brought to you live from n london, singapore, and around world, this is "worldwide exchange." welcome to the show. the headlines around the globe, athens ablaze. greece's parliament passes a sweeping austerity package taking a crucial step towards avoiding default, but prompting violence on the streets. japan sees gdp contract more than expected in the fourth quarter calling into question prime minister noda's push to tubl the sales tax. rupert murdoch's empire in the spotlight after nine employ wres arrested at "sun" tabloid on corruption charges. u.s. futures indicate a

strong open. the stocks finished friday with with the biggest losses of 2012 and the vix spiked about 20. hello, everyone. you are watching "worldwide exchange" with christine tan in sing more and i'm carolin schober filling in for ross westgate. greece has moved a step closer to securing a fresh 130 billion euro from the eu and the imf after the parliament approved further austerity measures. emergency workers are still b battling to extinguish fires, though, after violence erupt ed on the streets of athens during protests against the bill. julia chatterley is still in athens. give us a sense of what the reaction was to the vote. we saw those pictures of violence on the street but tell us more about what the media is saying as well. >> reporter: well, obviously the protests that we saw yesterday

started before we got the vote which came in the early hours of this morning. so already the population here were displaying their anger not just at the measures within the package but it at the government and their handling of this crisis. within that, of course, we have an agreement they passed through parliament last night. we still need now to get this written agreement for the troika from the coalition leaders in order that no matter what happens in the next election, these will continue to be passed. now what we saw yesterday, too, or this morning in the early hours, 43 nps here voted against the measures and an additional 20 or so we're hearing were against additional pieces or elements within the reform package so their future, too, is uncertain. it gives you a sense of the political uncertainty we're facing here object the ground and the government official has said that there could be a cabinet reshuffle as soon as today.

now one point worth noting, i want to point this out to you, the new democracy leader who arguably, according to the polls, could be the next leader of this country, said before the vote yesterday that he wanted to get people to sign this agreement with the ability to negotiate and change current policy forced upon us. if i were the troika i would be asking him to qualify what he meant by negotiate and change the current policy. now at the same time as you mentioned, tens of thousands of people took to the streets. they were of all ages. it wasn't just about extremists or young people, all ages here were protesting against these reforms and this is the backdrop now for greece. not only do they have to vote, the implementation methods for these reforms but we have to keep an eye on the social unrest and the population and how they view it. carolin, back to you. >> julia, just stay with me for a second is here. obviously greece is facing elections in april and there seems to be a lot of political posturing. to what extent do you expect

politicians to back track on the promises that were now made to the troika? >> reporter: well, there's certainly a risk of that. the comments i just read to you there actual ly saying that we need to be able to negotiate within these and the troika, the far left and the communist party according to recent polls represent over 40% of people's votes here now, so this could mean around the election time that not only do we have what was a coalition of three, we could end up with a coalition of more than six or seven and that's going to make implementing these reforms that much harder. >> julia, thank you so much. just stay with us for the next few minutes. joining us is our guest host, chairman of the investment committee at alpine capital. steven, thank you for joining us today. so what do you make of this step? this vote is really just one

step. over the next two or three days we still need to get the final okay from the eurozone finance ministers. so is this the end game for greece? >> the end game is a dramatic word. anyone can say that. i think your question was will the troika, will the eu now accept. i think the answer is i would be surprised if they didn't. there's an issue of blame here. if it's seen the greeks have done a great deal, which they have, and suffered serious protests for the troika and the eu then to turn that down would be putting the blame very much in their hands, i think would be a big mistake. until the elections in april the coupon payment will be made on march 20th which is redriving these negotiations. i think there is a relatively free reign but those elections are two months away and that is another completely open book. >> stephen, hi, this is

christine in az qua. international markets want to know where the risks of a disorderly default from greece have receded into the background. >> i think they have received it at all but are increasingly irrelevant. what's interesting is what's happening in europe. the hope the germans had is the pressure on the fiscal side would yield to meaningful reforms much in a way as what happened in germany 10, 12 years ago when the labor market reforms, which many people saw as a precursor for the renewed dynamimsm in the economy some fairly dramatic changes through the italian economy, and he's making a big virtue of those. in the last few weeks with the new government in spain, the conservative government over there, we have again had some signs that there is fairly decent action going on. the labor minister on friday described as being aggressive labor market reforms. this is what germany wants and

this will be a precursor. greece is a bit of a sideshow. it's only 3% of european gdp. it's a closed cul-de-sac. it's not sure greece can get out of the mess whatever it does because the numbers were so bad in the first place and also they have had two years to actually do something about it and, to be frank, it's arguable they haven't done anything. the bigger economies and how the markets have reacted since christmas are very positive. if italy and spain do get their act together aided by the ecb's infusion of cash, there are grounds for some quite serious optimism in europe. >> what about portugal? now that greece have measures being taken to deal with the austerity measures, is portugal the next focus for investors? >> well, portugal is on the edge. unlike ireland that was in a similar position a year ago and

seems to have escaped the vortex, portugal is still on the edge. i think it's difficult to say. i mean, if greece were to have got an enormous haircut, in a sense a get out of jail card, it would have been arguable port gel politicians would have only taken one or two who might have leapt on that, wait a minute, why are we going through this austerity when we can have the same sort of debt relief they have had. so far that hasn't happened. difficult to read that one. portugal is on the edge. again, it's a small economy. i don't think it's as important to markets as people would believe. >> stephen, thank you so much. you are staying with us for the next hour. julia, i want to thank you as well. we'll check back in with you later in the show as well. carolin, markets are mostly up after the austerity plan was approved. trade was cautious because there are lots of question marks with the violence breaking out whether implementation can be carried through. so some investors started taking

some profits out of these particular markets. over in greater china, this is what is in focus. the shanghai market gains were capped. we had local government wuhu reversing actions in terms of property easing and that's driving some lower capping this particular market. hang seng elsewhere financials are moving higher. this after, of course, commenting china was fine-tuning economic policies. a lot of people are saying that could mean further easing ahead so that is lifting the financials in this market. the nikkei 225 is up. gentlem japan managing to shrug off gdp data for the fourth quarter t. could put pressure on the boj. the kospi is up 0.6%. australian market up 0.9% higher. new zealand to trade lower. 0.2 and sensex in india 0.42%.

carolin, what does your heat map say? >> it is higher. the stoxx are up. as you said, christine, these gains could still be fragile given we still need the final okay from the finance ministers but for today we are modestly higher. let me show you the markets one by one. the ftse mib higher. the banking stocks are doing very well today but we'll come to that later. cac 40 higher by 1% and we're seeing similar gains for the market in germany and in the uk. but let's just show you a picture of how the european banking stocks are trading. they're all higher on this greek vote. we also have some of these italian banks here moving higher, up by 2% and the portuguese banks also showing very nice gains.

the euro getting a nice boost from the greek vote. euro yen up. euro/dollar is higher 1.5% up at 1.3265. again, any gains in the euro could be limited by more complications down the way. aussie dollar also higher against the euro by around 0.2% because it's a risk on move today. now let me just show you what's happening in the bond markets. keep in mind that we have a lot of supply in the market this week in the eurozone. 22 billion euro of supply. italian bond auction happening in around one hour's time auctions off $7 billion to 8 billion euros that will give us more indication if the borrowing costs have continued to fall today but as we would expect after that greek vote the safe haven prices have fallen, the ten-year bund price slightly down, the yield at 1.971%.

the yield at 5.5%. christine? carolin, japan clearly in focus gdp contracting more than expected in the fourth quarter. growth slipped to 0.6%, double what economists forecasted due to weak global demand, the unstoppable yen and thailand's devastating floods. the plan to double the sales tax. the drop could also add pressure on the boj to ease monetary policy. japan's central bank will announce its policy rate tomorrow. stephen isaacs from alvine. do you think the situation will get much worse if the crisis in the eurozone drags on? >> i'm fairly bullish so i hope that answers your question. the gnp growth for the whole of 2011 was 1.7% which is double

the best year since 1995. so, i mean, that last quarter was particularly bad. there were a number of factors. i think you pointed out the thai floods and the pressure at that time from the eurozone was probably at its worst. i'm not sure one needs to be too worried. machinery orders for the same quarter up 10%. in a more comfortable environment worldwide, particularly the u.s. economy which is more important, i'm comfortable with japan in 2012. >> stephen, thank you so much. coming up, "worldwide exchange" as downgrades, the country's prime minister tells cnbc exclusively that italy is not the next greece. we are live in milan next.

shares in cable wireless worldwide have jumped after vodafone confirmed an offer. cable wireless trading higher by, take a look at that, almost 30%. vodafone adding a gain but to a

much lower extent, 1%. there is no certainty that an offer will be made but, if so, it will be made in cash. the struggling firm has issued a string of profit warnings since its demerger from cable and wireless in march of last year. and moving on, the murdoch media crisis has reared its head again following the arrest of five journalists from the "sun" newspaper on suspicion of bribing police and public officials. katherine, just talk us through the details here and the possible implications, do you think that the fallout from this could be as massive as what we saw last summer from the news of the world? >> well, carolin, the backlash in public opinion is not likely to be quite as bad as it was interest the phone hacking allegations and this is because it mostly concerns bribes to policemen and prison officers and people like that but where this could really, really go badly for the murdochs is if it

leads to any kind of charges or fines under the foreign corrupt pr practices act which, as you know, prohibits bribery and corruption of foreign officials. >> but what does it mean for the fate of rupert murdoch in there are now three investigations into his newspapers. can this incident actual ly brig him down? what do you think? >> i think rupert murdoch is at this stage really honestly at the top of news corp. and he is an amazing person and he's still going. what's really key is the future of the dynasty within newscorps and whether it will be further damaged by these allegations and may potentially be forced to re-sign is his son. >> thank you so much. just want to remind everyone that we're talk iing about alleged -- >> of course. >> alleged deeds here. let's move on and talk about italy. the situation in greece is,

quote, massively different to that of italy according to the country's prime minister mario monti. karen is on the ground in milan. what else did mario monti say? i know he talked to maria about the labor markets, that is still the sticking point in the italian economy. >> reporter: it is indeed. this is one of the key challenges, mario monti is trying to achieve. he's already brought about reforms to competitiveness in industries such as taxes by issuing more licenses, allowing more pharmacies to open up, changing fees that lawyers charge. these are the key initiatives and this is what monti took with him to washington and also to wall street last week as he went on the offensive to try to convince politicians and investment bankers that he's doing enough to restore italy's credibility on markets and we know that funding costs have been coming down across italy thanks largely it to the ecb's ltro operation, just how much time that buys the likes of italy, that's the big question

mark for markets. if we take a look at some of the comments the italian prime minister has been making because last week we also saw a down grade to 34 of the 37 italian banks here, we actually have an exclusive interview that the italian interview mario monti speaking with cnbc's maria bartiromo about the fortunes of greece because this is still playing out in the backdrop. take a listen. >> i'm sure there will be greek default, i'm sure there will not be. secondly default or not i don't see greece leaving the euro. thirdly, the distinct between greece and italy is from the point of view of the markets is massively greater today than it might have been in september, october, or november. >> that was mario monti there

speaking to our very own maria bartiromo. stephen, so what distinction do you make between greece and italy? you toll us before that greece only makes up some 2% or 3% of european gdp so we shouldn't really worry about it. but then looking at the markets, the market clearly still responds to the ups and downs in greece. why are they not more complacent about it? >> arguably is leaner at the moment in the sense there has to be a sacrificial lamb. 0 okay, to some extent they deserve any sacrifices in that the debt position they were in was far worse. they've had two years to really do something about it and, as we saw over the weekend, they're still arguing dramatically to resolve the issue, but i think politically speaking if greece is sacrificed or sacrifices itself, doesn't take the medicine properly and spain and italy are in the way that

merrill lynch, aig, it's worse back in 2008 and, again, i think it shows what can happen if you don't play ball. i think that's the point, italy as we heard from your interview, and spain the last few weeks, they are addressing the underlying problems. the underlying problems are not simply the debts. they're also lack of growth and that growth problem which stretches back in many, many years in the case of italy, needs to be addressed by structural reform. if they're now making struck taurl reforms, then i think that does have more confidence. greece is too far gone, i'm afraid. >> yeah, and the problem is really about the risk of implementation, voting is one thing. anyone can vote. but in the case of greece, do you think those measures can be implemented in a timely manner because time and time again greek politicians have proven that, you know, they're not sticking to whatever the troika has imposed on them. >> well, it's partly a question of trust. i read over the weekend that one

greek politician called the austerity program similar to reparations. inflammatory language, you know, politicize mentioning of the second world war and germany's role. germany was occupying in greece during the war. all of this inflammatory language doesn't really help the sense of trust. and now what is needed is trust and it's not there. >> so should we just eject greece from the eurozone altogether? >> i think what we're doing, what the eu is doing, is to set finally some proper parameters and say these are the rules. if you wish to follow the rules, then we're happy to play ball with you. if we don't, sorry, it's over. they should have done this two years ago. >> and then the costs would be been smaller. >> the reason is they were then worried about spain and italy. it was the domino effect. now that we do have spain and italy actually playing ball, are the marketing will will be far more comfortable, then the domino effect no longer works. one could take a harder line

with greece. >> stephen isaacs, chairman at alvine capital. christine? carolin, thank you very much. up next on "worldwide exchange," focusing more on growth slowing in the land of the rising sun. japan, what contributes to the drop and what does it mean for prime minister noda's tax plan. we'll figure that out on the other side of the break and lending data is due imthently. this new at&t 4g lte is fast.

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welcome to the show. the headlines today athens ablaze. greece's parliament passes a sweeping austerity package taking a crucial step towards avoiding default. but prompting violence on the streets. japan sees gdp contract more than ebbs inspected in the fourth quarter calling into question prime minister noda's push to double the sales tax. and u.s. futures indicate a strong open as the stocks finished friday with the biggest losses of 2012 and the vix spiked above 20. and, christine, you're seeing a lot of green on this wall behind me. of course this is a direct reaction to the greek vote in

parliament last night. over the next three days we're only waiting for eurozone finance ministers to sign off on that final bill for gress to get the 130 billion euros in loans that it needs to avert a detaught in march. the stoxx europe 600 higher by two thirds of a percent, just off the highs that we saw earlier on the session but you see broad based gains across the board on that greece vote. remember, we have the japanese gdp data but markets took that in stride. let's show you the european markets one by one, the ftse 100 up. xetra dax down a little bit, only higher by 0.7%. ftse mib also higher by 0.7%. let's just show you how the euro is trading today, a nice lift from the greek vote, of course, against the dollar. it is higher by around 0.4%, currently trading at 1.3260. gains could be limited given that we could see more

complications down the road from the greek debt talks. euro/yen higher by 0.6%. the yen falling after that bigger than expected contraction in japanese gdp for the fourth quarter. christine, how is it looking on your front? >> well, carolin, some profit taking in the markets, even though the greek parliament pau passed the austerity measures, there is violence in the streets. the shanghai gains, the count wrers calling this lower. we had local government wuhu announced property measure easi easing. that is getting the property shares in the shanghai market. the financials are moving higher because premier wen jiabao saying that china will start fine-tuning economic policies, a sign that further easing may be up ahead and that's pushing the financia

financials, the banks, higher. the nikkei 225 up. this particular market shrugging up more than expected. the kospi up 0.6%. elsewhere taiwan weighted index is up. the australian market is up. new zealand 50 pretty much flat to the down side. 0.2% and the sensex is up. that seems to be the picture in asia. trade is cautious given what's happening in greece. carolin? thank you so much. skroi joining us now is david. thank you so much for joining us. we're waiting for the project data to come out. what do you expect from the data? given the leaks that we've seen so far, uk banks seem to have fallen short this terms of lending. what's your take? >> yeah, are that's the expectation that's really not a huge surprise. there's never been a real expectation of the banks were going to live up to these targets in the first place. this has been a bit of a charade

from the start, i would say. there is a lot of pressure from the government to meet the targets, whether it's on a gross basis or a net basis and so the fact the banks are likely to fall short is inevitably going to lead to a whole other round of banker bash and criticism of the industry. >> but that really begs the question, if you can't force the banks to lend, sorry, i'm just going to talk you through dat at that now it's out. the boe says fourth quarter gross business lending by merlin banks was at 57.2 billion. the boe says the project merlin bank credit to businesses totaled 214.9 billion sterling in 2011 versus 190 billion sterling. that was targeted again fourth quarter growth lending. this is the number we talked about before was at only 18.9 billion. they say project merlin bank credit totaled 74.9 billion

sterling in 2011. the forecast was for 76 billion sterling. so falling just roughly 1 billion sterling up below the target and this is exactly what we had expected. so just want to come back to the question i had before. if you can't force banks to actually lend to small companies, how can you force -- how can you make sure that this credit mechanism actually works? >> you can't. >> you can't. >> the bottom line, the banks will say part of the reason they're falling short is insignificant demand. the economy is very weak. businesses are retrenching and battening down the hatches. they're not interested in borrowing. the real itty is a bit more complex. the banks have gotten badly burned by excessive risk taking in the previous round of the financial crisis. they are under pressure to increase their capital buffers, trying to stockpile liquidity. it makes it much harder to lend. they don't see attractive lending opportunities out there for the most part.

>> david, not attracting many opportunities. what about asia? isn't that a growth area for them? >> it is but not under the project merlin mandate. only of the big uk banks and hsb standard chart er, barclays to lesser extent, that even have asia businesses. so, again, the uk government's concern here is not with asia, it's with the british economy which is desperately in need of credit or desperately in need of reassurance and some confidence and these numbers aren't going to help in that regard. >> stephen, off camera we talked about the banking situation in china. you had an interesting take on that. >> well, it's just picking up the commentary that premier wen made a comment about wanting to fine-tune the economy, almost leading us to 's happened over the weekend. and the provincial governments to be rolled over the next four or five years.

that's $1.7 trillion worth of loans, a fairly big number. i think it shows you of course there has been a slight slowdown in the economy. anybody would argue with that. the government is not going to be passive about it. they're flagging the issue. we have the party conference in november, a change of leadership so there's a greater design to manage any slowdown. there's a lot of armory they have in the bag they've started to deploy already. >> stephen, it's interesting you mention that because the local governments, the revenue they get is very much tied to the property sector. now that the overall central government says, hey, we need to cool down this particular sector, that means they are going to get hit more. do you see this as the tip of a bigger problem down the road even though our loans get rolled over? >> you're right about the property market. that is one comment that wen also made that they are going to be focusing on cooling the

property market bubble so that remains a problem and i don't think there's an easy solution. i think the international backdrop is more encouraging for china and a massive rally in the last eight consecutive weeks they have rallied and if you look at the stocks that have rallied. stocks that supply walmart picking up on the fact that the american economy looks in five different places. that is going to help china and underpin hope for this whole managing a slowdown. >> david, just want to broaden out the topic here because the ltro, whether it was the first one but also the second one coming up in a few weeks here, the actual motive was also to extend credit to the broader economy. to what extent have you seen that happen? to what extent do you think second ltro will fulfill that mission? >> the second phase of it stands a decent chance. the first phase really and the banks used the 500 billion euros

they borrowed. they use that basically to pay down the debt that they were facing. and i think the second phase depending on how much the take is, i think there's a greater chance that will start to trickle down. it's not something that's going to happen instantly. it will happen over in months, maybe years and the key part of the ltro is not extending credit, it's preventing a catastrophic collapse in the banking industry. >> all right. thank you so much, david, for sharing those stocks with us. that was david embridge at the wall stre"wall street journal." and let's get back out to karen cho. we are awaiting the results of the 1 -month debt auction coming up in half an hour's time. what is the expectation on the grou ground? >> reporter: indeed, carolin. sorry, we have some emergency sirens going off. we've been talking this morning about the government restoring

the credibility on international markets and that will be tested this morning when italy does try to sell 8 billion euros worth of short-term debt. the investment climate and key economic reforms is marco valley, the chief economist for the eurozone. thank you for joining us and braving the cold temperatures. this is cold, isn't it? >> absolutely. >> reporter: okay. let's talk about the economy because mario monti, the prime minister is trying to balance the budget but at the same time he's bringing about austerity measures as the economy slows. how possible is it to enact all of this at the same time and ensure you have enough support behind you? >> i think it was quite interesting to see and there's been a lot of popular support behind these measures. they are meant to be tough but short-term pain for long-term gain. the economy is in a recession. probably this measure in the near term but very important to stress to come down.

the market is already realizing that in the medium term, they have to bring down the gdp ratio and this is good news. >> reporter: if we talk about growth, we are official to see the q4 numbers suggesting a technical recession. if we look at where the austerity is going to hit, when will we see the worst impact on growth? >> most likely the first half of this year. that's absolutely clear. again, the fact that spreads have come down, the banking sector is moving in the right direction. we expect the recession to last but then should stabilize this spring and italy should grow by the second half of this year. >> reporter: if feels like the credit spreads have been helped out by the ecb and the ltro. if we take a look at what we're seeing on the ground in italy there needs to be credibility as well in the government's

measures and one of the key challenges is later market reform. just how confident are you about mario monti's ability to bring about what is a major reform for the italian economy? >> the troika is actually quite good so it does bode well for his effort to overhaul the labor market. here the big issue is trying to have flex securities. this means that you don't want to protect the job itself but you want to project the work. this is to provide more possibility for people and to better protect people who lose their job. i think this is very important. very important to enhance and increase. >> reporter: when we talk about flexibility, a lot of companies don't have the ability and when they see revenues decline they can't lay off workers. >> that's absolutely true. that's why the labor market needs to be reformed.

it's not just provided firms need more freedom. also to provide people with more assurance. that's very important. it's crucial to win the resistance of social arguments like liberal unions. >> reporter: thank you for joining us marco valli. of course, guys, the key event here this morning will be coming up shortly the announcement of what happened with the 8 billion euros worth of short term credit watching the appetite for that just after s&p downgraded the banks, 34 of the 37 later on friday. back to you. >> karen, thank you very much for that great backdrop, by the way. love it. over here in asia markets rose in the early trading session in greece but failed to keep the momentum up. the market highlights. chinese equities failed to

hold on to the gains. of course after disappointed investors sold off property plays on news that wuhu has back tracked on its promise to offer tax breaks in subsidies. the markets took it as a sign beijing is not yet ready to let go. but the goals were offset by wen jiabao's reported comments that beijing should begin fine-tuning its economic policy in the first quarter. these comments were published today came just as china released disappointing trade figures caused by slowing domestic demand. meanwhile, and this could be a taste of what we can expect from china's leader in waiting, the vice president answering questions via "washington post" said the u.s. has benefited greatly from its economic relations with china. xi says the u.s. should not let trade frictions undercut the relationship. tracey, thank you very much

for that. very interesting development there. let's head over to what's happening in japan. the country releasing, of course, fourth quarter gdp by the usual suspects. makiko utsuda has the details. >> reporter: gentlemjapan's eco shrank worse than expected 2.3% through december. economic growth had recovered during the july-september quarter but sluggish markets overseas and disrupted production due to floods in thailand have pushed it back into negative territory. however, economists seem optimistic that japan's economy will perk up again during the january to march quarter as post quake reconstruction demand kicks in. the government has already earmarked huge sums for the rebuilding effort in a supplementary budget. the bank of japan began its two-day board meeting today but it is likely to keep its key interest interest rate unchanged. no additional monetary easing

measures are expected. scandal hit olympus, said it fell into the red. a net loss of $423 million. the firm is scheduled to hold an extraordinary shareholders meeting in april where its current president is to step down to take responsibility for the $1.7 billion scandal. ousted former president michael wood ford is set to be flange to write a tell-all book on the scandal. that's all from the nikkei business report. >> back to you, christine. makiko utsuda, thank you very much, from the nikkei. well, joining us now to talk everything japan, head of japan equity research at jpmorgan, good to have you with us. did you expect those fourth quarter gdp numbers and does it get much better or worse for japan from here? >> no, it's going to get much about better. it's a negative surprise but we did have a lot of supply disruption. the key issue is look iing

forward. if you go into the pro-tucks sta tis it particular already january well above expectation. a lot of inventory rebuilding going on. a japanese economy that will start 2012 with solid growth around 2.5%. >> does that mean when the boj meets tomorrow they will have the same view you have and will not offer any more easing? >> i think that's right. i mean, the bank of japan is sitting there. it's accommodative in financial markets because they keep on buying assets and you're probably aware the bank of japan is now the only g-7 central bank that actually buys risk assets. they're buying real estate investment trusts quite actively in the market to boost their balance sheets. when all is said and done the bank of japan is probably very happy with the current development. good production cut back coming through. no major sign of deflation and going forward a huge fiscal stimulus package kicking in.

>> you are very well connected, jesper and know the feeling on the ground, what are you hearing of the doubling of the sales tax? do you think noda can push that through this year? >> it's very interesting because that whole political debate, oh, my god, we're going to have to fix the fiscal situation, is obviously on the front burner of politics. at the same time, however, politics themselves, the grip on power by the noda administration seems to be waning when you look at the opinion polls so, you know, they're trying to do the right thing from the fiscal corruption perspective but actually getting this done, delivering it with a strong political hand, remains a big, interesting gain to watch going forward. >> this is carolin in london. what worries me when looking at the data is the weakness in domestic demand. is this just a temporary effect or can we expect that to persist in the coming quarters?

>> when you look at the jobs data things are recovering, job offers to applicants are moving up. we find the housing market which at the end of the day is the big, center of attention. it's the biggest asset. you do find that a bit of a recovery trend is starting to come through. i'm optimistic it was a one off quarter and that at least for the first six to nine months of this year we do get strong support from domestic demand as well. >> yes, but what about the strong yen, are we in an era where we see manufacturing can companies or japanese companies shift more of the production overseas as a result? >> you are absolutely right. the one thing that you see is that since the disaster in march, you know, foreign direct investment has been

turbocharged. you've seen almost $70 billion of foreign direct investment since april of last year, big acceleration, very broad across industries. it's the food companies with the pharmaceutical companies together with even the internet companies investing more overseas. now the interesting thing is that all this burst of activity japan globalizing aggressively is actually very, very good for corporate earnings. remember, margins on overseas operations are basically three to four times higher than what they are on the domestic business so the fact that japan is globalizing more aggressively does actually make me quite confident that structural earnings in japan are going to be improving. >> great insights, jesper. head of japan equity research at jpmorgan. talking about southeast asia's biggest phone company posting a bigger than expected drop in the

third quarter. singtel ceo in a first on cnbc interview. >> very strong in the quarter in every market that we operate in have actually helped increase our market share and the earnings has been achieved for higher acquisition costs because of strong customer numbers has been impacted. higher interest expense. >> one of the things was this sharp depreciation partially offset by strengthening the australian dollar. how do you head your exposure? >> let me explain for the group.

we look at it at two levels. that is hedged. what we are not able to hedge is translation. we keep our books in dollars. anything not denominated in singapore dollars we would have to translate. it would mean that the numbers translated would be weaker. and that's not something that you can actually hedge. >> through the financial crisis holding shares of singtel was for a lot of people, huge, cash to cash flows, stable, reliable and a 5% yield. is singtel going to be able to keep that payout? >> our dividend policy is to pay out 5% to 75% of our underlying

earnings. we have been paying at the higher end of the range and once we have indicated a range, we would like to stay within that. and we would also actively review our capital position. it is not to have a lazy balance sheet and as we indicated in our statement we would to do a very conscious review every three years. >> and a quick check on stock to see how it finished up today, almost 2%. 3.13. shares were up 3% in the past 12 months. coming up next on "worldwide exchange," of course we have italian auction results breaking at the top of the hour. we'll get you back out live to milan and athens. carolin? plus, the music world paid tribute to the talents of singer whitney houston at the grammy awards over the weekend.

we'll talk about that after the break.

a final thought now from our guest host stephen isaacs.

the markets have seen an impressive run. is it too late to get into equities now? >> i don't think so and barring some sort of disaster -- i'll give you a few extra reasons to look at the equity market. first of all, the price of equities. ibm did a two-year fixed income deal in the states a couple weeks ago. the coupon was 0.55%. there was almost an arbitrage between the tiff denied yield and their own bond yields and i just see in the absence of any particular bad news albrbitrage gets whittled away. xstrata guys are pretty smart. i like to follow them. unless there's a disaster out there what do i worry about? french elections a couple months away. there is a possible wild card there. i can't see the disaster coming.

>> there's something that will have to take us higher. the greek solution more or less has been priced in. we can't just go higher endlessly from now on. >> they will be bouncing around always. no one is able to forecast 1% or 2% but on the year if we are in the early stages of the rally, let's not forget the bank of england did 50 billion in quantitative easing, and they have gone under the radar. it's a big number. they said they will do more. a lot of focus on the ecb but let's not forget the fed. they're going to fix rates for another two years. there's still the likelihood the fed will be meeting on its own. there's a lot more support to come. i think we're in a massive bull market to hold on. >> so is that what you're saying, stephen? >> i'm more in favor of equities because equity is achieved. gold is a sort of anti-currency trade. you need to have some in your portfolio, likewise commodities.

to me it's the value, the yield, the price to earnings ratio, all of those are compared to other assets very attractive. you have to own. >> all right, stephen. we have plenty more to look forward to on "worldwide exchange" including jackie deangelis who is joining us from the u.s. right now. good morning to you, jackie. good morning, christine and ca carolin. whitney houston's death dominated the 54th grammy awards last night. pop music's former queen was pronounced dead on saturday afternoon er room on the fourth floor of the beverly hilton. adele was awarded six grammys sharing the spotlight with fu fighters who captured five awards. ll cool jay asked the audience to join him in a tribute to whitney houston, a rendition of her biggest hit "i will always love you."

a very sad night for the music industry. >> jackie, i think i've seen the movie "bodyguard" 20 times. this was my idea of love back then. whether it will be fulfilled, i don't know. christine, what are your thoughts? >> i thought she made kevin costner look very good. i'm really a big fan of whitney. her voice was immaculate. there was no one quite like her. we'll miss her. >> i was a huge fan, too, obviously growing up with her music in the '80s. still to come on "worldwide exchange," a great lineup of guest hosts. tweet us, e-mail us, and stay with us.

good morning and welcome to the show. the headlines from around the globe this morning, in the united states futures indicate a strong open after stocks finished friday with the biggest losses of 2012 and the vix spiked above 20. athens ablaze -- greece's parliament passes a sweeping austerity package taking a crucial step towards avoiding default but prompting violence on the streets. japan sees gdp contract more than expected in the fourth quarter calling into question prime minister noda's push to double the sales tax. good morning. you're watching "worldwide exchange" with christine tan in

asia, carolin schober in london and i'm jackie deangelis. great to have you with us this morning. a look at the u.s. futures and see how the markets are poised to open for trade this morning. after the greek parliament passed the austerity package on sunday night, it looks like the markets are taking that as a dangerous sign. the nasdaq higher by nearly 19 and the s&p 500 up by nine. this, of course, carolin, after a tough day for stocks on friday. we did see some nervousness in the market ahead of that parliamentary approval. in fact, stocks saw their biggest decline in 2012. greece has moved a step closer to securing a fresh 130 billion yeuro bailout from the imf afte, as we set, further usausterity measures. emergency workers are still battling to extinguish fires after violence erupted on the streets of athens during pr protests against the bill. julia chatterley is in athens for us. you've been covering this all

week last week so there have been so many delays in the last couple of weeks but now down to the wire. what are going to be the next few steps in the next two or three days? >> reporter: we got the deal passed in parliament yesterday but, of course, now the troika will demand the two remaining coalition leaders give a written agreement to promise that no matter what happens next in the elections and they're due in april these reforms will go ahead. don't forget, also, that additional spending cut that was mentioned by the euro group last week. that has to be decided and at least discussed on wednesday so we need to understand the details of that. the political situation remains a concern, 43 mps on the new democracy parties were expelled last night for voting no against these reforms. and if you add those to the nine

that resigned over the last few days, you get a sense of the volatility here of the political situation. in fact, polls published yesterday showed that 61% now of this population want immediate elections and that's up from just over 45% just two to three weeks ago. and i think that's what the protesters were out there and yesterday protesting against as much as the wage cuts and the pension cuts and potential job losses. it was also about the government and their handling now of this crisis. it was people of all ages that turned up. it wasn't just one part of the population. the government was their main focus, the chants directed there. the number of key events to look out for. the psi deadline february the 17th is the date there. we need to know the participation rate. is there going to be an official sector element there and in greece over the next couple of weeks they have to vote again on how to implement these reforms

and that's going to be the concern for now. carolin, back to you. >> looking ahead the key question is really can greece fix its competitiveness problem and also its growth problem? in this bailout package based on what you hear from the people you talked to on the ground, does this package have enough of what it takes to get growth back on track? >> reporter: well, i think that's what people are hoping. the mps are definitive on this. there are reforms within this that will address the structural issues greece faces. if you talk to the population here, they believe that the additional cuts in pages and pensions this year is too much too quickly. so it's going to be a concern, i think, going forward. >> all right. thank you so much for that, julia, and hold that thought. joining us now is our guest

host, michelle, i want to talk to you about greece and get your thoughts. austerity on paper is what we deal with in greece but at the same time we're dealing with a civil crisis in the streets in it terms of implementing that austerity so the futures are up taking this as a positive sign but the greek government still has a lot to deal with, yes is this. >> the deals are 30% foot level and what you see on the ground is very, very painful. but as we've seen with other debt crises, for example, the longer you wait to try to come up with a solution, the bigger the damage is, the more it hurts. this is painful. there's still a long way to go. how do you get back to a pattern of growth, get commit growing, exports and how do you get people back to work?

>> and that's a good point when we talk about the length, it's taken a long time when you compare how quickly and decisively our government acted. i think it's left a lot to be desired. still, i also want to focus on what you said in growth and the future of greece because they're still part of the eurozone. do you worry with the bailout package in place and the reforms that we have going forward that greece is still going to drag on the european economy and still be a factor in the rest of 2012. >> there's a very, very big worry out there by a lot of people that even this is not enough to get greece to where it's going. i don't think that a greek exit has been ruled out but there's a big difference between a messy, nasty exit from the euro and the possibility of something that is controlled, that is voluntary and greece, after all, is a very small part. leaders think that the european project is very, very important. i think there are ways that you

think about europe being part of the euro. >> michele, hi, this is christine. when you say messy, a lot of investors are saying if we get an orderly default from greece that will be all right. we worry about the disorderly default. have the chances receded or we could expect some disorderly default coming from greece? >> i think the chances have receded. comparing this to argentina when you had a very, very messy default is that people have been talking about things in argentina. you can't even talk publicly about the possibility of is a voluntary default or restructuring and here people have been talking about that for a year so i think it's something people saw coming from a long ways ahead. it's been moving slowly, not as quickly as it needs to but in the grand scheme of things moving faster than the debt crisis did. >> thank you so much, michelle. some more insight from you during the rest of the show and

thank you so much for that report from greece as well and still to come on the program here on "worldwide exchange," shares in cable and wireless worldwide soar in london on top of a possible bid for the company. [ male announcer ] the draw of the past is a powerful thing. but we couldn't simply repeat history. we had to create it. introducing the 2013 lexus gs, with leading-edge safety technology, like available blind spot monitor... [ tires screech ] ...night view... and heads-up display. [ engine revving ] the all-new 2013 lexus gs. there's no going back.

good morning and welcome

back. you are watching "worldwide exchange" and it's time for your global markets report. start here in the u.s. and take a look at the picture in terms of futures and how we're shaping up for trade. does look like it's going to be a higher open with the dow higher by nearly 69 points. the nasdaq higher by 18 and the s&p 500 higher by 8 1/2. this was after a tough day of trade on 0 friday where stocks saw their worst losses in 2012 heading into the weekend before that in greece. a lot of nervousness and volatility. that does need to be easing today and does look to be more positive this morning as we head into the open. carol carolin? asian markets were capped a little bit by profit taking because of the nervous neness, spoke about greece, trade is cautious. we had austerity measures being approved. the implementation of those reforms will be key. shanghai market pretty much capped there because we had property counters under pressure. we had wuhu local government

last week coming out with property easing measures. this week they said, sorry, we'll reverse those measures. that is putting pressure over in china. the financials gave a lift to the hang seng. we had comments from wen jiabao who said he was fine-tuning economic policies and that seems to be a sign the markets have taken further easing ahead lifting the financial counters. else with where nikkei 225 is up 0 30i.6%, dropping below the key 9,000 level. we have this particular market shrugging off worse than expected q4 gdp data. people are watching the boj tomorrow and how they would interpret that data and whether that would mean further easing or not. the kospi up 0.6%. thailand weighted index up. new zealand 50 to the down side. the sensex in india flat. carolin, what does your heat map say? >> modestly higher, the stoxx europe 600 up by two thirds of a percent. these gains aren't massive.

they're modest because investors are still cautious. there could be roadblocks in the way until finance ministers actually pass the second bailout package for greece but for now risk on sentiment is clearly taking hold. just inching higher by two thirds of a percent. we're off a session high but still modestly higher, the ftse mib by 0.9%. the cac 40 up. the xetra dax higher by 0.7%. now the banking stocks are really the main drivers of this rally today. let me show you a couple banks here. in milan up by 4% almost. credit suisse up. these banks are moving higher on the back of that greek vote and we're hoping that the psi will be finalize this had week so one worry less for the banking sector.

the banks will take a 70% haircut. now let's just tell you how the euro is trading this morning against the dollar. it is slightly higher on the back of that greek vote. we have the yeuro if we can sho it to you at 1.3257 higher by half of a percent after gains of around 0.3% last week. but, again, all gains that we're going to be seeing in the euro could be cut by more uncertainty about the situation in greece and what we could get out of portugal and spain. now here is the bond picture for you. we are waiting for results from the italian bond auction, auctioning off between 7 billion and 8 billion euros. the yield of the previous auction was just under 3% and we're expecting those yaeldz to fall once again. the ten-year bund price slipping a little bit but the yield 1.965%.

out to karen tso in milan. >> thanks for that, carolin. we have the latest results. we were expecting italy to sell $8 billion worth of euro. it's higher than that, 8.5 billion euros. taking the yield on this, it.3% on the 12-month notes and four weeks ago it was 2.735%. we are seeing a move lower. take a slightly longer term framework and compare the yield back in december 5.95% so just in two months we've seen an improvement on the short term debt to the tune of 370 basis points. a lot of this goes to the ltro that's been out there, increasing the sovereign debt so that has head lessen the strains and certainly in italy today as we're seeing but in terms of

what's coming up next in italy. we have a mort short to medium term picture, three, two, and five year debt being auctioned off. this is all important because italy does have fairly strong financing needs this year, is seeking to tap a debt market to the tune of 450 billion euro worth of debt. this is why the italian prime minister has been talking internationally about restoring italy's credibility, trying to ensure there are enough investors to pick up the debt. so far so good today. we've seen the results, 8.5 billion being auctioned off. ro a big day am to, of course, watching the events in the eurozone. i'll be back tomorrow with the news moving markets in asia. take it away, guys.

all right. and still to come on "worldwide exchange," the business of play. we're going to take a look at what the $22 billion industry has planned to keep the money coming in in 2012.

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shares in cable wireless worldwide have jumped after vodafone confirmed it's considering an offer currently trading higher by around 27.6% and vodafone up by 0.75%. they said there is no certainty an offer will be made but, if so, it will be made in cash. the struggling telecom firm has issued a string of profit warnings since its demerger in march last year. the murdoch media crisis has reared its head again following the arrest of five journalists from the "sun" newspaper on suspicion of bribing police and public officials. rupert murdoch will fly into london on a scheduled visit with calls for him to sell his uk newspaper network as it continues to impact newscorp. there is talk they could face an investigation into the latest allegations. shareholders and mining giant

xstrata is becoming vocal about the merger with glencore. they will champion the $90 billion deal in a road show designed to win over doubtfuls. shareholders are openly opposed to terms of the deal. only 16% needed to block the merger. jackie? and here in the states boeing says that the latest glitch in the dreamliner won't slow production and that the company is still on track to produce ten aircrafts by the end of the year. the vice president of marketing at boeing commercial airplanes told cnbc at the singapore air show boeing has identified the problem with the aircraft shims used to close tiny gabs in the fuselage. noted that the issue would be repaired in a matter of days. the president is scheduled to submit his fiscal budget proposal to congress today. it's intended to chart spending in the u.s. fore the next ten

years. though the budget is often ignored, some highlights outlined by senior administration officials include a proposal of the buffett rule which will implement 30% on households making $1 million or more, it outlines more than $350 billion in cuts including farm subsidies, government works pensions and defense. and let's switch fwers for a moment and talk about toys and playing because it is a serious business. attendees at the new york toy fair will tell you that it's a business worth $22 billion annually in the united states. joining us now to talk more about it is the president of buffalo games. paul, let's talk about the toy industry. to me it seems recession proof. if you have a screaming 2-year-old and you can offer them a board game which is relatively cheap to try to assuage whatever it is that's bothering them, it doesn't seem like the toy industry would be that affected by a down economy. is that what you're seeing? >> that's what we see.

board games are great value. they're entertainment. they're social interactive type of thing where you can really enjoy your family and friends and stuff without spending the kind of money you would if you left the house. anywhere from $7 to $20 you get a lot of income value. >> and let's talk about the toy show this year. it's an important step in terms of outlining the toy strategy, right is this. >> correct. the holiday season just ended. we're well into, what, 2012 holiday will look like so, yes, the show is a big show. it's the biggest trade show we have for the $22 billion toy industry and it's really important to meet our buyers and show them what's new. >> paul, this is carolin in london. obje obviously you can't ignore the huge popularity of social and video games. how has that affected your

busine business? and my second question to you would be, can you really afford to go it alone? can you afford not to tie up with a social media company, with a video games company? >> yeah, we believe so. the two types of products are quite different. social immediamedia games are s, lone activity where a board game is a social activity where you get together with friends and family and have 0 social interaction, laugh together, play together. there's nothing virtual about the fun you are doing. yes, we believe we can without being part of the social media. >> when you talk to the average american consumer who is still playing board games, how optimistic are they about the current economic environment? how willing are they to spend the extra dollar on the new board game when they might as well play last year's board game? >> there is a thing where board games have a lot of tradition but they're looking for the new, innovative board games.

it is important too much new stuff, new content that they are interested in. so they are going to go out, the consumer, it's in their minds. they know they are liking the new stuff that we have. we had last word last year, over a million units and likewise double digit gains in percentages. so the consumers are still buying new products. >> paul, we've within talking about greece, getting the economy growing. it's certainly a question that affects the united states as well. as a business owner of really cool products, i have it to say -- >> thanks. >> what are the kinds of things you would like to see that would help your business grow? what makes you more confident about the economy? >> one of the things we've done, we outsourced our products for many, many years and we focused on insourcing and creating a manufacturing facility in the u.s. it to service our retail partners better. so we are getting closer to our retail partners with just in

time inventory and stuff so that's important to our business models, getting the stuff out the door today and into the retailers' hands. >> yeah, and that is key as we go throughout the rest of the year and the critical holidays and impacting the toy industry and that is a segment of retail so really something important to watch. thank you so much, president of buffalo games to join us today to talk about that. michele will stay with us and we'll get more insight from her. coming up on the show, futures point to a strong open today. that as the vix on friday. will it continue into trade this week?

good morning and welcome to the show. the headlines from around the globe today, u.s. futures indicate a strong open after stocks finished friday with the biggest losses of 2012 and the vix spiked above 20. and athens ablaze. a sweeping austerity package passed taking a crucial step towards avoiding default. but prompting violence on the streets. and japan sees gdp contract more than expected in the fourth

quarter calling into question prime minister noda's push to more than double the sales tax. good morning. nice to have you here with us on "worldwide exchange" this morning. let's take a look at the u.s. faw tours and see how we're poised for trade. it does look like a higher open. the dow higher by 71 points. the nasdaq higher by 18 and the s&p 500 up by nearly nine and, carolyn, this was after a down day on friday, the worse day for stocks in 2012. we did get that passing of the greek austerity package by the greek parliament and so that is lifting sentiment this morning. how does it look in europe? >> that's really what's fueling the gains on the european markets here. the ftse mib higher by around 0.76%. xetra dax 0.4%. the cac 40 up by 0.4%.

because of the greek vote happening around the weekend, also we're hoping that we will get the final ratification on the greek bailout deal this week hopefully on wednesday and that would include the psi with the european and the global banking sector. so it's a bit of a relief reaction today. i would also say that definitely gains are limit ed by the insecurity still hanging over greece and the rest of the periphery. >> absolutely and still a lot to watch out for. meantime, u.s. stocks finished friday with the biggest decline in 2012 and its most volatile day of the trading all year. it soared over 11% to above 20% and that 20%, of course, a critical level. the futures are indicating a positive open amid graes's austerity vote but can the rally in u.s. stocks roll on. with us is michele wucker. i know you can't speak

specifically but we can talk about the economy and whether we think this rally is justified. the cover suggesting that the dow could go to 15%. that is a huge, huge jump and it would have to mean the fundamentals were improving, yes? >> sometimes it's hard to tell if it's the fundamentals or just psychology. my e-mail box has been filling up with more and more bullish e-mails which prompts the contrarians at the same time. there is a sense of confidence in the united states and increasing signs of optimism and i think that's best tied to the progress in europe as well. >> and there's some critical data coming out. we're going to get some inflation numbers, some retail sales and we had that down tick in the employment number as well suggesting things are getting better. what do you want to see to have confidence that, in fact, the recovery is on track as it

should be? >> i'm watching what happens with the response to the latest mortgage relief plan. i think that until we get the housing industry back into shape, you are not going to see construction coming back. you are not going to see consumer confidence coming back. i think there's still a real drag on banks. so that's what i'm going to be watching. >> how 0 strong is the u.s. consumer at this point? we saw unemployment dropping to a three-year low so what do you expect out of tomorrow's retail numbers? >> i think you could really see a surprise going any way. there's a surprise from one day to the next, think one thing and the next the other day. but i would be cautiously optimistic we'll see some good numbers. >> and back to your point on housing because i think you made a fantastic point. such a big piece of the market and a fundamental piece. if we don't see that recovery in

housing then what could happen in 2012? >> i think we face something similar to europe, the longer a problem is left to drag on, the worse it gets. the worse the total pain is and the broader the impact is on other sectors. so getting it under control is crucial here, as crucial to the u.s. as resolving the greece situation is to europe. >> that's a very good point. thank you so much for your insight on that. meantime, i want to bring in ben lichtenste lichtenstein. ben, i'm going to start with you with the same question i posed to michele, that the dow could go to 15,000, what's your take on that? >> reporter: well, i think michelle had some great answers to that and i have to support some of the points she made. i think for one we have to wait to see the retail sales numbers. that's the first step towards getting to the dow 15,000 and obviously up about 13,000.

poised right now in the upper 12,000, 12,800. the down day on friday. little enthusiasm, participation and energy. keep in mind we have been seeing this low energy kind of grind higher on the way up but they've been sustained. we've seen followthrough and conviction associated with this move especially in the s&p up before 1,300. dow 15,000 is one of those infamous sort of levels, those psychological levels. as michelle pointed out, we've seen a down tick in unemployment. that's a psychological thing for the consumer and getting below 9%, in my opinion, has started to free up or sort of loosen up some of that consumer pent-up demand, if you will. without the construction spending, without some of these mortgages that are under water

being resolved, i think we're going to keep this lid, if you will, on some of the energy and follow through to the upside right now. consumer can haonfidence or enthusiasm, if you will. >> okay, and, ben, how much does europe play into it? 2012 is a year we've gone back to focusing on the u.s. fundamentals versus worrying about the headlines out of europe. what we saw on friday was troubling because the trouble in greece created an unprecedented amount of volatility so this week when we're looking at trade, what do you expect in terms of the europe domestic balance? >> i expect to see some continued chop type trade. we'll probably see whiplash type activity. for the most part we've been seeing this theme where value has been migrating to the upside right now and over the last couple of months while we've had concerns and there's been uncertainty associated with the

european situation and the crisis, i think that for the most part investors and traders alike have really felt like there's been this unified kind of concerted effort towards a ba bailout or some sort of resolution, if you will, and whatever it takes. we received statements and words from bernanke, from obama, as well as from european leaders again regarding this unified and collateral type. so the market really picked up on that a couple months ago and that's a lot of the energy and upside activity we see now. whether we can get some followthrough and continuation of that, now that we're seeing some resolution, i think we might -- the market might come off a little bit. there are major levels of support that are in place in the s&ps. you look at this 1,300 level which is 1,296 if you want to break it down that much and that's a big level we just tested that level and saw good strength, good bounce off that. down below we could go back as

low as 1250. i'm a big fan of the two steps forward, one step back. a pullback might be healthy for the market. it really seems like, again, fact touring in the volatility index, for the most part there was a lot of confidence and not a lot of fear heading into the last couple of weeks associated with the greek situation. >> that's exactly right, ben. a lot of great points there, things we'll follow up later on the show. ben will stay with us and michelle as well. carolin, over to you. >> jackie, let me update you on a german auction. selling roughly 3 billion euro of six month goods. the average yield and this is quite interestin0.076%. yes, i know, it's incredibly low but remember that investors were willing to paint negative yields. that was the level of risk aversion so that has eased a little bit. the average yield again at

0.0761%. the bid to cover was 1.5% versus at the previous auction 1.8% so demand dropping off a little bit. now germany is not the only country to auction off paper today. still to come italy pays investors less to borrow money at its debt auction today but demand also dropped. tspark card from capital one... spark cash gives me the most rewards of any small business credit card. it's hard for my crew to keep up with 2% cash back on every purchase, every day. 2% cash back. that's setting the bar pretty high. thanks to spark, owning my own business has never been more rewarding. [ male announcer ] introducing spark the small business credit cards from capital one. get more by choosing unlimited double miles or 2% cash back on every purchase, every day. what's in your wallet? this guy's amazing.

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welcome back. you're watching "worldwide exchange." let's start in japan where gdp has contracted more than expected in the fourth quarter. growth slipped to 0.6%, roughly double the size that economists had forecast. that's due to weak global demand. the unstoppable yen and supply problems from thailand's devastating floods. the contraction could create problems for prime minister noda and his plan to double the sales tax. the drop would add pressure on the boj to ease monetary policy. japan's central bank will announce its policy rate decision tomorrow for watch for that. and the cost of italian one-year debt fell at a 12 billion euro auction this morning. the yields fell to 2.23% from 2.73% in mid-january and the lowest since june of 2011. demand was weaker than at last month's auction with the bid to cover ratio 1.1%. karen tso is in milan to give us

more on that. >> reporter: yes, let's take a little bit more after look at the detail of that euros worth of t-bills. well, that's 50 basis points lower than just four weeks ago to a similar sized auction. if you take a longer time frame over the course of two months, that was 370 basis points lower so we are seeing an improvement in yields with the slight disappointment was lower bid to cover ratio was 1.1 down from 1.5 but we are seeing the yields go in the right direction. some of this you would have to put down to the ecb's ltro launched in december but ahead of the new operation, a three-year cash offer by the ecb later this month. now on friday we did hear from mario monti, the italian prime minist minister, speaking exclusively to my colleague maria bartiromo about the ecb's role. take a listen. >> this move by the ecb was a smart move and it was perfectly

inside the mandate of the ecb. secondly i believe that banks, each bank found a different balancing act between increasing its liquidity, part of itself and going into different assets. this has been a bit different for different countries to refinance the real economy and, to some extent, also holds more and buy more securities. >> let's talk more about the debt and equity with the director. thank you for joining me here. >> thank you. good morning. >> reporter: who is buying this eye titalian debt? >> well, certainly italian banks are now back into action and this is good news because they're very, very important for

making sure that, you know, there's a right connection between government and investors. the ltro has been really, really important for this connection to be restored because effectively that was totally cut off in a very bad period. >> reporter: there's no doubt the ltro has risk appetite. if we look at the individual measures to restore credibility because we know growth here has consistently lagged, with a do you make of the measures by mario monti? >> it was probably to make sure that some certain -- some more confidence was restored in the market as the first step. and, therefore, it's too early to say if the measures would

have a positive effect on economic growth which is obviously the most important thing for this country. certainly for my personal point of view we have a government which is taking action before talking. and that wasn't true before. we saw a lot of announcement and no action. >> reporter: when it comes to the challenges ahead, what more does mario monti need to assure the economy keep on growing? >> this is a big question. probably bigger than you would want. >> reporter: it took 600 years to create, apparently. >> well, i would say as a banker but a entrepreneur, the first thing this country needs to do is to make sure that everybody pays taxes and this is a very tough job because italy does not have a good record in this respect and the government is doing a very good job in this

respect but it will take time. and the second thing is to make sure that a young generation when they have a dream or they have an alternative, they must have the possibility to implement such a dream and i think in the last few years in this country, young generations, they have to go abroad to make sure their dream was given some space. and i hope the government is working in this direction. >> reporter: you are talking to international investors all the time. tell me about the appetite that there is for debt and also for equity in italy. what do investors really want to hear out of the kcountry? >> i've been doing the job of broker for many years and it was to sell italian companies to international investors. and it was different because italian companies had a lot of dproet, and in particular during the period of devaluation of the

lira that was easier to achieve. there's a global environment which is not easy. but there are some interesting companies in italy. everybody is focusing on the banks. from my point of view banks are not the most interesting sector in italy but there are some interesting companies which have been proven to be good at international a levels. i don't have to mention names but everybody knows that there are some international champions in italy and the fact the italian stock exchange right now as a total market cap is less than apple as a single stock. i think that says something about the valuations. >> aft s&p had those down grades of 34 of the 37 italian banks. thank you for joining us on "worldwide exchange." let me send it back to you in the studio, jackie. thank you for that, karen.

italy a big part of the puzzle. emergency workers are battling to extinguish fires as violence erupts in athens. we'll go live to the greek capital up next.

greece has moved a step closer to securing a $130 billion euro bailout from the eu and imf after the parliament approved further measures. julia is in athens. here in europe the markets are staging a relief rally, certainly no cheering on 0 the ground. >> reporter: well, the situation is that we've moved on but there's obviously a number of

factors still of concern. the first being that we have to get the two leaders here, the two remaining lead eers, to sig off on this deal and agree that no matter what happens in the elections they will continue to implement these reforms and an additional vote to address how they're going to implement their reforms so that is another kind of risk on the horizon we need to be aware of. in addition what we have to look at beyond these elections is maybe what the polls are telling us and they're saying they're too far left and the communist party here now contributing over 50% of the votes here which can mean in an election if these polls are right we see a very different co-lags in the future to what we currently have now and that could be a key problem for the implementation of these reforms and this entire bailout process. of course the government has struggled over the last 24 hours and what we're expecting to see is a cabinet reshuffle almost as early as today, in fact, according to some reports. now the locals aren't expect in

any continuation of the violence into this evening if only because it's a monday and people have gone back to work but it's not been anything officially organized as we saw on friday and on sunday. jackie, back to you. >> thank you so much for that. in the united states we are waiting for president obama to submit his fiscal 2013 budget proposal while john williams is going to speak at 9:45 a.m. eastern time. and on the earnings front, some results from diebold. and still with us is ben lick ten steen. ben, a lot coming out this week, not only president obama today and the fed comments potential ly talking about qe3 still on the table. the retail numbers and inflation data as well. what's the main driver out of all of that, do you think, in terms of our markets? >> well, each individual number

has a significant amount of performance. we'll look into the retail sales, look for a robust number to, again, just sort of fuel the fire that we've been seeing in the stock product, the energy to the upside. we need to see the consumer joining in in this. it's not going to be this wealth effect, low interest rates, sustained type activity. we're going to need to see some investor type activity, that long-term investor type activity coming through not just trader type energy to the upside and i think that's what we've been seeing. in addition i don't really expect any major market activity associated with that. for the most part i think it's out on the table that the fed has this low interest rate environment they're focused on right now to create this wealth effect right now. as we're seeing it's working. we've been talking the possibility of 15,000 in the near future. the bonds for the most part have been sideways. this 140 to 145 handle range. we have to focus on the dollar

and we have to focus on gold. gold has been in this 1500, 1,900 range. right now 1,700. that will give us an indicator when the markets will shift. look at the euro currency, again, kind of hanging around this 1.32 level of the yen still hanging in the 1.30 level. so we've seen some market activity across the board. it's mostly the stock indices futures products that have had sustained type movement. yeah, those are really great thoughts, ben, and i just want to get a final thought from michelle. in terms of the greek headlines, the eurozone crisis and the mixture of what we've seen domestically, talk iing about growth driving things forward and that's your take on it, right? you have to see the fundamental growth before we can go higher. >> absolutely and it's a very similar question in europe and in the united states when you've got this government borrowing in order to support government

borrowing you really have to get out of this vicious circle. you have to see some real growth on the ground. if i had the answer to that question -- >> of course. >> it would be fantastic. but i think really looking at the real economy what are we doing to invest in the real economy if there is government spending it should be done in such a way it's generating more spending so let's look at the government as an investor instead of just a spender that throws money at problems. >> yeah. that's a great way to look at it. thank you for joining us on the program with your insight and to ben lichtenstein as well. the futures and how we're poised for trade. a high er open, 74 points on th dow and 20 points on the nasdaq. s&p 500 higher by nine. that is it for today's show. stay tuned for "squawk box" next. i'm jackie deangelis in the united states. >> i'm carolin schober in europe. thank you for watching wo "worldwide exchange."

good morning. a deal in greece finally but parliament's work is being met by violent protests in the streets of athens. signed, sealed, and about to be delivered. president obama sending his 2013 budget to congress and a new target the s.e.c. reportedly now looking at private equity firms. monday, february 13th, 2012. "squawk box" begins right now. ♪ we could have had it all ♪ you had my heart inside of your hand ♪ good monday morning. welcome to "squawk box" on cnbc. i'm andrew ross sorkin. joe kernen is back in the house. good morning to you, joe, after a big week out at pebble beach.