exporter stocks rebound in tokyo as the yen pulls back from an eight-month high against the dollar. >> hello, everybody. i'm louisa bojesen. financials are failing to lift european stock markets despite a capital hike by bnp paribas.

>> and i'm julia boorstin in the u.s. the fdic plans to ask banks to pay three years of as banks are dwindling deposit funds. >> hello, everyone. welcome back. very glad that you're with us still on the channel watching now cnbc's "worldwide exchange." we're with you for a full two hours. let's take a look at our cnbc ftse 300. very flat right now. it's not often oouz that. open on a slightly weaker footing for some of them. the ftse 100 flat to a little lower. the likes of compass group, for example, the world's largest indicate caterer come out with a higher market, but the understandsy is still on the lighter side of things. the currency rate in the current

session, we're looking at these crosses at the moment, sterling/dollar lower by a tad. a lot of focus on the yen after we had some comments out by the japanese finance minister indicating that currency prevention was a possibility in extreme cases there by adding to a little further yen volatility. speaking of yen volatility, lisa is rejoining us. hi, lisa. >> hello there. i want whatever you're having in your coffee, louislouisa. thank you very much. we had investors over here looking at all of the m&a acquisitions, all the of the activity happening in the united states and saying, hey, i guess companies are willing to spend billions of dollars in acquisitions and invest that kind of money. perhaps i should take this money off the sidelines and invest it. the weak japanese yen, as louisa was referring to with the finance minister in that company coming out and saying, i don't

support competitive valuations. the yen weakened against the dollar. the s&p/asx 200 at the bottom of your screen, that market closing at a year high, 4,007. quickly taking a look at the pride of crude today, they're a bit below right now. we had gains yesterday, but remember, there's eia data coming out this weekend that's expected to show a build in supplies. it's not quite the summer driving season when things are busy, not quite into the winter heating season where things slow down a bit and that's where crude is sitting at the moment in asian trade. julia, over to you. >> thanks so much. yesterday, the markets broke a three-day losing streak. the dow broke 107 points.

looks like we're pointing towards a lower open. dow futures are down over 11 points from fair value. nasdaq is also pointing lower. the 10-year bund yield is up to 3.27%. and the 0-year note is up 0.02 to 3.30%. let's take a quick look at how gold is moving right now. gold prices have been inching up today as the euro gains against the u.s. do recall. gold is up 4.2%, $991.3. spot gold is still below that crucial 1,000 mark. louisa, over to you. >> with that brooe wrap-up, let me introduce our guest to you. david kosperla out of denmark and we've got steven kakula

joining us in the studio in london. david, you put out a pretty big piece along with saxo bank, of course, that a quarterly outlook that you call japanesation of the stock markets, one of the trends you look to, as we head out of this quarter, we're in for another quarter of double digit gains in many areas of the market despite the fact that many market participants are headed in this direction. where is it coming from, david? >> well, first of all, we believe this market is completely out of sync with reality, so it can go anywhere. it can go 10% higher. so far, we're targeting 1121 in the s&p 500 and it's a buy and dips all the way up to 1121. and apparently because credit markets are functioning quite well, very much supported by a lot of liquidity measures from single banks and governments

around the world still and we believe that we have been moving into a scenario which we call japanesezation, where basically really big financial players, even sovereign nations, if you look at eastern europe, just blue chip companies in general cannot really fail. and so this is -- this needs to be priced out of the price earning. that's why price earnings are rising, especially for big companies. that's also what you saw in japan in the 1990s where the price earnings of big companies was outperforming price earnings of smaller companies because the big ones were deemed too big to fail. and this is what's happening right now, that are going lower because of liquidity measures and this general support, just of the economy in terms of stimulus, indirectly and directly we just see bailout and stimulus across the world.

this is just a lifting of the price earnings higher and the yields lower for corporate debt and for treasuries. >> steven, do you think that the markets are out of touch with reality? >> in a way, not really. there's so much liquidity. bonds, government governments, 3.3% on the ten-year treasury. that's not pricing for a strong recovery. you've had credit spreads phenomenally over the last six months. there's so much liquidity. so it's a combination of the fact that global interest rates are near zero. you've got massive quantitative easing from a number of the large governments of the world. you've got fiscal stimulus measures that are almost without precedent. in a sense, liquidity has to find a home somewhere. so in a accepts, it's a atlantic quiddity story, not a growth story because the world economy looks very fragile to us. >> david, it's julia in the u.s.

you say the u.s. economy will return to positive gdp growth in the second half of the year. how sustainable do you think that growth is and how dependent do you think it is on government stimulus? >> i think it's very dependent on government stimulus, both for the housing market they're now talking about prolonging this federal tax credit for first-time home buyers. i think that the program in a political context has been a success so far, so that is why they are -- and i know they are -- they know that this is necessary in order to keep a hand on to the housing market. the cash for clunkers program has been another -- you might call it a success. i don't think it's a success because it's pulling forward demand. so the demand, once these programs are petering out, will be so much less but the politicians are very much short sighted in their focus and that's why i believe these kind of programs might actually be prolonged. and you cannot rule out that this is a stimulus in the short-term for the economy, but

even if they just continue prolonging these programs, eventually the demand for purchasing homes and for purchasing cars will peter out, anyway. so this is a concern. but we're just seeing that in the short-term, these are providing stimulus for the economy and we also see tendencies towards restocking in inventories and that might be providing some support, some optimism. we have optimism, at least compared to what it was back in march. so the economic activity is stabilizing, it's perhaps even creeping a bit higher, but it's have a very, very low starting point from -- well, you might say if the starting point is back in march, so we just see that the growth could be at positive quarter on quarter and annualized, but as the stimulus programs are running out in the beginning of 2010, this will be

a huge problem for the economy because a private part of gdp will not really be able to keep ongoing in this recovery. >> steven, i want to get your thoughts on this. i understand that you expect the data that we're going to be seeing here in the u.s. this week to confirm that we're moving towards recovery, but it sounds like it could be a jobless recovery. how far along do you think we are in this recovery? what role do you think unemployment will play and what role is the government stimulus playing in this recovery? >> look, there's no doubt we'll get positive gdp numbers, but i think in a way that's the wrong question. a recovery of 1%, 1.5%, or even 2% gdp is not the kind of recovery we want given the output of the last 18 months or so. our definition of a recovery that val dates share prices where they are, that val dates talk of exit strategies from the fed and from the government would be a gdp momentum of 3%, 3.5% not just for one quarter or

for 18 months or two years and i don't think that's on anybody's agenda at the moment. while we're getting signs of a turning point, the worst is behind us, but that doesn't mean that there's a return to strong, solid growth that's going to lead to inflation problems going forward. and, in fact, one of the critical elements that we see for a sustained pick up in the u.s. economy is a turn in house prices. obviously, we get some numbers later today and if we do get house prices starting to move higher, that has a wealth effect from the consumer, it helps the banks and that is the most essential building block that we see for the turn in the economy. but there's still big risks out there. >> david, i'd like to put this question to you. you heard what stephen just said. he would like to see economic growth, 3%, 3.5%. what's the shortest path to getting genuine, economic growth like he's been talking about? is it the stimulus batch growth that we've been getting, the japanesation that we've been getting or is it to let some of

these companies fail and to take our medicine after the results of the past 20 years? >> what is needed to have a recovery is exactly what politicians don't want and that is savings. we need higher savings, we need caution in the households so that if one in the household is getting laid off, then they can still keep things going for half a year. that is not possible. as it is right now, because of the complete lack of savings and liquidity in the households, then we have -- they're facing a catastrophe of if the father is laid off, right? that is a huge problem. we need the savings caution. we need to recapitalize. we need to write off the bad investments, and there are plenty of bad investments. there are plenty of nonperforming loans in the bank systems across the world and you can see that just by looking at the banks that have been taken over by the fdic in the u.s., they are writing off around 30%

of their asset base in their balance. and as long as this is continuing like this, accounting numbers are so misleading and these write-downs just need to be taken in order to regain the trust in our financial system. >> yeah, yeah. david, thank you very much. interesting reading. david karsbol, chief economist from saxo bank and thank you to steven kokoulous from td securities. thank you, steven. let's move on because you ubs -- hang on, before i move on, i'm getting ahead of myself, i want to remind you of what the e-mail address is, worldwide@cnbc.com. we'll be having loads more of these discussions in the next two hours. get involved. send us your questions and we'll pose your questions to the guests on the program. okay. ubs has announced royal dutch shell's peter vosa and berloni will not stand for re-election

on for the board. speaking to the financial times, the ceo said that ubs could take the assets back on to its balance sheet, but conceded that it may not be able to do so until late 2010. shares in bnp paribas are trading to the upside in paris after france biggest bank announced a capital hike in order to pay back state aid. they say third quarter results should not differ significantly from results in the second quarter. on a completely separate note, reports suggest that the netherlands could be looking to sell fortis's asset toes bnp paribas in order to speed the approval of a merger between fortis bank. one of the top stories in asia, more deflation worries for japan. data out this morning showed prices logged a record fall for august when you compared the data to the same period last

year. consumer prices fell 2.4%, reflecting a pullback in oil prices from record highs, but a 0.9% fall in prices that exclude energy costs continues to signal weak household demand. meantime, the yen pulled back after we were talking about earlier after the finance minister said current forex moves are too fast and currency intervention is possible under extreme circumstances. right now, we have dollar/yen trading at 89.75. chinese state owned oil company c nook is currently involved in buying stakes worth about $30 billion. cnooc is bidding, according to the report for one-fifth the price of what it's pumped by nigeria. the company will be in

competition with total, chef ron and bp oil. taking a look at the stock in hong kong, close to 3% mier. $10.58. julia. >> thanks so much, lisa. the fdic is expected to ask banks today to pay three years of premiums as it looks to shore up its deposit fund. the insurance fund, which is at its lowest level since 1992 has been snapped by a rash of bank failures in the past year. banks have paid insurance premiums through 2012 which could bring in about $36 billion. the fdic has assessed an emergency bank fee this year. sheila bair says she would like to avoid tapping a $3 billion credit line with the treasury. >> the s.e.c. is holding a public round table today to discuss new regulations for the lending market.

this includes reinstating the so-called upparticular rule where investors can only short a stock after it rises or ticks higher. short selling has been blamed for worsening the investment crisis. but others say short selling enhances liquidity in the market. >> coming up here on "worldwide exchange," stocks are snapping a three-day losing streak thanks to a nuri of m&a. we're still a little lower in europe. plus, deflation deepens in gentleman opinion. we'll he assess whether the government will need to launch fresh stimulus measures to boost domestic demand and investor attention turns to third quarter earnings. are we underestimating how productive have become?

how you could start saving. hello. welcome back. you are watching global exchange here on cnbc, "worldwide exchange," or global exchange if i change the name of it. we are now all put in little tiny boxes because we're a global show. we're going to show you what's going on in all these markets. let's start with you, becky, in london. >> thanks very much.

let's -- oh, that's better. let's take a look at the ftse 100. it's been a bit of a choppy day of trading, really. we're edging around this just below unchanged level, shall we say. yesterday it was a strong performance. today, though, a slightly different pictures. conference group is a new picture after the company came out with tradings company, they are the world's biggest caterer, telling us today that they have been cutting back hard on costs. while they have seen a modest cut in revenue, the cost cuts have helped them to improve their margins, also to say they can see a bit more of what's happening in their business over the next few months. that's an improvement in terms of what they have experienced previously. shares today are higher by 4.of l 6% president let's get out to carolin with the latest on the

swiss stories. >> thank you, becky. we're trading pretty much flat on the smi. watchmakers are doing very well. some of the pharmaceuticals are. but ubs is down lower about 0.7% of the moment. here is where we have most of the news flow today. the ceo of the company told the financial times that they don't see their u.s. brokerage business as one of their core assets and they are ready to sell, but not just yet. they're probably going to wait for valuations to come up further. the ceo says he would like to buy back some of the toxic assets on the business in general. he said that the bank would reserve its outflows within the next year. but we also heard more changes, we hear that the vice chairman, currently cfo of fiea, that he will step down next year along with the ceo of royal dutch shell and that's it from the swiss market.

now to patricia in germany. >> thanks very much, indee, carolin. at the moment, we are down about 0.5%, up about 2.8% yesterday. watch out for that gitta at the moment. that company down about 2.5%, saying they're going to issue convertible bonds, raising about 300 million euros in order to finance their own business activities, not finance some sort of acquisition. bfh bank says the timing is very positive, however, at the moment, the shares are reacting negatively. watch out for basf, the biggest chemical company in the world, at the moment, trading down 1.2%. we hear the cfo talking about the chinese and asian markets, in general. of course, there's a lot of savings potential within the company itself going forward. what is interesting to see is that they're not interested in selling any kind of chemical parts of the company in asia to any kind of other possible interested party from the u.s.

but at the moment, as i said, the markets slightly down, down about 0.6%. that's frankfurt. over to paris and stephane. >> in paris, bnp paribas is trading higher after the bank announced a capital hike to repay the government loan earlier than expected. the capital increase will be diluted, butts it's widely seen as a good decision because the timing is good and also it will give banks some space from the government. bnp paribas says the capital hike is not linked to any acquisition plan, but the ceo of the bank declined to comment on some reports that bnp would be interested in buying the dutch assets of fortis. the stock has been widely up, 277%. now trading lower, still, eads after airbus confirmed that it will deliver 13 airbus 380 this year, which is one less than expected. it's not clear whether it's due to technical reasons or st if

it's just because of market conditions. the ceo of the company made clear that the euro strength was an issue for airbus and would become a major problem if the price of the -- the level of the euro will continue to increase against the dollar. that's the story in paris this morning. over to adam now in singapore. >> thank you very much, stephane. well, the asian markets got pulled higher today thanks to the triple digit gains that we saw in the dow jones industrial average. in gentleman opinion, the nikkei 225 coming back up from the two-month lows, although the topix index had a little trouble here capping gains in the market. the world's second largest economy may be sliding deeper into deflation. that said, the forchs of the japanese equity market very much tied to the movement in the currency market. we had back pedalling on some of the rhetoric today, that sort of weakness in the yen versus the u.s. dollar. that didn't translate to overall dpans in the exporter sector,

particularly the u.s. automakers. so we're trading at 89 to 90, they're still losing money in terms of operating numbers. moving on to south korea, the blue chips had a pretty mixed day. one of the top gainers was coal gas after meter reports saying that they could be interested in some of the lick phied natural gases. that stock was up 5 plus percent, but the company declined to confirm that note. now back to julia in the u.s. >> housing and the consumer take center stage today in the u.s. the s&p case shiller price index will be out at 9:00 a.m. new york time. that measures single family home measure necessary 20 metropolitan areas. at 10:00 a.m. new york time, analysts look for a reading of 57 in consumer price index this month. dallas fed psh richard fisher will be talking about the

economy at 9:00 a.m. new york time. then at 10:00 charles plosser will speak about the fed's role in the economy in an event in eastern pennsylvania. on the earnings front, we'll get numbers from the likes of drugstore chain wall greens, dardens restaurants, as well as j bill circuit, nike and mattress king sealy. that's your global stock watch. >> coming up on "worldwide exchange," one of the world's biggest sovereign wealth funds, gic, says it's shifting its investment strategy, but to where? find out after the break. >> plus, the uk prime minister gordon brown is expected to heal the economy in a speech given later today. will the second quarter gdp support his re-election campaign, though? we'll have the latest at a time data next.

ooh, peanuts. i'm lisa oake. in asia, gic says it is recovered more than half of last year's losses. >> and i'm louisa bojesen. financials failing to boost european stock markets despite a $6.3 billion capital hike by bnp paribas. >> and i'm julia boorstin in the u.s. pay in advance, the fdic plans to ask banks to prepay three years' worth of fee toes help

shore up its depositing wealth insurance funds. >> welcome back, everyone. i am just grabbing ahold of the latest revisions of gdp that we're anticipating out of the uk markets. we're anticipating to see it moderate slightly. that's at least what many economists have been calling for. second quarter gdp revised to minus 0.6%. the last estimate i was looking at was for minus 0.7%. so we've moderated a little bit. second quarter gdp year on year, minus 5.5% year on year which is unchanged from the last estimate. and here, i was looking for a little bit more of a drop on the annualized figure of 4.9%. we're looking at the 2008 gdp revised higher and first quarter gdp revised to minus 2.5%.

quarter on quarter, as well. i think the important thing to look at here is the gdp figure being revised to on 0.6% and 5.5% year on year. brian, what does this tell you? >> not big news. remember, the gdp numbers come out pretty early in the global cycle. it's not surprising as more data has come through, they've been able to come up with a slightly less negative number. but, you know, the positive news we started to see in terms of industrial production, the pmi goes positive, that was really beyond the second quarter. that was really over the summer. so not really big news, to be honest. >> is this more of an inventory cleanup that we're looking at? why are we looking at kind of a slight moderation? i was being asked by somebody earlier whether we're heading towards a -- you know, coming out of a technical recession, i

guess? >> i don't think the inventory cycle is -- has affected these numbers yet. i think we're expecting the pace of inventory has slowed in the last few months, but again, we're not going to see that until q3. so the inventory bounds that people are talking about is the second half of the 2009 sorry. the inventory has been holding these numbers down. >> yeah. okay. let me just show viewers what is taking place in the markets. we'll come back to you in a second, brian. but just a brief glance at the ftse cnbc global 300 index shows us that we're still relatively flattish at the moment. if you look at some of the markets, the european markets, it's a similar story there. we are seeing outperformers, for an example, compass, the world's largest caterer in the uk and we're seeing the world's largest stocks below that $70 per barrel offer and we're seeing volatility in the markets out there.

the currency markets, well, a lot of focus after we had the japanese finance minister saying that currentsy intervention was a possibility in extreme cases. and that led to a little bit more interest surrounding the yen, but currently we're looking at relatively stable markets, also in currencies, the euro/dollar, seeing the most activity lower by around 0.3%, $1.4578. let's revisit a few more details out of asia with lisa. >> hello there. very positive day for the most part for asian markets. you can see green pretty much across the entire region today, the exception being the shanghai deposit. the yen is weaker after comments by the finance minister. 0.9%. the kospi higher, markets in shong congress and australia also doing well. julia. >> thanks, lisa. here in the u.s., it looks like we're headed towards a lower

open. yesterday we did see very strong results from the markets. the dow finished up 124. all three indices broke a three-day losing streak. the dow is now looks like futures are down over 9 in fair value and the s&p 500 down more than 2 from fair value. so it looks like we're going to do a little bit of a correction from yesterday's gains. looking over at the u.s. ten-year yield, yesterday the treasuries saw buying. the ten-year yield was at 3.285. the ten-year note is now up 0.027 to 3.31%. now let's get back to brian colton, head of global economics at fitch. brian, you know win saw in your notes that you say that the global monetary policy has headed off the risk of deflation, but that core inflation is going to continue to fall. so what is your long-term perspective on the inflation/deflation balance globally? >> i think what we're seeing at the moment, a lot of countries

are still seeing the effects of the collapse in oil prices late last year. they're still affecting the headline changes in consumer prices. but that's going to fall out of the numbers soon. that's the reason why the u.s. and some of the countries are having low cpi numbers. but with the exception of japan, which is an important exception, core inflation has come down about 1.5. we think even if we get the global economic recovery we're expecting, there will be a lot of spare capacity, unemployment is going to rise, keep pressure down on wages, there will be very little pricing power for firms, core inflation is going to continue to drift down and that means even though the headline is not going to be affected by all going forward, it's not going to pick up very much as we go forward. so very low inflation rates going forward for the next couple of years, really. >> okay. brian, hi. it's lisa in singapore. since you mentioned japan, let's talk about it. we hear so much about the lost decade, but it's more like two decades because it's almost been

20 years since this economy has not been able to get out of its own way. when do you think japan will break out? >> i think a bit concerned about japan in some sense. it wasn't at the forefront of the global economic crisis, it's growth today which to be honest hasn't been too bad over the last five years. they've managed about 2% on the five years to 2007. but a lot of that greeting was export driven and we just don't think that external nand is going to be strong over the next couple of years. and, you know, the policy options that the authorities have, looking pretty limited. they've goot a huge government debt burden, so the fiscal leavers can't be pushed too much further. on the monetary side, they've been doing qe since 2001. unless they got to some sort of swedish option, to introduce nominal interest rates, real interest rates are not low at all, in fact, are rising because core inflation is significantly

negative. negative in japan. with that, we've had the appreciation of the yen, as well. it doesn't help with their deflation struggle. >> brian, we had a guest earlier, david karsbol saying he thinks what is happening now is there's an stumgz that many of the big companies across the world will be bailed out by the government defueling this equity rally, and he calls the japanesezation of economic markets. does it concern you? >> primarily what the governments in the center banks have been refer to are the deposits and that's what the interventions have been all about. i do think, you know, probably indirectly, the huge quantitative easing that we've seen probably has spilled over into financial asset prices. i just -- that's an inevitable part of the transmission mechanism. it's not necessarily what the

central banks would like to see. they would rather it's going to credit growth to the real economy, but at the moment, nobody really wants to borrow in the real economy. so inevitably, that is part of the healing process of getting the macro economy back on its feet. so i don't see it as a big problem, to be honest. >> brian, thank you so much for your time, head of global economics at fitch. another story we're tracking for you today is about the gic funds. we had news that the world's fourth large heest sovereign fund has signaled that it is shifting its focus to asia after its portfolio slank because of losses on western investments during the global meltdown. gic manages about $ 00 billion in assets. where is the money headed? let's get a perspective from peter huflik. he is sitting next to me in the singapore studios. thanks so much for coming in,

peter. it's been a rough 18 months for western sovereign funds and for everyone involved in the market. what sort of funds will these economies take post market? are they going to be more cautious? >> i can only see them being more cautious. i can look at the middle east sovereign wealth funds, which i think loss more than $250 billion taking probably a bigger hit that temasek glc did. there's a question about the sort of political backlash against the sovereign wealth funds. recrisis, they weren't very welcome during the crisis. i think there's openings for investment are fairly limited. >> some say they did step up, they took substantial holdings in many of the western banks that needed it and in other companies that were reluctant to get direct government bailouts. they benefited from these government funds that -- >> you're talking about barclay's. that is a case where middle east money really did make a very big

profit out of that. i think over $1 billion out of a quick turn around. i think that was about six months. >> but did that change the perception of these fund? precredit crisis, they were viewed with suspicion by many countries, and now since they did step in, some would say now perhaps companies will be more open to stakes being held by sovereign wealth funds. >> i don't know. the sovereign wealth fund is always tricky. i think they might be shifting their portfolio into less political assets, but i'm not sure where that's going to go. commodity sess what they want to be investing more in. i think they could go that way, but certainly it's going to be a challenge for them going forward. >> peter, it's julia boorstin here in the u.s. i see in your notes you're focused on sovereign wealth funds investing and financial services. obviously, the financial stocks have been boosted by stimulus. but what else when some of that stimulus starts to be pulled

back? >> well, yeah, that's the big question. in fact, that's why we're not very positive about 2010. 2010 is the year when everyone has to go real. i think we are seeing some seasonal boost in the economies and obviously the banks would do well when that happens. but going into 2010, that's when the economies are going to need to go on their own steam, when the government is going to scale back some of their guarantees, some of the other supports. they're all saying that they're not really ford it yet, but by 2010, they are going to reshift some of that money out. that's when banks and other companies are going to understand what they're facing. i think it's going to be a very slow 2010. certainly some of the banks that have benefited from turmoil in the last 12 months, they were earning healthy margins that will be reduced when competitive pricing starts to come in. in terms of sovereign wealth funds whb what weir waiting for

is the chinese sovereign wealth funds to start puttinging its money into financial services. i think that's the tricky one and that's something that we want to watch going forward in 2010. we might see some of the chinese banks investing in financial services overseas, but i'm not sure about the sovereign wealth fund. >> peter, we're seen so much acquisitions recently. i think it's $60 billion worth of deals announced in the past five weeks. a lot of people see opportunity in this market. do you see the sovereign wealth funds being in the market for acquisitions? and where would the opportunity lie? >> well, i think there is some upsides for the sovereign wealth funds in terms of commodities, natural resurs sos, maybe real estate. i think that is what gic is looking to invest towards. when you're at the bottom of the market, there is a lot of easy pickings too be had. the last time the market was down, private equity came in and

they did very well. so i think that's certainly where we're going to be seeing some of the upside. obviously, they would need the expertise and it's a matter of where the expertise is flowing that we'll see that type of investment happening. >> peter, thank you so much for joining us today. that was peter hoflich, manager at the asian bank talking about sovereign wealth funds. turning our attention to india, ayesha faridi joins us live for the india business report. hello there. >> hi. thanks very much for that. it's a positive session. that's how we have come back after the extended long weekend. the nifty has been hovering around that 5,000 mark. the midcap is holding up okay. so two sectors in focus today, which is holding up and supporting this particular market, that is ic indeed. a couple of comments coming in from ge. now they are are looking at

currently upping their indian business, as well, and extending their relationships with players like tech and tcs. so tcs, indeed, is a big winner in trade today. the counter was holding up by nearly 4.5% the last time i checked. two stocks in focus in india, as well, disman farmer is the biggest climb for them and they say that the business is not going to be impacted. abbot is listed, as well. stocks are definitely in focus. meantime, they take the shine right now. it's the festive season in india. this comes in the background of an import dip that we have seen this year. but this time, experts are expecting a pick up when it comes to demand on account of the volume coming up. with that, it's back to you. >> thank you so much.

that was ayesha faridi joining us live from mumbai. >> prime minister gordon brown will address his labor ruling party in brighton later on today. he's expected to clean up british politics, get tough on crime and heal the economy in a blizzard of policy moves aimed at avoiding a crushing election defeat next year. ross westgate, our colleague, you may know him. he's on the beach in brighton, by the looks of things. ahead of this speech this afternoon, ross, it looks loafly where you are, first of all. second of all, i've been told that the gap between the labor party and the torris is 15%. is there anything brown can do at this point to change that? >> well, you know, louisa, it's a beautiful, sunny day here. is sun is shining. but at the moment, it's not shining down on labor's fortunes. gordon brown has a huge task ahead of him, much more difficult than me walking across the shingle beach while i'm talking to you.

they're trailing third today while trailing by 15 points. but mr. brown will have been cheered by the welcome yesterday as the hall behind me standing on their feet in applause. >> yes, we may be the underdogs, yes, we may be. but if we show the british people that we have not lost the fighting sxeert and appetite for change that is defined this party throughout its history, then we can and will win! and i tell you, conference, we will win for our party. we will win for our party and we will win for our country. and we will win for the british people. that's what we're going to do! >> reporter: he advocated for

the clunkers scheme. but we don't know what germany's stance is on that at the moment. we charred from alistair darling yesterday who came out and said we were legislate to try and cap bankers' bonuses. >> in the next few weeks, we will introduce laepgz to end the reckless culture that put short-term profits over long-term success. it will meet an end to automatic bank bonuses year after year. it will mean an end to immediate payouts for top management. any bonuses will be to be paid out over years so they can be clawed back if not warranted by long-term performance. >> and, of course, that is a policy that's really just rubber stamping what has been talked about at the g-20 that was discussed in pittsburgh last week. gordon brown, he has a great reputation. unfortunately, it hasn't really

transferred down to the electric tort here in the uk. his real job, of course, is to try and make labor competitive in the elections. the risk is if they lose the next election in june fairly heavily, they may not be out of power for just five years, but there is talk that they could be lost for a generation, which would lead the labor party perhaps looking a little bit like that abandon pier behind me. >> gracious. ross, thank you very much. we will kb of course, here on the channel be talking a lot more than you. hope you get a swim in somewhere in between. we'll come back and we'll see you soon again, ross westgate live in brighton. julia. >> coming up, don't take the dollar's dominant for granted. that's the message at the world bank. >> many of you have been writing in with your currency questions. keep nos e-mail questions coming. we're heading towards a break. we'll talk more about the currency markets once we get

back again.

my. welcome back again.

currency markets, relatively stable trade at the moment, although we have had a lot more focus on the yen on monday. yesterday, the japanese finance minister indicated that they were comfortable with the yen's strength, and then he backtracked a bit by glancing at some of his latest comments. he said intervention wag possible in extreme cases, but right now it's possible not to promote a weak currency. paul, quite a bit of focus on the yen. i mean, we've seen the dollar up against the yen after hitting an eight-month low recently. how much further momentum is there on the back of these comments? >> i can't say there's a lot. i think we're seeing that fujii, the new finance minister, he's fairly new to the job and feels like he has to saying somethin the yen every time ee asked. i think he should back away and maybe not make so many comments. he's backed away a little bit to

appreciate comments and i think he's going to be a little bit more neutral. i think the more he's interested in the yen does revolve around the yen tomorrow. we always get this repatriation story at the end of the financial year. when it's true or not, it doesn't matter because the yen will strengthen. plus, of course, any japanese investor made a good bit of money. so they will have more dollars in their funds and so they'll probably sell them ahead. but it's off tomorrow we think it goes back up again. >> paul, hi. it's lisa over in singapore. where do you think interest rates are going to be headed globally and when do you think central banks will start tightening again? most economists think it's not going to happen for quite some time. austral australia, norway, we are getting suggestions that rates will be going up quite sooner. >> i think they're probably right.

we can't see any big rush to put rates up any time soon. but i think australia has been fairly clear. and yeah, we have 25 basis points higher for norway in the next month. but i don't think on the major economies there's any rush. we're still not looking much for the u.s. i think maybe europe will be ready to go a little sooner whereas the uk, i think, it suits to keep low interest rates down just now. >> paul, it's julia here in the u.s. there's been lots of attention to the dollar, jean claude trichet says that he's for the strong dollar, but robert zulich cautioned against assuming that the dollar will maintain its role as the world reserve currency. where do you think the dollar is headed? >> we're still a little downward on the pressure of dollar in the near term. we had 1.48 which it hit fairly easily. trichet's comments are not new for hem.

as we know at the moment, the economy is not all that strong. on the reserve side, there is only one way for the dollar to go on as the reserve currency. we sort of think, really, that the euro has quite a track record to make that major of an impact into the dollar. i think it's going to be years, rather than months before the dollar is rivaled at all as the major reserve. >> we've also been talking about in the past couple of weeks about whether or not the dollar would replace the yen as the funding currency. what do you think the chances are of that happening? >> i think there's a chance from the japanese data this morning. we heard also that the swiss has always been a natural alternative to the yen and, of course, sterling, as well. sterling interest rates aren't going up. as you look forward, the aussie can take, for example, japanese

exporters. but the cost of forward coverage is practically zero now. in the 1980s, you recall the yen was barely one. so i think actually the interest rates are carry counter. i don't think really carry trades are very much en vogue at the moment. once we start interest rates going up, then perhaps we'll see that. >> jim writes in and says, please ask your currency guest about the pound against the euro. >> i think fundamentally the pound is still pretty much undervalued against europe. i think basically anything over eight is very weak. but currencies can move outside of fundamentals for a long time. the market has it in its head that the government wants against sterling. we may see euro/sterling move up to 95. i don't think it's going to reach parity. but i think people will start to see value fairly soon.

>> they were got very excited last year as we got close to those levels. paul, thank you so much. >> we're going for a quick break. come up in the next half an hour, we'll bring you up to date on all of the top stories makesing headlines around the globe. >> plus, junk bonds are expected to post another quarter of double digit returns. so is risk back on the table?

i'm lisa oake. cnooc is reportedly in talks with nigeria to buy up some of the world's richest oil blocks. >> hello, everybody. i'm louisa bojesen. in europe, financials failed to boost the european stock markets despite a capital hike by bnp paribas. >> and i'm julia boorstin in the u.s. pay in advance. the fdic plan toes ask banks to prepare three years worth of fees to help shore up its dwindling deposit funds. if you're just joining us in the united states, welcome to the start of your global day with "worldwide exchange" broadcast live from the u.s., asia and europe. here in the u.s., we're taking a look at how the markets are going to open. it looks like the futures are pointing down. the dow is off more than 10 points from fair value. nasdaq is off nearly 6 points in

fair value and the s&p 500 is down about 2 from fair value. of course, yesterday we did some quite some gains. the dow was up 1.3%. now, looking over at the bund yield, we'll just pull that up now -- oh, sorry, we're skipping straight to the 10-year note. the 10-year bund yield is up 0.0 7 to 3.27%. now, looking at the bonds, treasuries did see londz on light volume. the 10-year was up 2785% at the end of the day on monday. now it's up to 3.31%. how is it looking in europe, louisa? >> the global markets at the moment are relatively flattish. let me just tell you, we had the eu monthly economic sentiment survey published for the month of september.

we're looking at the figures rising at the moment, indicating a level of 82.2, so it's slightly higher. industry sentiment is slightly higher. consumer inflation expectations up to minus 14 versus minus 16. this is all according to the eu commission, of course. business climate is rising a tad and industry's selling price expect ages also rising a little bit. so across the boshd, we've seen some of these sentiment indicators coming up a tad. european equity markets are still lower across the board pretty much. i call these markets relatively flattish. we've seen more selling in the past hour or so. but nothing huge. and our cross rates, our currency cross rates, a lot of attention on the yen still. we have the repatriation effective, of course, probably set to cause a little bit more volatility in tomorrow's session potentially, especially as we were dejust hearing from our currency guest a couple of moments ago.

lisa, let's talk more about what's been taking place in the asian markets. >> hello, louisa. we had investors latching on to the gains after those m&a deals that were announced and investors over here thinking, well, if companies are willing to invest that much money, perhaps we should take some of this money sitting on the sidelines taking it back and put it to work in the market. that's what happened in the shanghai composite, as you can see there. in the yen, you were mentioning that after the finance member sister saying competitive valuation is not something he's in favor of, but he will defend the yen if necessary. that increased interest in exporter stocks and you can see there that japan had a decent session today. nymex is holding steady for most of the session in asia. it had been a bit lower, back to

687 at the moment. remember, we've got data out this week expected to show a build in inventories. and we've got brent crude at $65.47. louisa. >> yes. as we head into our number two here on "worldwide exchange," alpesh patel is joining us for the full hour of our guest host and that mines you can e-mail through with questions that v for al besh. the e-mail address appearing right there worldwide at cnbc.com. alpesh, how are you? how is life? >> the markets have been turning. if only everything could have a one-way trajectory. >> if you're not short. >> well, fewer and fewer people obviously are and the ones who are short are getting their fingers bent because they were expecting september, as indeed we were were because statistically it tepdz to be a bad month for long only, but the

markets have continued up ahead. >> and indeed, they are. this contrast between the talk, the water cooler talk or whatever you call it saying we're in for some type of correction, the markets just aren't listening. people aren't taking mr thrown away from where their mouths are. >> there's a very simple indicator that you can have if they're not going in one direction because others everybody would be rich. so that reverse indicator is a good one. i'm sure 90% of people were expecting the second downturn, the double dip, which is what you want to call it which is why the markets had to rally. >> you're saying people should do the opposite of what you're telling them to? >> i'm the outliar. everybody else is on the other side. >> obviously. >> alpesh, i'm curious to hear about your speculation for risk.

speculative bonds have gained up to about 48% for the year now. what's the appetite for risk now? >> what we're seeing, certainly in our client base, is they've got an interest in venture capital funds. if you're talking about risk, then look at that end, for instance. and when people start saying they're interested in the vc, and you know there's a strong appetite for rick, the vcs aren't investing that much money at the moment. but there's an appetite without it. as you've seen with what's happening with the dollar, what's happening with the markets outside the u.s., there continues to be, from what we can tell, a continued interest in going into the emerging markets. this isn't just hot money chasing returns for short-term. these are people who believe that these are long-term stories which are going to continue to play out. and we can't disagree if you're looking for a two to three-month outlook, even a 12-month outlook. that's not going to be actually a high risk play. >> alpesh, hi, it's lisa over in

singapore. how much money do you think is sitting on the sidelines right now? and is it enough to keep this rally going perhaps until the end of october? >> when you look at the figures, there's lots of figures out there in terms of the billions. what i find quite instructive is when you look at the large long only fund managers like fidelity, what they tend to do is talk about how they're starting to deploy some of the that capital because they don't want to be left come the end of the year when they're reporting that figure, they don't want to be left looking at underperforming the understandsy. it's not necessarily based on valuations or growth or earnings expectations or throw all that in, but they will talk about, between the lines, about the fact that there's a bit of momentum in the markets. and, of course, they're trying to be cautionary, because they

don't believe this because they know they're going to invest. so they're almost forced into dealing their hand as it were and that's part of what is causing the markets to rise ever higher. we would be half -- as i said on this program on january the 2nd, the start of this year, that the u.s. market is up 15%. we're pretty much there at the moment and i'd be happy if we stay where we are because anything above this i think will start to look more shaky. >> do you think that we can continue on a recovery path? let's say we stabilize where we are. do we have to see a massive downside in the second? not having further top line growth? >> i'm looking for what's really going to kick off the leg down, whether it's going to be indications offen flagzary pressure, interest rates rises, poorer earnings, a spike in oil prices and we're not seeing anything on the horizon that's

going to spook the markets. we had the '98 bank collapse in the u.s. about two weeks ago. did anyone notice it? no. it was a very small bank. nevertheless, they're still shutting down and we're not getting spooked. >> that may be a good thing that you get this washout. >> i'm not necessarily saying it's a bad thing. i'm saying given that nothing is spooking the market, when we look at the multiples on which is u.s. markets are trading, i'm not too worried. we're still within the realms of reasonableness. and not only that, but underlying that is earnings, actual profits and profitability growth. i would be worried if they're saying their losses weren't as deep as we were expecting. a lot of these companies from the u.s., europe, from the uk are bidding for huge infrastructure projects in either africa, china, india and so there is that long-term sustainability behind it. >> alpesh, you're staying with us for the full hour.

e-mailers are sening their questions through, keep them coming at worldwide@cnbc.com. julia. >> still to come, cracking down on short sellers. the s.e.c. may reintroduce the so-called uptick rule, but is short selling simply a scapegoat pore policy measures? stay tuned to find out. welcome to the now network. population: 49 million. right now 1.2 million people are on sprint mobile broadband. 31 are streaming a sales conference from the road. eight are wearing bathrobes. two... less. - 154 people are tracking shipments on a train. - ( train whistles ) 33 are im'ing on a ferry. and 1300 are secretly checking email... - on a vacation. - hmm? ( groans ) that's happening now. america's most dependable 3g network. bringing you the first and only wireless 4g network. sprint. the now network. deaf, hard of hearing and people with speech disabilities access www.sprintrelay.com.

hi. welcome back. just a year ago, the european financial landscape was shaken to its core following the collapse of lehman brothers. the uk lender, bradford & bingley was rescued by the uk government while fortis in belgium suffered a near death experience after clients withdrew millions of euro from the bank. in germany, hooper real estate was saved with a $73 billion package. >> one year later, many wall street firms, including goldman sachs and vanguard are reportedly rejecting rules the s.e.c. is consider to go restrict short selling. the s.e.c. is holding a new round table today to execute reinstating the so-called uptick rule where investors can only short a stock after it rises or ticks higher. short selling has been blamed for worsening the financial

crisis, but the ceo tells short sellers have enhanced securities in the market. we're joined now by michael to discuss this. was short selling a factor in the financial crisis? do you think we need some more regulation? >> yes. first of all, thank you very much for inviting me to talk with you about this important issue. and since we are representing the independent securities trading houses and the market specialists in germany, this proposed regulation definitely would have an effect on our member firms that we have a view on this. our view is that it's surprising that there is no contestable scientific academic evidence so far that short selling has the negative effects on the market which are so often attributed to it. the experience from the short selling currency regime currently in place in the uk rather indicates that such a

disclosure regime deteriorates the price quality by widening the spreads and reducing the liquidity in a given securities. >> and so what would the impact be of these suggested rules? >> well, it is that different rules suggest that we have the disclosure proposal on the table from the european committee of european regulators which one to have a two-tiered system with reporting requirements, the regulator, as well as reporting requirements to the general market as a whole. so the last requirement we are most concerned about, of course, because this would require firms to report to the market about the proprietary increasing the trading risk and naturally reduce in the willingness to provide liquidity to the market in the form of short selling, which is some kind of liquidity multiplier and they're very often overlooked as far as no

short selling is taking place without a buyer on the other side which thinks this is a competitive price to buy a specific instrument and even also to no short seller ever meant any profit before buying in the stock. and you usually buy in the stock in a falling market. so the short seller for the latest date is stabilizing the market. >> el person, what do you think is the main change to the market from this short selling being put in place? >> i think it made it a lot easier for funds like us to make money. what the regularities did, for instance, in the uk wblg is they banned short selling on a few select companies, like the banks, which meant all we did is we put more money into shorting the companies which are on the peripheries of that, like man group, for instance, or icap because we knew there was less money going into shorting the banks because you couldn't actually do that so there must

be more effort and money into short selling. they made the targets a heck of a lot easier. and you saw companies such as manpower and icap were screaming as a result of that. the regulators were clueless about their consequences. and that is one of the lessons to be drawn which is don't ban short selling on specific sectors. >> michael, hi. it's lisa in singapore. your point on liquidity you made earlier, point tape. but what about short selling, they made an argument that an unstable situation was made even worse and helped drive the credit crisis. how do you respond to that? >> well, even here there is a clear analysis missing. one thing is clear, markets need some kind of circuit breaker mechanism in extraordinary

turmoil situations. but this has nothing to do with short selling as such. and i think that the role that hedge funds played here is heavily overstated because there is a negative sentiment against hedge funds as well as market -- short selling as such in the market at the moment. even the capital markets themselves because somehow a scapegoat for a lot of things they have nothing to do with. and there is a legitimate interest from the regulators point of view to have an information on significantly important positions, whether they are held by hedge funds or other financial institutions. but that sa completely different story than disclosing market positions and given the market participants the possibility to exploit those trading information. >> alpesh, is anybody making money on shorts these days? a year ago, it was a given that, of course, you could make money. >> you know, a year ago, it wasn't just the banks that you

were shorting to make money on. you were shorting the shipping companies because the freight rates had fallen through the floor and you were able to make money off the back of those. we forgot about dpm spt like, it was a one-way back. so yes, it's now restricted to more normal market conditions. but either you want transparency in the market, in which case you have no room for selling or you don't. and what you want to do is make things more difficult and clouded. >> alpesh, thank you very much. you're staying with us. michael, thank you so you. michael from the securities trading firms. >> going for a quick break on "worldwide exchange." stay with us. after this, germany's basf has high hopes for asia, pumping about $3 billion into the region. we're going to talk to the chemical company's regional director in a first on cnbc interview. stay with us. ♪

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welcome back. german chemical giant basf is betting big on asia. it's investing nearly $3 billion in the region by the year 2013 and also aiming to double its sales here by 2020. basf says it is optimistic about the region's long-term prospects. here to tell us why, dr. martin

brudamueler is director of the board of directors. this is a first on cnbc interview. thank you so much for joining us today. why don't we start by talking about what you've been doing lately. you've been a busy guy. you're expanding your joint venture with sinopec. tell us what you're seeing in that country that makes you so optimistic. >> well, i think the confidence in asia, particularly in china is very high in the moment, definitely much better than in europe. it is fueled by the stimulus program of the chinese government, which brings subsidies to appliances in rural areas and subsidies in cars, and that is directly translating into chemicals. we have always believed in the chinese market had a an early, very solid commitment to china.

we expect china has an attractive growth. it will know the largest single market in the futures. that's why we have given ambitious targets for the future and want to double our sales until 2020. >> i'm glad you mentioned the stimulus in china. some would argue that it's such a big factor in the growth right now that when china is forced so slow down the company, a lot of companies will be slammed into the windshield. what is your take on that? >> well, i think the stimulus package is certainly enormous and we can applaud the chinese government for doing swift action. and it's very much about psychology. i think the domestic demand over time will increase and that's the country will lose a little bit its dependency on imports. i think we will have a solid impact on the future. i think this will smoothly go into domestic demand increase

and this is, as in everything in manufacturing, there are chemicals, the future for basf and chemical industry, in general, i think is very bright in china. >> martin, it's julia here in the u.s. with dow chemical's acquisition of roman haas a year ago, are you interested in any acquisitions? >> well, as you know, we have recently done a big acquisition because basf acquired siebart. quite a big global business, which by the way, also a significant positioning here in asia pacific about bring basf forward with a lot of new product offering in the plastic additives business, paper chemicals, as well as products for the coatings & industry. so this will be a major task for basf now to go for the integration. but i expect that consolidation, the chemical industry will go forward and after the

integration where we focus currently to bring home energies as quickly as we can, we are certainly interested in the future to participate actively in this consolidation. >> thank you so much for your time today. we appreciate it. good to have you on the show. that was dr. martin brudamueller, director of basf. if you want to keep up to date with the news, videos and blogs on today's market-moving stories, go to cnbc.com. housing and the consumer takes center stage today in the u.s. the s&p case shiller price index will be out at 9:00 a.m. new york time. this measures single family home price necessary 20 major metropolitan areas. at 10:00 a.m., index on consumer confidence will be released, up nearly 3 points from august. dallas fed president richard fisher will be talking about the economy at 9:00 a.m. new york. time then at 10:00 a.m., charles

plosser will speak at an event in pennsylvania. louisa. >> coming up, the third quarter is coming to a close. how long can investors' confidence last? well talk more about our strategy. come back and join us after the break.

welcome back to "worldwide exchange." it's 30 minutes past the hour. here are the top business stories from around the world. >> in the u.s., pay in advance, the fdic plans to ask banks to prepay three worth years of phis to shore up dwindling deposit funds. >> in europe, financials are failing to boost the european stock market despite the capital hike by bnp paribas. >> and i'm lisa oake. japan's finance minister says intervention will be an option in extreme cases.

>> let's take a look at how futures are trading ahead of the market open. we've been pointing down so far today and it continues down. the dow is down more than 10 points from fair value. nasdaq future also pointing to a lower open. s&p pointing lower, as well. that's, of course, after the dow finished up 124 points yesterday, on monday. let's take a look at the bonds and see how those are shaping up. the yield on the 10-year note is up to 3.31% after the treasury did see buying on light volume, which drove yields lower yesterday. louisa, how is it looking in europe? >> we're a little lower across the board on our european sectors. basic resources are off the most follow i closely by telecom, construction, industrial goods and services. when it comes to the industrial sectors, you're fought seeing a bunch out there at the moment. we are seeing a couple of outperformers, though.

in general, some of the banks have been seeing a little bit of buying. not much, though. on top of that, we're seeing some interest in some of the big underlying outperforming new stories of the day, sufficient as compass group, for an example. let me show you the currency cross rates. you've got the dollar/yen flat to a little higher. euro/dollar, lower by some 0.2%. lisa. >> let's quickly run you through some of the markets here today. really green across the screen with the exception of the shanghai composite. investors looking at that m&a activity in the united states overnight. looking at the markets, they've gone up for august when they weren't expected to. they just kept on going in september and a gain, that was unexpected. and investors sort of thinking with all of this m&a activity at the moment, perhaps maybe could keep going through tend of october. so they moved back in over here in asia in a big way today. japan was an interesting point largely because of what louisa just mentioned with the japanese yen.

it weakened after the comments today. if necessary, he will get in there and protect his currency and that sort of scared investors who were short yen out of the market today. also boosted the equity ports stocks in japan. they really get hurt quite a bit when the yen strengthens and it's been strong lately. so investors are moving back into the export stocks today because of the valuation of the yen. we have nymex light sweet meandering in and out of positive territory, off by 0.5% at the moment. brent crude is down about 0.6%. we have an eia data coming up later this week that is expected to show a build in inventories. julia, over to you. >> thanks so much, lisa. joining us now for market strategy is robert patch lick and alpesh patel from infineon group is still with us. robert, i want to start with you. just the third quarter raps up

tomorrow. i'm curious for your perspective on how the market is going to fare once we hear some of those earnings. do you think the earnings will show continued cost cutting? what do you expect to see from those third quarter numbers? >> i expect to see a continuation of what we saw in q1 and q2. in q1, analyst estimates were too low and i think you saw that in q23 and some of the moves were by cost can you cutting and a continuation of the businesses that analysts didn't expect to happen. it did slow down substantially, but it is continuing to improve. we're in the early stages of a every recovery here. what you'll see is analyst estimates that are a little too low. i think that is going to carry the market going forward. i think there's a little bit of nervousness heading into this q3 earnings season. but i think year over year numbers will be just fine.

i think sequential growth is going to be okay. i think when we head into q4, i think that's where the investment public is going to start taking a real interest in these companies because i think the year over year numbers are going to be quite better. >> robert, we continue to hover underneath that key 10,000 mark for the dow. how soon do you think we'll be able to hit that 10,000 number and what will that mean? will we see profit taking once we get there? >> there might be a little bit of resistance. as a professional investor, i'm not concentrating on more of a psychological number. what i really want to do is pay attention to where the market is selling. i think right now, you know, you see a market that looks expensive, but if you compare the earnings estimates for the s&p and the dow, and you see a much smaller amount of growth in the earnings estimates for the s&p relative to the dow, the dow's estimates are expected to increase around 6% this year over last year and the s&p aren't quite expected to grow that much. but i think if you put that kind of number, that kind of growth

on earnings for the s&p, you get a higher earnings number and then you get a much more relatively priced market for the s&p 500. and i think that can take us up, again, to the end of this year. i think what you're going to see is a continuation of the improvements in the economy and i think what we're going to see is an s&p that ends probably somewhere between 1085, maybe 1150. >> alpesh, we were talking about how to value companies here a bit earlier. pj has written in. he says, how can you predict anything with old models when we've never been here? >> we've never been anywhere before in one sense. but serm you can't get away from the fact that there's earnings and prices and companies tend to be valued amongst a lot of things, but one of the key things that tends to hold up well across all market environments is a multiple of their earnings and that tends to be a good, good, broad brush approach to looking at whether or not the dow, for instance, is

overvalued. >> robert, it's lisa in singapore. could you give our viewers advice on how to measure up japan. it doesn't look overly expensive, but when you look at the structural problems that won't seem to go away, it starts to get tricky. >> absolutely. i think japan is going to be facing some challenges going forward, just like the united states is. it's going to be in a -- sort of a slow growth recovery phase. but i would recommend that investors in the japanese market concentrate on the sectors that i think are the appropriate sectors hooe here in the united states. the early cyclicals, via the areas of the economy that are going to respond and recover faster and see the faster amount of growth as we continue to emerge from this recession.

what i particularly like in japan are the financials, consumer discretionary and the financials. i don't think you want to be heavily weighted in the slower growth staples and health care and telecom and utilities. i would underweight those areas. >> robert, you mentioned technology. alpesh, we have another viewer question. a viewer writes in and says, it is okay to buy research in motion, rimm, at $66? >> yes. i don't think that is -- i wouldn't necessarily say 100 fuss that's the lowest it's been, but i was looking at this last night. they were 11% down yesterday because they said they were going to miss analyst forecasts on sales. that doesn't worry me. i think it's a buying opportunity when it's trading at a level of 14 and historically it's traded at higher multiples than that. the iphone is not a competitor,

despite what you read from analysts thinking it's an either/or display. nevertheless, it's a big market out there which they've not even tapped yesterday and it's if only serious business phone, you know, i'm sorry nokia and sorry the others out there. >> you make them talk to each other. be able to sync your blackberry to your mac, please, come on, sort identity out. >> it will happen. >> alpesh, you're staying with us as are you, robert, so we'll come back and get more on strategy. >> let's cross live to tokyo right now and check in on the trading day there with asuka kondo from the nikkei. hello there. >> hi, lisa. a modest pick up in the u.s. dollar against the yen helped exporter shares today. the nikkei 225 rose 0.9%. among major exporters, cannon

rose 1.4%. nomura holdings surged 4.4%. it lost about 20% in the past two sessions after the company announced an equity financing plan. the securities group added 2%. other major winners included nippon airways as credit suisse lifted its rating from underperform to neutral. but recovery was seen as limited. marketplace continued to monitor foreign exchange movements cautiously, even though finance minister hiro fujii may step into the current isy market to stem the yen's rapid appreciation if currency rates move up normally. japan's core consumer price index fell 2.4% in l, logging a record fall for the fourth straight month. some observers say it will take 3 to 5 years to bring the supply/demand balance into equilibrium and concerns that

japan may sink into deflation amounting. and that is the nikkei business report. back to you, lisa. >> thank you so much, asuka. that was asuka kondo joining us live from the nikkei. . >> still to come, is the era of curling up with a book around bedtime stories coming to an end? it could soon be computer time stories. stay tuned to find out.

welcome back to cnbc's "worldwide exchange." here are some of the top stories we're watching from around the world. the fdic is expected to ask banks today to prepare three years' worth of premiums as it looks to shore up its deposit funds. the agency is holding a public meeting at 10:00 a.m. new york time. the insurance industry has been sapped by a rash of bank failures in fact half past year. banks have paid premium insurance through 2012 which could bring in about $36 billion. the fdic has already assessed a bank emergency fund this year. the economy is still spooking shoppers. the national retail federation

says consumers plan to spend after average of $56 on hallow week this year, down about $10 from last year. and about 88% who say the economy hurt spending plans say they'll cut down on buying candy, will reuse old decorations and make costumes. hallow week usually falls about a month before thanksgiving. and the official start to the crucial holiday shopping season. disney wants to shift storybook time to the web. the entertainment giant is launching a digital kids' bookstore today for $79.95 a year or $9 a month, families can read hundreds of books online. about 500 titles will be available to start, but they won't be downloadable to a device like amazon's kindle e-book reader. disney closed at $28.23 on monday.

louisa. >> i'm a sucker for the real pages, you know, and the pictures. and when they get old over time and little children's fingers on them and all that stuff. but anyway, shares in bnp paribas are trading to the upside in paris after they launched a $3.6 billion capital hike in a move to pay back state aid. on a separate note, reports suggest that the netherlands could be looking to sell fortis's asset to bnp paribas in order to approve a merger. the group's ceo will be on closing bell later today. lisa. >> we have more deflation concerns in japan with data out this morning showing prices logged a record fall in august. core consumer prices were down 2.4% from a year ago, reflecting the pullback in oil prices from record highs. but a zero 0.9% fall in prices that exclude energy costs

continues to signal that household demand is still weak. meantime, the yen pulled back after japanese finance minister fujii says said currency moves are too rapid and intervention is possible under extreme circumstances. >> i'm still stuck on the book story, but we need to get the final thoughts from alpesh. alpesh, we've had a whole flood of e-mails in to you in the hour. please give me some insight on moves in the interim, the future shipping of industry in china, is it dead, but i guess the broader take away from this question is china? >> yes. well, you the biggest problem most private inesters have is knowing how to access those markets.

shang traded funds is available and that's your first starting point. you can even find sector specific ones within china or india and so on. and the other way is adr, the american deposit receipts, those are the chinese or indian companies list on the t on the new york stock exchange where you're being stock specific. i'd say given that the indices are behaving on small cap stocks, you probably want to diversify your risks. or through the shanghai indices with china. and longer term is always easier to predict. longer term, of course you're going to put your money there given the amount of infrastructure spending they've got, research and development that they're doing, two things which the americans are not keeping up with and it's going to hit them in three years when they don't have the number of start-ups that they need today in order to meet the demand later on. but the chinese, for instance, are still doing that. >> alpesh, thank you for though

that. real books or digital books? >> real books for kids, digital books for grown-ups. >> julia, real books or digital. >> i'm loyal to the real books. i get the technology, and it's very cool, but i'm loig to the old fashioned books myself. up next, we look at the trading day ahead on wall street. consumer confidence numbers are due out pretty soon. welcome to progressive. how may i help you? i'm looking for a deal on car insurance. i think i might have a coupon in here. there's an easier way. we've got the "name your price" option. you do? follow me. you tell us how much you want to pay, and we'll build you a policy that fits your budget. and i still get great coverage? uh-huh. go ahead. you're the boss. i'm the boss of savings. more like the c.e.o. oh, oh. no glass ceiling. the freedom to name your price.

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hello, you lovely people. well, up after this program comes u.s. "squawk box" for viewers in europe, asia and the united states. joe kernen joins us to tell us what to expect. don't look so happy, joe. come on. >> you know, they don't call it wall street for nothing. what is that the. >> london, do you have a street over there? downing. i don't know. i'm not sure where the financial center is. but it's called wall street for a reason. we have two legends on today, billionaire invest every wilbur ross. we're going to find out where the turn around specialist has been circling lately for the

best opportunities to make money. also, former bear stearns chief allan ace greenberg. we'll get his reaction to the wall street crisis a year later. he's going to sound off on the compensation industry surrounding the financial industry. also, we have consumers on the ropes. spending is down. holidays are just around the corner. find out which consumer stocks are ready to move higher, potential hi pop we'll give you some names that might surprise you. not your ordinary consumer staples. and we'll spark up the health care debate. republican congressman mike pence and democratic congresswoman, allison pence. back to you. >> fantastic, joe. we look forward to it. thanks. robert pavlesh is still with us. robert, we're tight on time.

let's get right to it. we have case shiller consumer price confidence numbers. what do you expect? >> home prices probably decline a little bit month over month. but i think what you're going to see as far as consumer confidence, you'll see that starting to increase and continuing that trend. i think you look out for the rest of this week, and you look at the chicago pmi. the adp employment report placate some additional weakness as far as you're concerned. that's a key indicator of how the economy is doing. you'll see snap continue to increase and friday you'll got the not form payroll for the in of november. so you're going to see a continuation of improvement in that trend. but you may see the unemployment rate particular up, but the market looked past that the last time that the number rose because the market understands that unemployment is a lagging

indicator and that doesn't factor into what's going on in the market right now. the market is a discounting mechanism. so you really want to be investing here using any kind of market weakness to get into those early cyclical sectors that i spoke about earlier. you want to try examine move money into there and move money out of the safe haven staple type of sectors, staples, cob assumer staples. >> very interesting. >> you want to move money out of there. >> very interesting. i know there's going to be a lot of tension on that jobs number on friday. a question about m&a. we've seen a lot of money moving tubts later this year and investors yet. how can investors play all that activity? >> that's a risky type of move. i think what you'll see is much more investment into numbers that have weaker competition. they're using their strengths

wrb dheer being opportunistic here and i think that's really what you want to be doing as a long-term investor is partnering up with those kind of companies by buying the shares of those kinds of companies, trying to pick and choose which smaller companies that they're going to be buying is a really risky type of investment strategy that i really don't get into. >> and is there anything else that you're looking for now, any numbers you're watching or indicators you're keeping an eye on? >> again, i think that ism is going to be the key. i think what you're going to see -- what you really want to see is a continuation of improvement dmt manufacturing area. retail sales, that's been improving. personal spending, personal income, that's been improving and those are good signs going forward. i think what you're going to see is a higher market by the end of this year and lock term investors should be pog positioning themselves for that. >> great. thank you so much for joining us, robert patch lick. that's it for today's show. i'm julia boorstin in the u.s. >> good-bye, everybody.

i'm louisa bojesen in europe. >> and i'm lisa oake in asia. thank you so much for watching "worldwide exchange."