Transcripts For CNBC Worldwide Exchange 20131126 : compareme

instrument in the tool belt. >> the protests in bangkok gathered steam as demonstrators defined new security laws and surround key government limits in a bid to top trillion government. a boost for investors, the spanish oilmaker strikes a deal with argentina over a price for the stake in ybs in 2012. and shipping into gear, crisis as it intend toss lift shares on the new york stock exchanges. the automaker's ipo plans will likely be delayed until sometime next year. >> announcer: you're watching "worldwide exchange" bringing you business news from around the globe. >> announcer: you're watching hello "worldwide exchange" bringing on today's show, we're joined sclus you business news from around ively by the the globe. >> announcer: you're watching "worldwide exchange" bringing smiping manager of oocl. see anna looks to approve ads 3 billion capital increase we're going to enter in as well as the new san paolo chief carlos sanchino attends his first management meeting. we'll get the latest on the winter storm threatening to cause havoc ahead of the thanksgiving holiday in the united states. we'll be in new york for a preview of earnings from tiffany and find out how the luxury jewelrymaker is placed in the run up to the key holiday shopping season. but first, european central bank rates will stay low and they could be cut even further. this accord to the ecb executive board men benoit kurr. he spoke to cnbc and began by saying he agrees that the bundes bank's approach in the asset quality review. >> i think that the bundes bank president is right to set it as an objective. there is no reason why any particular kind of asset should be treated asterisk free by banks. that's the general principals that deserve to be supported. now, with that said, it is not a european issue. it is an a international issue. there is no reason why german bonds, european bonds will be treated differently from u.s. bonds or japanese bonds. so it is an important discussion, but it takes place in basul committee for supervision. it's not a european discussion. >> you've gone on the record to say that the european union, the eurozone is not on the path to a deflationary spiral. but we're talking about the prospect of lower oil prices, especially in light of the deal with iran and this growth divergence between germany and the periphery. could disinflation actually turn into deflation? how big of a threat is that? >> we don't see it as a very likely prospect that this inflation would deepen, would worsen in the eurozone as growth recovers, which is our main scenario. inflation will pick up gradually, and we will gradually come back to the 2% objective of the ecb. so this is the most likely scenario. that said, we've seen inflation cutting closer to zero. we have this safety buffer that protects us from entering into the danger zone when it comes to inflation numbers. and we'll be monitoring very carefully these numbers. the governing council of the ecb has been clear, saying that he's ready to keep rates at a low level for an extended period of time and if necessary, lower, if we see this safety buffer being further eroded. but that's not the most likely scenario, in our view. >> if a deflationary spiral is not something of major concern to you, why are your fellow policymakers citing the need for possible negative deposit rates? >> well, negative deposit rates is a possibility. we've been clear already a month ago that this has been discussed technically investigated, legally investigated, so the ecb is ready. now, that said, that's only one instrument is a toolbox. so we have a range of instruments that we would be ready to use if we see further rates to price stability materializing. but as i said, the main scenario is a scenario where inflation would value austerity. >> joining us for the first part of today's show, stephane eglacias. we've heard from noise this week. expecting rates to stay low for longer. they've got the forward guidance, but it's rather woolley forward guidance. how important is the ecb going to be for assets in europe? >> i don't think they will be very supportive. we don't think actually the negative rate, for instance, is very likely. we would argue that deflation is a rate but is not a central case scenario. so you're likely to see other action from the ecb, but only if inflation goes down further than what we expect. i do not expect any very big step from the ecb in the immediate future. next year will be different. they would probably need to bridge the year. but, again, in the immediate future, i don't think there will be any big surprise. >> so where will investors in europe be taking their direction from? from our point of view, we will have a recovery. and if you have a -- a very slow one. >> i was going to say, france looks like it could be back in recession. >> france goes back in recession. but if you look at the leading indicator, they are clearly above 50 for the pmi. we do think there is a recovery in europe for the time being. that's why i don't think the ecb needs to do much in addition to what they have done already. so from our point of view, we still believe that the stock market will continue to rally on the back of the european recovery, the u.s. recovery, and so we feel like -- for the time being. >> it's an interesting point, this recovery. the fist couple of attempts of a percent growth. >> yeah. >> well, i mean -- >> i mean, i get the marginal rate is important. the magical rate of change. >> i think there are two -- there have been two steps. the first step is we advice to go long european equity at the very beginning of july. the reason was we thought they would be stabilized and what was was a very, very low outcome. so you had this rally. and if you look, the rally was only on the p because the earnings have not progressed. growth rates are very weak. basically, it was a risk rally. people were pricing on the scenario. the scenario was mediocre. now is not enough. if you want to further rally, because europe is small value in our model. you need the proration of earnings. and then you need the progression of gdp at some point in the future. and that's the best. and i agree that q3 was not terrific, to say the least, but we do believe that when the futures and earnings -- we think next year earnings will start to improve because we have 1.1 point continue in europe. we have 1.1 for next year. again, it's not great. it's a mediocre number. but if i give you 1.1 with the leverage of the company, that's enough to generate some earning momentum. i think you need earnings. >> all right. stephane, stay there. we'll come back to you. we'll talk about the risks in the fixed income market, as well. meanwhile, protesters have been clash, police on the streets of kiev as authorities have moved to remove. eu official condemned russia's action and says the trade offer remains open. there appears to be no end in situ anti-government protesters in thailand. the protesters want to disrupt the government work in a bid to topple the prime minister. he's face ago two-day confidence debate in parliament, but still holds a strong majority. her opponents accuse-other corruption and are trying to whitewash the record of her -- a former prime minister. with the latest on the protests from bangkok is paul gambles. that's around half an hour from now. tensions between china and japan continue to simmer over china's self-declared air defense zone. this requires all planes to submit air plans. japanese airlines say they will do no such thing. meanwhile, the nikkei newspaper reports japan and the united states will step up air surveillance in the area using drone aircraft. right now, it's time to bring you up to speed with the global markets. we kick off in europe as ever with the dow jones stoxx 600 and we are weighted to the down side at the moment, around about 5 to 4. but we are at the session low. the ftse yesterday was up some 20 points. we saw slim gains for the dow and the nasdaq, similar to the s&p overnight. the nasdaq over 4,000 for the first time in many a year, about 13 years. right now, the ftse today, let's take a look at that and the rest of the bourses, just down 17 points. the xetra dax still near the all-time highs at 9,300. the cac 40 is down 0.2%. the ftse mib is off 0.8% as you can see. a number of individual stocks we're focused on today, axa surging after bayer made a bid for the nor norwegian drugmaker. repsol, up 4% after a deal has been reached to compensate the company for nationalizing its energy firm last year. and remy cointreau down almost 9% because of a sharp slowdown in china. talking of which, we'll bring you up to speed with how those asian markets have fared. is s&p/asx fairly flat. just show on you where we stand with that. that is actually okay. just up 0.75%. the hang seng was fairly flat today. shanghai composite also fairly flat and the nikkei 225 down slightly. we did see some relief for the yen today. we'll get on to that. but it's still pretty much down at four-year lows against the euro, five-year lows against the pound and six-month lows against the dollar. we'll come on to that. show you where we stand with bond markets. keep your eye owes treasury yield right now. yields lower once again and on the currency markets, let's show you where we are. dollar/yen, 101.36. we got to 101.90 with that six-month high. euro/dollar, 1 is.3550. and the u.s. dollar down slightly. some on her news we're following, as well, sylvia berlusconi has plead with italian lawmakers not to kick him out of parliament. this week he faces a vote that could see him expelled from the government, but the former prime minister has appealed to lawmakers to consider their actions. >> translator: don't take this responsibilities, that would be a burden forever on your personal history, on your consciences, a responsibility that would become a shame in the future, something to be ashamed of in front of your children and your constituents, in front of every italian. >> that's silvio berlusconi. just 35 days until the new year. we've heard stephane say he's overweight equities. what does he think of fixed income? >> fixed income we don't like. we think that -- our economies believe it will start in january. so you should have a sell off in fixed income. to give you an order of magnitude, my fair model is 3.4 for the treasury next year. we're looking for something like 70 basis points sales. a nice forecast with yield going to 3.4 never happen like that. you're probably going to have a correction on the stock market when that happens. >> the fed doesn't want this to happen. >> no. >> and i mean, i know -- and we started in -- when we had the rise in rates in the summer, we started from a lower base. we started at 2.7%, 2.8% yield. we shouldn't go so high. >> well, if you look at the sell-off each year from the top to the bottom, from the bottom to the top, we have 88 basis points. from june, you have 85 basis points. will we have a big accident next year? probably not. if you look at the sell-off we've done before, it's 150 basis points. i'm talking about 70 basis points. so in the big scheme of things, let's say for the sake of the argument 50 basis points, obviously, will be a very big shock for the market, but we're not talking about the disaster by any means. the stock market, by the way, was down 6% to 7%, the s&p during may and june. >> so will that knock equities if we go -- >> if you have a big champ like that, yeah, probably. i think a number of investors positioning themselves for the correction at the end of the year because the market has rallied a lot during this year, i don't think there will be a correction. because if you think by tend of the year the reporting season is over. as i say, the ecb will not -- so i don't see any big news -- >> something to knock us off track until the new year, basically. >> exactly. and the next year, it will rise and you have a tapering in january. >> when you have to revert back, gains right now the s&p up 26% for the year. i mean, exceptional performances. you can't keep having exceptional performances. so how do you revert? are you going to revert back toon a average performance. >> well, our point of view is that the s&p is very close to fair value. so the p is close to long-term average. and if you adjust the earnings for the trend, you would be also at very close to the long-term trend. so the point is, i think the s&p is very close. >> you could argue the margins have gotten exceptional things. >> yeah. >> very low tax rates, very low cost of borrowing and very cheap labor. >> yes. >> and those two things look to be on the wane. >> yes. so i think the story next year, to give you a number again, we have a six-person epf growth rate for next year. what could happen, for instance, cap ex. that's one of our theories. if cap ex speaks up, that's it for the margins. that would be another argument. but the margin would become pressed. if you do cap ex, top line for another company, you would have a recovery which would be stronger than expected. and then, indeed, we've done a 35% average on average every year. i don't think we're going to do 35%. >> stephane, we'll take a pause. still to come, china anchors itself with a 230 million euro deal in kabul. we'll have an exclusive interview with the greek shipping minister, coming up. you really love, what would you do?" ♪ [ woman ] i'd be a writer. 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[ male announcer ] fedex one rate. simple, flat rate shipping with the reliability of fedex. when you think of luxury marketplaces in the uae, the capital of -- may not be the first place that springs to mind, but government development programs and a focus on tourism means luxury tourism is on the rise and the city is increasingly competing with dubai. happy gamble has been out investigating. >> reporter: dubai's prowess as a tourist market is undisputed. but now nearby areas are on the rise. >> i think for retail, the market currently is on the supply when you look at the spending power of the population in terms of the incomes and the population here. but this is a limited product. there are a number of big malls currently in the pipeline. so they will be coming up in the next three to five years. for that to be sustainable is dependent on new job growth and an increase in tourism arrivals. >> while dubai currently accounts for 33% of the luxury market, abu dhabi is picking up the pace adding top international brands to its portfolio. >> when you look at international brands, is it a given that you would have a major presence in the middle east and in abu dhabi specifically? >> yes. the customers here, they know what they want. if they can see our cars in beverly hills or london or geneva, they would to be here. abu dhabi is a maurnlg jor metr and center of activity as well as luxury corner this new mall here. >> and it's not just luxury brands like mclaren that are putting abu dhabi -- it's become a major fund-raising pit stop for finance and business leaders alike. >> that the track is barely used the rest of the year makes little difference to the oil rich emirates where giants of private equity rarely make the pilgrimage to the uae capital in a hopes of getting a piece of the action. so as government led officials get a green light to spend on the finer things, abu dhabi could put the emirates on the right track. cnbc news, abu dhabi. >> now, spain is heading for its first current account surface since 1986. this according to the country's central bank governor. the year-end surplus will be give lent to 2% of gdp thanks to exports and the return of int internationinte international investors. they said a recovery is taking root. meanwhile, in greece, the finance minister said they are nearing agreement with the troika over the nation's 2014 budget gap. speaking with greek television, it was said despite ongoing negotiations over the figure, the government's shortfall was only 1 billion euros. this marks a sharp drop from the previous estimate which greece's incident er national parliament insisted was close to 2 billion euros. at the same time, china's giant shipping costco has closed a $230 million deal with the country's port authority. this will guarantee 4.75 million containers will come into the greek port annually from the chinese shipper. costco will build a fuel dock for the transport authority, which is expected to be repaid in 22 years. joining us now exclusively is the greek shipping minister. thanks very much indeed for joining us. my apologies for slightly getting your name wrong. good to see you. thanks for joining us. how important is this deal with costco? >> well, it's the single and biggest foreign direct investment in greece since the crisis erupted. so it's very, very important. it's very important that greece is accumulating new investments. and a quarter of a billion investment for us is very crucial. this is becoming one of the biggest ports in the mediterranean, doubling, going up to 6.2. but double the number of ship that's are calling our port and, of course, increasing the jobs in the area. >> i mean, this is a controversial investment, other people didn't want chinese investors. >> well, the people that don't want, they're our competitors. so it's not easy to tell. the only thing is that this investment is still under the approval of the european union. we have to -- our way with digicom. there's the agency of european union. and i think that we are going to have a positive outcome within the next few weeks. >> we'll know before christmas, do you think? >> hopefully. hopefully. we try to put the european union to take a decision fast. because we really need investments in greece. >> what is -- what do you do? is there any hope that this investment, albeit from china, rightly to other investments, is that the idea? >> well, no. the idea is that for the first time we are using our geographical location to attract investment. in our port, in our wailway system, and our transportation system as a whole. and now we are going after the approval of a european union, then we are going to call for the privatization of the whole and we are moving forward with the other ports. >> how long would it take for that process to be -- >> hopefully within 2014 everything will be completed. >> and you hope to list in 2014? >> yeah. >> yeah. how much -- how big a stake will you process, a whole lot or you retain a minority stake? what do you think? >> well, probably, we are going to go for the whole 67%, which is the absolute -- >> what do you make of the progress they're making in greece, stephane? >> well, the progress has been recently quite impressive because they were talking about spain. it's very close to balance now, has been reduced quite a lot. so we were starting to see what has been done in the past, i think. so in this kind of investment, are showing that you're probably close to the bottom now and you're probably seeing the economy recovery. >> thank you for your kind words. it's the first time after a long period of time that we're having a budgetary surplus. and it's the first time also the unemployment has been stabilized and the last of few months, we've seen a rise in employment. i don't think -- i can't say that everything has changed, but definitely the trend, as stephane has pointed out -- >> is stabilization. >> is we tried to pull it up. >> and this -- how close -- your speaking today about this gap between the troika and the greece has come down to 1 billion euros on the budget. what do you think is going to happen next? >> well, this is up to the european commission to decide and the numbers will be out in april. but definitely today way we are measuring things, it is much better than it has been in the past. >> no more certain, no more steady, do you think -- >> well, it has been a long period of austerity. what we say is that we can't put any more taxes in the greek economy. greek economy is overtaxed. now we want to facilitate investments and we want to attract a lot of money in our country. and we have seen the trend changing because there is an increased interest about what's happened. >> are you happy with the contribution that greek shipping is now making? i mean, i know there's this sort of voluntary agreement that they're going to, you know, 90% standing on the -- under a foreign flag has come off the pace of money. but is that enough? >> a double tax for the next three years. well, it's very good that it's a voluntary contribution. and that we don't have to impose it by a lot. and they come and they play by themselves. i don't say that this is going to solve our budgetary problems, but definitely, it's not going to send a message to the shipping community that they have to flee away. like it has happened in other countries, shipping and shipping business went away, went to eastern asia. >> yeah. how much is shipping still worth in this country? >> it's worth more than 7% of the gdp. and it's actually createding more than half a billion -- half a million jobs in greece, which is a very important number. the most important is that all this period of crisis, the greek shipping hasn't lost its position. it hasn't been affected. therefore, we can say that we are still the european champions in one of the economic sectors. >> and just on a final note, there was a period when we were worried about greek activity. those fears for now have been put to bed. but the politics in greece, because of the high levels of unemployment and the far right movement are still very to know toxic. what is going to happen with the government and the -- and the opposition? >> well, it was only two or three weeks ago that we had the confidence in the parliament. i don't think -- although it's really toxic and it's really -- we have a rise of the far right, the extreme right. we have a neo-nazi party in the parliament. half of their mps are in prison right now. but, anyway, they are still accumulating 6% to 8% of the polls. still, the government is very stable. and we are confident that we are going to have another year of political stability. >> good to speak to you. thanks very much indeed for joining us. we'll take a short on break. still to come, europe and asia are planning to bmd on record highs on european equities while the ecb board members says there are still options left to spur a recovery. >> negative deposit rates is a possibility. we've been clear already some months ago that this has been discussed, technically investigated, legally investigated, so the ecb is ready. now, that said, that's only one instrument in the toolbox. >> bangkok protests gather steam as demonstrators define new security lawes and surround key government limitaries in a bid to topple the government. plus, there's a bid to boost investors as the spanish oilmaker strikes a deal with argentina over a strike in ypf. european equities, down a bit. 2772% fort treasury yields. gilt yields, 2.77%. italian yields, 4.08%. on the currency markets, dollar/yen has just come back from its six-month high. we hit around 101.90. but the yen is still penned down against four-year lows against the pound. euro/dollar, firmer today, up to 1.3550. and sterling/dollar is around 1.61 is 80, just over 1.62 during monday's session. board members, meanwhile, bank of monte de paschi are expected to approve a 3 billion euro capital increase as the italian lender struggles to avoid capitalization and get approval for its 4 billion euro bailout which was agreed earlier this year. the capital hike, higher than expected, paves the way to launch a rights issue in early january. reports share fall over 7%. currently down 10%. today will be the first meeting of san p aolo manager with the new ceo at the helm. but what about the future of european banks? what does it mean for investors? stephane is still with us from ubs. still got a concern about the health of the european banks, particularly as we go through the asset qualities review. we wonder what is going to happen with the impact while we wind down the rto. >> i think the asset could be quite -- next year. as you say, we need to find the problem or the stress tests will not be credible. if you look at the way it will be done, they've negotiated a lot of room for maneuver. but i do think -- and they know they have to be critical. so i do think they will have an asset quality review and stress test which will be largely credible. but then the problem is a number of banks might fell and then we don't have a clear path of what we do with that. the option is banks recapitalize by asking for the markets, but if the market doesn't want it, then what happened? do you do a baiting disruptive for the market or do you do recapitalization by the government and you don't want government to be involved, etcetera, etcetera. but that's the risk. there will be banks failing, but we don't know how we address that issue, then we have problems. a few weeks ago a letter was published from draghi, a secret letter from draghi to the european commission and they are arguing bailing. so we know on this topic the ecb and the european commission do not agree. and that's the risk. so i think what we're seeing is -- >> and what the germans or french might agree or disagree on. >> yeah. but that's the problem. at some point, you need to put money in some of the banks and nobody will agree with -- >> nobody knows where the money comes from. >> exactly. the volatility or markets become nervous once again. i think that's the thing to risk. as much for the end of next year, because as you know, that is quite a -- of top of november, we don't know exactly. but that's an issue i think should not be -- >> wa do you think should -- do you have any idea what the answer should be? should money come from the sm, should there be a new fund? should there be bailin? >> what's happening is you see a number of banks raising capital. you are talking about the italian banks. so maybe what will happen is banks will be preemptive. >> if they're smart they will be, right? in a market they're still willing to give you some money. >> exactly. maybe to end up with asset quality saying there was this bank, this bank failing and guess what? the banks would have recapitalized. that would be the perfect scenario is you have done the hard work before the the syndication of that. so you need to do a lot of wishful thinking for this scenario, unfortunately. >> yeah. this is one of your sort of alternative scenarios, one of the risks. besides that, what else sticks out of this as potentially a big problem? >> well, the big risk for me is your first question half an hour ago about the curve. i think at some point it's almost an avoidable. no, that's the big risk in terms of probability. we're in a sense almost certain that at some point you will have an accident. >> the fed is doomed to fail, is it, in its quest to convince the markets that even when we taper, don't get worried, rates are staying low. is it doomed to fail in that quest? >> yes and no. you're not talk about 300 basis points like in 1994. so you're likely to have a -- but a small one. if you want a big accident, it would be a credit event in china. we think it's a very good probability. that would be a disaster. >> stephane, good to see you. thanks very much. if i don't see you before, have a good -- we've sort of just about going thanksgiving this week. >> happy turkey. >> happy turkey. thank you very much. >> thank you. the japanese government will its end four-decade long rights subsidy policy as early at 2018. fushiko toshiba has more for us from tokyo. >> hi, ross. it's the subsidy program that was originally introduced the domestic rice farmers from lowering prices by limiting production and giving cash handouts. rice farmers would agreed to produce less grain receive 15,000 on yen per 1,000 square meters of land. the new bills allow them to grants to farmers will be cut in half by next year and will have scrapped altogether in 2018. the government will, on the other hand, take steps to prevent rice prices from tunnelling by sdpanding s iexpa subsidies to farmers and preserve farm lieutenant in mountainous areas. with the prospect et of the ppd deal opening the door to chief rice imports, the government is hoping to protect the highly priced rice industry to impending stiff competition from foreign farmers. ross, back to you. >> all right. thanks very much indeed for that. let's remind you what's on the agenda in asia tomorrow. what would normally away ho-hum event in china is now taking on importance in the risk on of capital flight. textile chemicalmaker yongsheng advanced materials makes its hong kong trading debut. meanwhile, in the uk, george osmond has been talking about financial policy committee has requested the bank of england to review the role for the leverage ratio within the capital framework for british banks. he's suggested the fpc may need to set baseline ratios that are higher than that which is in the basul minimum for uk banks in some cases. the priority is to bring greater certainty on mead yaum term capital framework. and mr. carney says he agrees that it's time to look into role of leveraged ratios for uk banks and they think the spc will be able to complete that leverage review in around 12 months. the chancellor said he's open to the idea that it may need power. so a little discussion going on between the chancellor and the bank of england governor about leverage ratios. they are going to look at it. the ecb remains committed to doing whatever it takes, including negative deposit rates. if it sees further risks through price stability. in an interview with chloe cho, he said he's not concerned about disinflation. >> we're not concerned about the prospect that disinflation would deepen, would worsen in the eurozone as growth recover which is our main scenario. inflation will pick up gradually and will gradually come back to the 2% objective of the ecb. this is the most likely scenario. that said, we've seen inflation coming closer to zero. we had the safety buffer that protects us from entering into the danger zone when it comes to inflation numbers. we'll be monitoring very carefully these numbers. the governing council of the ecb has been very clear saying that he's ready to seek rates at the low level for an extended period of time and, if necessary, lower if we see this safety buffer being further eroded. but that's not the most likely scenario in our view. >> if a deflationary spiral is not something of major concern to you, why are your fellow policymakers citing the need for possible negative deposit rates? >> well, negative deposit rates is a possibility. we've been clear already some months ago that this has been discussed, technically investigated, legally investigated so the ecb is ready. now, that said, that's only one instrument in the toolbox. so we have a range of instruments that we would be ready to use if we see further risks to price stability tooirl materi tie materializing. >> some of the other stories today, peugeot has confirmed carlos savaras will replace phillipe ascio. peugeot shares ended the day higher amid expectations the appointment would help secure funding from chinese partner dongfen. fiat is working on an ipo for the first quarter of 2014. the public offering is expected to help settle a dispute over the carmaker's value between fiat and the united workers health care trust, the biggest orthopedic of chrysler. shares of fiat down over 2%. argentina has reached a preliminary deal to naturalize its energy firm ipo back in 2012. repsol was seeking approximately 10.5 billion in the deal. shares are up 3.5% today. buyers made a 2.4 million offer to buy norway's algeta. the german pharma teamed up in 2009 to create a new prostate cancer treatment approved for sale back in the u.s. in may. if the deal goes ahead, bayer will get outright ownership which sold for nearly $17 million in the third quarter. bayer stock pretty flat. algeta up 30%. still to come, down near an 11-week low as anti-government protests show no signs of slowing in thailand. could it represent a buying opportunity? 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[ male announcer ] fedex one rate. simple, flat rate shipping th the reliability of fedex. tensions between china and japan continue to simmer over air defense zone. this requires all aircrafters to report plans. but japanese airlines will do no such thing. meanwhile, the nikkei newspaper reports japan and the u.s. will step up air surveillance in the area using drone aircraft. there appears to be no end in situ anti-government protests in thailand. several protesters have surrounded key mip industry buildings yesterday. the protesters want to disrupt the government work in a bid to topple the prime minister. she's face ago two-day confidence debate in parliament, but still holds a strong majority. her opponents are accusing her of corruption and are trying to whitewash the record of her exiled brother, a former prime minister. joining us on the telephone now is paul gambles, managing partner at mbng international. paul, thanks very much for joining us. we talk about the process, talk about the occupation of government ministries. what is it like in bangkok at the moment? >> it's probably not as bad as you think in a lot of ways. i think it's sort of gone from a situation last night where maybe it felt a little bit like high drama. it's a little bit more i think like comic relief today. the focus seems to be much more on the proceedings in parliament, on the debate. we've had the head of the opposition accusing the prime minister of being the center for -- i think he said center for corrupt practices in thailand. and to a lot of people, i think that sounded like it was an educational establishment, a lot wanted to sign up and join the center for corrupt practices, i think. >> that's one way of putting it. what is the risk of this getting bigger and putting off investment in the country and the japanese taking fright? >> obviously, i think today there is just a sense of the tensions are easie ining slight. i think the next flash point could well be there's an arrest warrant issued, heading the protests. a lot of it will depend on how smoothly his arrest or passage into custody, how smoothly that goes. but i think there's generally a much -- you know, sense of greater calm today. we seem to rally in the market a little bit. we've seen it bounce a little bit. we've seen the bot stabilize. when you bear in mind how bad the currency has been beaten down, i think that's an indication that maybe people are start to go worry if this is a low point, if maybe the end is in sight now. >> do you think ying is going to stay in power? >> yeah, i'm pretty sure of that. the majority she's got is so strong, if she called an election tomorrow, i'm sure that the party would find a way of winning that. so i don't think that barring any constitutional means because, of course, there is this challenge that the amnesty legislation that was put forward was in breach of the constitution. but barring any legislative means of removing her, then i think we would expect to see a hold on to power, either in the current government or if she calls in the election and wins that. >> so, paul, from an investor's point of view, what is the take away? you seem to be saying this is more of a repeat of 2010. is there a buying opportunity here? >> yeah, i think there is. unless anything untoward happens, this is from high drama to pass, i think this could be a reasonal entry point. we don't always get the news through the government sources. but i think you have to watch it minute by minute. if you do, if you think that the worst is over, you know, we're going to go back to the normal business of doing business, which most of the country has been doing. even most of the capital has been doing, to be honest with you. even in the central business district, we're about a mile or so away from the area. and the protests have been confined in there. i think getting towards the end of the drama, i think to a reasonable entry point to go and pick up on the way to the stocks have come off by 5% or so this month in the way the currency has come off this month. >> paul, good to talk to you. thanks very much, indeed. paul gamble, managing partner at mbmg international. things aren't very smooth for the french cosmetics company reporting a fall in first half profit of $18 million. earnings are down on foreign exchange losses. christine tan sat down with the ceo and asked him about the weakness in his biggest market, japan. >> there is an economic crisis in japan. it's difficult. the currency declined very much. and i think there is a phase where you question yourself, how you do business, how to approach things. it's not only us, it's many companies who look at this. so i don't blame anything, anyone, so we just see how we are going forward and how we are going to do better again in the future. >> what's your outlook on japan? do you expect sales to deteriorate further? >> i think we have reached the bottom. i think it's going to improve now. >> are you doing anything to mitigate a slowdown coming from japan? >> worldwide, there is an economic crisis. and our financial situation is very healthy. ow property is still reasonably good and we, therefore, thought that we can continue to invest as we planned before. this means invest in the brand, but at the same time, all of -- many of those investments are just coming off of the bottom line short-term. >> could things surprisingly pick up in the second half for you, do you think? >> i'm always optimistic. i think we will have a fantastic christmas because we are not only a accuse mettics company, we are versus very gifted. still to come, goldman sachs raised its for the hang seng next year by 1,000 points. what is the european market outlook. we'll get to hear from peter oppenheimer. the second hour of "worldwide exchange," coming up right after this. just by talking to a helmet. it grabbed the patient's record before we even picked him up. it found out the doctor we needed was at st. anne's. 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, it's a good listener too. [ female announcer ] today cisco is connecting the internet of everything. so everything works like never before. ♪ stacy's mom has got it goin' on ♪ ♪ stacy's mom has got it goin' on ♪ ♪ stacy's 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. ♪ negative deposit rates are a possibility. we've been clear already some months ago that this has been discussed, technically investigated, legally investigated, so the ecb is ready. that said, that's only one instrument in the toolbox. protests in bangkok gather steam as demonstrators define new security laws and surround key government ministry necessary a bid to topple the government. a boost for investors in reptol as the spanish oilmaker strikes a deal with argentine in over the price for the stake in ypf. and shifting into gear, chrysler says it intends to list shares on the new york stock exchanges, but the automaker's ipo plans won't happen until the fist quarter of next year. >> announcer: you're watching "worldwide exchange" bringing you business news from around the globe. a warm welcome to you. welcome to the start of your global trading day on cnbc. we saw the doe up 0.1% yet, the s&p down 0.1% and the nasdaq crossing 13,000. futures today, just three points above fair value for the dow. about 1 point above fair value for the nasdaq and the s&p is about 3 points above fair value. the ftse yesterday was up 20 points. this morning, it's down 23 points. the xetra dax, pretty flat. not far away from the all-time high we hit yesterday. just above 9,300. just below it at the moment. the s&p/asx is fairly flat today. there's a feeling that the prime minister will stay there. so the index up 0.4%. the shanghai xotit down 0.1%. and the nikkei ending up down around 0.6%. we see some of the pressure of the yen coming up there. slightly negative for the nikkei. meanwhile, european central bank rates will stay low and could even be cut further. that's according to the ecb executive board member benoit couret. he told chloe cho he's not concerned about the threat of deflation, but he did begin by saying he agrees with the bundes bank's asset quality review. >> i think that the bundes bank president is right to set it as an objective. there is no reason why any particular kind of asset should be treated asterisk free by bonds. and that's a general principal that deserves being supported. now, with that said, it is not a european issue. it is an international issue. there is no reason why portuguese bonds, greek bonds will be treated differently from u.s. bonds or japanese bonds. so it is an important discussion, but it takes place in the basul committee for supervision. it's not a european discussion. >> we're talking about the prospect of lower oil prices, especially in light of this deal with iran. could disinflation turn into inflation? how big of a threat is that? >> we don't see it as a very likely prospect that disinflation would deepen, would worsen in the eurozone as growth recovers, which is our main scenario. inflation will pick up gradually and will gradually come back to the 2% rate for the ecb. so this is the most likely scenario. that said, we've seen inflation coming closer to zero. we have a safety buffer and we'll be monitoring these numbers. the governing council of the ecb has been clear saying he's ready to keep rates at a low level for an extended period of time and, if necessary, lower if we see this safety buffer being further eroded. but that's not the most likely scenario, in our view. >> benoit couere. housing starts and building permits are out at 8:30 eastern. at 9:00, we get the september case-shiller home price index. price res forecast to rise 13%. and at 10:00, it's november consumer confidence, expected to pick up nearly two points from last month. hormel, tiffany, and barnes & noble among those reporting results before the open. hp and tivo report after the close. meanwhile, our next guest has been long equities since march last year and he doesn't see that perspective changing as we move into 2014. joining us is peter oppenheimer, european equity strategist at goldman sachs. thanks so much indeed for joining us. we've had a rerating of the stock market. gains next year will be predicated on real earnings, right? >> i think that's exactly right. the drivers change. last year was very much about the kind of hope phase with most of the gains being driven by multiple expansion. and as we go into next year, we believe that you'll get slower gains but driven by fundamental profites and dividend growth. where is that profit coming from? how is that being generated? it looked like france was going into recession if you believe the latest out of pmis. >> well, i think there are a couple of things here. first of all, the corporate sector in europe has exposure toes different parts of the world. so if you look at sales weighted gdp, it's picking up and that should generate better top line growth. moderate, but still positive for the aggregate corporate sector. and also margins have been cyclely depressed in europe whereas they've hit record highs in the u.s. and in the context of coming out of recession, we would expect some rise in margin toes drive earnings, as well. >> this margin story is an interesting one. because in the u.s., you could argue there's been big benefits on margin that are waning, the ability not to pay too much tax, the fact that labor has been cheap and, of course, corporate borrowing. is it different in europe? >> yeah. let me be clear. the u.s. market, of course, over the last couple of years is has outperformed europe, largely because profits have gone to record highs, so have margins. margins are plateauing in the u.s. at a high level. we expect european margins, have have been cyclely depressed because of the deexpression you to start recovering. in line with moderate income growth, but also because you've had quite a lot of growth cost savings particularly vis-a-vis the labor market in the last year or two, which will start to feed through. >> okay. so you -- it's weighting european equities over the u.s. as a whole? >> yes. when we look at our global views for next year, we expect higher returns outside of the u.s. in fact, stronger returns indeed in japan than in europe. but stronger returns outside of the oou u.s. than in the u.s. not because the u.s. economy is not recovering, but because the market has priced in more of that recovery than we've seen elsewhere. >> much, of course, on what else will also depend on the bank not only from a portfolio performance, but also, you know, how healthy they are, how they get the quality reviews and whether they themselves can contribute to an economic recovery. >> we have an overweight position in european banks. there's a balanced risk here. obviously the ongoing relatively modest growth in europe will prevent very strong lending growth. on the other hand, you have got above positioning cycles coming through, you've got lower cost of capital because of the asset quality review and a move towards more european banking integration in terms of supervising -- overall supervision. and generally, we think that banks will benefit from a recovery as modest as it may be in the broader european economy. >> all right. we'll pause there. peter, stick around. more to come from you. meanwhile, chrysler plans to list its shares on the new york stock exchange under the ticker cgc. on monday, the automaker postponed plans until next year saying it wouldn't be practicable to list shares in december. the time sg being pushed back so chrysler can work out a tax issue with the irs converting the firm to a c corporation, which is what most public companies are and that would subject chrysler to more taxes. a judge will issue his decision on whether detroit is eligible for bankruptcy production next week. but unions, retirees and pension funds objected, saying city officials didn't negotiate in good faith and that michigan's contribution protects their preparations from being cut. during a trial that wrapped up earlier this month, detroit sought to prove it is bankrupt. the trial includes a rare appearance from a governor on the witness stand. and what would you pay to pray? the first book ever plushed in the united states is expected to fetch a record amount on the auction block at sotheby's. it was printed in 1640, just 20 years after the pilgrims arrived at plaintiff's exhibit yoymouth. sotheby's estimates this copy could sell for between 15 and $30 million. . why are they touching it if it's worth so much? we want to know, what book excites our viewers. so if there was a first edition copy tomorrow, wa title would you pay handsomely for? would it be a first edition of one of ian flemings's bond novels, for example? [email protected], tweet @cnbcwex or direct to me @rosswestgate. still to come after the break, we'll hear more from peter sax. ♪ i want to spread a little love this year ♪ [ male announcer ] this december, experience the gift of unsurpassed craftsmanship at the lexus december to remember sales event. some of the best offers of the year. this is the pursui of perfection. 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. the european central bank tells cnbc deposit rates could drop below zero. chrysler intends to list shares on the new york stock schapg, but not until the first quarter next year. protesters surround thailand calling for the governor to resign. george osborne, the chancellor, the british finance minister made a request for the bank of england to review leverage ratios within the capital framework for uk banks. mr. carney, currently speaking in front of the treasury select committee says they expect to be granted leverage powers shortly after a year. they would be able to complete the leverage review in around 12 months. and the spc, the financial depository committee has been set up to regulate banks in addition to the monetary policy committee is there to set rates. we'll keep our eyes on any more views than that. while we're talking about that, the economists are fairly split on whether the british government's to revise scheme is helping the market or going too far and creating a bubble. what do we think at goldman sachs? peter is with us in the studio. are we going too far? are we create ago bubble? do we care if this is an investment opportunity for house builders in the short-term? >> i think they're separating the opportunity to create and build more housing, which is really what we're looking at here. first and foremost, we're pretty positive of the uk economy. we think we're going to see 7% growth next year and the year after. in that environment, you would expect to see quite strong housing activity. it's worth noting that the housing builders have had a strong rebound in 2011. but since april of this year, they've been relatively flat against the index. we think there's a good upside opportunity there and a good way of really positioning for a decent recovery in the uk economy. >> the uk pmi is nothing but a heart to heart, the highest series in a world, anyway. it's extraordinary. you clearly think that the growth is sustainable because you said it was going to repeat that growth pattern for a couple of years. >> yes. obviously, you have to look at where the uk economy has come from. it's had a period of substrend growth for quite a long time. so you've got a big output gap and that allows this relatively attractive combination of a cyclical rebound in the economy. we're still with relatively low inflation and, therefore, still pretty accommodative policy. and that combination we think will be pretty good for growth and for assets sensitive to a cyclical rebound in the economy. >> you are, though, downgraded industrial. you've talked about upgraded banks. downgraded industrials. you believe the commodities is over. so there are parts of the market you don't want to be in. >> absolutely. i think that in general what is like cyclical exposure, particularly to developed economies because we think this recovery will come through. on the other hand, we don't particularly like cyclical exposure that's very en sensitive. and also very sensitive to commodity and demand because we think that commodity investment is going to slow, industrials tie in with that to some degree. we think given a relatively slow recovery in the em market, it's appropriate to be underweight there. >> just a final point, earlier it was said the yields in penetration are going to go up to about 3.4% next year. clearly, it's still the biggest risk for investors globally, what happens to treasury yields and tapering. where do you think is a point where we get to where it becomes an impediment? >> spike in bond yields would be a risk given that they're pretty much back to average valuation. but the key question i think is what would drive bond yields higher? if it's a moderate rise, i think equities could still do pretty well under those conditions. but if it's about investors panicking and a rise in the risk premium in the bond markets, that would away different story and would be undermining the general positive outlook for equities that we would have. but i think getting bond yields up to 3.5%, to 4%, if it's gradual and real interest rates rising, that would probably be okay. but beyond that, i think we would have a problem. and if it was a rapid adjustment upwards, then, again, i think that would be more negative for equity investors, too. >> peter, thanks very much for joining us. still to come on the show, less pair rather than paperless. we'll meet the ceo of a company vying to help people manage their virtual filing cabinet pes. 0 that's a good thing, but it doesn't cover everything. only about 80% of your part b medical expenses. the rest is up to you. so consider an aarp medicare supplement insurance plan, insured by unitedhealthcare insurance company. like all standardized medicare supplement insurance plans, they could save you in out-of-pocket medical costs. call today to request a free decision guide. with these types of plans, you'll be able to visit any doctor or hospital that accepts medicare patients... plus, there are no networks, and virtually no referrals needed. join the millions who have already enrolled in the only medicare supplement insurance plans endorsed by aarp... and provided by unitedhealthcare insurance company, which has over 30 years of experience behind it. with all the good years ahead, look for the experience and commitment to go the distance with you. call now to request your free decision guide. o0 c1 you get your coffee here. you get your hair cut here. you find that certain thing you were looking for here, but actually you get so much more. when you shop at these small local businesses, you support all the things that make your community great. the money you spend here, stays here. in this place you call your neighborhood. this saturday is small business saturday. get out and shop small. just by talking to a helmet. it grabbed the patient's record before we even picked him up. it found out the doctor we needed was at st. anne's. 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, it's a good listener too. [ female announcer ] today cisco is connecting the internet of everything. so everything works like never before. if you've just joined us this morning, futures are indicating fairly flat. the s&p up around 26.4% so far this year. meanwhile, nasdaq's executive eric knoll is leaving the exchange to be the ceo of brokerage and technology financial firm convertix. he oversaw a deal to buy an electronic bond trading platform. he had been seen as the leading candidate to eventually succeed the current ceo who recently signed a five-year contract extension. nasdaq's board has been working on planning. nasdaq's omx stock down 2% in frankfurt. evernote is a process designed to help people access and manage files from nn location. the company says it can help users in everyday activities such as remembering people you have met or food you may have enjoyed. phil livin is ceo and is joins us on set. good to see you, phil. >> great to be here. how healthy is the sector at the moment, do you think? >> i think it's great. there's a good fund-raising climate, a good capital climate, the best time in the history of the universe as they try to make the start up. >> really? >> i think so. >> how much is the fact that the healthy client is aid by the fact that it's pretty low hurdle rate, bond yields have been low after generate returns of savings. does that cost more money or not? i think that's a small part of it. i think there's a lot of things that come together to make this perfect soup, this perfect set of conditions. a big part of it is where the conditions are. because of smartphones and app stores and social media. if you make something great, the whole world will hear about you and be able to buy your product. >> you say they want to build a 1 00 year start up. you're only five years old. what do you mean by a 100 year start up? >> i think it means what it sounds like. the 100 year part means we want to make somewhere durable. we want to make something that's literally around for a hundred years. a company that outlive tess people in it i think is a very interesting way to think about it. we want to be a start up at that point, we still want to be innovative, a company that can still be in love with. >> that's hard to do. >> we're not trying to optimize for what's easy. >> you look at all the companies created in the '80s and look at them now. they're big corporate and it's hard -- it's hard to keep the innovation going, isn't it? >> it's hard, but i don't think it's impossible. and the fact that it's hard makes it motivating. there's many companies that weren't innovating for a long time sdmou they're back. i think nike, apple, google. >> what do you think of like ge? >> yeah. i think i'm probably not the best qualified person to talk about ge. >> i don't know. these are 100-year-old companies. but, you know, so is coca-cola. and they are innovating more now than they were before. 20 years ago, they probably were not an innovative company, but they are now. it goes through cycles. >> are you going to list? >> i think so. but its still two to three years out. >> everybody is talking about wearable technology. i can't -- you know, i don't want to wear a phone to my wrist. actually, i prefer to wear a watch, unless it looks good. wearable technology has to look good, right, if you're going to wear it? >> it's going to look good. more importantly, you have to look natural using it. i don't think anything can be mainstream if you look like a dork when you're using it. and all the stuff is going to go through a phase where it's awkward and bulky and only extreme nerd whose don't care what they look like like me are willing to wear it. >> you can test it. >> i can test it for the rest of you. but at some point, i think it's going to happen in two years. it's going to meet that threshold and you can look natural in it. then i think the wearable devices are going to become super mainstream. right as soon as they cross that threshold of just looking and feeling normal. >> i could chat with you for a very long time. unfortunately, we're out of time. good to see you, though. still to come, the nasdaq and dow closed at new highs on monday. how long can the bulls be in the ascendency? more after this. you're watching "worldwide exchange." i'm ross westgate. your headlines today from around the globe, europe and asia fail to build on record highs on u.s. equities while the ecb members tell cnbc that the ecb still has options left to spur a recovery. >> negative deposit rates is a possibility. we've been clear already some months ago that this has been discussed. technically, investigated, legally investigated, so the ecb is ready. now, with that said, that's only one instrument in the toolbox. >> chrysler does intend to list shares on the new york stock exchange, but the ipo may not come until the third quarter next year. and the spanish oilmaker strikes a deal with argentina over a price for the stake in nypf back in 2012. plus, the protest necessary bangkok gather steam as demonstrators defy new security laws and surround key government ministries in a bid to topple the government. >> announcer: you're watching "worldwide exchange" bringing you business news from around the globe. >> if you've just joined us, it's a softer session for european eths. right now, we're down 23 points. off about a third of a percent. xetra dax, 9,300, just above that. the cac 40 is currently down 0.2% and the ftse mib at the moment is down around 0.2% of 1%. as far as u.s. equities, we've seen the dow and the nas dax, slim gains yesterday on the s&p, slim losses. the nas dax yesterday creeping through the 4,000 level for the first time in 13 years. at the moment, it's around 2 points above fair value. the s&p 500 a little bit above fair value by 2 points at 1800 and the dow at the moment is some 10 points above fair value. are u.s. equities now too expensive, particularly relative to earnings growth? joining us is michael pervis, global strategist and head of equities research at weeden and co in new york. nice do you see, michael. thanks very much indeed for joining us. are we going to continue to grind higher? >> i think we are. certainly at least into year's end. and there's a couple of key factors going on. first is a lot of important funds, a lot of hedge funds, a lot of long only matters, as well, are trailing their benchmarks. and, you know, if you look back over the last several years, the stronger the january through october performance, often the stronger november to december period. so you have whether it's fear or greed driving this, there will be people really wanting to make sure they grab every little bit of -- they can into year's end. but there's a second factor, too, which is for the first time in several years, the investors can point to flows coming into equities. and there's a -- it's not an enormous stream of flows, but it's a steady stream of flows. that's something that's been talked about for several years, but now it's becoming a reality. valuations are getting stretched here. so i think the key one will be a little bit more interesting. >> yeah. it's an interesting discussion on valuations. because, you know, the bulls will argue stocks are cheap, they're only trading 15 times, you know, estimates and that is pretty close to historical long-term average. is that the wrong way to analyze things? >> well, i think at the starting point, if you look at the multiples, they are aligned with very long-term averages. but the problem is that the amount of earnings growth that we're eeking out today is about one-third of what it is what you'd expect to see in a mid to late stage bull market such as we saw back in 2005 to 2007, '93 to '95. you had much stronger epf growth. you had higher nominal gdp, and you had operating margins. and we've had margins that have been plateauing and coming down. and, you know, there's -- it's a world where we're having -- you know, companies are having a hard time really getting pricing power, you know, across a wide range of industries because of these deflationary components happening. so i think it's hard to see a market, you know, exploding to the upside based purely on earnings growth. it's simply a lower gdp, lower nominal gdp world we're working with right now sfp. >> what's the trade right now, then, michael? >> well, my trade right now is simply to buy upside calls on the s&p 500 or some other broad markety index like the russell 2,000 or the nasdaq. and, you know, into year's end. however, having said that, one of the other trades is to sell the vix in december. but i think there's going to be a lot of up side in volatility in q1. >> stay there, have a cup of coffee. see you in a few moments, michael. the fda has limited restrictions on the drug avan did i a saying it no longer includes heart risks. avandia was one of the world's top selling drugs, but sales began to fall in 2007 after researchers questioned link toes heart attacks. last week, penny's reported a wider third quarter loss in weak sales and margins, but uhlman said sales trends are improving. officials say the health cacarev website won't be working perfectly, but it will be able to handle 50,000 users at a time, which is the volume it was originally expected to ham when it launched. still to come, chrysler is tapping the brakes on its ipo plan. find out what's hold onning up the automaker's plans to go public, next. ya know, with new fedex one rate you can fill that box and pay one flat rate. i didn't know the coal thing was real. it's very real... david rivera. rivera, david. 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[ male announcer ] fedex one rate. simple, flat rate shipping with the reliability of fedex. america's east coast is preparing for a major winter storm. sleet and freezing rain is expected. joining us for more is the weather channel's keith carlton. how is it looking? >> it's not looking good. the timing of what we're calling winter storm borious here is awful. we have heavy rain across the panhandle of florida into the atlanta, georgia, area. into the north, a bonus round here is snow into the western suburbs of boston and just to the west of the new york city across eastern pennsylvania. but we think the real problems will start tomorrow. obviously, tomorrow, the busiest travel day of the year. so today we've got that rain and ice. and tomorrow, it depends on your location, but some of the biggest hubs in the northeast and mid-atlantic from boston to new york down into maybe washington, d.c. here is going to be dealing not only with some rain, but also some very heavy winds, as well. it looks like the heaviest of the winds will be to the east of borious. that will be over cape cod, massachusetts, maybe down into the east area. on the other side of this storm is the winter side. cold air will filter in. we'll be looking at snow and ice, the highest snowfall total hes. then this area year in the purplish color, that is going to be your freezing rain and ice area. that will be a big problem. so as far as the snowfall total in the forecast, between, good news is we're staying away from some of the biggest hubs here, boston, new york, down to d.c. but we have some significant snowfall off to the west, western new york state 5 to 8 inches, to the east of buffalo another 5 to 8. .then 3 to 5 in general here across much of central parts of new york state. so the timing on this storm is definitely awful. back to you. >> yeah. so the message is, go now. take an extra day, go now if you're going to travel. >> yes. >> good to see you. that's the weather channel's keith carlson. the vix has fallen in multi year lows. some investors are setting up positions to profit from a jump in it. ahead of the fomc meeting in december. and he rejoins us. michael, you were just talking about this in the last year, as well. how much of this is dictated by the risk from the fed? >> well, i think clearly the tapering risk has been sort of the dominant volatility theme in the u.s., the u.s. markets and arguably many global markets this year. i do think we will get tapering at some point next year. it's a guessing game, of course, as to when that is and how that is structured. the options market is suggesting that it's going to be given sometime in the spring if you look at the structure of the s&p volatility right now. we're getting up much more so in the spring than it is in the near term. but i want to make one other point here, is that the second time around, unless it's something absolutely severe, is likely to be much less. it will be noticeable and i think there will be a lot of people really focused on if we do get a tapering, say, in march, wa conditions are applied to that? because what we saw last summer is that when we had that first spike up in raids is that a lot of economic metrics reset lower and that, of course, helped set up the reversal of that september tapering, which we never got. so i think we have to -- it's going to be a very nuanced tapering and it's probably going to be much more focused on treasuries and mortgages. >> yeah. you have made the note that in the near term, treasury bond volatility is declining, not getting more. right? so -- >> correct. >> does that pose a problem for you? >> well, i think the treasury bond volatility spiked over the summer. i think while the it has come in, it's set to expand once we get into q1. the move index, you know, the lifetime low of it over 20 plus years is 48 and we're right now around 60. and if you look at the precrisis levels, its was noticeably higher here. we should normally see some mean reverse higher than that. i think as that happens, that will lift volatility in the spring. but i also want to make an important point, that the nature -- we talked about the valuation on the s&p 500. i think the nature of the markets are shifting from one of straight up a wall of worry climbing to more of a flow driven market with high valuations. and that's going to bring on more volatility and equities, as well. so it's a combination of those two factors conspireing to lift volatility higher in the spring. even if the equities trend higher. i think you can see volatility trend higher. >> good to talk to you this morning. thanks so much indeed for joining us. and a recap of the headlinesed in, the european central bank tells cnbc deposit rates could drop below zero. cry chrysler says it intends to list shares on the new york stock exchange and protesters surround ministry buildings in thailand calling for the government to resign. now, chrysler had hoped to return to the world of publicly traded companies before christmas. but those plans have been shifted back a little bit. kayla tousche is at cnbc hq in the states with more. hi, kayla. what's the new plan? >> well, ross, chrysler issued an s.e.c. filing late yesterday saying it intends to list its shares on the new york stock exchange under the kicker cgc. but earlier, it postponed plans for an ipo until early next year. the company's majority owner fee ya says it wouldn't be, quote, practical to conduct an ipo next month. the time sg being pushed back to chrysler can resolve a tax issue with the irs. that involves converting the firm from a limited liability company or llc to a c corporation which is what most publicly traded companies are. as an llc, chrysler has few shareholders and can pass on responsibilities pore paying taxes to its owner in this case fiat. but a c-corp. has is its taxes and shoulders a great er tax burden. in an interview monday morning, it was said the fiat ceo has long opposed an ipo to begin with. he repeatedly said he would prefer to merge fiat and chrysler. chrysler was forced to file paperwork in september after failing to reach a buyout deal with the uaw trust. prepping for an ipo could allow the two sides to agree on a buyout price. looking atrophiat shares, they're down by just 0.25%. the value of chrysler, between $10 billion and $1 1 billion base odd what underwriters are saying. but as far as when the market can stomach that ipo, it looks like it will not be until next year. it's a big week as we know with thanksgiving, kayla. one of the pilgrim father's books have going for sale. this week. but what would you pay to pray? the first book ever published in the u.s. is expected to fetch a record amount on the auction block at sotheby's today. the 300 page based on book, only 11 copies are known to exist. only five in complete condition. sotheby's estimates this copy -- i'm not sure why if it's so expensive people are allowed to tux it without any gloves on -- they reckon this could sell for between $15 and $13 million. so we've been asking, what first edition charter would you pay handsomely for? mike took to twitter to say he would buy common sense by thomas baines. and jay schuman says there's only one book he would be interested in and there's only one log book, the eye titanic." whoouk? tweet or e-mail us. still to come, will there be a lot of blue boxes under the tree from tiffany's this christmas? the luxury retailers reporting openings before the opening bell. we'll have a preview, right after this. e announcer ] this store knows how to handle a saturday crowd. ♪ [ male announcer ] the parking lot helps by letting us know who's 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 that's stuck in the thing. 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[ male announcer ] you'll 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. don't wait. call now. you get your coffee here. you get your hair cut here. you find that certain thing you were looking for here, but actually you get so much more. when you shop at these small local businesses, you support all the things that make your community great. the money you spend here, stays here. in this place you call your neighborhood. this saturday is small business saturday. get out and shop small. it was a flat close for u.s. equities yesterday. a flat open that's been predicted for u.s. futures. as far as the agenda today stateside, we've got september and october housing starts out at 8:30 eastern. the september report was delayed because of the government shutdown. at 9:00, we get the case-shiller home price index. then at 10:00, it's november consumer confidence. it's expected to tick up nearly two points from last month. also before the opening bell, tiffany reports third quarter were eggs. the luxury forecaster is set to earn 358 cents a share. we'll be closely watched at how well high end items are holding up in the u.s. >> joining us with his few, phil. wa do you think they might say about china? we've heard from remy quantro, a big profit warning because china sales aren't what they thought they were. >> analysts expect china to continue to be basically the market that gives tiffany the push it needs. last quarterer it did really well. the chinese tourists help lift tiffany's sales in europe when they go there on vacation as well as in the u.s. so there is the expectation that the chinese consumer continues to spend at tiffany stores. >> what's going on, meanwhile, in the u.s. and will what's going on in china offset a fairly sluggish market? >> well, you know, the u.s. still is tiffany's biggest market by far. the probativeny has had in the last year is that shoppers on a modest income have been pulling back about 25% of tiffany's sales come from jewelry items that cost less than $500. so it's not just the high ticket items that tiffany sells .those have been sluggish and what's hurt tiffany, as well, is they've had designs that haven't really caught on with shoppers and they've brought in a new designer this year to help them fix that. but, you know, consumer confidence took a big hit in october with the government shutdown. and jewelry is one of the first things that shoppers will pull back on when they're not feeling comfortable about their finances because you can do without a piece of jewelry, but you can't really do without other staples or even clothing. people want to update their wardrobe more often than they want to pick up a new piece of jewelry. >> if they talk about the number of visits they want with their flagship stores, will that get into how other department stores may be faring? >> certainly the flagship on fifth avenue, which by the way looks fabulous in its holiday presentation right now, generates 8% of the company's overall sales. but it's very important in terms of the overall company's image. but tourists are here in big numbers. so far this holiday season. and that, of course, is a big boom for burgdof goodman, part of neiman marcus group. so it's the very high-end stores look like they're going to do quite well this holiday season. >> phil, we wish you the best. thank you very much indeed for that. that's about it for today's edition of "worldwide exchange." coming up next, of course, "squawk box" the countdown to the opening of markets stateside. keep it here on cnbc. whatever happens, we hope you have a very profitable day. good-bye for now. avo: the volkswagen "sign then drive" sales event is back. which means it's never been easier to get a new passat, awarded j.d. power's most appealing midsize car, two years in a row. and right now you can drive one home for practically just your signature. get zero due at signing, zero down, zero deposit, and zero first month's payment on any new 2014 volkswagen. hurry, this offer ends december 2nd. for details, visit vwdealer.com today good morning. there's no shortage of market excitement. the nasdaq flirting with levels not seen in 13 years. today's economic tests include key reads on real estate and consumer confidence, plus quarterly results from a couple of retailers as well as a tech giant and weather watch, a dangerous winter storm is threatening thanksgiving travel for millions. it's tuesday, november 26th, 2013 and "squawk box" begins right now. >> good morning, everybody. welcome to "squawk box" here on cnbc. i'm becky quick along with joe kernen and andrew ross sorkin. we're going to start things out with the markets this morning. we know that the dow and the s&p have been posting record numbers. but yesterday, it was the nasdaq stealing the show. the tech heavy index rising above 4,000 for the first time in 13 years before failing to close at that level. u.s. equity futures at this hour at least. if you want to take a look, you'll see that right now you see some modest advances. right. the dow futures are up by about 1 1.5 points above fair value. s&p futures up by 1.5 points. joe mentioned there are a few tests for the markets today, so why don't we take a look at the calendar on the economic side. we'll get the s&p case-shiller index-home prices for september

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