brought to you live from london, singapore, and around the world, this is "worldwide exchange." welcome to wo"worldwide exchange." the headlines around the globe today, china's official pmi surges past expectations to a five-month high in february, but hsbc data paints a different picture as china's smaller manufacturers struggle to keep up. ecb reported ahead of the bank mario draghi of the dangers of the bank's liquidity offer. and in the u.s. ben bernanke fuels concerns amid more qe.

lawmakers may press him on the issue again today. and stock warnings about the year ahead. conditions in the food retail industry are challenging. it sees job growth slowing. welcome to today's program. with christine and myself, ross westgate, pmi 49. it was 49 on the flash, confirmed a slight uptick. slightly weaker. the new order index 47.3. the manufacturing sector contracting for the seventh straight month in february. factories struggling under some of the toughest conditions on record. this survey is confirming this morning.

and whether the eurozone as a whole is back in recession the first quarter is uncertain according to the data provided by the market. euro/dollar, nevertheless, has just rebounded slightly. the euro/dollar got to 1.3486 and then we lost about a full euro on bernanke speaking. data in china as well, christine. we do, indeed, ross. while you talk about contraction, china's factories picking up speed by more than what economists predicted in teb. official pmi climbing to 51, a five-month high. output was driven by a bounceback in new export orders for china's big manufacturers as global demand strengthened. according to hsbc's final reading it showed pmi still contracting. suggesting smaller factories are

trailing the rebound. let's get reaction from our guest host today, head of emerging marging fx training. good to have you with us. contraction in the eurozone but china factories are resilient. does it somehow suggest they can't count on its own domestic market to pick up the slack as demand slackens overseas? >> absolutely, christine. there are two things to mention here. firstly, we're in contraction territory very, very briefly below 50 in the last quarter. we're nicely back above 51 today. the most important thing to recognize with china is it has the fiscal monetary capacity to determine its own economic power. its own 0 growth power. what other countries in the world can say that? they have very low external debt, huge amounts of reserve. resources available to them to determine their own growth path are enviable for everyone. >> how closely do you think the pboc is reading this figure?

there are lots of hope in the market that there can be easing. >> i think the easing has been a fine-tuning and adjusting liq d liquidity in the market so some of the smaller corporates and banks can get liquidity if and when they need it. i don't think we're going to see benchmark rate cuts. the last inflation of 4.6, feels like it's edging up. you've had decent pmi readings as well and oil prices ticking up as well. so i don't think we can expect any easing from the pboc. >> the survey shows that a small factory, a small company, still struggling. do you think there's help interest policymakers in china to keep them going in the meantime? >> i think there will be. the rrr cuts that we saw recently confirm that and, as i said, they have the fiscal monetary capacity to do whatever they need to do. >> so you are of the view that

china is indeed heading for a soft landing, right? >> absolutely. i think anyone suggesting china is going to have a hard land aing is so far wide of the mark. >> we'll leave it there. you'll continue to stay on as our guest host. we have stewart oakley today. >> good to have you onboard. plenty more to come from him. finance ministers are meeting this afternoon in brussels to give their final seal of approval to the second bailout package ahead of a summit of leaders that will will kick off at around 18:45 ct. a panel of derivatives experts is also called to decide whether the greek bond swap constitutes a credit event and whether to trigger cds payouts. the international swaps and derivatives association which is overseeing the committee says they will begin at 12:00 cet and has until monday to make a final decision. while that is going on the governing councilmember has warned of increasing risk on the decision to ease requirements for the region's banks.

in a letter to the president mario draghi weidmann, head of the bank, urges them to revert to vikter rules on class ral. elsewhere speaking on austrian state television, other councilmember nowotny says it cannot be repeated indefinitely and that the timing of the three-year ltro is correct but stresses the measures are only temporary. so where does this it leave us as we head towards the summit? joining us, i'm happy to say, for the first part of today's program, vivian redding of the european commission, commission of justice, a fundamental rights and citizenship. commissi commissioner. >> good morning. >> thank you for joining us on set. we're appreciative for you to come on here. as we head into the summit, we also have the ecb actions which

are very important. but they're only a liquidity injection. at the same time we have to cure the imbalances within the eurozone and we have to get some growth going. mario monti and the spanish are talking about we have to try implements in growth measures. can we do that and ease the sort of it fiscal targets that have been set? >> well, i think the summit is about growth. we have fixed institutional problems. we have fixed financial problems before. the decisions have been taken. the reinforcement of the firewalls is going to be even strengthened. so i think that our leaders now are going to concentrate on how do we give hope again so that our young people will have a job and that our economies are going to grow. so that is going to be the core of the matter for tonight and tomorrow. >> in spain that means they want to lift some of the targets that

we have under the fiscal compact. they said, look, austerity is going to make the problem worse. do you think there is any -- is there a groundswell of support for that or not? >> well, austerity is one word but it is very clear that we should stop to live over and above our means and that we need to bring this very high debt down and that we need to raise our gdp. so to make expenses which are not necessary, those have to be scrapped everywhere. also in great britain. this is exactly where we are heading to. having investments going into growth enhancing measures like, for instance, the transport, the broad band, bringing a new world to those young people and new job opportunities, strengthening

the internal market which is really our goal in europe which has so many opportunities which are still blocked by deferring national rules, to scrap those national rules in order to have one continent, one rule that will be a big saving initiative that will create jobs. >> as you say, we're supposed to be a single market. we have this agenda that never got think where. is this crisis going to make governments less or more willing to put in place a better, more efficie efficient market or not? you've seen what's going on between greece and the northern states. also, the northern states send out this message that we've got to pay for states in the south who basically are spenders. that's just not the case when you look at the dynamics in

spain and ireland. >> well, like always in the history of europe, we need a crisis in order to make reports. if you look in the way we have been building up in the last month, our economic governance, we couldn't have done it when things went well during the last ten years but here we got it done in ten months. to have the financial governments and to add to it a real economic govern anance, th reforms are on the table, are in the pipeline, or are already completed. so now we can concentrate on growth enhancing measures. >> good to have you on today. we have more to come from you later. we are going to get into privacy matters. that's one area we're looking at. the price induced by google and you want to overhaul prices in the eu as well. so that's a subject.

any questions or thoughts or comments you can e-mail us worldwide@cnbc.com. what kind of reaction to that chinese pmi data? >> well, we're getting not much of a reaction. markets are mostly concerned about what fed chairman ben bernanke said and he kind of played down qe, so that's driving sentiment lower across the region trading some profit taking across the markets, so most of the markets are weaker as a result. the shanghai market is up 0.1% today. basically, despite an uptick in manufacturing activity we saw, we know that pmi rose better than expected. the banks were kind of weaker on fund-raising concerns after a report that the industrial bank was raising $4 billion to institutional investors and that drove bank shares lower. the hang seng drifting lower 1.4%. those fears in china dragging down the property plays as well as the financial plays on the whole the last month. the index is still up 5%.

over in taiwan flat. the nikkei 225 failed to hold on to the key 9,800 level locking some profits, 0.1% lower. but last month did pretty well. this particular index rallying 10% last month. elsewhere we're seeing the topix up. the australia down 1%. new zealand up. the sensex trading to the down side. 1.2%. pmi data coming up from india showing a slight expansion but exports were weaker. overall a very cautious day today here in asia. what does the heat map show? >> we're near the session high but still weighted to the down side, 5-4 decline ers outpacing advancers. we had losses of around nearly a percent. right now getting back to the flat line for the uk indices just up 15 points. xetra dax down. we're up a quarter of a percent for the ftse mib. we'll be looking at key auctions today in spain and france. spain got three issues.

they get that successfully they'll have over 40% of their total funding needs already completed and in france we're looking to raise up to 8 billion. you can see yields are low, 2.95%, and in spain 4.92%. so still benefiting from the ltro. saw yields moving down. in the uk we'll keep an eye on manufacturing data due to come out as well in around 20 minutes' time. that spanish auction i mentioned, where we stand on those yields, 2.25, 2.99 is where we stand. we have seen sharp steepening of the yield curve since the ltro in place. euro/dollar, up to a fresh three-month high and then we sold off after bernanke wred. you have to remember during the session yesterday off the ltro, 1.3436. the yen is on course for its

worst month in 11 years against the euro. currently at 108.11. dollar/yen 81. we have a jump up yesterday when some members of the mpc suggested qe might be at an end. we'll take a short break. still to come can on "worldwide exchange," we'll be joined first by the ceo of continental, the tire maker says it's optimistic for the year ahead.

[singing] hoveround takes me where i wanna go... where will it send me... one call to hoveround and you'll be singing too! pick up the phone and call hoveround, the premier power chair. hoveround makes it easier than any other power chair. hoveround is more maneuverable to get you through the tightest doors and hallways. more reliable. hoveround employees build your chair, deliver your chair, and will service your chair for as long as you own your chair. most importantly, 9 out of 10 people got their hoveround for little or no cost. call now for your free dvd and information kit. you don't really have to give up living, because you don't have your legs. hoveround replaced the legs. and now every hoveround comes with this handy tote bag and cup holder for access to your favorite items. and right now, get this limited edition hoveround america travel mug free with your hoveround delivery. [singing] hoveround takes me where i wanna go. call or log on to hoveround.com to find out where a hoveround can take you!

continental says sales may grow more than 5% in 2012. the ceo says he's optimistic. the german tire maker posted 2011 sales of 30.5 billion euros. joining us first on cnbc is degenhart did he go, the ceo of continental. patricia will throw in a few questions from frankfurt as well. thank you for joining us. some might say those are quite optimistic forecasts for the year ahead. how do you back those up? >> good morning, ross. we believe the forecast is cautiously optimistic. and it's driven mainly, again, by the development in asia. we expect in asia growth of five

to ten percentage points. we have a good move in north america where we expect production rate of about 4%. so the north american markets will go up to 13.7 million. as a matter of fact, there will be a decline in europe. we expect by about five perce percentage points to mainly the situation in southern europe and all in all, the total market by about one percentage point and we know that we can outperform the market by some five percentage points. >> okay. so the growth side is there. what about the margin side is this increasing costs and other material costs. >> yes. as a matter of fact we had to to talk with an additional prosperity in 2010 and 2011 combined in the range of 1.5 billion euros which is quite a

lot. we believe that the situation is stabilizing but still we expect an additional prosperity in this year over 2011 of 100 million euro and we have another negative impact coming from the earth material because of launching programs. we have developed customers. we expect costs of another about 150 million material. >> mr. degenhart, continuing that debate, what about the prices? will you hike prices to try to even out margin prices for this year? >> good question, patricia. in case the base material for rubber, and we are talking mainly with about synthetic rubber now and other materials, would continue to go up.

we would would still be forced to raise prices in the market as we have done in january in europe. we raised prices by 3% to 5 percentage points. we will continue to do this. >> now in terms of your debt, your debt restructuring program continues successfully. you want to go below 6.5 billion why are owe worth of debt. no details on how you're going to achieve it. sale is one thing but do you think you need to cut costs further, also perhaps letting some more people go? >> cost cutting is a normal process. so besides this, as i mentioned before, we want to achieve our target of growing at least 5%. we would have to add another couple of thousand people.

into our organization. this is not the issue. we have to hope with the raw materials and in the last two years we will find ways to at least keep our performance. we have targeted a cash flow of at least 600 million in this year and this performance will allow us some leverage to invest new opportunities business wise as well as most probably another dividend in 2013. >> degenhart did he go, hi, this is christine. you said you were going to grow more. what are are you placing more emphasis on? >> we grew by about 20% last year over 2010.

in asia our sales volume is accounting now to 5 billion why are owes. we are growing over proportionately and for sure driven the market in china. china is accounting for 2 billion of the 5 billion in the meantime. and we are growing main ly at te automotive side so far. but as we are just ramping up the tire facility, our first in china, we have ambitious plans also for the tire business but the rubber business in general it in countries in indonesia. >> thanks for joining us, did he go did he go teg, ceo at continental, first here on cnbc. let's return to private policy today. facing major challenges. france's data protection authority said that the new

privacy guide lines are in breech of eu laws. commissioner reding is in part of that area of responsibility. you're relaunching privacy data protection laws in the eu. 1995 was the last that we had and that didn't encompass the internet. so what are the principles on which you're going to launch this new regulation? >> it is inscribed this the european treaties. the personal data belong to the person, and it is the person who has to decide what is happening with his personal data. that means that any company first has to inform in a very simple word what is going to do with the data of the individual, how it's going to process it. if it is going to sell it to a third party or not. and the individual has to give

its consent. only then can a company utilize the personal data of an individual. >> is this going to set you on a collision course with the likes of google and facebook and yahoo! because they make the bulk of their revenues from selling data to third parties such as advertisers? what you are proposing, before they do that, they have to get our permission to do it. >> absolutely. because at that time at ththe dg it them. it belongs to the individual. and if the individual agrees on this action to happen with this data, that's fine. but today the individuals simply do not know -- do you know that 80% of the british citizens are very worried about what is happening to their personal data? >> i can imagine. most people are asked, do you want your data sold off, i can imagine most people will say no, actually, we don't. i imagine that will be the sort of -- is that what you feel, most people will say no? >> for the time being you have

the small print, dozens of pages. nobody understands what's going on and in the end people find that they have been cheated, that their data has been sold. not only their data, the data of their friend that through apps they are followed in the street, all their action in private life are followed. i do not believe that people want this to happen. we have to go back to privacy by design. privacy by default. >> are you expecting a run-in with the likes of google, facebook, the big data, sort of net worth companies? >> absolutely. now there is a very big principle. we have one continent, one rule, and this rule is being applied for all companies who want to utilize this gold mine of the internal market, but they have to also apply the european rules. this is, unfortunately, not the

case today. that is why in the new legislation i want to equip 0 our regulators with real teeth. for instance if you follow now the question of the french regulator in the name of the 27 regulators to analyze what google is doing, well, what can the french regulator do against google? but in the future, it will be capable to apply a fine of 2% of the world to turn over google to a company, to this company which does not comply with the rules. that would be a fine of up to 560 million euros so there things become serious. >> christine? >> commissioner reding, that's exactly what i want to touch upon. when you instill these harsh penalties, does it somehow make these companies think twice about wanting to do business in the european continent?

>> no, because they have the biggest economy in the world, and they have this economy now without barriers. one market, one rule, which makes them safe. 2.3 billion euros per year alone because we got through the red tape. here they have the gold in their hands and they will do everything in the end in order to apply the european rules in order to be capable to utilize the european companies, the european market, and the 500 million european consumers. >> google is simplifying its privacy, guidelines into a si single one including youtube, g-mail, social networking sites. are you worried about all these different services and data being combined into one place? >> i can just quote what the regulators say and they are very

worried this is an intrusion into the private life of the citizens. citizens are not aware, very few of them are capable to understand this very complicated rules which are imposed on them, and their data are out in the open, and no control anymore of the citizens about their data. that is completely against european law. >> commissioner, good to talk to you. commissioner reding, thank you very much, indeed, for joining us. manufacturing pmi in the uk, 51.2 in february versus revised 52 in january. slightly weaker that the forecast 51.8. pmi input price index is 55.3 in february. it was 44.3 in january. so the input price has jumped up the highest since september. the employment index shows the strongest job growth since june. as it perhaps raises hopes they will expand in the first quarter that is highlighted the head winds particularly that inflation number. i don't know if richard mcgwire is with us.

if he is, we'll get a quick reaction from him. although the bank of english foreca forecasts the economic forecast will pick up helped by falling inflation. slowed at the risk of setbacks. i think richard is with us. richard, pmi at 51.2 in february. the input price has jumped up a little bit. where does this put us in terms of your thoughts on the uk recession and whether, indeed, we get more qe? >> well, in terms of recession, we had a fairly strong manufacturing pmi number out of the uk in january. far exceeding expectations and underpinning hopes perhaps we may narrowly escape recession. we have obviously given a little bit with today's territory. i think the question whether we do technically enter recession this quarter remains an open one. it will be decided really by the

certifica services pmi rather than the manufacturing one given the sector only accounts around 12%. three-quarter that is will be the casting vote in this regard. in terms of qe, the recent rhetoric from the bank of england struck a more cautious tone. we had martin wheel effectively pouring cold water on additional qe. king cautioning yesterday in parliament that we have to give the uk economy some time. it's a question of waiting for this to happen. so i think for now qe it's in the balance. we have to follow the data. it's by no means a done deal that they will provide further qe after may. after today's manufacturing pmi. >> we'll take a short break. when we come back we'll look ahead to the bond auctions out of spain, france, and the impact of yesterday's ltro announcement as well.

welcome to "worldwide exchange." the headlines you're watching this thursday, focusing on china. official pmi surging past expectations to a five-month high in february but hsbc's data

paints a different picture as the manufacturers struggle to keep up. >> france and spain tapped the bond markets in invest or confidence after the ecb's 530 billion euro liquidity operation. >> and in the u.s. ben bernanke fuels concern amid investors after staying silent on the possibility of more qe. lay makers may press him on the issue today. stark warnings about the year ahead. conditions in the food retail industry are challenging. they see job growth slowing. so we have the first test this morning. the first auctions since the ecb lent out another 500 billion plus and given indications on whether it's having desired effects. spain is, of course, scheduled to sell up to 4.5 billion euros,

the bill maturing in 2014, '15, and '16. bonds expiring in 2022 and 2026. stewart oakley is with us the richard, let's kick off with you, first of all. we've seen, of course, a big sticking of the yield kev with the ltros. one will wonder now whether we're getting to the point people might -- even though there's liquidity, whether they want to play the carry or, indeed, whether they think there's value at the shorter end. >> i don't think that the front end has really been supported. we're still of the view that really what's happening here is that banks that have and continue to tap the three-year facility in order to fund their own debt which falls due this year and next.

a positive by-product of that rather than the actual aim itself is the support this provides for short data and spanish debt as they park that liquidity until such time as they need it to pay for their own bonds they are redeeming. given that, there's going to be some mechanism support as it were for the front end of the italian and spanish curve. yields have fallen rapidly since december so the scope for further decline is limited, but i think there's limited risk of a flattening here given this money still has to be parked somewhere and it is hikely to be parked on the front end of these curves. >> if it's still a parking facility, as you put it, that suggests very little of it is going to seep its way into the wider economy even though there were smaller banks yesterday tapping the ltro. >> yes. i think our view is that it's certainly an open question as to whether this will filter through in the real economy. we're skeptical that it will. in so much as the ltros are to

revert a credit crunch within the banking sector as they had a huge spike. in the first quarter of this year, they're significant volumes of debt throughout the remaineder of the year. the risk has been taken off the table. ba banks have refunded themselves to pay the bonds. that doesn't mean that it's going to go into the real economy. it's all, in fact, if it is being used to prepunned these debts that are falling due, it's probably not going to go into the real economy. it's much easier to close out the governments, the holding of the government bonds than to call in a loan to a small business. so i don't think it will alleviate the credit crunch within the real economy as it were. >> richard, good point to make. richard is skeptical about it going through the real economy. what do you think? is this ltro money going to go into the real economy? >> quite possibly. i think we have to realize what really matters here, okay, and that is that the risk has been taken out. the world is absolutely flush

with liquidity, not just because of ltro but because of reflagsary policies among 0 many central banks. that money needs to be forced into assets because it needs a yield and it needs some sort of capital appreciation, capital return. it's done its job. yields are off hundreds of basis points, banking stocks are at six-month highs. people are being forced into assets. so in a round about way, yes, it will find its way back into the economy. >> what sort of time frame are you looking at? >> that's a very difficult question to answer, i would say three to six months. >> we'll see what happens. >> richard, i want to ask something. we've just been confirmed to cnbc that a second question whether a credit event has occurred re greece. it's a bit complicated how they go about deciding that but in the end do you think they will? do you think we will trigger cds? >> yes, i think we will.

they've received a question on this front. they're meeting today at 11:00 a.m. there's no schedule but we're told it's before monday. isda did say that the insertion of collective action clause noose greek debt in it self wouldn't necessarily constitute a credit event but the use or implementation would. so it's quite possible that they won't declare it a credit event in the coming day or two but still is very likely they will declare it to be so by around march 10th when we see what kind of participation there is on the part of private investors in the greek restructuring deal and, therefore, see the likelihood greece will have to make good its threat on these collective action clauses. >> thank you for that, richard. ltros were difficult to understand, isda even more

difficult. shares of the french media giant lower, warning they are not going to see profit gret for the next two years. stephane has more in paris. >> reporter: the numbers for the last year, ross, were in line with expectations. it was a record number for even these numbers up 9.4% for net profit but the outlook is not positive. the company warned profits won't grow again. the company has a significant activity. in france vivendi is facing the phone operator free mobile and since the beginning of the year sfr, the mobile phone unit of vivendi has lost customers. as a result the company says it will reduce some investment plans. that's from the ceo of vivendi and that questions the industry. it was the real cash mash.

reaction after this announcement, cic securities along with its price targets on the recommendation of vive th di, and you were mentioning before the stock is down 8%. it's the biggest decliner. >> stephane says relative to food retail industry are challenging this year, after a lower than expected operating profit in the fourth quarter. but the dutch supermarket operator which makes around 6% of its sales has raised its dividend to four euros a share. also stock rallied despite warning the job growth is slowing as well. let's move on and we'll take a look at some of the other things that are coming up. european boweurses, of course, march have had -- sorry, february -- have had a pretty interesting performance. it's worth recapping where we are with all of this. we've got the ftse 100 up about

3 1/3 percent in the month of january. the dax up some 6% and the cac gone up some 4.6%. the dax still perfeorming fairl well over the course of the last year indeed. now the dollar as well has been of interest. the one currency standout has been euro yen. the yen against the euro having its worst performance in some 11 years. you can see up by 8.5% in that time. dollar/yen, weakening against the dollar. that's about the worst performance in two years. a lot of this was down to the bank of japan coming out and effectively introducing more quantitative easing, christine, which has had an impact on japanese stocks. >> it has had an impact on

japanese stocks. the yen was weaker and that benefited the japanese market. take a look at the month of february for the japanese market. the nikkei is up more than 10%. as you can see we saw profit takinging going on that 9,800 level is touch and go it. a lot of people are seeing whether that particular index level can be reached as well. the kospi for the month of february is up 3.6%. over in india had this particular market for the month of february is up 1.7%. february was a good place for the hang seng up more than 5% and, of course, the shanghai market is up 6%. so overall china markets, everywhere else in asia, is doing nicely for the month of february. let's just see whether all that activity is going to filter through into the real economy. of dorse we talked about the real economy, about manufacturing in particular. india's manufacturing activity, of course, is showing signs of easing in february. let's get more details live from

mumbai. >> reporter: the manufacturing index has come this at 56.6 in february. 56.7 in january. however, it indicates an expansion. that is a tad bit of a scaledown. the economists who we have spoken to earlier said that there is definitely a slower pace of growth but, nonetheless 0, it is still growth. remember that the gdp numbers had come out yesterday for q3 in india 6.1% and that actually stirred the markets a bit because the prime minister's economic advisory council has come out to see that the gdp for the gross domestic ro duct will come in at between 6.9% to 7.1% respectively. in order to achieve that growth we need 6.9% in q4 but it doesn't indicate that we could possibly achieve q4 and a small indicator would be the data that

came out from sector growth which came in around 0.5% in january. that is 37% of the iip and that growth may not be as great or as expected, reaching that 6.7% might be difficult. remember that the rbi does meet in march which is one day before the budget which will be outlined by the finance minister and the rbi could be in a predicament based on what they have growth rates. already they push it to april and see what inflation comes out to be. back to you. >> live from mumbai. let's get reaction from our guest host, stewart oakley. pmi data over in china softer. does it have the domestic firepower to absorb some of the slack overseas? >> india, what atract to china. we were talking earlier about

china's external position, being the envy of the western world. india is pretty much the opposite. we know that they run a sizable current account deficit. we're in a risk environment, and markets are rallying, india is fine. it can fund its deficit with capital account in flows. we've seen that this year and we saw what happened at the end of last year when you get capital repatriation and deleveraging, india gets hit very hard and there will always be a risk. >> we have some flashes come up from spain. i'm sure ross will tell us about it. ross? spain has raised the money it wanted, 4.5 billion. the 2014 two year 1.06. the 2016, the four year, was 1.53. so that means the 4.5 billion they were looking for has been raised. bid to cover on those 2.8, 2.4, 2.6. slightly lower bid to cover in

2006, slightly lower for the last auction and the important thing is the yields for the two year. the yield 2.2%. the three year the yield set at 2 2.74. and for the four year the yield set at 3.47. so that's quite a bit of a premium, of course, to where the four year is trading on the cash market at the moment. but, the important thing is the yields have fallen versus the previous respective auctions. so yields have come down post that ecb ltro. yields continue to fall in spanish auctions and it's worth reminding 0 ourselves, christine, spain has raised 40% of their total funding needs for the year and here we are on march 1st. >> it's a good sign:a good start to the month. higher spending we're seeing by japanese companies to tell us

more we have the details from the uk. >> reporter: up 7.6% for the october to december period according to government figures released this morning. this was the first rise in three quarte quarters. spending reached some $122 billion largely pushed by invest mtsz for restoring kuwait hit plants and equipment. sales in august business sectors fell 1.3% and pretax profits dropped slightly more than 10%. still, the finance ministry sees the figures as a bright sign for the country's economic growth. the data will be factored into data in the october-december period due out next week. japan's gdp fell 0.6% but analysts say this is likely to be revised upwards. that's all from the nikkei business report. thank you, krus teen. >> yukako ono, thank you for

that. we saw the nikkei doing well because the yen was weaker last month. is this trend likely to continue and for how long? >> well, it's certainly something that the market has got excited about. it was one of the stories we had in february. i think what's more interesting is not so much dollar yen but the crosses against other asian currencies. yen is looking very exciting. this is starting to break trend line support. yen korea is coming down. now those anecdotes about how x competitive samsung is against sony, hyundai is against toyota, it's a fundamental that people like. 2007 yen korea was trading around 7 1/2. it got up to 15. but that's a huge competitive advantage that korea has had over japan. that is now start iing to rever. so one likes to be short yen, long korea. >> all right. some advice from stewart oakley, of course, our guest host.

he will be staying with us. up next on "worldwide exchange," what's happening after the break. an exclusive interview with apple co-founder steve wozniak. >> people talk about $1,000 stock price. at first you want to doubt it but i believe that. i don't really follow stock markets.

a final thought from our guest host, stewart oakley. you mentioned you were shorting the yen, long the cokorean yuan. what other positions do you have? >> well, we like laggard emerging currencies. emfx hasn't traded particularly well because asset managers have been focused on going long equities and commodities and i think it's going to be a bit of rotation back into emerging market. i think korea is undervalued. it is a cheap currency by many metrics. i think the mexican peso as well. the thing these two currencies is they have very open capital markets so as people rotate into local assets, those two asset markets, particularly their equity markets, should be the beneficiary of inflow and technically they look very good as well. >> sounds fascinating. we'll be checking on those

currencies the next time you're back. thank you for your time and pleasure having you as our guest host, stewart oakley at rbs. >> great to have stewart on. we say hello to jackie joining us for the next hour of the program. hi, jackie. good morning, ross. good morning, christine. great to be back with you guys today. well, apple has become the sixth company in the united states' corporate history to surpass the market cap value. we spoke with steve wozniak who was in singapore for the leadership sum is mitt and asked him if he ever envisioned the iphone maker becoming that big. take a listen. i'm an engineer. i don't keep track of -- i don't want to worry about money and amounts. >> reporter: but you are a stockholder and you are still an honorary employee of the company. >> i am so honored that the company i started is the largest market cap, whatever you say, in the world. it's a huge company and it's a lot of can companies in one.

every one is so excellent. the retail store is a company. the itunes, the music is a real company. the ipods are a company. the ipad is a huge company. the we have all these -- and we still have computers. we have a whole bunch of huge companies. >> reporter: computers fit in there somewhere, right, steve? somewhere there's a computer in there? >> and if you took out any one of those on its own it wouldn't have that dramatic presentation. the to know apple is rated as number one when we were the number one it technology company passing ibm, steve jobs called me, did you ever think this would happen when we hit the highest valued company in the world over exxon. he said, did you ever think when we started? i heard the excitement in his own voice and, yeah, i'm very -- it's just -- >> it doesn't sting to have that kind of a run. >> yes, but i love being associated with a company that gives me some good credit like the world's number one company. it's like giving me credit as

much as i'm a part of it. >> obviously the app centric world has -- you look at mountain lion, the new operating system, apps are on the desktop. they already are but it's the way we interface. how much room for growth do you believe apple still has? >> i never think about it and i don't judge it. apple is on such a winning course because it has encapsulated all of its big products that i mentioned. they all work together so well that you are in -- if you buy a product from another company it doesn't do as much as the one from apple does. they have large room for growth. people talk about $1,000 stock price. i absolutely -- at first you want to doubt it but i actually believe that and i don't follow stock markets. >> reporter: $1,000, do you think it's possible? >> they have that much growth left. talking apple tv that works with these other great companies and

produc products. it's not like a project we're going to start a company, we're going to start tv within the whole apple world assuming that we are going to. i don't know. >> that was brian sullivan speaking, of course, to exclusively with apple co-founder steve wozniak. you can catch the full interview at 2:00 p.m. eastern standard time. make sure you tune in. of course still to come on the show, no mention of qe from ben bernanke on capitol hill. will he give in to lawmakers' questions on fresh stimulus today? we're going to discuss it after the break. and as always keep your tweets coming in. we'll put your questions to our guest hosts.

good morning and welcome to the show. the headlines this morning, in the united states ben bernanke fuels concern among investors after staying silent on the possibility of more qe, but lawmakers may press him on the issue again today. spain sells 4.5 billion euro worth of debt, one day after the ecb's 500 billion liquidity operation. yields continue to fall. china's official pmi surging past expectations to a five-month high in february. hsbc data paints a different picture as manufacturers

struggle to keep up. so we've had a successful spanish auction this morning. they've raised 40% of their total targeted funds for the year. yields continuing. we have auction results. 825 million euros, 1.9%. bid to cover 4%. very healthy, indeed. the average yield 2.48%. the bid to cover on that 2.74. again, fairly healthy. the 2022, the ten year, they sold 3.9 billion of the ten year. the average yield 2.91%. that's certainly on a result of that april 2022. and they also had a 2026 auction as well. 3.5%. bid to cover on that 3.17%.

so the sale is at the upper end of the targeted range. didn't quite get the full 8 billion they were look iing for. yields look all right. euro/dollar post that auction getting up to near the session high. the french auction just coming up slightly 1.3341 is where we stand at the moment. post-ltro we hit the three-month high up above 1.3480 and came back down after mr. bernanke spoke. european data is out and february cpi come in -- the jobless rates in december. we've seen 10.4% so further jobless rate is worse and that's despite a better jobless picture in germany. the highest since 1997.

and the cpi estimate 2.7% versus 2.6 so that estimate is ticking higher as we are pushing out, people were forecasting more rate cuts from the ecb. inflation ticks higher and as we wait for the ltro to have more of an impact at the same time. now we are also understanding that -- you thought ltro, long-term was a difficult concept, get your head around this. this is isda. the international swaps and derivatives association. and they've been asked to, as we understand it, they've been asked to 0 decide whether or not a credit the event has taken place in greece, if they eventually decide that, of course, they will trigger cds. they have a meeting this morning to decide whether they should discuss whether a credit event is taking place. cnbc has confirmed that a second question has been asked of them. so those deliberations are going to take place. it's very con can fusing, just to explain what isda is and why

they're deciding on this, they're a global financial trade association. they have basically 815 institutions for 58 kcountries and six continents and it it's a range of derivatives, international banks, asset managers, energy commodity firms. they basically -- one of them get together and they sort of decide whether they, "a," first of all, want to answer the question and then if they want to answer the question when they're going to do it be a then down the road decide whether a credit event is taking place. it is a confusing, long and difficult process to say the least. >> this whole process has been long and confusing in terms of what we've seen in greece, but as we wait for more clarity on that, let's take a look at where we stand this morning. if the markets were to open now, it would be a higher open. we were lower this morning when i first got into the 0 office. if the markets open now the dow would be higher by nearly 16 points. the nasdaq by about seven and the s&p 500 higher by 1.3

points. this after a down day, ross. i do want to point out we're seeing mixed sentiment in the market. we saw positive reaction to the ltro but negative reaction to what bernanke didn't say in his testimony yesterday. the s&p logged its best february since 1998 the nasdaq topping 3,000 interday which we haven't seen since december of the year 2000 so seeing again some mixed sentiment. meantime we did talk about fed chairman ben bernanke. he is expected to testify back on capitol hill today giving part two of his semiannual testimony on the economy, the senate banking committee at 10:00 a.m. eastern time. bernanke surprised the markets. he didn't ofrp that the fed is considering another round of easing measures. he's expecting today to reensure investors rates will stay low for a while. he is encouraged by a pickup but is still cautious on the overall economy. >> the recovery of the u.s. chi continues but the pace of

expansion has been even and modest by historical standards. after minimal gains in the first half of last year, real gdp increased at 2.25% and enthusiastically rate in the second half. the limited information ava available for 2012 is consistent with growth in coming quarters at a pace close to or somewhat above the pace that was registered during the second half of last year. >> and in addition to ben bernanke's comments, philly fed president says the u.s. economy is improving at such a steady pace. the case for further easing goes away. mr mroser says they could raise rates before 2014 and even some time this year. >> i think if the performance on employment and the economy continue to improve as we've seen them over the last six months, if they proceed for another six months, i think that would be pretty good cause for thinking maybe we need to ease off on the gas pedal a little bit. we could still raise rates somewhat and be a very easy

policy stance. still to come. 800 european banks took place in the loan operation yesterday. find out what barclay's boss bob diamond has to say next. carfirmation. only hertz gives you a carfirmation. hey. this is challenger. i'll be waiting for you in stall 5. it confirms your reservation and the location your car is in, the moment you land. it's just another way you'll be traveling at the speed of hertz.

ben bernanke back on capitol hill today, part two, his

semiannual testimony. it starts at 10:00 eastern time. david bloom of hsbc with us for the rae mander of the program. good to see you. fell a good euro when bernanke came. what's the impact of what he said for the risk assets? >> well, that's typical the fact the ltro is concentrating on a big thing. bernanke comes in. there's a double whammy here. when the fed said that time they kept rates low, markets rallied. in other words when they said things would be worse for a longer time, markets actually rallied because it's about rates. not the usual 100 and everyone said this is hawkish. >> things aren't great, still not brilliant, but there's -- in terms of there's no more qe. yes, because he didn't mention there was a possibility so what

he didn't say that became important, but, also, he pinned a lot on the unemployment rate saying the fed didn't expect it to fall this fast and given the state of the economy don't expect it to move further. now we have payrolls next friday. only one number anyone will be looking at. that's the unemployment rate so for the jobs hard to get and consumer confidence, better numbers. so pointing to better numbers. the market saying these numbers could be better, unemployment could be down again. this is what the fed is not expecting and if this happens, this means we're going the other way towards some kind of reneging on the waiting promise. >> david, you bring up a good point. there's been a slew of economic data as well that's been positive. yesterday we got our gdp number in the united states and there was positive sentiment around that as well and i heard one person say isn't it better to have improving fundamentals in the u.s. economy than to have more quantitative easing? wouldn't investors want to hear that?

>> that's exactly the enigma because that's not how the market has been reacting. in other words, when the fed did say earlier this year they would extend the period of low rates, markets rallied. you think to yourself, that means things will be worse for

longer. the market is responding to the point that either you're not going to get qe or, lo and behold, at some point you break the promise and interest rates go up. this is the fear that the

markets are trying to live through. it's just typical. . the japanese have been watching closely. the japanese yen will be a key question. and the dollar yen getting upwards. but don't fall in love with the trade. ultimately by the end of the year things are going back down again. >> i think the dollar will come under more frepressure as the y goes on, as we pass the next for the market is the french presidential election. politics in any particular currency has not been particularly good. we saw this with merkel, the own electorate is saying she didn't mean on the international stage. i think the two candidates in the u.s. will be saying things have gone both in the u.s. but in the intenaon cmutyf1 o we won'ti tt e s.f1 and as we await our second day of testimony from fed chairman ben bernanke, of course we're looking at the futures this morning and are seeing a more positive picture. if the markets were to open now they would be higher more than 10 points, the nasdaq by six and the s&p 500 just over the flat line. the futures, of course, were pointing down earlier t but witeen interday 10:00 a.m. after l ittro. that's when we saw that decline. mixed sentiment as well because on tuesday, ross, we saw the s&p hit that technical level of 13 70. so while there's some negative pieces to the market, definitely some positives as well. >> and ahead of the u.s. open we are up mildly.

up 3.5% for the month of february. xetra dax up nearly six. the cac up. the ftse mib up about a percent. still getting benefit to banks in spain and italy. again in spain you saw again lower yields at auction had three issues, 2014, '15, and '16. yields on those 2.2, 2.7 and 3.47 respectively. the four year was higher than the cash market. t ten-year yield is dragged down 4.9%. spain has now raised 40% of its total issuance it was target in at the beginning of the year. we talked about euro yen. the yen having its worst month in about 11 years against the euro. euro/dollar at 1.3337. we saw pmi, manufacturing pmi in

the uk were okay. sterling slightly higher against the dollar. gold, what an amazing day yesterday for gold. you can see this enormous drop during the session yesterday. 1,717. during yesterday's session we hit both the month highs and lows all in one day. we'll get more on that with david in a few seconds. first, christine, how have is we fared in asia? >> ben bernanke staying away, not mentioning any further qe. that kind of played with sentiment here in the region and that dragged down stocks in the overall region. the shanghai market is off. banks were lower because of fund-raising concerns among some of the chinese banks. those concerns, capital raising concerns filtering through, down 1.4%. taiwan weighted index flat to the down side. nikkei 225 drifting further away from the key 9,800 level. take a look at this market up more than 10% for the month of

february so doing nicely because of the weakness we're seeing in the japanese currency. the topix is off today. the australian market down 1%. new zealand, one of the few bright spots up 0.3% but modest gains. the sensex trading to the down side 0.1%. manufacturing data coming -- expanding soft. that's it for me today. i'll be back with the news moving markets here in asia. stay with us because coming up next we have tougher sanctions, of course, from the west, already appearing to be tightening the squeeze on iran's oil exports. further restrictions increase anxiety in the already edgy markets. the answers straight ahead. today is gonna be an important day for us. you ready? we wanna be our brother's keeper. what's number two we wanna do? bring it up to 90 decatherms. how bout ya, joe? let's go ahead and bring it online. attention on site, attention on site.

now starting unit nine. some of the world's cleanest gas turbines are now powering some of america's biggest cities. siemens. answers.

oil prices are edging up today. nymex and brent are trading higher. we're at 123 pour brent and these prices, of course, drawing some support from faster than expected growth this the u.s. sxhi and amid continuing concerns about supply disruptions from the middle east. joining us now to talk more about that is dan weiss, senior fellow and director of private strategy, the center for american progress. and still with us our guest host david bloom in london as well. dan, when we talk about oil and see a rise in these prices, we know that we have -- despite the

geopolitical concerns that we've on the table, we know that the saudis can step up and increase their capacity. we know that we have strategic reserves here in the united states that we can tap. so it really doesn't seem to me to be such a supply issue but it seems to be the speculators driving these prices up. why is that happening? >> well, jackie, there's that old saying, buy on the rumor and sell on the news. speculators are taking advantage of fears about a supply disruption in the persian gulf which has not materialized yet. and i think that has led them to churn a lot more contracts and last week they found that speculators are buying about two-thirds of futures contracts and end users only about a third when normally it's the reverse. so i guess you could say that i'm a believer that speculation is in part behind the runup in higher oil prices.

>> and it's really interesting when we talk about the oil prices and we talk about the speculators, as were you commenting, that we've seen a rise, of course, in the dow and people are happy about that. we hit closed above 13,000 for the first time, of course, this week. but at the same time we're seeing a real decline in the dow transports and that's as a result of these oil prices. as long as we see this disconnect between risk in terms of equities and high oil prices, how do the markets trade from there? >> well, that's a good question. one thing that's important to understand is, at least in the u.s., the world's largest oil user, demand is actual ly down. so these price increases are not being demand driven. in addition, there's been no supply disruption and so that leaves you with not too many other suspects for what's behind these higher prices. in addition, the u.s. is both producing more oil than it has in many years and, in fact, has a huge reserve aside from our

strategic reserves, the amount of resefb oil that's on hand is much higher than the department of energy forecast. >> it's all political risk premium there, isn't it, dan, and maybe that is justified when you look at what might be going on in iran. the thing is, of course it's of interest in the united states, is to see the price per gallon of fuel. are you believing that it will go up to $4? >> i don't know. many analysts predicted that it will. certainly the gasoline prices have been at a record high for this time of year, genuinely speaking they're lower this time of year because there's less driving in the winter months. so indications point that prices will continue to rise. one thing we've talked about is bursting the speculative bubble by having the president take some of our reserve oil and put that on the market. every time that's been done and it's been done with every

president beginning with george h.w. bush, it's led to a decrease in oil and gasoline prices of up to 19%. so i think that taking like 30 million or 50 million barrels in our reserve oil, putting it on the market could be a stepping stone for lower gasoline prices. >> dan, thanks for that. good to see you. what do higher oil prices mean at the moment for investors besides just trading, what are the correlations? >> if you're really nervous you should buy the energy stocks in equities, that's obvious. the point is what happens in foreign exchange. looking at the balance of pain in the it typical way. what we did is looked at what actually happens to foreign exchange rates when oil prices go up. the one remarkable thing we found is they don't sell off. in other words all parties can make equities but they don't make the high-risk currencies.

and perhaps the reason is that other commodities also rise when oil rises so the typical things, norway, that's obvious. but you buy over malaysia. >> in the long term that may crimp activity. others do get opened up. >> you might hit a point where you get total demand destruction. in other words you need a massive supply side for that and we're not seeing it. one thing dan said he was a believer. he should have said i'm a bereaver in terms of the monkeys. sorry. >> no, i know. more of a daydream believer, isn't it? how closely are you watching oil prices at these levels? >> put it this way, monday we put out a global piece.

tuesday an asian piece. all on oil. so oil is thousand -- the market is moving from one worry to the next and the big point is this. last year we were in the same position. we were talking about economic recovery, talk iing with about stimulus. the oil price went up and that snuffed out economic recovery and that's why everything has a history, and the history is last year had hammed and it absolutely dampened down economic growth. will the same thing happen? that's the concern. >> all right. david, good to have you on. more thoughts or questions for david you can e-mail us. we have plenty more coming up as well, jackie. >> that's right. coming up on the show, the dow is up for five straight months testing the 13,000 level. the nasdaq reaches 3,000 for the first time in more than a decade. will the markets continue to roar in march. some insight after the break.

good morning. welcome to the show. the headlines this morning, in the united states ben bernanke fuels concerns among investors after staying silent on the possibility of more qe but lawmakers may press him on the issue again today. spain and france managed to sell 13 billion euro worth of

government debt. the maximum amount targeted just a day after the ecb's liquidity operation. yields still heading lower. and eu leaders meet in brussels today to discuss ways to foster growth as pmi and labor data show that the eurozone is still not out of the woods. good morning. nice to have you here on "worldwide exchange." it's 5:30 a.m. on the east coast. let's take a look at the u.s. futures, see how the markets are likely to only on wall street toe. looks like it's going to be a higher open. if we 0 open to this point the dow would be higher by 25 points, the nasdaq higher by 8.6 and the s&p 500 higher by 1 1/2. this was after a down day yesterday, ross, that we saw mixed sentiment there. the s&p is logging its best february since 1998 and the nasdaq interday for the first time since december of 2002. >> we like nothing else than a round number. the dax was one of the best

performers up over 6%. starting in march we are half a percent higher. xetra dax up. the cac up 0.4%. continue to see lower yields in auctions spain and france and lower yields as well in the cash markets for those. and it's worth pointing out the eu summit tonight we've got, it's probably the first noncrucial eu summit in a while. the pressure is off and they can enjoy this one. >> that's right. meantime, the u.s. markets finished out february in the red. overall it was a very good month for the major indices, the dow rising 2 1/2%. the nasdaq gaining 5.4%. joining us now to talk more about the markets is rob morgan, chief investment strategist and still with us, of course, our guest host david bloom in london. rob, i want to start with you when we talk with about the u.s. markets and we're seeing a little bit of mixed signals

here. we're seeing positive data points, positive reaction to the ltro yesterday but then what bernanke didn't say drove the markets lower. how are we supposed to read this? a lot of people want to cling to the positive data points out of the u.s. and say this is a good thing that we're seeing some growth here and we don't need further stimulus. >> oh, i would be in that camp, jackie. i don't at this we need any more qe. there are a couple of fed governors who say the same thing. i think the u.s. economy had been strong in certain areas and now finally the job market is kicking in and i think we are seeing some definite improvement in the economy and that will help u.s. stocks. >> when we talk about the stock market we've seen impressive returns not only month to date but year to date as well. at the same time we're seeing volumes on the low side so we do have a sense that the retail investors are out of the market taking a little bit less risk and investors are really driving the market. the fact it's a market driven by fundamentals again, do you agree

with that? >> i do. and i think in some ways it's encouraging that the retail investor is still pessimistic because that gives us the wall of worry that actually gives us some cash to keep fueling a continued rally. >> let's bring david in and get your perspective. we've had low reserve requirements, japan, qe, we have ltro from the ecb, the u.s. saying they probably won't get more qe. a lot of liquidity being pumped in. you think we will get more? why? >> the mistake on the one side is you get some inflation and you raise interest rates. the other mistake is the japan mistake. growth in japan around 96, 97, 3 1/2%, rose the consumption tax. let's resolve the fiscal issue and raise the consumption tax to 3.5% to 7%.

a nose dive and 21 years later they're still in it. you don't say it's enough. you say the mistake on the one side is much smaller than the other side. >> what's going to change between what we heard yesterday and might hear again today and what's going to change to make the step between that and implementing more in states? >> everything is cyclical. as you know, even the path of true love is not smooth so the numbers will turn down. when they turn down, everyone is going to go, we need more qe and stop panicking. we're on a bit of a roll at the moment. that's great. >> rob? >> i couldn't disagree more. the u.s. economy has been so strong from a standis point of steep yield curve, strong corporate products, over many months the things missing is job growth and now we have two

nonforeign payroll reports early in january and february, well over 200. the qe2, usually these implementations of monetary policy, they take 6 to 12 months to work their way through the system. it worked. i think we're seeing the benefits of that now and we don't need further qe. >> i hate to shock you but it has been going on for five years. and to get a number that's trend growth, 150,000 to 27,000 is nothing. if you remember at the beginning of the expansion -- >> no, it's much higher than 150. no. no, it's much higher. look at weekly initial jobless claims, too. this has been a trend number below 375,000 for many weeks now and there's a strong correlation the unemployment rate going down when that number is below -- >> let's assume europe right and they do more qe, what's the

damage? let's assume i am right and they do more qe, what's the damage? that's the risk/reward. if you're right, you get some inflation and eventually the fed has to raise rates more than expected. if i am right and they do more qe, it limits the massive damage we would have. regardless which one of us is right, the risk/reward must be to keep the system pumping with money. >> well, i think i would -- i would value inflation as much higher damage than you would because, you're right. that is the risk but that's a pretty strong risk. and as i said, where is the evidence now certainly in the u.s. economy? obviously we have structural issues in europe to work through. the ltro, it's not that -- that didn't cure that. i'll grant you we have some issues there. but looking at the u.s. economies or emerging economies, where do you see the holes here?

i'm not seeing any holes. >> you talk about the risk of inflation. look, gold has a bit of a shock yesterday, really volatile gold session moved from its month high to its month low in just one day, falling over 5%. they didn't think they were going to get more qe. they thought they weren't getting any more data. just talk us through that gold move. >> this is the irony. more qe means more deflation. that's the puzzle. then you'd be worried about a deflation and they're not doing qe so, therefore, you think there may be some inflation and gold is a better risk. that's the thinking and so if you are saying we're heading to recovery, the fed is pulling away, the economies may be recovering, then gold gets left and, boy, did it get a slap. >> how do you compare that kind of slap to other slaps that gold has had? >> it's reasonably big because

our technical analyst said 1850 would reverse it. he's bearish. he was getting worried and this is the kind of move that we've seen. maybe it was overextended. we've seen silver have a fantastic run this year. they have become quite volatile. there's no doubt about it. >> right. we'll take a pause there. plenty more to come from david and rob. i'm going to quite enjoy the last part of the show, jackie. and still to come on 0 the program u.s. auto sales are expected to continue in the fast lane in february but how are consumers changing their purchases to deal with the rising gas prices? we're going to check in on the car market up next.

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.

good morning and welcome back. you're watching "worldwide exchange." automakers report february u.s. sales today, which are expected to keep up their recent strong gain. analysts forecast the total sales will rise 3% as consumers brought smaller and more fuel efficient vehicles to offset higher gas prices. ford says the small cars made up at least a quarter of all of its sales last month. meantime, general motors announced they are to join forceses in a global alliance which they hope will save $2 billion in and enthusiastically costs. in the deal gm will take a stake in peugeot. the two companies will combine

efforts in research and development and purchasing and will begin to build cars on shared platforms to bring costs down. joining us now to talk more about the auto market is andrew jackson, head of automotive analysis at data miner. i want to start with you on some of the change in the buying pat aerns that we're seeing. the smaller cars, of course, especially here domestically in the united states seem to be more popular as the gas prices tib to rise. will we see that continue and is that what you are expecting? >> certainly. with regards to smaller vehicles, major impact point being gas prices and certainly has the need for vehicles which a still functional with regards to taking a trip to the mall or carry a family of five around. the smaller compact vehicle that is more versatile will be something that will increase and

the fuel efficiency again with that kind of vehicle are synonymous. >> now in some parts of the world, of course, the smaller vehicle has always been king and always been used. where do you expect the most growth coming from? >> i would certainly expect to see continuity in growth from the south american markets and also with china and the emerging economies, too. where before it was a luxury item it's trying to diversify and certainly in terms of the middle market, as it were, or the blue collar workers, trying to alleviate the market. >> it's all very well from my own personal consuming buying a small smaller car but if emerging markets are growing the way they are then an aggregate oil consumption or carry on will

keep going up. it's a personal decision you make but on the macro side there's no stopping, it seems to me, the clamor for hydro car bops and fuel. >> this is a very old argument. >> sorry. >> we've heard it all before. >> when you look at these emerging economies, in india and china, we talked about well, you've had it good, now we want access to that. so there is also the aspect that where technology is now, the actual consumption of oil per unit is reducing all the time. in regards to the development of hybrid vehicles or efficient fossil fuel vehicles, something that gives some weight to offset. >> an electric vehicle over the life of the car to decommissioning it, is it that much more fuel efficient in

aggregate? >> this is a very contentious question. and in terms of the credited rate, the capital emissions for the refining of the materials and such as that, this is something. >> just picking up on the gm and p peugeot very good at making small cars so this deal that we've got between gm and peugeot, is gm going to start making peugeot cars to some degree? how much sharing actually are we going to have? are people buying gms drive a peugeot platform or people buying 0 gm platform? >> the potential there is very clear. what you have to look at in regards to the offerings gm europe has is a very similar kind of portfolio vehicle. >> so there are clear synergies

there. there may be synergies existing underneath. what people forget is they go into the vehicles and a lot are common between vehicles. if you imagine the tires, for example, a tire of a specific shape and size with fit a multitude and hundreds have exactly that same kind of function. of course going forward this is something to maximize. >> when you look at this, which of the automakers that are best positioned to take part in the trends that you have already talked about and in terms of lowering their costs at the moment, who are the winners here on a global perspective? >> it's obviously the majors mainly because they have the leverage and the cost of scale to be able to ensure they it continue to buy the right price for them. so certainly when you look at manufacturers such as volkswagen, for example, eye n ironically gm fwm to an extent, you could argue tend to lose

more than psa. psa are smaller and they can be for the buying power general motors can bring. >> andrew, i want to switch gears and talk about the luxury segment of the market for the final question here. some consumers, of course, not really that price sensitive when it comes to a higher cost of vehicles and also the higher costs of gas. how are sales continuing in the luxury market? >> well, it's something that we're starting to see growth in a point that were you making earlier with which is in regards to small vehicles and luxury vehicles going forward is, again, a downsizing essentially with regards to that product portfolio. it is extremely lucrative for those who are in it and obviously the ability to be able to produce a small segment luxury vehicle, for example, is something that's very much sought after. and, indeed, at the other end of the scale, with the extreme

market, you are indeed still seeing a continuation in terms of portfolio diversification with recent announcement by lamborghini they are going to look at a future suv. >> we're going to have to leave it there. joining us to talk about car salts. and coming up next on the show, u.s. retailers get set to report february sales but did stores get any love from valentine's day shoppers? we'll get a preyou up next. are you still sleeping? just wanted to check and make sure that we were on schedule.

the first technology of its kind... mom and dad, i have great news. is now providing answers families need. siemens. answers.

a bit of a spat growing at the ecb. warning of increasing risk from the decision to ease collateral

requirements for the region's banks. in a letter to the president mario draghi publish ed by the german daily weidmann is urging them to revert to stricter rules on collateral in the future and has flagged growing risks related to imbalances in the eurozone as a result of those weaker collateral rules. we saw a lot more smaller banks taking part in it. we asked bob diamond if the stigma of the ltro has now faded. >> we heard that there were 800 odd banks taking part versus the 500 odd in december. which i think means that people are now convinced there is not a negative stigma attached to this, that it's a positive for the markets in europe. >> he thought it was because the stigma, and i thought because they won the collateral, more banks were probably able to get

to give their hands on the ecb money. >> the market has this totally wrong. in december the ltro came and everybody said it's so big because banks have so much bad debt on their balance sheets and this is incredibly negative. the euro went down, markets went down. yesterday in the select committee to the united kingdom to the mpc asking them why aren't you doing an ltro? so we've completely swung around from thinking something was incredibly negative to how fantastic it is and that's why the market doesn't quite understand how it works and what's gone on there. the market is now saying it's positive. i don't think there was a stigma attached at any stage. >> the reason we have an l it tro, the qe can't do full qe. >> it could if it thought it threatened stability. in other words if they thought that we're heading towards a deflationary spiral, then they could do whatever they want because that's their mandate. of course they have to do something a bit different and they don't want to print

directly because then there's no pressure on governments to make structural changes. so this way is a small reward for some of the structural changes but it doesn't prevent default and it doesn't stop the governments from having, as you described today, the first nonemergency summit that we've had for a long time or meeting in the eurozone. >> rob? >> yeah, ross, i would agree with david that the ltros have been successful. they certainly in the short run have eased liquidity. if you look at spanish and italian yields, they have come down 300 basis points and that's all very good but at the same time there are still long-term structural issues to be addressed here. they are buying some time so that can happen. >> it is worth pointing out what we've done with the ltro we have loaded up the weakest banks in europe with more of the weakest sovereign debt. there's a big pet being placed here that we don't expend a

greek or portuguese debt crisis any further, rob. >> yeah, no, you're right. there's certainly some risks here but at the same time this liquidity crisis seems to be in the short run anyway fix iing itself but we have to continue to have these long-term discussions to fix structural issues as well. >> all right. thanks for that, rob. and let's get you an update on what we're expecting in terms of the calendar on wall street. looking ahead to personal income and spending data out at 8:30 a.m. eastern time. we'll be getting the manufacturing index for february and construction spending for january, plus a number of fed policymakers will be speaking told including cleveland fed president and atlanta fed president dennis lockhart as well. on the corporate front keep an eye out for the results of foot locker, wendy's, kroeger's and big lots. i want to bring you back as we look ahead to the trading day. we have a lot of economic

trading points today. how do you think these will speak to the larger environment and the decline that we saw post-bernanke's comments yesterday? >> well, the numbers that are expected for, say, weekly initial jobless claims and the ism index, they're pretty positive. so i don't think we're going to see an upside move from that. i mean, conceivably if they disappoint, today could be a down day. i don't ex inspect that. i think these numbers are going to continue to improve through time but you do get the periodic one-off number in a series where you do get a disappointment. >> and some of the retailers coming out with numbers as well, we've seen strong retail sales from the companies that have reported. so do you expect that trend to continue? >> i do. but, once again, through time we should see improvement there but today could be the one-off day with where maybe the numbers would would disappoint. i'm not expecting a lot of positive surprises today but i'm not really expecting negative surprises but the odds are if we get a surprise it would be bad. >> david, what's key for you

today? >> the ism is always key and the employment part it have is absolutely key. they've been on a run at the moment. so there's no reason for them not to be, but i think the thing that we keyed ourselves up for if you remember during greenspan we looked at the pc deflator. it was the main thing to look at. the thing to look at is the unemployment rate. that's friday, a week. that is the slam dunk number to look at. if that continues to fall, the fed may start reneging on its waiting promise. >> yeah, of keeping rates low until an extended period of time. >> you make a promise you don't really mean. >> never at the offset. that's a very costly mistake. david, that's very costly. david bloom joining us from hsbc. thank you to you both. and so on behalf of jackie and i, have a great day. coming up next, "squawk box" and the countdown of markets state side.

good morning. stocks starting a new month today. february could be a tough month for the bulls to top. today's test key reads on jobs, manufacturing, auto and the consumer. it's thursday, march 1st, 2012. "squaw "squawk box" begins right now. ♪ of the blue bird as she sings 6:00 alone would never ♪ good morning. welcome to "squawk box" on cnbc. i'm becky quick along with joe kernen and andrew ross sorkin. this is in honor of david