welcome to to the program. the headlines from around the globe. france and britain's aaa ratings under threat. they're not confident the countries can handle the debt burden as it cuts for italy and portugal. the bank of japan says it's hopeful growth will recover but that down side risks remain. >> and in the united states investors await key economic readings on retail sales, import prices and business inventories.

hello. you're watching cnbc's where wore. i'm ross westgate. chloe is in today for christine. plenty to get through. we have data aplenty. moody's has adjusted the credit ratings of nine european sovereigns. they cut its raiseintings. for the first time the uk is under threat along with france and austria. they're on negleative outlook fm stable. the ratings agency says the changes come as a result of uncertainty over the euro area's ability to reform. the pound is weaker against the dollar on the back of that. andrew sevntence is with us, former bank of england monetary policy committee member and senior economic adviser. andrew, thanks very much, indeed, for joining us. let's pick up with the uk rat g rating. a negative watch for the uk. george osborne has come out and said we can't waiver from

dealing with debt. will it change the view of the uk as a safe haven or not? >> i don't think it should in the sense the uk among the western economies has quite a robust deficit reduction plan and they're sticking to 0 it. i think that's the right thing for george osborne to be doing in the circumstances. i think we need to be a bit careful about oversensationalizing these statements from the ratings agencies. after all, we had the other one from standard & poor's i think the last time i was on the program and the markets, to some extent, shrugged that off and it told them something they knew already and that's probably the situation. >> the ratings agencies are catching up with how investors already feel potentially. do you think that's more the case? >> i think what also they're indicating this is a very difficult for 0 public finances. governments can't rely on particularly strong growth to get public finances back into shape and, therefore, have to do a lot of hard work themselves on

public spending and taxes. >> they talk about weaker growth and, of course, exposure to the eurozone. we can't do anything about exposure to the eurozone. that's out of the government's hands but what could they do on the growth side? >> well, i think the missing ingredient on the growth side is the supply side strategy. we've had a lot of demands. we have the bank of england pumping in still more money with quantitative easing. the government has started to outline a supply side strategy where they're deregulating the business climate, reforming the tax system and i think we need to go further and faster on that agenda. >> and just -- i mean, as far as the down grades firstly in spain, we'd down grades for them as well. is this an environment and what's your own view where we stand in terms of resolution for the eurozone debt crisis? are we still wondering whether greece -- at the end of the day we think greece will get the

money. >> resolution of the euro crisis. we were talking in those terms late last year. i think we were expecting there to come a big moment where things would resolve themselves one way or the other. this is a long-term gain, a long-term issue. the problem won't be resolved quickly. i'm hopeful there will be a deal are for the greeks and that won't disrupt the euro area and if that is agreed then i think it's a question of the government and policymakers sticking to the plans they've already outlined. clou chloe? >> andrew, alsos just updating you on what happened out of japan, unveiling a surprise decision to ease monetary policy boosting markets and the japanese yen. the bank of japan says it will wrap up its program by $130 billion. now that after japan's fourth quarter growth came in lower than expected triggering calls for the central bank to act and take a look at how the jgb yield

on the longer end came down in reaction to this move because the asset purchases will go towards buying j dw bs at the longer end of the curve and the bank deciding to adopt a consumer inflation target of 1% for the near term. boj chief says japan's economy is heading toward a moderate recovery but the outlook remains unpredictable. he also dismissed suggestions that the bank's decision to ease was in response to government or rather political pressure. andrew -- what do you think? do you think the yields would have gone up and the boj needed to ease further from its already ultra loose monetary policy? >> well, i think the main significance of this is it's part of a continuing global stimulus in terms of monetary easing. we've seen the bank of england continued its easing program. the european central bank is not doing quantitative easing str t

strictly speaking but is providing a lot of support for the banking system and japan is now joining in and we're also seeing a relaxation of policy in other asian economies so i think the combined affect of this is to provide further stimulus to the global economy and i think that's going to lead to a pickup in growth in the global economy as we go through this year. >> do you think what the boj is doing is going to have its intended affect to beat deflation and ultimately get that 1% inflation rate? >> i think we're very uncertain about these type of quantitative easing policies. it'll probably send a positive signal to the financial markets in terms of confidence and perhaps that will help in terms of some modest stimulus to growth but i think we have to face the fact that the economies like japan, the western economies, are in a sort of more longer term slow growth phase and policymakers also don't need

to adjust to that situation as well. >> yeah, indeed. and take a look at how the dollar/yen pair pulled back. we haven't seen it at that level for quite some time. we'll talk more. andrew, delightful to have you as our guest host for the full hour. we have pretty much a split picture. the key concern is about the moody's announcement of number of downgrades and also the warning about the uk and prance, austria being stripped of their aaa composite rating. the shanghai composite pulls lower one-third of a percent. the financials are trading to the down side and, get this, in shanghai today there was a pricing for key ipo that is coming to the market. china communications, construction, the biggest build er of ports in china. and they are trying to raise about a billion or $2 billion,

one of more than 500 companies trying to tap the markets for money. so ultimately you can understand why this market continues to be under pressure. the hang seng did manage to reverse gear, flipped into positive territory. rallies outpaced weaker rivals. there seems to be some signs the mortgage market is stabilizing. the nikkei certainly reversed gear, ended up 0.6% in reaction to the b 0 oj's easing move and some interesting commentary coming up just a short time ago that long-term yields would actually go up if the boj's independence was undermined. the kospi sinking south. the sensex sitting up with a small gain and take a look at australia. resources a big trigger. down about a percent and, ross, let's take a look at your heat map in europe. >> about five to four decliners outpacing decliners.

yesterday some gains for european stocks, up 0.9% for the ftse. 0.7 for the dax, the cac up 0.3%. right now down a quarter. pretty flat in germany. the cac down. the ftse mib up 0.4%. some auctions coming out. i'll look at those in just a second. first of all, euro dollar weaker down to 1.3154. just above that this morning as we wait for an agreement over greece. eu euro/yen is weak er. i want to show you yen/dollar. euro/yen, excuse me. so even weak on the yen there. and the pound as well 1.5707. as far as the bond markets are concerned, bunds back firmly below 2% at 1.92%. italy raising up to 6 billion

euro's worth of btps. the 2014 will take a chunk of that, 4 billion. the yields have come down steadily across that auction so we'll keep our eyes on 20914 issue. it was 7.8%, the issue 4.8%. we should be looking 3.6%. this is where we currently stand on the two year in italy. 3% on the cash market for the auction yield will be important. what is worth noting ten-year btp down to 5.9%. out of the ukgilt today not a big reaction to the moody's announcement. yields at the moment 2.13%. they are off a little bit. we have key inflation data coming out in about 20 minutes. expect that to come down to 3.6% ahead of inflation report this week as well which gives us a key indicator whether we get more qe or not. so that's where we stand with the markets. also coming up in today's program, "sports illustrated" is unveiling its 2012 swimsuit

issue cover star. we'll find out how that measures up. and apple has crossed over the key $5 a share level, buys the tech giant a buy or a sell. and it's the most romantic day of the year for some but for those of you not coupled up we'll look at the business of online dating. that's all coming up a little bit later. also, we've got the singapore air show. >> reporter: ross, let me say this, the undisputed glamour of this event are planes like this private jet, the citation xls plus. but outside all the glitz and glamour, the real hard scrabble debate is focused on the eu's emissions trading scheme. why all the fuss? join us after the break to find out.

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welcome back. boeing, airbus, ge, you name it, they are all here at the air base and we have been covering the event all day long. what do you sense is the mad

over at this year's event because we hear that there are a lot of deals being signed, historic deals, in fact, between boeing and lion air. do you have the sense asia is picking up the demand that europe might be putting off? >> reporter: that's right, chloe. there's caution but there's confidence is how i sum it up. first of all, i was really thinking about you because if you look over my shoulder here, the real glamour of this event, the real celebrities and the stars are the private jets like this baby over here, the cessna citation xls plus. but if you get away from all the glitz it and glamour, the real tough debate in the industry is focused around the very contentious european union's emissions trading scheme, almost unanimous opposition in the industry to this program. there's a he very real fear that is going to drain profitability in 2012. tyler, the director general, was talking about this and they could have a 30% impact on the

bottom line for the global aviation industry. dave hess, the president of pratt and whitney, told me earlier the industry doesn't need another cost. this is what he had to say. >> a third to half of the airline's operating cost is fuel. they have a tremendous financial incentive already to try to operate more fuel efficient aircraft. aircraft with lower emissions. so compounding it with another financial incentive in the form of carbon credit trading for my perspective seems unnecessary. >> reporter: so a lot of caution. a lot of pessimism because of the ets but a lot of confidence as well because what we are seeing is the development of china's own 0 domestic aircraft manufacturing industry. you saw all this today, china's dominant aircraft manufacturer, said it will sell 20 c-919 aircraft to boc aviation. the long term goal, remember, is to break the duopoly boeing and airbus hold in china.

the president earlier today did play down the xcompetitive thret and said that all three manufacturers could collaborate in future ventures. >> translator: china has a very open market. they will not post a threat to boeing or airbus over a long period of time since we only have two time of aircraft so far, c be-919. i think comac can actually collaborate with major makers like boeing and airbus in some noncompetitive areas. >> reporter: chloe, let me end by saying there's not just a big foe can cuss on the commercial side of the business but military aviation as well. i was told earlier that despite the u.s. defense cuts, supply engines for the next generation f-134, 135 fighter jet for the u.s. military could be a business that earns $90 billion over the next 30 to 40 years of

the program, chloe. back to you. >> i wouldn't be surprised given that already reports have suggested that china may, in fact, double its defense budget as well. aside from the military aspect of aviation, i'm just wondering how much of chinese millionaires, for instance, would be looking into buying chic commercial jet, a private jet that you are standing in front of. is that something is that's also picking up bonds? >> reporter: that's a huge story, chloe. i'm glad you mentioned that. one of the real cloud pullers of the singapore air show has been jackie chan's decked out in the red and gold livery of the chinese flag and dragons and everything. we haven't seen jackie yet, but if he does pull a few stunts, we'll let you know. this is a growing market out here in asia pacific and in emerging markets broadly. remember, business jets, corporate jets, private jets, whatever you want to call them

are real dirty words at the height of the recession. they were synonymous with the worst excesses of corporate greed but it's a growing market out here in asia, especially in china. in fact, we're hearing some of the big financial institutions are now developing aircraft leasing arms to tray to get into this very luke crative market a is a way of diversifying their own income streams. chloe, back to you on that moat. >> sri, i'm going to pick it up. i'm sitting here with andrew seven is tense who used to work for with boa. you looked at emissions trading. you don't think it should be -- you think there should just be a european scheme. >> i think the issue about emissionses trading is a good idea is in danger. i think europe should have started off just imposing the emissions trading scheme on flights inside europe where they obvious obviously clearly have jurisdiction and that would have avoided disputes with the u.s. and china which is now happening. secondly, i don't think when the analysis was done on the eu emissions trading scheme people envisioned we would be at $100 a

barrel of oil and clearly that changes the economics because airlines have a very big incentive to be fuel efficient in this environment. >> it's true. that is at the point some of your guys are saying the price of oil is making us want to be as efficient as possible anyway. >> reporter: yes. that's what i'm hearing from a lot of airline executives that they are already making their own inroads into reducing their own carbon emissions and given the fact that rising -- that oil prices continue to rise, it's all very sticky in the opinion of the cathay pacific ceo. this is still a big predicament for the airline industry, rising costs. they simply don't want another cost to deal with. having said that, that does seem to be some room for reconciliation and everyone has just to cool off, sit down around the table.

it's going to be a long discussion. it's going to be a hard discussion but we need to have a narrative over this now. clearly both sides are at an impasse and it will cost the industry. they don't seem to be opposed to it in principle. it's the extra territoriality of what the eu is doing. this isn't just pour eu airlines. it's outside the region. this is what has the chinese especially up in arms. back to you in the studio. >> that's the point you're making, andrew. exactly. sri, thanks for that. good stuff. that's down on the tarmac in singapore. some comments out. the european council -- the eu has concerns advances have been matched by human rights progress. they called on all members of the u.n. security council to act on syria.

china blocked security council resolution on syria. meanwhile, of course, m.a.n. has warned profits may drop after beating forecasts in the fourth quarter. patricia is in frankfurt with more on that. hi, patricia. >> reporter: hi there, ross. despite this caution we have the stock trading up 1.4%, the second best performer so it seems that investors are still quite confident about the company even though the actual numbers were more or less in line with expectations and they're realistic about their forecast as well saying that the sales in the commercial vehicle business for 2012 should fall by 5% as seen also pressure on the profitability and sales due to emission targets, brazil, for example. they're giving an outlook. the outlook is not very great in some respects. however they're putting the reason behind exactly that. all in all you heard from the ceo. he said that they actually do not feel an economic downturn in

their order intake and it was more or less also in line with expectations. orders for january the ceo so far said are stable and at a high level and more or less comparable to 2011. of course later on during the show here on "worldwide exchange" we have the ceo joining us for a first on cnbc at 11:34 ct. i think it's interesting what the company had to report in terms of the entire development of the business. the development seems to be good and if you look at the actual sector, it is very much indicating the cycle we are in in an economic situation. on the other hand some analysts say the dividends and the outlook were disappointed. dividends at two years were below expectations. we were expecting two euros. >> i'm sure it's coincidence but i suppose it's a good day for lo

lo loreal to post. stephane has more details. >> reporter: absolutely. in europe it's not very good if you look at the fourth quarter for l'oreal. down 0.6% and also the margins last year we are really under pressure in europe. 20.9% for the full year versus 21.6% in 2010. that being said loreal is driven in market and brazil which more than upsets the weaker performance in europe for the luster in terms of outlook l'oreal will have revenue and profits in 2012 and the company is confident the market will grow around 4% this year. that's for one story. and thus far not the reason why the stock is reacting positively.

there is probably some speculation on l' oreal after the richest woman in france and the main shareholder of l' oreal has decided to step down from the board of the company. liliane bettencourt was place rd not by her daughter but grandson. he is only 25 years old 0. has been studying economics in france and in the united states and he will have to look after the huge stake they have in l'oreal. they will not buy more shares and nestle is not to buy more shares. they are the second largest with 29.4%, if i'm correct. it was signed in 2004 but still it looks like there is some speculation on the market.

she's worth it, cloery. >> indeed. thank you so much for that. the update from paris. and still lots more coming up on "worldwide exchange." can china be europe's shining knight in armor? we will find out what is on the agenda as leaders from china and the eu meet in beijing. plus, vat's dropped out 0 of the equation. what impact has that had on the annual rate of inflation in the uk. we'll find out with figures right after this.

this is wo"worldwide exchange." the headlines from around the globe. the uk for the first time as moody's warns it's not confident the countries can handle the debt burdens. this as it cut ratings as well for spain, italy and portugal. gentlemjapan's central bank policy surprising markets. the doj says it is hopeful growth will recover but the down side risks remain. investors await key economic readings on retail sales import prices and business inventories. we're going to get the latest rate of inflation out of the uk in a few moments. ahead of that stocks today

fairly flat. gilts have been concentrating on this number and the negative outlook put on in terms of moody's, the first time the uk ratings come under threat they put france on negative watch but of course france has been downgraded by s&p. we have the number out. now january cpi down 0.5% on the month. the annual rate as expected, the consensus of the market 3.6%. the lowest since november 2010. rpi dropped 0.6% on the month. that brought it down to 3.9%. that is weaker than forecast 4.1 rpi, an old measure we used to focus on so much. the annual rate of that 4% is forecast at 4.2%. so the biggest contributors of cpi were as we ekts inspected falling out. we had a hike last year. no hike this year so the annual impact falls out.

petro, restaurants, and tobacco. stow that's pretty much as expected. sterling/dollar steady. 1.5726. after the moody's announcement, we have rallied since then. andrew is still with us, former member of the bank of england. what do you make of that figure, andrew? >> i think it's a sign much of the times when inflation falls below 4% it seems a good thing. obviously i welcome the fact inflation is falling back but it has been at a sustained high level now since about the mid-2000s running botch the inflation target. so we've yet to see a decisive move above the target and the bank was premature in additional quantitative easing before they got reassurance that inflation was going to fall decisively below the target. >> yeah. this falls on the ppi as well. is it falling as fast as their

forecasts suggest it was in november inflation report? >> in my view, i don't think we're heading for a sustained period of below target inflation. i think if we carry on in this sort of direction, inflation will come down to about 2.5% to 3%. but that will be part of a prolonged period of above target inflation where it's peaked at over 5% twice and has only been below target since the mid-2000s to two relatively brief periods, one of which was created by a cut in vat so there is a persistent tendency of inflation in the uk to run above the target and i'm not sure the monetary policy committee has come to grips yet. >> were voting for rate hikes, those who were voting for rate hikes. we would like more qe. what we don't need is a different type of qe. actually what the problem is we need to deal with a lot of the

mortgage banks and he'd like to see a bad bank set up and the bank of england buying mortgage backed securities. have we got the wrong type of qe or we shouldn't have qe at all? >> no, i don't think that's necessarily the issue. i think the sorts of proposals they were putting forward i think we've had a lot of proposals of that sort to try to sort out the financial system. where i'd like to see the government go is to recognize that the financial system will take a relatively long healing process and to let that happen and other measures, other areas of government regulation where they can help create a better climate for business, areas of genuine tax reform that will stimulate growth in the uk. those are what economists with would call supply side measures and the chancellor has a good opportunity to really push forward on that in his forthcoming budget. >> i want to bring you in on one point here.

at what point does the bank of england own too much of the gilt market? >> that's a very interesting question. the markets are quite concerned about the effectiveness of qe. i think on one side you've got the gilt market which has clearly been benefiting from the flight quality aspects in the uk, whatever moody's did say resilient economy but we still have our own fiscal sovereignty. that's one of the reasons gilts have been doing well next to europe. but at some point my suspicion is that qe no longer functions because shock and awe policies run out of shock at some stage, so i really do think that the fathom proposals moving it into more defined method may be b better. >> do we have a credit problem, andrew, in this country? do people who want credit, smaller companies, are they getting it or not?

>> it at this point in the pscye we always have a situation where small and medium sized companies who would like to access credit will find it difficult. and that's being intensified by the cautiousness of the banks. but i think my point would be we've already seen quite a lot of policy initiatives to address the problem and there's a broader problem actually in the corporate sector. the corporate sector is also sitting on quite a lot of cash, and the reason that cash is not being released in terms of investment is lack of confidence. i think one of the big issues in the western economies in general including the uk is the confidence in policymaking frame works we had was eroded by the financial crisis, and i think policymakers have got some work to do to rebuild confidence particular particularly in the corporate sector, in the with business sector, in the measures that they're taking. >> it's difficult when you are getting double speak all the time from policymakers. they say we want banks to lend and on the other hand we want banks to be safer. you don't know, do you?

>> the financial system has a long period of restructuring. they just have to face up to that and then we have to get on with other measures we can take to help the economy. >> there's another aspect here and that's the way the banks behave. banks are so overregulated today that they are scared to do things. so let's take the uk mortgage market. it's been cooled down by itself, by the banks being unwilling to lend, by the banks deliberately putting down valuations. >> how fast can you get to the end game. more to come from you. we have those auction results coming out as well. chloe? yeah, and a lot coming up. also, ross, china and europe's top brass are gathering for a key summit in beijing as well. the talks are likely to focus on europe's debt crisis on the chinese government. plans to help resolve europe's troubles and tracey chang has been looking into this. what do you have for us? that's right, chloe. while the european council program van rompuy is on his way

to beijing for the 14th summit with chinese premier wen jiabao, the european debt crisis to dominate their meetings as officials try to gather more financial support from beijing. the leaders are also expected to touch on topics such as syria, iran, and the eu tax on chinese airlines. the two european officials will also meet with president jintao tomorrow. the summit came at a very interesting time. just yesterday the head of china's 4dz 10 billion sovereign wealth fund cic struck out at angela merkel's call for china to buy european sovereign debt. he says such investments were, quote, difficult for long-term investors. he also said if china were to invest more funds into europe, they will be in the form of industrial and other real assets definitely not bunds. and of course china's official shanghai securities news reported today that cic had

gotten a very big post lunar new year gift from the pboc. it has received a fresh $50 billion capital injection from the central bank. i'll leave it there. back to you, chloe. >> tracey just highlighting a couple of points. let's carry on this discussion with the managing director at ihs. it's not a lack of money. what i thought summed up the clear thinking of beijing's top brass is a comment of pboc adviser and he says we may be poor, ultimately meaning they're an emerging economy, but we're not stupid. even if the coffers are bigger for cic it doesn't look like any of that is going to head into any of the you'european banks o even financial assets. be it bonds. >> not much. we think that there will be some commitment to bond investment at the edges in europe. we don't think there will be a major commitment to bail out europe by the chinese. after the investment of morgan

stanley a few years ago, there was so much blow back from that and all the say wen-jo, the government is really careful not to deploy buckets of money which they don't really have in europe just kind of arp trarl. >> what is the best outcome from the european perspective since it is a real difficult political hard sell for the domestic market back home for the chinese. >> well, the best outcome is for the chinese to invest in infrastructure and to support what some of these prif it at thisization privatizations that may have to happen in europe. >> given what's happening in greece, whatever the assets are, whether we're talking about airports, energy assets, they're going to go at fire sale prices and this could become a huge political hot button issue. so do you -- do you see a lot of

tricky nerves happening? >> well, i think it depends on how the european structures those asset acquisitions. will they buy in over time or will it be one single transaction or some other? they don't want things sold at fire sale prices. if they can get a better valuation, even if the funds come in over time or however they structure it, there's got to be some other way they can make these acquisitions. >> ross? >> just got the spanish t-bill auction results. they've sold 2.9 billion euros at the 12 month. just over 3 billion last time. bid to cover 2.3 versus 3.5 the last time around. so slightly weaker auction in that sense. spain has sold 18-month bills 1.87 so more has gone into the 18 than the 12 month at bid to cover 2.9 versus 3.2 at the previous auction. the good thing about spain they've raised, what, 30% of their funding costs for the year

so well ahead of the curve. will money continue to be focused on the shorter end of these auctions because that's where if you're going to get rto money that's where it's going to go. >> i think that's one factor we will see the confidence in the market because of the upcoming second three-year l it tro at the end of the month. spain's auction today perfectly adequate. but i think there's an element of catch-up going on in the market. the first people who were the early movers into this rally at the beginning of december when it was first announced and then through the last six weeks have all done very well. as a result we've seen funds outperforming. the guys who didn't buy the story are now the ones who are piling in, and i think they're doing it quite cautiously so i think we might see european curve steepen a little bit more as people continue to look at the short end rather than take the risks at the long end. >> spanish banks borrowed $161 billion from the ecb.

italian banks borrowed $200 billion from the ecb in december. it was quite clear the ecb is now the main provider of funds to eurozone banks, aren't they, andrew? and that's actually -- that's a good thing and also the massive problem. >> but i think we may be underestimating the significance of this ecb action. they are providing three-year money into the financial markets, into the banking system in quite significant volumes, and i think that is helping to ease the pressures in the euro area and we've seen evidence of that as we've gone through this year. so, yes, the ecb action, i think, in the last few months has been quite significant. >> the issue is, of course, there is no functioning, is there? >> it's interesting you say that because by providing the three-year, i'll agree that the three year ltros don't solve much but they have created some confidence. it's not just banks using the three-year ltros to invest in

short dated sovereign paper or even to buy other banks. it's created the confidence to allow big funds to go back and invest pension money and whatever, to go back into the market. and i think it's very interesting that we are now seeing the beginning of a reopening of the european senior debt markets. we have been seeing italian banks even being able to come to the market, even spanish banks come. now i think that is very, very vulnerable to either another shock or simply a realization that this isn't all fixed and that's when we start to see real problems but in that case the three-year ltros will continue to provide this lending of last resort that's going to keep the european banks solvent this year. >> we have this italian -- the 2 2014 is probably coming up later, what is the demand for italian debt like? who is buying it?

>> well, italian banks, for a start. the italian banks have been very active but there have been a number of players that we did see come in because there are a number of different -- it's conflicting views that make a market, of course, but i think a lot of people looked at italy in december at the 7% yields and said, you know what, italy is saveable. this three-year ltro will create a buy so they jumped in and they've seen the market rally, rally very strongly. people are still playing catch-up and i think they're doing it into italy rather than spain. i think spain's housing bubble is the big issue there. >> bill is making an interesting point. the introduction of ltros and we have more lined up later this month. seems to be tiding over the situation whenever we have european bond auctions but the final metals don't seem to be any different now. in fact we have comments out from wen jiabao now saying he supports strengthening fiscal

can discipline in europe. ultimately do you see the debt markets in europe? a lot of these countries being able to come back to the market and get inhave i tags ts, in fact, get interest from the likes of china anytime soon, let's say next year. >> it's a tough road. i think the conditionality is there that they have to get their house in order and i think it's at this point more of an it than a when and so when the chinese decide to put money back in, i don't think it will be in the near term. i think they may save face, like i said, at the edges to do some small activity, but i don't think they'll go in in any big way at this point in time. >> yeah. seems to be the case at least judging from the drumbeat of comments we continue to get ahead of that big summit tomorrow. thank you so much. we appreciate you taking the time with us, tony nash talking to us on -- just ahead of the european and chinese summit. our many thanks to bill as well, bill blaine. appreciate you coming in to talk

to us. all right. let's take a quick shifting of gears and let's move over to japan where the central bank there surprised by easing monetary policy further by boosting tokyo equities today. let's find out more from yukako ono. >> reporter: hi, chloe. the bank of japan's decision to expand its asset buying program by $130 billion was the central bank's first monetary easing since last october. government officials and diet members had been demanding for the central bank to take more action as squa pan's gdp growth pulled back more than expected in the fourth quarter. shiraka with wa expressed concerns they were pushed by such, quote, political pressure. he said that monetary support is essential for the country to end deflation. boj also clarified its policy goal by setting a price stability goal. for the meantime, the target

will be a 1% growth in consumer priced index. he said this shows the commitment to overcome inflation and said that it will keep conducting, quote, strong monetary easing until the goal is achieved. the central bank is expected to keep its near zero interest rates unchanged for a while. markets welcomed the sevcentral bank's decision, the nikkei 225 shot up to close at a six-month high. that's all from the nikkei business report. back to you, chloe. >> thank you so much for that. appreciate it. ross? >> thanks for that. we'll take a short break. still to come, more auction results to come in europe at the top of the hour. there's also greek gdp and the latest economic sentiment numbers out of germany with the zew and are you feeling the l e love? we'll talk valentine's day, the day that "sports illustrated" magazine has announced who will grace its cover this year as well. we'll leave you for the moment with the news that kate upton, the model who will grace this year's edition.

hello there. welcome to "worldwide exchange." southeast asia's largest property developer has posted a 20% drop in fourth quarter net

profit but the company remains upbeat about its investments in china. our very own christine tan spoke with president and ceo young in a first on cnbc interview about the company's challenges ahead. >> affects one of the results this year simply because last year a lot of backup profit. so i would say probably 50% depending on which country. in countries like singapore where in the past we registered profit, that's a big amount. in china it's not so bad. >> give us guidance for 2012. what do you see this year? >> someone said what is forec t

forecast, i'm not so pessimistic about that. i think china, to me, the market will come back again. i'm not necessarily pessimistic. our shopping malls are doing very well. sales in china and some of the rest of the region 30%. so our shopping mall would be doing very well which means our property is much, much more. our affordable housing, what we call value housing, will be launched so there will be another sector for our being out in china. >> when you say you expect china to launch more property easing measures, what sort of time frame are you looking at and in what way? >> i think control on credit which means that more will be able too much assessed the

credit. in fact, one city has moves on foreign buyers and the rules about deposits. so i think -- >> are you talking about the local government of wuhu is this. >> yes. >> but they pulled back. >> they pulled back again because i think it's too sudden but you can see the trend. the trend is that talking to officials, the local government has to see some relaxation. >> all right. well, that's it. capitalis and shares pretty much flat today in singapore but still underperformed the market. the sti was up just under half a percent. catch the full intervau with the ceo of capitaland on managing asia this weekend. ross? >> you want to watch that. let's just recap as well bank of japan boosting asset purchase gain today. they also announced an inflation target. andrew, the final thought from you.

the federal reserve is leaning towards that. here in the uk we've had an inflation target for a long time we've sort of written another letter today to explain why we haven't met it so is inflation targeting back or is it in fashion or not in fashion? >> i think it's interesting we had this shift in the u.s. and japan because there was some criticism of inflation targets in relation saying it somehow didn't send the right signals but i think the issue is more complex than that. i think the thing is if your inflation target can't be just a fair weather friend that you meet when it seems to be convenient and i think what we've seen in the uk is while we clearly have an inflation target framework, we've seen to be operating on one side of it, on the upside, for a prolonged period of time. and it relies heavily on forecasts and the bank's forecast will see some more later this week, their inflation forecast. they have tended to be

excessively optimistic. so i think what you have to do with inflation target is to make sure that you treat it symmet c symmetrically and don't stand to one side of the inflation target or another. >> andrew, thank you for joining us. former bank of england monetary policy committee member and now senior economic adviser at pwc. and a good point to bring in jackie for the next hour from the u.s. "worldwide exchange." happy valentine's day. >> to you, ross, and chloe as well is. i'm not sure how you celebrate valentine's day across the pond over there, but here in the states it obviously is a very big holiday and so i have some valentine's for my co-anchors today. i'm going to start with ross and i'm going to send this in the mail tonight in a very big envelope. the card is a valentine poem for my love. i hope this doesn't make you blush. roses are red, violets are blue, my love for you, ross, is big --

and this card is, too. happy valentine's day. so this will be coming across and you can put that on your desk. maybe not big enough. >> i wore the red tie. >> and i did not forget chloe either. i have something special for you because you are one of my favorites as well. this is a little dancing puppy. ♪ baby, baby >> oh, it sings. adorable. ♪ baby, baby >> a little justin bieber in the morning didn't hurt anybody. >> i'm not sure i'm in that generation but i'll take it. why not? >> so we'll turn him off for now. this will be coming for you in the mail. >> you always do that, chloe. >> thank you very much. >> you guys are welcome and it's a pleasure to do the show with you guys every morning. we have so much fun here at this early hour, of course. still to come on the show we've got a bunch of freaking data of course that we're going to review with ross. the german zew data and stay with us. we'll get that all live and of

course we're keeping an eye on the rest of the auctions out of europe this morning, also. and love, it is in the air for apple stock as well. we'll look at apple at $500 and whether it really can continue to go up from here. and as always, keep your e-mails and tweets coming in.

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welcome to the program. the headlines from around the globe, france and britain's aaa rating under threat. they have cut the ratings for spain, italy and portugal. spain hit its targets in its latest bond auctions hitting the top of its intended range for 12 and 18 month it t-bills with lower yields. >> and japan eases policy surprising markets the boj says it is hopeful it will recover but the down side risk remains. investors await key economic ratings on business inventories.

okay. the latest on the zew forecast this morning. the euro has just risen against the dollar after that zew survey. and the current conditions index 40.3. it was 28.4 in january. the poll was 30. the economic sentiment index 5.4 so it jumped up the poll was minus 12. zew saying the indicated rise showed economic growth that isn't likely to last. german gdp had contracted in the fourth quarter. but since then, of course, continuing conditions improve for government bond markets within the eurozone as well. we have another italian auction coming up this morning. we'll see how yields go on that. we expect them to fall particularly for the 2014. the zew says positive data has fostered hopes for a more stable

business climate. the zew highest value since april. a session high above 1 .32. down to 1.3154 after those moody's ratings cuts in six eurozone nations and the credit watch negative for austria, france, and the uk. for the first time as well. let's just get more on that. moody's is saying nine european sovereigns. stan greenhouse is with us this morning. the interesting thing about this is for the first time it's the uk is being put on negative watch. s&p as we know has downgraded france. negative watch for them for moody's doesn't make a lot of difference. do you think that changes the nature of the game? the uk has been a safe haven. >> it clearly does change the nature of the game. david cameron obviously isn't doing as much as he thinks is

necessary to get out in front of this but it also sort of reminds us all that there really are no good solutions to the problems in which certainly developed economies find themselves. i personally agree with much of what david cameron is doing but with respect to what moody's had to say this is the reality in which we find ourselves in the global economy right now and while certainly the uk, you would hope, is better in the five to ten-year time frame, let's say, the one to three-year time frame as we're seeing is going to be challenged. >> we have the eurozone meeting to approve the package set forth by greece. a lot of austerity measures on the table. they want to secure those funds for a bailout to have a systemic default but it still would be a default nonetheless. fwrooes is still in a lot of trouble. when you look it at the eurozone as a whole, what are you really worried about now? are you worried about greece? it is a small piece of it. or are you worried about the bigger nations?

>> it is completely and totally irrelevant, no one would care, it would be the next sovereign to default. they would have a rate above 07s and we would go on with our day and never notice it would happen. it's happening within the context. the only reason this matters is the contagion effect and by extension to ireland. they suffered and are suffering from different problems that are greece and portugal so there's a lot to worry about but in terms of a bond default in italy or spain, this was always a more farfetched idea than the other countries. >> yeah, so, dan, if you think that notion is farfetched, what about the fact that a lot of banks and countries continue to get downgraded and while we continue to tied over problems because of cheap credit lying

around, has your strategy changed now as opposed to the height of the financial crisis in 2008? >> oh, well sure. our strategy and outlook has changed the last couple of days, the last couple of weeks. i think when you listen to what wall street strategistses and economists have had to say the last couple of months from my v vantage point really the most fundamental sort of missed opportunity was to switch from jean-claude it trichet to mario draghi. as we go through time we will look back at that moment as an underappreciated adjustment to the way the economy was shaping up. personally i think trichet will go down as one of the worst central bankers of all time but at the same time i could be completely and totally wang and he could be one of the best of all time in that he brought about the type of austerity packages and competitive shifts that the eurozone is undergoing

that would not have undergone had jean-claude trichet gotten out in front of this. that he brought about the difficulties in a three, five, seven-year time frame he may have helped lay the groundwork for more sustainable gret in europe. the opposite of which, what's interesting is the opposite is happening here in the united states that by getting out in front of the problem in terms of government spending and government debt, ben bernanke may be accommodating fiscal spending thus making it more difficult for the united states. but, again, very quickly, i think i underappreciated as did most people the shift to mario draghi. >> only time will tell if the policies will really play out the way he was hoping and, of course, more insight from dan who will stay with us on the show. coming up, we'll celebrate valentine's day corporate style and find out how to make money out of love. yeah, indeed.

and, plus, we are going to chart apple's meteoric rise to the $500 mark. is this the moment to buy, sell, or hold? keep it right here.

welcome back. you're watching "worldwide exchange." it is that time of the morning for your global markets report. let's start here in the united

states where we'll take a look at the u.s. futures and see how we're setting up for trade on wall street. it does look like a lower day today, lower by ten points. the nasdaq slightly above the flat line and the s&p one point below the flat line, this after a strong day on wall street. yesterday the dow up 72 points. the nasdaq 27 points higher. an 11-year high there. there were light volumes. investors still worried about greece and looking to that moody's downgrade as a risk as well. it looks like that sentiment is weighing on 0 the markets now. how does it look over in london? >> we're better than we were an hour ago, right now, so advancers to decliners matching on the dow jones stoxx 600 so that means we have a pretty flat european stocks. up for the ftse 100. an hour ago down a quarter of a percent. we're just down four points. inflation numbers as expect ed, 3.6% as the hike from last year came out of the equation.

big energy price hikes also coming out the next few months so that rate should continue to fall further. xetra dax fairly flat. the u.s. growth rebound helping along with that. the cac down six points. the ftse mib 42 points. a key auction coming out of italy fairly shortly in the next half hour or so, so we'll get the results on that. euro/that are up to 1.32. zew tracked down by the moody's ratings cut and outlook negative for the uk for the first time. euro/yen -- well, yen has weakened after the bank of japan announced more quantitative easing. dollar/yen has also strengthened. sterling 1.5742. stable post inflation. was weakened by the cut to

negative outlook. as far as gilt is concerned 2.12%. they had gained the yield slightly since the inflation number. good demand for the 18 and 12 month t-bills out of spain. ten-year btp. lacking to raise billion across three issues. the focus on the 2014, the two-year, $4 billion of the money coming in that particular market. we do expect a yield between 3.6 to 3.5. you see the cash market yielding just over 03.059. what kind of day have you had in asia? >> a mixed day here in asia. of course the big concern, the overriding concern was about the moody's announcement about downgrades and placing countries like france, austria on negative outlook along with the uk as well. overall take a look at how the nikkei was able to reverse gear and finish up just above 9,000. it's up 0.6%. took many of us off guard but, in fact, upping its asset purchasing program by another $130 billion or so.

it brings the total size to just under $900 billion. but the thinking here really is that this may only be a short-term dollar yen, a negative, and ultimately they may need to do much more than keep the yen levels where they are now. in fact, just crossing 78. elsewhere we saw quite a bit of weakness in many of the markets. the hang seng managed to close up fractionally. there seems to be some signs the market is stabilizing that helped the property plays there. take a look at the shanghai composite. certainly the financials seem to be under pressure as well and also more ipos, more supply hitting the market. and, chloe, apple stock has hit the $500 mark for the first time. shares have been soaring as of late gaining $100 in just over six months and rising 30% since the passing of founder steve

jobs in october. the new price brings market capitalization to just over $460 billion making the company the most highly valued publicly traded in the world right now. that really is staggering. joining us now is the senior analyst. when we talk about apple's stock price at $500 and this all-time high that it's crossed, this is a big psychological barrier for the stock. where do we go from here? >> well, that's a good question. the stocks are up about 4,000% over the past decade. if you're an apple shareholder you have built in this expectation the stock will continue to outperform because results have been so strong and we've seen is the halo effect, six, seven years ago and it's absolutely playing out. if you're an apple shareholder you are confident that will keep rolling forward and whether that happens i think i'm skeptical of. >> okay, and joe, do you happen to -- because i didn't see it in my notes, do you happen to own

apple stock? >> i don't. >> you don't. okay. moving on to my next question which is about that cash level right now at apple, we're looking at $100 billion, that is a huge amount of cash. what do you suspect they're going to do with it? >> well, i'm hope they return via a special dividend. historically can companies struggle when there are peaks and troughs. no one would think apple is capable but that will be the case at some point. in terms of returning cash, one of the worst things they can do is a share buyback and that's not something apple bulls want to hear but the reality is it would be a tragedy to not buy back any stock and wait million the point it's the biggest public company in the world, bigger than amazon, ibm and coke put together and then go out and buy a bunch of stock would be wasteful. >> just wondering, even as bullish as many people are about

apple, does the stock performance and how the company has performed pretty much reflect its momentum into 3g but as the 4g rollout happens in many parts around the world, is that growth somehow going to get dented and reflect how the stock moves moves forward? >> yeah, i think so. obviously they're not going to be able to sustain growth above 70% on a rolling basis and when you think where the company is in terms of its growth story, it's getting most of its revenue from outside its core market in the united states and you do have big dwroet engines in china, for example. remember in the u.s. that per capita gdp is five times higher so they have pretty well saturated their core market. they have all their early movers in emerging markets and developed economies outside the u.s. so i don't think there's a lot of low hanging fruit in the same way many other people do. >> joe, hey, this is dan

greenhaus. first of all, btig follows apple, our analyst has a buy rating and a price target on it. i have a question, when you read through the last quarterly reports, one of the things that stood out to us and to me was the 1.4 million or so units of apple tv that were sold which for those that don't follow the company i believe is roughly 50% of all the apple tv that they had sold in the previous couple of quarters or the previous year. to what do you attribute that and going forward do we look to apple it tv as an important revenue driver for the company? >> yif, not indirectly. i have an apple tv and i love mine. i don't think the apple tv it self will be a big driver of revenue in the latest incarnation. the bigger value of the apple tv even if they start selling full-size full-sized televisions is in building out the ecosystem and keeping people more engaged in the itunes experience and that's where the real value comes in. it's not going to be -- even if they roll out an amazing large screen television, margins on

that are terrible. but where you would get hooked is when you start buying all your content through itunes, through your television, and at that point you will be roped into using an ipad, an i mack and an iphone. in that sense i think there is a the lot of incremental value. it's just not going to show up at the point of sale with the actual apple tv. >> thank you so much for that, senior analyst. we'll have to leave the apple discussion there for now but if you haven't had enough of that story, check out our website. we have analysis on why apple's hot next thing may not be the ipad3. we explore what it would mean for apple to become the first company to ever reach a trillion dollar valuation, all that and more on cnbc.com. chloe? can you imagine apple stock surging to past $500? a lot of people are already treating it like it's a stock. jackie, ross, have a fantastic valentine's.

>> have a good evening. >> thank you so much, chloe. you have a great night. of course coming up on the show, feeling the love. we're going to celebrate valentine's day corporate style and find out how to make money out of love. ♪

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yields have fallen on all three of them. up to $4 billion on the two year. the yield is coming at 3.4%. better than the gray markets 3.6% to 3.5%. remember in november this same issue was yielding 7.89% so fell in november, 5.6% in december all the way down to 3.4% here in december. the bid to cover was a little shy at 1.4 but a substantial fall in the yield and another 2 billion over the 2015-2017 issues. about bid to cover 2.3 and the 2017 1.7. we have seen a sharp fall in yields t.o. remind you on 2014 the benchmark two year, the yield on that down to 3.4 and in november it was 7.89%. so, again, you can be sure a lot

of the ltro money has washed through. it's encouraged pension fund holders to buy. when you look at that yield since is november, jon corzine was right. he was just early. >> a lot of people are saying that. just bad timing, if you will. we are going to go to a lighter note from the italian auctions. with a story about "sports illustrated." 19-year-old model kate upton has been crowned the swimsuit covergirl. the 5'10" floridian sports a bikini that is so small she has become the most scantily clad model to appear on the issue. of course it's valentine's day here in the states and all over the world. if you don't have anyone special, you might want to check out are you interested.com that services 8 million monthly

active users through facebook and mobile users as well. shares of snap interactive which owns are you interested.com shares are up over 200% year to date. join us to discuss it more is cliff lerner of snap interactive and areyouinterested.com. this has been a huge trend and it's really helped connect people and help them find love interests in a way they haven't been able to before. talk to me about those trends and how social media is tapping into that. >> absolutely. i think the two big trends we're seeing are mobile and social. when you think about mobile and how users are going to online dating, you can take out your mobile device and find singles nearby. you can find companies overnight that become huge successes. in just a couple of years we have 55 million installs on facebook where top grossing app on iphone and social networking and when you combine that with social media one of the big advantages we have is the user

in one click can create an entire profile with their pictures. when you compare that to traditional dating sites, that's such an advantage for the user because it's a real picture and it's a lot of information -- your likes, your interests, your hobbies. what is also really special about that and our integration with facebook is the data updates in real time. one of the things about traditional dating sites is the profiles get stale and static 6789 long walks on the beach. it's the best picture ever taken. >> you've convinced me it sounds like the model is user friendly and functional, but let's talk about how you monetize that. at a 200% spike is huge and i want to know what's behind that move in terms of the fundamentals. how are you monetizing that and getting users or clicks or whatever it may be to translate into revenue? >> absolutely. we'll let the users send a couple of messages back and forth. they'll send virtual gifts. we want to make money so we have one, six, and 12 month plans. there are features and benefits

when you upgrade to a subscription. >> and the facebook ipo. how is this going to impact snap? >> facebook's ipo has been tremendous for us. when you think about pure facebook, there are only two of them, us and zynga. for the first time investors are trying to understand how our model works and what does it mean to be a large app development company and all sorts of advantages as a result. >> okay. is there any way to quantify any sta t statistics that you may have in terms of how people are meeting people out there right now? old, traditional ways, through friends, blind dates, et cetera, versus these online options? >> companies like us didn't exist years ago. facebook gets 850 million monthly users, half of them logon every single day. more and more people go to friends to find potential dates. and then of course mobile. we have 15% of our logis ons th

occur. nearly every day that number increases a little bit and we expect to see that continue. >> so many are saying mobile is the future. i'm always trying to look a step ahead. if we're talking mobile right know now, i want to know what the future plan is for snap. >> in the future we've been collecting an enormous amount of data because of our deep integration. you see companies talking about big data a. the big question is what are you going to do with all of this data? we're working on re-inventing our product around this data and interest based matching. which we think it's a powerful thing to say to a user here is someone just like you. you have eight things in common and what's even more powerful is the real time capabilities of face bobbing. what that means is as you're liking stuff throughout the web and facebook we get that in real time and can create matches on the fly for whatever is trending. if you are a knick fan and like jeremy lin we know that and create matches around that in

real time. it is very powerful. >> it is. and tell me, are you concerned about privacy issues? what are you doing to protect your users? >> absolutely. we're always concerned about that. the best thing is to educate and common sense. we have notices all throughout the site. meet someone in a public place. be smart. >> keep it on the radar in terms of the management of those relationships. for now that was cliff lerner, ceo of snap interactive. thank you for joining us today on valentine's day. ross, over to you. >> more comments interest the european commission president herman van rompuy, says macroeconomic fundamentals are sound. financial stability is necessary. europe must do more as we knew on economic growth and unemployment. that was interesting was he's in china. they need to match economic growth with improvements as

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good morning and welcome to the show. the headlines from around the globe today, in the united states investors await key information. britain's aaa rating is under threat. moody's puts them on negleative watch. this as it cuts ratings for six others including spain, are italy and portugal. but spain and italy are on target with the latest bond auctions hitting the top of their intended range. german's bund falls as a result. >> and japan's central bank eases policy surprising the markets. boj says it's hopeful growth will recover but down side risks remain. good morning and welcome back. nice to have you here on "worldwide exchange." let's take a look at the u.s. futures and see how we're setting up for trade on wall street. it's really interesting, ross, as soon as you mentioned that auction data we saw the futures turn a little bit. now we're looking at a higher open. if the markets were to open now

the dow would be higher nearly ten points. the s&p 500 up by nearly two. this was after a positive day for the markets yesterday, although we closed off session lows. we did see light volumes, ross, and it will be interesting to see if investors are back in the market today. >> just remember $4 billion at 2014 auction out of italy, the yield on that 3.4%. it was 7.89% in november. shows you just how far we've come. uk inflation this morning fell down 3.6% as expected. mervyn king explains why they are still above their target. i expect that rate to still fall to 2% which is the bank of england's target by the end of this year. the inflation rate now falling as expected but the pace and extent of the decline highly uncertain. two key outliars, tensions in the oil market which, of course, could slow that down. also the eurozone debt crisis prospects and the impacts on banks will be key to the

inflation outlook. later this week the quarterly inflation report. stocks here ahead of the u.s. open are now at their best levels of the session. the xetra dax up. the cac up a third. ftse mib up 0.8% is where we stand at the moment. jackie? >> yeah, thanks so much for that, ross. still with us, dan greenhaus. i want to ask you your opinion on these results. is that enough to make you all of a sudden bullish to change your opinion? we are seeing these data points out of europe and it seems that investors want to cling on something. is that enough for you? >> i don't know if it's enough to make me bullish, necessarily, because there's a whole lot of inputs into that equation but it has to make you less bearish. to the extent you were nervous about the spike, about the risk asset environment in sovereign debt yields then you have to be less bearish today and getting back to something we talked about before with respect to the twitch to mario draghi, there has been a meaningful change in

the ecb's leadership in terms of how they approach the crisis whether we can agree or disagree about trichet being good or bad, mario draghi has been a positive. we've seen the global marketplace on the equity side rally across the board. bonds have rallied. something that people are being caught off guard by but has happened from time to time. so certainly there's an element of less bearishness that creeps in. with respect to the bullish argument you still need a change in the earnings landscape and we're still waiting for globally a shift in that regard. >> i think you are exactly right on that point. a lot of investors are trying to sell the story now that the down side risks are abating but, as you've said, we've seen this story before and it's going to take a lot more to convince other investors those fundamentals are solid in europe and the united states before we can really move forward and see the markets rally in a real and meaningful way. when does that happen? when do we see that shift? >> well, that's obviously the $65,000 question.

from our standpoint we've ridden most of the lows from the summer. we're not unhappy where we are. clients that have been, you know, discussing and talking to us over the last couple of months have generally speaking rid then rally on the way up. now that we are at levels no different from where we were prior to the summer swoon is what drives us meaningfully higher from here and this is quite interesting because there's a real divergence at least in terms of clients, in terms of where the market should be and can go. there's any number of people and you are seeing this find its way into the press. we saw larry -- investors should be 100% in equities article and jeremy siegel was on tv yesterday saying he wouldn't be surprised if the dow 15,000 happened this year. there's a level of optimism and conversely that's pushed whack by a number of clients that have said, wait a second here, how do we get there other than just

cuts? a lot of the argument is predicated on expansion. the bearish argument is not. and so there's a widening gulf opening up now between further appreciation. >> and you bring up many, many great points there. i want to bring in mickey cargil of car gil investments. let me ask you your feelings as we weigh the news out of europe, what's going on in our domestic economy. we'll have some data points out today. the retail sales numbers will be quite big. how are you looking at those numbers as a measure of consumer sentiment and domestic growth on the domestic economy here in the states? >> corporations have just done a great job of taking their sales and translating them into greater earnings and so they've become very, very efficient, returns on investment capital is high right now. we are very bullish on american corporations. we do think what's going on in europe has little impact on us in the u.s. as we look at the news, you see as the market is fluctuating, it's not really having the

impact -- talking about europe -- having the impact that it did a few months ago. and we think that's very important, also. we become desensitized to this headline news and start looking at the fact that the economy is getting better here, certainly not getting any worse and so that's leading us to higher stock prices and better mul multiples. >> thank you so much for that, mickey. we'll have to leave it there and send it over to ross. more from mickey later. ross, to you. >> warning profits may drop after beating forecasts in the fourth quarter. joining us first on cnbc from munich is frank lutz, the cfo of man. you had a better fourth quarter. that was a quarter we saw the eurozone economy sort of go into negative growth. why do you think the zew thinks things are getting better, why are things going to be tougher for you? >> well, i think we had a good fourth quarter because our

geographical mix supports our business quite well. we have a strong position in germany and germany is doing quite well in the eurozone during the fourth quarter and continues to do well n. addition to that we are strong in the latin american market which had a good yield last year and continues to be vong so, therefore, our view on the world is more positive than what you can read in the press at the moment. >> why are you slightly less optimistic about the next period? >> well, in europe we will see a somewhat flattish market. in latin america which, as i said, is an important market for us, there is the introduction of a new emissions standard in 2 2 2012. euro five is being introduced and will replace euro three. there will be some distortion in the latin american market which will provide a down turn in sales and, therefore, tore the whole group we see a slightly lower revenue number for 2012 but that's the area of minus 5%

or more. >> in your planning, in your planning, your investments, where you will cut, what scenario is your base scenario for what happens to the eurozone financial crisis, the eurozone financial system? what's the base scenario that you are working on? >> well, the batse that we will see a solution to the turmoil that we have experienced during the second half of 2011 during the next couple of months. we will see some effects on the european market. on the other hand some of our growth markets are the remaining bric companies and there we see continues growth and therefore also support for our business. >> and what's hamming on the cost input side? sort of expecting inflation to

fall a bit. we've seen some reduction in cost of materials. is that going to continue or not? >> we think it will continue during 2012. we've already seen that in some of the contracts which we entered into in late 2011 for the production volume of 2012 and we believe that will continue during the course of this year. >> thank you for joining us, frank lutz, ceo of m.a.n. >> yeah, and still to come on the show, ross, washington gets its first meeting with the man destined to lead china in the coming decade.

good morning and welcome back to "worldwide exchange." china's vice president will meet with vice president barack obama today as part of his u.s. trip. xi widely seen as the leader in wait i waiting is expected to discuss issues ranging from geopolitical tensions to trade and joining us now to talk more about that is frank neville, vp of global communications and former state department spokesperson for the u.s. embassy in beijing. frank, let's start with this visit today. we've seen a similar visit about ten years ago when ghu jintao came to the united states as well. can we expect much today or is it a getting to know you visit? >> well, certainly it's a getting to know you visit.

i wouldn't expect any major athounsments. we have to remember that this is an election year in both china and the united states and both sides are going to be playing to the crowd, as it were on the u.s. side. obama is going to need to show that he can push the chinese on economic issues particularly the exchange rate and the trade deficit whereas on the chinese side he is going to need to show that he can manage the relationship and that he can stand up to the u.s. on political and military issues. >> yeah, and those are, of course, great points and a great issue and they affect not only politics but the markets as well. and i think it will be interesting to see how president obama comes off today. obviously as you mentioned this is an election year. a very important year for him and it will be important for the obama administration to be seen as being tough and standing up to china, correct? >> on the chinese side there are a lot of factors that will

prevent any real movement. there's been an increasing economic slowdown in china. now in china slowdown means you go down to 7% or 6% growth. but, still, that's going to constrain the chinese and their ability to, for example, adjust the exchange rate or do anything about the deficit. >> i know the attention is on the top with xi expected to take that role but seven of the nine standing committee members will be changed, i guess for lack of a better word. is there anything going on beneath the headline we need to be concerned with here in the united states? >> certainly in china everything goes on beneath the headline. one of the big stories is to watch the secretary who has been embroiled in a situation in sizuan. the police chief, in fact, ended

up at the u.s. consulate possibly seeking asylum several days ago and was escorted to beijing by the i think the vice minister of state security so that's definitely, i think, put a dent in his political chances and that could have more far reaching effects on who shows up in that leadership lineup in the fall. >> i suppose tensions to some degree in the future will depend on what economic policies are pursued. and the chinese, whether they rebalance their domestic or export strategy. in the u.s. whether they still care about whether the dollar weakens and they try to build inflation or not. so, i mean, how much attention is actually around what economic policies the two pursue and do you see that changing or not? >> in the near term, again, i don't see a lot of change, again, on the chinese side, the

sl slowdown is going to force them to probably be more protectionist, is probably going to slow the currency on the u.s. side. certainly there aren't a whole lot of great options in dealing with the economic situation here in the united states. >> with respect to your question, frank, do you read anything into the fact that nobody is meeting with the u.s. treasury secretary while during this trip? >> well, certainly for xi he wants to avoid controversial issues and for the u.s. side, that's the one where they could push the hardest. i don't find that terribly surprising. again, xi is pushing to the crowd in beijing so going to the pentagon is important because he needs to make the point that the united states needs to be restrained militarily in the western pacific.

criticized or beaten up publicly on the other economic issues. >> a pivotal cons queps politically and economically as well. thank you for your insight, frank neville of public affairs at thunderburg school of global management and former state department spokesperson for the u.s. embassy in beijing. of course dan will stay with us and we'll get more insight from him. up next on the show, we're going to look at the trading day ahead on wall street and it is a busy one. plenty of earnings, retail data, and a number of fed speakers on the loose.

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are now powering some of america's biggest cities. siemens. answers. good morning and welcome back. you are watching "worldwide exchange" on this tuesday morning on valentine's day. let's take a look at the u.s. futures and see how we're poised

for trade on wall street. a higher open now. if the markets were to open, the nasdaq higher by six and change and the s&p 500 higher by about 2.25% as well. a turn there after those bond auctions out of italy and spain saw the yields drop and our futures did take a turn for the positive side there. in the u.s. we are waiting for data today and a lot of different earnings. that's 0 out at 7:30 a.m. eastern time. at 8:30 we have two pieces of data. the retail sales report for january. economists expecting 0.9% as an increase as compared to an advance during december. we also are waiting for import prices for january which are expected to rise 0.3%. at 10:00 a.m. business inventories are also going to be released so watch for those. two fed presidents are speaking at 8:45. philadelphia fed president charles mroser and dennis

lockhart. on the earnings front avon products, goodyear tire, met life, weight watchers and michael kors reporting today. it is a big day on the earnings front. still with us to discuss that more is mickey cargile, mappinging partner of cargile investments. we have that retail data expected to come out today and traders are certainly going to be focusing on it. if we do get a 0.9% increase, that's a substantial jump. what do you make of a change like that? >> well, i think all the numbers, all the data has been getting better and i expect it to continue with the numbers we'll see today. as i look at the market, we have seep the market really have a great resiliency that when the numbers are not quite as good as we expect, we really don't get the big sell-off that is we were having three and four months ago and so i think there is a case to be made that this market may break out of the trading range and continue higher.

>> and in terms of the earning picture, what we've seep so far in the companies reported and what we're expecting from companies that report today, obviously earnings are helping that picture for a breakout? >> earnings have really outperformed expectation. what that tells us is the analysts are still too pessimistic and they haven't brought their guidance up enough yet. that's good for the market. so as long as we keep having these very strong quarters where most companies are outperforming expectations that puts a cushion under -- or puts a floor under the market and allows it to go higher from there. >> mickey, it's ross. what is interesting, just looking through your notes, you don't want to engage with either the gold market or treasuries. staying out of both of those. why? >> i think treasuries have reached that point where the fed is really having difficulty pushing the rates down farther.

as we look at what they did last month, we would have expected the ten year to drop down 1.4% but it's been stubborn at that 2% level. the there's just a point where investors will not allow the rates to go lower. and in my career i've seen it happen a couple of times where the market actual ly takes rate away from the fed and starts putting them in a place with where it actually meets their demand for return. when you look at the gold market, i just don't think it's really good for the individual investor. >> dan, i want to bring you into the conversation as well. we are seeing a lot dof data points. something that is concerning is the fact that flows are light right now and volumes are light. what does that tell you with about investor appetite for the market? >> it tells me very little. this has been an ongoing discussion for the last couple of months, quarters and years. first with respect to flows, the retail investor has long since

ceased being an important driver of he can with wit in terms of ins institutional money, much more prevalent and powerful. with respect to volumes, i haven't seen anybody come up with a credible explanation for why volumes have been doing what they're doing. i would say many technical analysts, and i don't want to speak for the whole genre, will you but many will say volume matters to the down side not the upside. >> yeah, that is a good point as well. thank you so much for joining us on the program today and of course our thanks to mickey cargile as well. that wraps it up on this valentine's day. i'm jackie deangelis in the united states. >> and i'm ross westgate in had europe. up next, "squawk box" and the countdown to the opening of markets state side. whatever happens, jackie and i hope you have a profitable day.

good morning. downgraded, moody's slashing ratings on a handful of european k countries and warning more cuts could soon come. plus in the u.s. the budget battle is just beginning. cabinet secretary is heading to capitol hill today to defend president obama's budget. and it's valentine's day. that means it's tuesday, february 14th, 2012. "squawk box" begins right now. ♪ this love has taken its toll on me ♪ ♪ she said good-bye too many times before ♪ good morning and welcome to "squawk box" here on cnbc. happy valentine's day. i still have to get a gift.