if you just joined us state side. Angela merkel is currently speaking at a conference in berlin. Mario draghi will be stepping up to the podium a little later. We will be dipping into what he has to say. Angela merkel for his part says the prime focus for the next few years must be cutting debt. There are those who think maybe the prime focus should be engineering growth. The reason why one might say that is weve had disappointing numbers out of the eurozone. Not in germany, but certainly in france. U. S. Futures, down about 9 points. The s p down 3. Above fair value. Dow is some 34 points above fair value. The s p 500 currently around 3. 5 points above fair value. The ftse cnbc global 300 has been down during the session, off about 0. 3 . The ftse 100 yesterday was down 17 points. Were flat at the moment, just down two. Public finances in the uk, by the way, getting better. Not quite as good as we thought they were going to be, but it does look like for the year the government in the uk is going to borrow less and the office of budget responsibility was originally forecasting. Growth has come in better than we thought it would be. The xetra dax is down 0. 5 . The cac 40 down 0. 6 . Divergence in these two economies for november. What weve seen is the composite number in france down into negative territory, 48. 5, and in germany, stronger than expected of 53. 2. But bear in mind france contracted, not by much, but these activity numbers suggest we might get contraction in the fourth. If thats the case, france could be back in recession. Ftse mib up 0. 1 at the moment. On the bond markets, keep our eyes on treasury yields, we saw them back up during the session yesterday. Lower than where we were, but just below 2. 8 on the yield. 2. 78 at the moment. Gilt yields, similar amounts across the board here in europe. On the currency market, the dollar got a bit of a boost from the fed minutes, as well. Dollar yen is the one weve been most focused on at the moment. Back over 1100. Fourmonth highs against the yen. 104. 7 is what we see. Could this be the occasion where the dollar consolidates a move, a break above 100 which it has failed to do nearly all year . Elsewhere, euro dollar has come back down, 1. 3434. This time yesterday we were around 1. 3534. Thats the trading right now in europe. The nikkei is doing very well, indeed, unlike the rest of the equity markets. Sixuan has all the details for us out of singapore. Sixuan. Right, ross. Its a split showing for japan and the rest of asia. The nikkei 225 outperformed, ending higher by almost 2 as the dollar yen broke above the key 100 level as you just mentioned. In china, the pmi data came in weaker than expected. But china markets still managed to attack it lower. And the hang seng index pulled back from its tenmonth high. South koreas kospi lost 1. 2 with heavyweight samsung tumbling 2 . Australia shares extended its fourday losing streak ending down by 0. 4 . Lets check on sectors in china continue to go be driven by recent reforms. This includes agricultural stocks boosted by those land reform hopes. Telcos surged after, of course, news 4g licenses will be issued by yearend. There were reports that beijing may soon set up a National Network of housing information. The Registration System is one more step towards housing transparency. The big players tumbled from 3 to 4 in todays trade. Thats a look at asian markets. Back to you, ross. Thank you, sixuan. Have a good evening in singapore. Minutes from last months fed meeting showed members agreed that they could start tapering their Bond Buying Program in the coming months if the u. S. Job market continues to improve. They considered slowing purchases even if theres no clear evidence of strengthening. Most fed watches think a december taper is unlikely, but january is coming into play. The minutes show the fed wrestling with house communiques that even after it starts cutting back, rates will still remain near historic lows. And this is as the Senate Banking committee is voting on Janet Yellens nomination to be the next fed chairman at 10 00 eastern. The penalty expects to back yellen and pass the nomination to the full senate. What does it all mean . John hanes joins us on set. Jaup. Ross. Good morning to you. Good morning. Can we get a taper in january and not upset investors . I think there are two different types of investors. The trading investor tries to position himself for the next three to six months and then theres the longterm investor who understands i think that you have to withdraw qe at some time. If they are withdrawing qe sooner than later, its probably a good thing. Traders, yeah, maybe theres a reason to take if its december rather than january or february. But its a good thing. Weve got to get qe out of the system. We have to go back to capitalism as we knew it in the first place. As people really understand what qe is and think hard about it, it is the Federal Reserve standing in the way of a broken Banking System. If we dont have a broken Banking System, we dont need qe and the sooner we realize that, the better. There is that argument, maybe its bad, therefore, we shouldnt do it. There are distortions in the markets, clearly. And those are the more nervous disposition think its all over the equity market. I dont. I think the equity market is responding to real economic signals, not to excess liquidity. But if you do feel that way, then well, there are distortions. A zero yield environment, it causes massive distortion. Then you have to work out how much of the zero yield is because of qe, which is what its designed to do. Exactly. And theres the other side of the coin. Has it had some decent impact upon the real world and real Economic Activity . And i think it has. The policy of being easy monetarily, whether its qe or any other way is having a real impact on the u. S. Economy and on global Economic Growth. So im of the firm belief that next year we will see an acceleration of the world Economic Growth for the first time in three or four years and it will be driven by china and the u. S. And europe. And if thats the case, then its a good thing to see the back of qe. This idea that january is now in focus, theres one problem with january, is that we could be heading into another road block in washington. Would that be reason in your mind to not taper . I think theyll take everything into account. Its a road block in washington actually is worse than last time, which i cannot imagine, then certainly they will do what they did last time, which they will go you guys need some more timeout and theyll push the thing down the road. But i dont believe the Republican Party misunderstands the message that was given to them by the electorate in very direct terms and by their pay masters more broadly. Corporate america was very, very explicit in the message that they gave to the Republican Party. If they want to ignore that, fine, but then they are in trouble at the next midterm elections, which are only nine months away. U. S. Secretary of state john kerry will sign a memorandum of understanding which he delivers a speech later today. The event closes the latest round of u. S. china talks and will be the final stop in liu yandongs trip. She says it will encourage world peace and development. Joining us on the phone is perry link, Professor Emeritus from princeton university. Thanks so much, indeed, for joining us, perry. Im just wondering, how is the planned reforms that have been announced, how might that change the perception of china in the United States . Oh, i dont think that will change much in the United States. The announcements are vague. The u. S. Public is even less equipped to understand the nuances, if theyre there in the first place in that fairly obscure kind of verbiage that has come out. Yeah. I wouldnt think so much from the public perception. I was thinking more from a corporate and political section of america. Im sorry, you want to know if the third plenum announcement is going to yeah. Reform china and open up markets, let markets decide how to on work to encourage private enterprise more, im wondering whether that gets greater support from american korccorpos and political classes, as well. I think if they believe it, yes. But the key of these pronouncements, one never knows what it might mean until action follows or doesnt follow. International companies have had quite a bit of trouble in china with roadblocks that this very government had set up pt so the announcement of deepening reforms as the vice premier has put it sounds good, but the proof is in the putting and we just havent seen the pudding yet. Im not in the corporate world myself, but thats certainly the way i think they would react to this kind of announcement. Right now, where do we have a good understanding . Where do we have cooperation . And where are we agitated . Between the two governments or the two people . No. I mean the government, the u. S. Government. Well, the flash points are clear. The Chinese Communist party has announced that there are nonnegotiable terms. For example, the taiwan issue, the tibet issues, the Southeast Asian sea and the east asian seas have had troubles recently. Thats a bit more negotiable and flexible. So those are the ones that catch attention recently. Yeah. What do you think this is clearly an enormous market, okay, for china and u. S. Firms. Do you see any progress in terms of production of rights . One of the issues is black markets and firms being ripped off, as well. Do you see any progress being made there . Well, the legal system has been undergoing over two or three decades slow reform. There has been progress. There are a lot of prosecutors and lawyers in china who are pushing in the right direction. But at the top of the system, it still remains the case that the communist party trumps the legal system. It is not an independent legal system. Every u. S. Corporation and every individual in china who wants to who gets in a case has to face that fact, that if its low key and if its at the bottom of the system, the mechanics will work. Will it becomes so that it conflicts with the interests of a well placed party person and that could be at the local level or the provincial level or the top level then the legal system doesnt work and one can never rely on that. Perry, good to talk to you this morning. Thanks so much for joining us, perry link, Professor Emeritus of east Asian Studies at princeton university. Tapering might again in the next few months. This is weaker than expected growth in france weighs on the eurozones composite pmi. Even Goldman Sachs makes a bad bet every now and then as filings suggest Investment Bank was burned by currency trade in the Third Quarter. And just reminder, Germanys Angela Merkel is delivering a speech from berlin in a Major Economic conference as she has finished. Well hear from the ecb president mario draghi. More on that when we come back. Were in poland where the Prime Minister has announced a shakeup of his cabinet where hes hired a finance minister with no political experience. Geoff is in warsaw. The question is whether this enables donald to take more control, i guess, over financial policy. Whats the view . Yeah. Its interesting, this one, ross, because i know the economist that covered this region have been kicking this one backwards and forwards over the last 24 hours. And the Immediate Response was to say, well, look, this new economist who comes in 38 years old, no political background, that clearly means that mr. Tusk is taking more of the finance portfolio for himself. But i think you have to look at this as part of an Election Campaign over the next two years to 2015. The party has fallen in the polls, theyve been overtaken by the opposition and the current finance minister is largely perceived as a liability politically. So i dont think this move is so much about him taking the finance portfolio as its about getting rid of someone in the government who is not popular with the polish people because of policies like moving up the retirement age for retirees and putting in someone who, over the next two years, perhaps, will not rock the boat politically. But is seen as maybe independent of previous policy actions. But well have to wait and watch. The budget for 2014 is already on the books. And we have this Election Campaign in 2015. So no significant change of policy direction expected here for the government. We did get the opportunity, while weve been here, though, to talk to former polish Prime Minister mr. Bieletski who advises donald on tuk on economic affairs. I challenged him and said, look, this is an economy that used to grow at 5 or 6 . Now theyll be lucky to make 2 here this year. Is part of the problem that reforms have stalled . He denied that was the case. Lets listen to his answer. If we look into facts and we look, for example, very much at where the bank is doing business ranking, we have been improving the conditions for the Medium Sized Company from eighth position in the world up to 45 place this year. So every year, we improve it. So, actually, it means that we are changing in the right direction. And just a couple of things to think about, ross, for our audience who maybe havent thought about putting money to work in this part of the world. Theres challenges for the polish economy, but the market outpaced the ftse 100 this year. If you buy government pace, youll get ten year delivering a 4. 5 yield and better debt metrics that you see some a lot of the peripheral economies. Just a couple of things to think about there. Im going to tootle off and have a chat with mr. Belka at the bank. If youre interested in currencies, make a point of keeping in touch with this polish story. Rates could be lower than 2. 5 . That would have some impact. As i say, that interview with mr. Belka still to come on cnbc programming. Back to you, ross. We look forward to that, geoff. Polish pronunciations must be about the hardest on the planet, i would think, for an english tongue. Yes. Well, i know the joke has been said before, but ill say it again. What we need here is an air list of emergency vowels. That would sort out some of these words. Because when you see a combinations of ks, zs and ys, you do have to you pause a couple of times before you take a run at it and invariably, you get it wrong. Still, i think youre doing a very good job. As one who has mispronounced many polish names amongst others, im full of admiration. Dont forget, you can head online to read more on our emerging europe series, as well as take part in our poll. Were asking you this week which one out of the ones were visiting is offering you the best Investment Opportunity . Hungary, romania or poland . Let us know your thoughts. [ male announcer ] this store knows how to handle a saturday crowd. [ 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. Opportunities arent always obvious. Sometimes they just drop in. Cme group can help you navigate risks and capture opportunities. We enable you to reach Global Markets and drive forward with broader possibilities. Cme group how the world advances. Angela merkel is delivering a speech in berlin. Shes come out with germany ready to work on treaties in order to introduce Banking Union. Although theres a big difference of opinion between germany and the likes of italy and france on how you might wind up failed bank and whether you put any money in the pot to do it. Shes said it makes no sense to weaken german competitiveness by artificial means, which seems to be a bit of a stab at those who say germanys surpluses are in excess and do something about it. Coming from both the u. S. Treasury and now an investigation for the european commission. Mario draghi, the president of the ecb, will also be following Angela Merkel at that conference and well dip into that. John hanes is still with us from investec world management. John, theres a lot of money that flows out of the United States into european equities over the last six months. Now, though, well take a look at the French Economy and the pmis. The cover seems to be peeking over. Is that money being misplaced or not . No, i dont think so. I think theres always some warming and cooling of the water. But i think the the story over the last 12 months has been things getting worse more slowly. The story over the next 12 34 months is things getting better. Its quite pro found when the key reasons for the downturn in the first place was the Financial Services industry effectively seizing up, the Financial System seizing up. And that has a multiplier effect. So when those gears start to move, they start to value the system and things get quiet a lot more quickly. So i actually think whats happening in the states is people are sensing a repair in the Financial System to the point where it becomes a growth promoter again rather than the drag on growth which it has been for the last three or four years by voluntary means. The banks have been tied up by the regulators in order to make them fit to lend again. Next year, theyre fit to lend. Were off. And i think thats what the money coming in from the states is thinking about. Okay. Well take a pause. Angela merkel is just winding up. When we come back, we hope to hear from the ecb president mario draghi. Remember, his whatever i it takes speech moved markets. Next, deposit rate speculation grows. What might he say about that . Well be back. This is Worldwide Exchange if youre just joining us. The fed minutes reignite fires that tapering could come this year. Die verging europe, stronger than expected growth in activity for germanys manufacturing and services industry. A different matter in france where all sectors contracted in november. That dragged eurozone composite pmi below forecasts. Goldman sachs gets burned. The currency market may be behind the big drop in Bank Trading Revenue last quarter. Announcer youre watching Worldwide Exchange, bringing you Business News from around the globe. If youve just joined us in the states, a very good morning to you. Welcome to the start of your Global Trading day. U. S. Futures indicating a slightly higher start. After the pause weve seen over the last few sessions, right now, the dow is some fully 5 points above fair value. About 10 points above fair value for the nasdaq. The ftse cnbc global 300 is down 0. 25 . European equities have been down, but are starting to turn up. The ftse 100 is now flat. The xetra dax, the cac 40 down 0. 3 . The ftse mib up 0. 4 . Divergence as shown by the pmi. Contracting on the composite number for france. This, remember, after the economy contracted 0. 1 in the Third Quarter. And these activities numbers play out through december. Theyll be concerned now theyll be back in a technical recession. Germany, on the other hand, having better than expected activity numbers. And this comes on the top of minutes from last months fed meeting, which showed minutes agreed they could start tapering their bond buying in the coming months as the government continues to improve. Theyve considered slowing purchases, even if theres no clear evidence of strengthening. Most fed watchers think a december taper is unlikely, but january is coming into play. Still with us is john hanes from investec world. John, a lot of the markets weve seen, a big jump on the markets, 20 odd percent gains for u. S. Equities. A lot of that has been down to expansion of multiples. Is that gain over . Can you do that any more . I think its pretty much over. Its if you look to next year, were optimistic, as youve seen from our comments. We think the World Economy will accelerate and that will produce some decent Earnings Growth, which is much better Earnings Growth than weve seen this year. But the quid pro quo for that is Interest Rates have to move up a little bit as qe comes off. So the valuation back drop is much more challenging. We will be further through the cycle. As i said, weve expanded valuation quite a considerable amount. So i do think we shouldnt expect any more from our equity markets than will be delivered by Earnings Growth. But i think we should expect that, that theres still enough room for that. Plenty of doubt. In some ways, carl icahn was right when he said they havent done enough with top line. Top line is okay. Its moving forward. The issue here is its about last year the expectations were actually quite low. Right. So it doesnt matter that we underperformed the initial hopes for growth in the world and that we got pretty negligible Earnings Growth out of the negative economy, maybe 6 or 7 is what its going to end up with this year. What mattered is you had some growth and you didnt have a recession or systemic move back into the crisis we had. For that, people were prepared to pay up because they realized at some point they would get the growth. Now is the point. We now need that growth. We need the growth. Okay. Is there concern that lets look at this on a global basis. Is there concern that growth in emerging markets is going to underperform and that will, you know, hit the rest of the pie . That certainly is what the half of the world that doesnt believe in the world continuing to improve is worried about. I am not worried about that. I think people worried about china are massively offbase. Essentially, theyre in control of their own destiny. They have enough money to fix the hole in the Banking System. While that hole is there, their money is going nowhere. There is no fragility in that system beyond their ability to deal with the problems. I think that the measures theyre taking now to adopt and more fully imbed a transition to a consumer society, okay, they have a cost now, but they make their earnings and is their growth more valuable. It is more securely based going forward, assuming that they implement the slightly vague promises theyve put in place. But i think in the near term, they have its entirely in their control, whether or not they accelerate the economy or decelerate it. They said theyre not going to decelerate it. Im fine with that. U. S. , i dont think theyre going to choose to juggle the precipice. I think theyve shown thats a bad idea. We know where theyre going. There is one thing, the impact of just the the sudden impact from tapering, the dollar will strengthen and that will make china less competitive amongst its peers. Well, i mean, im not dismissing the fact that there are real Economic Impacts or real price impacts from qe being withdrawn, but im suggesting that the pace of withdraw can be control and that the markets are, to a degree, braced for that. Plus, if you withdraw qe, its because you believe the real economy is supplying liquidity on its own. It doesnt need it. And that is, i think, the point that people are misunderstanding. You take qe away when the Banking System is functioning properly. So the Banking System steps into that hole. That, i think, is our interpretation of the evolution of events. Some people may disagree. Well find out who is right in the next year. And you part of that story is youve add japan, as well. Japan is a leverage play on our optimistic view of the world. John, thanks so much for joining us today. John hanes from investec world and investment. As we say, the ecb president mario draghi is getting ready to deliver his speech from this berlin conference on strategies for more growth. Well wait for him. Meanwhile, some of the other stories were looking at today, Goldman Sachs was burned by several bad betts in the currency markets in the Third Quarter. These previously undisclosed mishaps played a big part in the revenue stunts during the quarter which led to executives defending the firms trading strategy. Goldman, anticipating the fed would start its Bond Buying Program, took positions in the emerging markets. But then when the fed as announced it would keep the program is place, the bank was hit with big losses. Down 0. 6 today in frankfurt. Yumm brands will keep its china and india units separate as part of a restructuring program. Yum is the biggest Restaurant Operator in china, but it struggled in the last year because of some food scares. The stock up 0. 3 in frankfurt. Amazon plans to start rolling out its black friday deals. It will release daily deals about every 10 minutes. It includes a 50 inches l. E. D. Tv, Popular Video games like fifa 14 for 25 and up to 60 off clothing. Customers will get Free Shipping on eligible items or unlimited tuesday Free Shipping if theyre an amazon prime member. Amazon stock down 0. 75 in frankfurt. Still to come, chrysler is driving towards an ipo possibly by the end of the year. But if it was up to the ceo sergio marcioni, that offering would never happen. More details, straight ahead. 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. Weve had pmi data today out for both china and the euro scope. This is sort of the equivalent of the ism data in the United States. Its casted some doubt on the strength of the global recovery. Activity on chinas factory floors is speeding up at the same pace as last month. The estimate from hsbc and Market Manufacturing says pmi for november came in at 50. 4, a touch lower than the 50. 9 we saw back in october. And thats because export orts a orders are slippinging which suggests chinas export growth may be losing some momentum in the Third Quarter. Germanys manufacturing was the bright spot, it expanded more than expected, but france continues to be a drag on regional growth. The Manufacturing Index stepping to a sixmonth low in contraction territory. The Services Component at a fourmonth low. The french composite number in contraction territory. Now, it didnt do much for european equities early on for that number, but futures have turn around. As a result, things are looking slightly brighter for european equities. Were off 0. 1 for the ftse 100. Down 0. 3 to the xetra dax and cac 40 down 0. 4 . The ftse mib up 0. 3 . Meanwhile, Fortune Magazine is set to unveil its best business person for the year of 2013. Weve been asking who do you think is the best business person of the year . Let us know. Get in touch with us by email, worldwide cnbc. Com, tweet a l cnbcwex or direct to me rosswestgate. One of those might be sergio marcioni. Now the revitalized automaker may be one accept closer to becoming a publicly traded company. Seema mody has more from the United States. Hi, seema. Hi, ross. Barclays, Morgan Stanley and ubs were added to help underwrite its ipo. Now, reports say the automaker could launch the offering as soon as next month. Chrysler filed paperwork for an ipo in september after majority owned fiat couldnt reach a buyout deal with the companys second largest shareholder, a Retiree Health care trust affiliated with the uaw. While the ipo could still happen, analysts think the fee ya and aviva trust will come to terms on a buyout because chryslers market value will be set. Some analysts say its worth about 10 billion. Now, when chrysler was bailed out in 20309, the u. S. , fee iat agreed to a deal. It was set up in 2007. It was supposed to be funded with cash. The union agreed to take a stake in chrysler in lieu of cash. The u. S. Government has since cashed out of its stake and fiat has grown to 58. 5 while the trust owns 41. 5 . Fi fiats ceo has said he wants to merge the companies, creating the worlds seventh largest automaker. Chrysler has become a machine for fiat. While chrysler has seen north american sales jump nearly 50 since 2009. Checking shares of fiat in milan, were flat on the day, although up about 8. 5 over the last six months. Ross. Hes an interesting chap, marchionnie. He never wears a tie. Normally he wear as a deep navy blue sweater. He did change for a black tie event and put a black sweater on for that. Really . But no bow tie . No bow tie or anything. Just a black sweater instead of his navy blue one. We sort of met in the middle, i guess. Reminds me of what we see in silicone valley or the tech world. Thats okay. Thanks for that, seema. Have a good day there. Now, the strong u. S. Consumer appetite for new cars which has steered the likes of toyota towards record profits may not last. The north american ceo says he expects about half a million more calls will be soldov overa next year. Jim lentz says new cars will be in their driveways market years. European equities taking a hit after fed minutes suggest taper could begin in the next few months. This as weaker than expected growth in france weighs on the eurozones composite pmi. And even Goldman Sachs makes a bad bet every now and then. The Investment Bank was burned by currency trades in the Third Quarter. Ya know, with new fedex one rate you can fill that box and pay one flat rate. How naughty was he . Oh boy. [ male announcer ] fedex one rate. Simple, flat rate shipping with the reliability of fedex. 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. Yep. Got all the cozies. [ grandma ] with new fedex one rate, i could fill a box and ship it for one flat rate. So i knit until it was full. Youd be crazy not to. Is that nana . [ male announcer ] fedex one rate. Simple, flat rate shipping with the reliability of fedex. Just a bit of news out of turkey. Police have shot and wounded a suspected bomber near the Prime Ministers office. They detained an individual suspected of carrying an explosive device outside the Prime Ministers offices. Meanwhile, if you just tuned in, u. S. Futures turning around slightly at the moment. And getting higher. The dow is current currently some 46 points above fair value, about 10 points above fair value at the moment and the s p 500 is about 4. 5 points above fair val value. On the agenda in the states, weve got weekly jobless claims out at 4 30 eastern, forecast to drop by 4,000. At 8 30, we get october ppi. Prices are expected to drop 0. 2 , but inch up 0. 1 when you exclude food and energy. The november manufacturing pmi numbers are out just before 9 00 a. M. And at 10 00, its the philly fed survey and october leading indicators. The st. Louis fed president James Bullard speaks about the economy this afternoon. Dollar tree, gamestop, target, Abercrombie Fitch report before the open. Gap and pandora after the close. And the Senate Committee votes on Janet Yellens nomination to become fed chairman. Its expected to pass the nomination to the full senate which would be expected to vote in december. Yellen only needs five republican toes suppos to suppoe confirmed. Policymakers have talked about tapering in the next few months if the job market continues to improve. As a result, oil prices have been trending lower after the minutes. Brent dipping below 108 early this morning. This is also, as growing optimi optimism, that world powers might reach a deal with iran on its nuclear program. But wti could reach support from yesterdays eia supply data which shows stocks falling far more than expected last week. Joining us with his thoughts on all these oil related, harry from bnp paribas. Good to see you. Good morning. Lets kick off with the fed minutes and the taper effect at the moment. How much is it likely to be that theres a growing consensus that politics aside, we might get a january move or december, even. Bmp paribas is forecast for a tapering in march. We dont think the economy is going to be recovering fast enough for them to make a decision. Clearly, obviously, the fed is emphasizing data dependency, the jobs report, etcetera. For us, what means in the near term is that theyre not going to start tapering. That shouldnt have any impact on the dollar and its currency. As long as they dont taper, the dollar wont remain where it is and wont appreciate. As a result, of course, that helps commodities alone, including oil. But as they do this morning, think theres a chaps, the balance of risk will change, the dollar will get stronger. Thats true. A lot of people are thinking about that. If you recall what happened in june and again in september, listen to the fed. Data dependency is a key here. So as long as the economy doesnt recover sufficiently, theres no reason for them to start tapering early. Why would they waste all the effort over the past two years and basically decide to do something prematurely . It doesnt make sense. So when the economy is strong enough, theyll taper. For now, the dollar is unlikely to appreciate and therefore, for us, thats supportive of Commodity Prices in general. Meanwhile, major powers resumed talks yesterday with iran over its nuclear program. An interim report might be within reach. What does that mean, sir . I like the conditional about that. Might. Certainly these negotiations have broken down. They are going to start again. We honestly dont think theres going to be a break through. Recent numbers indicate france has a tough sense of what he wants to get out of these negotiations. Its very unlikely that the u. S. Could live with something that is not showing sufficient progress. We think that these negotiations only delay the inevitable rampup intentions. You think we get a ramp up . Absolutely. The longer this is protracted, clearly the greater geopolitical tension is going to ensue. Perhaps over the next six months, brewing of geopolitical tensions will, again, prop up prices. For now, were simply negotiating. Its a delay in something that is inevitable. If we get a ramp up, harry, and demand and supply equation remains kind of where we are at the moment, on its own, where could that potentially send france . Well, it could easily regain the summer highs we saw at 115 to 120. Thats fairly sensible. Then depending on the outcome of how these tensions play out, we could move higher. Really, at that point, its hard to tell where the price could go. Meanwhile, in the shortterm, what happens with the spread between brent and west texas and nymex . We had this stock data out yesterday. Its pretty good down on this. You know, is that are we going to see a closing of the fed or not . Well, for now, the spread is going to remain relatively wide. There are a lot of seasonal factors affecting wti and depressing it relative to brent. Refineries and crude inventories are pushing. I think ultimately what were looking for is basically for runs to resume in the u. S. And bring down those stocks in curbing. All right, harry, always good to see you. Just a quick word, as well, on china. Slightly weaker data on the pmi number. Is that going to feed through . Ultimately, the number is above 50. So china is still expanding. Theyre going to reach their 7. 5 gdp growth target. I think thats supportive. Thanks, harry. It is time to tell you that the Obama Administration has rejected fair home capitals plans to recapitalize fannie mae and freddie mac saying the only true way to revamp the Property Market is repricing. He moves to recapitalize the lenders which was seized back in 2008 requires congressional approval. Weve been waiting for the ecb president mario draghi to deliver a speech from berlin on strategies for more Economic Growth. Weve now heard that he will speak later than originally scheduled. We will bring you more of what he says later on cnbc. We thought we would hear from him during this program, but alas, we have been let down. It happens sometimes. Our apologies for that. But well get his comments during the course of the day on cnbc. Coming up next, squawk box and the countdown to the opening of trade stateside. Whatever happens, keep it here and have a profitable day. Goodbye for now. Good morning. Todays top stories, the taper questions just wont go away. Plus, a new day and some more data with key reads on jobs and inflation. And the state of the Consumer Retail earnings dominate the agenda. It is retailer reporting month, as it always is, a month late. Thats everyone else. But thursday, november 21st, 2013, and squawk box begins right now. Fed minutes hinted at the idea that tapering could begin sooner rather than later. They were talking about it coming in the coming months. Take a look at the futures this morning after all of that. Youre going to see right now. Futures are indicated higher this morning, up by about 52 points for the dow. S p futures are right now just about five points above fair value. Among our market newsmakers today, we have mario gabella. Hes going to help us pick some stocks that have room to run. Thats starting at 7 00 eastern time. Also, coming up at 8 40 eastern time, we have pimcos mohamed elerian. It was pretty funny watching some of the readings and some of the takes on this afterwards. People say their heads were spinning as they went through the