world leaders in world leaders in seoul issue an uninspiring communique vowing tough action, but few specifics in their fight against nuke cheer terrorism. jamie balance bullard sa says -- bernanke's comments boosted bank and resource

stocks. >> and chinese industrial profits fell more than 5%. first sustained drop indicator since 2009. you're watching "worldwide exchange." we are getting of course some communique coming out from the north korean summit. world leaders pledging strong action to combat the threat of nuclear terrorism including minimizing the use of highly enriched uranium that can be used to make bombs. apparently it's a planned nuclear summit communique, seeks a safer world. uninspiring are what some people are calling it. of course world leaders are gathered for the two day nuclear summit, reaffirming the immediate to work harder to ensure a safer world for all. it also made a joint call to

secure all vulnerable nuclear material in four years and back the international atomic energy agency and facilitating international communication. we will head out to seoul for the latest details and analysis in about 30 minutes. meanwhile draghi says the liquidity operation will not have an inflationary impact. he said an increase in the rate of inflation would only be expected after an increase in money and credit, not an increase in central bank liquidity. draghi sounded an optimistic note about the recovery in money markets. >> there are signs of stabilization in both financial markets and overall economic activity, although sablization still at low levels. so when people say i'm

optimistic, i think i'm optimistic in perspective comparing the situation to what it was four months ago. i'm not optimistic in absolute value. that would be premature. >> he and the central bank continue to remain alert to threatses to price stability and now facing pressure from a consortium of policymakers who are been urging the central bank to prepare an exit strategy. >> and james bullard says a third round of quantitative easing isn't necessary unless the u.s. economy starts so-tto sputter. he tells cnbc he'd like the ned to assume a more normal monitor policy as soon as possible. >> i think qe-3 would require the economy to deteriorate somewhat from where it is right now. the basic story on the u.s. economy is that we've had good news over the last six months or

so, especially compared to the recession scenario that was being painted in the august/september time period of last year. chairman was describing there that the improvement in labor markets has been a little unexpectedly strong, so is that's certainly welcome news and he was sort of talking about some of the explanations for that. >> top economists believe the fed's easing money policy has been effective, but most don't think the central bank should pump more money in to the economy. and the latest survey by the national association for business economics, more than 60% says the fed's first two rounds of qe were a success, but 81% say the ped shouldn't do anymore bond buying this will year. while a majority support the fed's commitment to low rates, only 60% say rates should stay at these levels through 2014. joining us as our guest host, we

have pat drink green. good to have you with us. do you think the fed should be pumping more money? >> not at the moment, no. we've had better than expected data. the real question is how much of this boom has been due to better weather, things like that, and so that the encouragement of tax incentives for capital goods that obviously expired at the end of last year andic t i thine big question is how will things pan out over the next three to six months. clearly it's the u.s. propping everything up. if you think spanish bond yields is stabilizing, then i think he's definitely bordering on the optimistic. and then you look at the pmi data from europe, which is pretty awful and dipping back down, so i think bernanke's wise

to stay on this cautious route because there are an awful lot of mine fields out there. china is very clearly slowing more rapidly than most thought. the question is if you're talking about qe-3 and we start to see the cracks, do you wait for the wall to art sum blenk door down or do you act beforehand. at the moment, everything is looking reasonably okay and as long as we get -- i suppose the question is the employment market really getting a sort of a velocity that's becoming self-fulfilling. that as employment gets better, even though the data that week is slightly disappointing, and can the u.s. move on on its own. >> patrick, it's interesting what those comments have done because before they came out, most of this year, what we've seen is -- well, certainly over the course of march, we saw stocks going up with the dollar

and yields heading higher on treasuries. today we have classic qe trade, which stocks up, dollar weaker, yields down. so i'm wondering which is the trend -- which of those two will dominate more over the next few months. >> i actually think we've probably had a change in trend. today is a reversion of what we're used on. and you have to look back to the 90s when we used to have the strong bnd market, equities going up and the dollar going stronger. and there are changing metrics for the u.s. and obviously everyone is doing qe now a days. not only that, you have things like the longer term energy story which is positive for the u.s. we might have higher oil prices in the short term, but longer term, the u.s. is its own domestic energy production is

continuing to glow and will continue to do so over the next five to ten years. >> is the dollar going to be driven by yield or not? >> i don't think so. you're talking about in a world where everyone's rates are low, so you look at europe and bund yields are at 190. i don't think the yield is so many the dominant force that it was at all. with everyone at zero, yield becomes a marginal game. it becomes much more structural than that, i think. >> stick with us. chris even, what is happening with the asian markets today? >> the picture is looking at i walk back towards the board, mostly a pretty good session. we're seeing a pretty nice session. take a look at the japanese market. big winner today. highest close since the tsunami hit more than a year ago. up 2.4% and blue chips getting a

really nice boost. the only weak session we're seeing is in the shanghai market. investors starting it price in, maybe the pboc is not going to relax monetary policy given high commodity prices and inflation. so that's keeping sentiment weak. hang seng up a strong 1.8%, but traders say it's window dressing. some bargain hunting going on. hopes maybe the rba may have to do something to boost its soft domestic economy and the sensex trading up 0.1%. so overall a good session with

the exception of the china market. >> in europe, advancers outpacing decliners by around about 7:2. of course yesterday up 0.8% for the ftse 100. today up another 35 points. ibex after posting losses yesterday up one and a third, so regaining. what's interesting is the qe trade in the united states very firmly back on resources which has been a big underperformer so far this year. but there are no sectors in negative territory, but the more defensive he said is down. euro-dollar a little firmer this morning. we got a 133.68. euro-yen 110.49 at the moment. we hit that 4 1/2 month high

last week before dollar-yen 82.76 is where we stand. on just a little bit higher over the course of the session. commodity currency has underperformed after the weak could chinese data. has rebounded a bit. we had a two month low last week. spanish yields and treasuries, treasuries just benefiting from the qe remarks a little bit overnight. ten year italian yields back over 5%. spanish yields below the 5.55 we hit last week. bunds are benefiting broadly speaking. still to come, michaels stores reportedly going up for a public listing and we'll discuss why investors may be looking at ipos differently. after the break, an analyst sees

a 65% up side in the unicredit and why he thinks it's a buy.

unicredit set to support its fourth quarter late in the day. our next guest says he sees a 65% up side in the sock. banks have been leverage plays on the view of the government debt.tock. banks have been leverage plays on the view of the government debt. how much you can divorce a stock like unicredit from risk sentiment with regards to italian public finances? >> unicredit we believe has become a specific story in the european context following a quite strong business plan an a large and a third one in three years. it's a restructuring story. and we believe without enough visibility and capital was into

the credible one, now the capital has been raised and they have cost cutting, they're getting out of businesses that they didn't make it up big in the last few years. effectively trying to detash from sovereign risk. >> are you happy they won't have to come back for anymore money? >> yes, and not only that, i think we have spotted that they have put on the side 2 to 5 billion hidden capital buffer in the plan that should cushion any other risks that they should face. the previous management tried to make it big in to investment banking, open big operations in london. it lost quite a lot of money through the former franchise and

they're stepping out of that. >> stay with us because we just got news coming out of south korea. christine. >> south korean president apparently holding a press conference at the summit. the 54 world leaders gathered in seoul have just issued a communique that's been deemed uninspi uninspiring, and have pledged to work harder for a safer world for all. let's see if there's anything we can take away from this press conference. he's speaking in korean.

we will try to get a translation for you as soon as it comes out. but we do know of course north korean nuclear weapons programs are not on the agenda. neither country was invited to the forum involving some 50 world leaders. >> we'll keep our eyes on that. i understand why you say unicredit is a unique situation, but surely if sentiment soured again toward italian debt, unicredit will get washed down. >> we think the whole sector starts to feel toppy. italian banks are trading up around 50% discount. so we feel that's a safer buffer, not only that, but italian banks have protected themselves so you're right, if southern risk comes back, i do

expect -- >> with the l it tro money, they actually loaded up a lot more on italian debt. >> unicredit is an exception in this. unicredit has been much more cautious on that. so we believe it wouldn't be the number one name but, yes, it would be subject to that. >> how does this compare to the spanish banks? we've seen yields on spain rise a bit. sfwh we keep an optimistic approach. you can get in at half the price on the main listed ones. secondly, we're wary of government m&a in spain, increasing k35s for tcapacity f banks in a shrinking market. so we don't see that much value

available. >> do you you think -- one thing as far as the eurozone sector is concerned, we've only really just started the process of deleveraging and recapitalization. how long is this going to last, this process some i wonder how different the landscape will look because we haven't really had the big m&a and closures that we've had in the uk or certainly the united states. >> so actually it's a mixed picture. you have within the european bank sector some banks that do not need to delever. italian banks are among these. both on the liquidity and capital front. and then you have banks that have just started the leveraging. main the french and germans in particular. and we expect that on have not to be priced in fully yet and that's why we're more optimistic versus wholesale. >> good. thanks. and just mentioned, a billion

euro bank aover has been agreed to this in spain. la caixa will pay 980 million euroses in the deal. if the merger goes ahead, the combined group would become spain's biggest domestic bank and would meet tough new capital requirements set by the spanish government. julia has joined us to talk about this. >> as you say, this is a classic example of the changes going on in the banking sector. the government has made it very clear they'll continue to push ahead with increasing high provisions. the entire banking sector has to raise 50 billion euros in order to boost real estate and mortgage loans this year and banks that can't do that, can't raise those provisions are

expected to merge. for the smaller banks, playerly those, it will make it difficult for them. so in the case of local need i can't reports, this bank is an amalgamation of four that they were unable or looked likely to be able to raise 2 billion in order to boost those provisions and they've moved to this merger option. they're looking to boost their core capital ratios as per the requirements. it's difficult to predict. data shows that real estate loans which is a key issue in spain, 175 billion were spoke spokely problematic according to the definition. now, the data on the loans depends on what type of loan you're looking at.

real estate and construction loans at 1% and mortgage down at 2.7%. but they do expect earl deterioration in nonperforming loans over the next two to three years and i think it this is the main point. we are expecting a continued deterioration in loan quality to remain an issue. >> all right, julia. thanks for now. >> the banking and financial space also in the news today, in china of course is an apparent bid to boost investment and protect savingses. the government may be making a number of rule changes. >> that's right. several media sources are reporting on the possible financial reforms beijing may be

ready to take. chinese shorts are finalizing plans to allow individuals to invest in oversees financial assets. the plan could be an important step toward liberalizing china's capital account. meanwhile china is looking to boost foreign investment levels after china's fdi declined for the fourth consecutive month. they've raised foreign debt quotas. according to dow jones citing an unnamed source. and lastly, the government has been wary of pilot projects allowing limited investments in volatile domestic stock markets. they have been told they can be invested in government bonds. >> thank you very much. pat rick, with a do you make of

that? >> my initial reaction is big deal. one of the interesting things is that what we're seeing is a fundamental shift of flows in to china full stop. they're paying it down as they no longer believe fx depreciation is intact. we actually have a $4 billion deficit for the first two months of the year and increasing signs of capital flight from china, as well. hot money flows are coming out. and despite all the official controls, i think that chinese themselves are piling money overseas. you look at russia and we estimate private capital flows about 80 to 100 billion u.s. i think it's my seef to think

that in china and moreover the recent political turmoil will accelerate the floews. the chinese increasingly want capital to come in, which is a sign of weakness on their part. so china actually it's been falling for about the past five or six weeks. looks dreadful from a technical perspective. i really do -- my big concern is that overall while the u.s. is puffing up things, europe remain as basket case for all intents and purposes and the problem is china is continuing to slow and i think generally it's given it's the global growth, most investors are far too optimistic about the outlook given what's going on in china. sooner or later, it will be one

of those wilde. coyote moments. >> what can you you call it, wile e. coyote? >> yes, the cartoon figure who looks at the cliff and looks down. >>s are ross, do you remember that? >> i do. jim o'neill was on and he's not of that view. says everybody should be happy to grow at 7.5%. >> the question is what is the operational leverage in china. you have the agricultural bank results last week. let's not forget that was against the background of very strong gdp growth last year. nominal close to 15%. so let's say 10% nominal gdp growth. i think that's a general concern. plus the overall success of

investment, the it government themselves noticeably if you talk about all the political action going on at the moment is that the government themselves specifically identified corruption within soes. >> okay. going to be a lot of corruption. we'll come back to this. still to come on "worldwide exchange," the oecd is due to p unveil its latest.

headlines today, woerld leaders issue an uninspiring communique vowing tough action, but few specifics. >> and jamie bullard tells cnbc qe-3 shouldn't be if the cards you can the u.s. economy starts to fall apart, but benner can had more dovish comments boosting bank and resource stocks. >> china industrial profits fall, the first since 2009. nuclear discussions going on

in korea. just had a meeting between president obama and the spach stand leadership. obama says he hopes pakistan parliament review has a balanced approach of respecting pakistan solve ripity. he says either wants to see terrorist get hands on nuclear materials. let's bring you up to speak with where we've traded. chris seen. >> hopes of more stimulus is lifting. nikkei 225 posting its best performance since the tsunami hit more than a year ago. banks and automakers getting a

strong lift. only weakness we're seeing is in the china market, down 0.1%. of course we had the industrial profitability indicator which will is down, a sign earnings are slowing in the chinese market but there are hopes investors are pricing in that the pboc may not be easing policy anytime soon. market drifting lower as a result. traders saying a lot of gains are more because of window dressing ahead of the end of the quarter. we have financials, real estate developers high as a result. bargain hunting helping to lift the market. australian market up 0.9%. fueling hopes maybe the rba will have to do shift to lift its

weak economy. so with the exception of china, it's a pretty good session all on bernanke. >> foot eye 100 up half a percent. dax up 1.2. 61 points higher. ibex up by similar amounts that it was down yesterday. take a look at the sectors. you'll see it is the additional qe plays here. resources are up. and then we have banks and autos. despite bmw with the recall. but there are no sectors at the moment in negative territory. in terms of currency markets, euro dollar has been trending higher, 1333.68.

but that was the one month high we were at on monday. dollar-yen 82.08. the us a say dollar actually after underpurchasing last week on the weakness has just regained ground. treasury yelleds sti s yellede elevated. ten year bund yields just around 1.94. other things we're watching, the oecd secretary general and eu commissioner in charge of economic affairs are currently holding a press conference to address the latest survey of the european economy. ecb may need to widen nonstandard measures.

christine. >> focusing on china, we have industrial firms clocking a rare drop in profits in the first two months of this year according to the country's national bureau of statistics. many listed chinese firms are already predicting bigger drops in earnings. it strengthens the case of policy easing as chinese exports continue to weaken. let's talk more with andrew sullivan. andrew, good to have you with us. we have china very weak today all on concerns that maybe the pboc should do more. you're still positive. why? >> i think certainly the chinese companies are seeing a slow

down, but china is in a very good position to create more stimulus if it needs to. the key thing in the short term is they're trying to shift away from the export led market that's historically been a stamping ground and try it on foster that more domestic consumption, trying to get more people to buy goods and services going forward so they can build a more diversified economy. >> you're talking about the rebalancing process. what which names or which sectors would benefit most from this move? >> i think we've already seen i guess a move from the white goods when they did their new for old scheme. i think we'll see a development of that in the short term and they'll try to improve the intra structure type plays going forward. and you'll see the domestic

staples continue to improve tloud as people become more western sized in their spending patterns. >> patrick, what's your own view of the chinese banking sector? >> is it still has the outstanding issue that the government is trying to tackle the outstanding shadow banking systems, but these still have a large influence from the central government this how they treat their loan port follow i don'ts, and how they lend. and that will be a concern. we haven't really seen a great commercialization of the banks and probably a true risk return scenario being put forward. and that will cause people

concern. and certainly the current concern is on the local government loans especially since they're at the same time targeting a slow down in property. >> how does all this bundle together? a lot of people if we get a sharp slow down in process, we we could see china head for a hard landing. >> i don't think we'll see a hard landing on or sharp slow down. they're trying to at that time bubble out of the speculative end of the market. it still needs to build housing for the masses and it will probably try to push a number of the existing property developers into developing that type of housing. it can put size restrictions on the properties that are produced. we'll have a stop gap i guess where the developers have to try to get rid of their existing inventory of the largest nonmass

residential units. but going forward, they'll try to target that to get more normalized pricing of property. and when we get to that stage, then the normal property sick kell will continue. until we get this, tlg be a restrictive policy. >> railways makes a good investment in your view. why this sector? >> you look it at the high speed link between shanghai and it's a two hour flight, slightly longer on the city. on the train, you go from the somewhere of the city to the center of the city. so you don't have the hassle of getting the taxi back in. and i think people realize the high speed rail services are as good as probably the euro star, that people will start using it

that more. and chi into needs to be able to have a rail services that can transport resources around on. short term we've seen problems, we've seen train crashes, construction issues. i think that's the normal developing problems of any scheme like this. we had the same thing with the boston tunnel. so that's the not uncommon in large government cases. but they will be more stringent going forward. the leaders will obviously be the construction companies, the followers are the rolling stock manufacturers and probably the safer play is the rolling stock manufacturers. >> all right. andrew, thank you very much for your time. good to talk to you. the aij saga was a high profile scandal. we've got a big apology from the chief executive.

let's go to the nikkei for the story. >> the head of aij investment advisers admitted his wrongdoing for the first time today. president of the asset management firm which lost most of some $1.8 billion pension monday apologized saying that he was painfully aware of his upon thes. this was the first time he appeared in public since the scandal came to light about a month ago. he says it came from trading against the market trend. and that he was the one that took the initiative in falsifying investment reports, but denied any intentions to cheat on his cliptss. stressing that he was working to regain the losses. he admitted he has dropped his accountant to inflate figures in the report so aij appeared to be

making stable profits so it could lure new clients. the whole scan delhi lighted japanese firms. calls are mounting for tightened regulations. that's all from the nikkei business report. back to you. >> thank you very much. >> we'll continue to monitor what's going on on the span spanish debt market. they sold 1.5 billion of three month t-bills. bid cover 3.5. and they sold 1.08 billion six month t-bill, more than the 0.76. bid to cover 5.6, but a strong 10 popt 2. they've already raised 40% of hair total funding costs.

average yields on the three month slightly lower, 0.38. six month, slightly higher, so we'll keep our eyes on that. we turn our attention to gold now. the price of gold risen over 18%. next guest says the price could hit another $1800 an ounce by this time next year. malcolm, thanks very much in-keyed for joining us. you have a number of prospects. gold seems to have done better on scares of deflation. is that your view? >> yeah, i'm certainly bullish on the price of gold.

i think if you look at simple noninvest himself supply and demand fundamentals, there might be headwinds for gold. but it's an emotional investment choice. >> that's my problem with it. you shouldn't invest on the basis of emotions. >> that's right. but it is logical for people to invest in gold. >> you're not paid for holding gold. >> that's right, but you get a return when the price goes up. i think the price will continue to go up because we continue to look at low inflation, anxiety around europe. gold is a logical place for people to invest. >> someone told me you should

buy gold if you believe china and independent that will continue to buy. so is china and india still buy something. >> they appear to be. we've seen a number of commentators reinforce that position. they think they are significant consumers of gold and they're looking at a global position, at what's happening in the u.s. and europe. for them gold is a logical investment choice. >> what will it if a for gold to reach 2,000? >> i think we continue to see very low inflation, maybe more quantitative easing. i guess it's more optimistic this week than it was a month ago, but there's still anxiety around europe. and while those levels of uncertainty are happening around the world, then gold continues to be a logical choice for

investment route and then the price will go up. >> let's look at the queenslands. going to start drilling again after a wet period. how is production in term cost of production? >> that's a very important point. when you look it at the gold mining industry, it's all about margins. so we can talk about the price of gold, but we also have to manage how much it costs us to produce an ounce. we're in a strong position because gold is essentially from surface through to the top 200 meters as far as we know now, that reduces our costs of extraction.

maybe our capital costs are much lower. so very much gold -- >> how long before you you know definitive definitively? >> definitively, it will probably be a two year exercise. these things cost money and take a lot of time. >> and are you funded to get to that stage or do you need finance something. >> we'll need to have another financing round to get to that stage. and as we can demonstrate good results over time, that should be reflected in improving share price and certainly we see that when we look at other projects that the company is associated with. the increase in value over a period of about two years went from $40 million to $1.1 billion in market capitalization terms. so this period for mineral exploration where you can add significant value through defining additional resources is the sector that we're playing in. >> okay.

thanks very much for joining us. good to see you. bmw is recalling 1.3 million cars worldwide because of a possible problem with a battery cable cover. patricia has more details. it's not the most result molds. five and six series? >> yes, five and six series dating back a little bit in terms of year, but we have to put it into perspective. there are about nine cars globally that have this problem detected and need repairs. and because of those nine car, they recall 1.3 million cars. and if you think that is almost as much as they actually sold in 2011, which is 1.38 million,s's incredible. so they're doing a proactive move in terms of recall.

and they were fined because they haven't reported early enough about potential problems in america. so all in all, i think you're seeing a move to the up side perhaps on the back of an increase of a price target coming back from deutsche bank. price target is 68 euros per share. >> all right. patricia, thanks for that. still to come, we were just talking about gold. what are you going to do with came modity currencies? %

i was having trouble getting out of bed in the morning because my back hurt so bad. the sleep number bed conforms to you. i wake up in the morning with no back pain. do you toss and turn? wake up with back pain? if so, call us now. you'll learn how the sleep number bed helps relieve back pain by allowing you to adjust the firmness and support to conform to your body for a more proper spinal alignment. just look at this research... 93% of participants experienced back-pain relief. plus it's a great value because it costs about the same an innerspring yet lasts twice as long. so if you want to sleep better or find relief for your bad back, call now. call the number on your screen for your free

information kit with dvd brochure and price list. call now and we'll include a free $50 savings card. call now for your free information and this free $50 savings card. call now!

a communique a communique pledging a safer world for all, but short on many key specifics. the details live from seoul. >> as you mentioned, among what the 50 plus delegates he conference are pledging, joint

call to secure all material within four years and a strong international corporation to fight nuclear terrorism. they say they want to minimize civilian use of highly enriched uranium and convert them into low enriched uranium. we know the summit has been hijacked by north korea wasn't even on the agenda, but the planned rocket launch in mid april has took center stage. north korea rebuffed saying the

dprk will never give up the launch of a satellite for peaceful prurps. and calling president obama's stance confrontational. they will prep for a possible launch gearing up to deploy missile speaker september tors. so despite this having been a big event, uncertainties regarding the possible rocket launch next month still lingers here in seoul and elsewhere. back to you. >> thank you very much for that translation. >> and let's recap, as well, some of the comments out from the oecd suggesting the eurozone should boost firewalls towards $1 trillion. they said further reforms are needed, as well. and should consider a more integrated consideration bank failures falling on the private

sector shoulders through the use of bail instruments. patrick, we've seen a big trade this year, if you've been short australian dollar, would you have made a lot of money. the aussie of course as we've seen today might rebound. but so which trade do you you favor? >> i think the biggest concern for me is china. growth is clearly slowing down. it looks like production will be unchanged. that's not good for australia. and you have the head of dow kem cal earlier on talking about how australia was excessively exposed to the chinese economy. so i think ultimately if china does continue to solve then, then we should see perhaps canada as a greater energy exposure, australia has the iron ore and coal. so i think we probably stay with

that one, but watch out for general weakness. >> all right. patrick, thanks for that. court, nice to see you this morning. >> yes, either and he nice to see you again. good morning, ross. coming up, the s&p and nasdaq have fresh 52 week highs for a second straight day and our next guest says he's more optimistic the u.s. will recover relative to the eurozone. stay tuned. 

the the james bullard says qe-3 shouldn't be in the cards unless the u.s. economy starts to really fall apart. >> and warns europe's debt crisis is far from over and urged leaders to boost the if you said to a trillion euros. >> world leaders in seoul issue an unen entiring communique vowing tough action but few specifics in theaeir fight agait nuclear terrorism.

>> you're watching "worldwide exchange." great to have you with us. let's take a look at how the u.s. markets are poised to open. looks as if we could have a strong start. the dow would be up by more than 61, the s&p would add more than 7 1/2 and the nasdaq would give almost 12. we've had a very impressive run for the u.s. markets so far in one day we have erased all of last bike's losses and last week for equity it was one of the worst weeks we've had since about mid-december, but that is far in the history books. it remains to be seen if we can continue that today. >> european stocks are up this morning again boosted by the bernanke speak. ftse 100 up half of 1%. 1% gains for the dax yesterday, up nearly another percent today. ibex after losses yesterday rebounding up about a percent. fairly healthy t-bill auctions.

>> james bullard says a third round of quantitative easing isn't necessary unless the economy starts to sputter and decline. he's a nonvoter but tells us he would like the ned to resume a more normal policy as soon as possible. >> i think qe-3 would require the economy to deteriorate somewhere some what from where it is now. we've had good news over the last six months or so, especially compared to the recession scenario that was being painted in the august/september time period of last he year. the chairman was describes that the improvement in labor markets has been a little unexpectedly strong, so that's certainly welcome news and he was sort of talking about some of the explanations for that.

>> this as top economists believe the fed's easing money policy has been effective, but most don't think the central bank should pump more money in. the latest survey by the national association for business economicists, more than 06% suggest the first two rounds were a success, but 81% say they shouldn't do anymore bond buying. only 6% say rates should stay at these levels through 2014. joining us for more, co-founder of absolute strategy research. if you're going to have more qe, it's because we still haven't got through the impact. how will equities do in this next phase? >> our sense is that actually the u.s. deleveraging process is going pretty well. the better vinement that we have

coming through. there is a credit cycle emerging. but we did a study last week looking at deleveraging throughout the last 130 years and what you find is that the top of the debt cycle tends to be the bottom of the equity cycle. the next ten years after the peak typically saw returns of about 200% to 300%. so we think should you bring it on. >> so you're following goldman rule in a sense. we've seen corporate earnings taking a much greater share of gdp than income. so will they still benefit? >> i think we have to see a switch back to labor income and we ran a survey of u.s. households financial position which we also published and what that showed was that 63% of the

u.s. working population believe that the u.s. economic model is no longer working in their favor. yes, it would come down, but will it come down sharply. we think it's a much slower process. and with the level, normally you'd expect unemployment to be much lower. we still think unemployment will be 7.5% before the election. >> this this is courtney in the u.s. i know unemployment is certainly an overhang over the markets, both financial, economic and sort of that consumer market and we're talking about the rising price of gasoline and it's crept higher and higher. getting close $4 a gallon for the national average. at what point do we see demand destruction start to occur when consumers stop spending discretionary income elsewhere? >> i think proper factors that come into place. firstly, we found it takes around about a 6% move of more

than 50% to really squeeze the household income side. and even then, equities really only start to go down almost a year afterwards looking at the results of the data since 1973. the second factor is don't forget that this is an offset here. food prices are set to come down dramatically. we think food prices -- >> what will drive that? we still have developing populations in emerging markets. >> we're looking at the effects from the slowdown that we had last year. that is coming through. also probably going to drive chinese inflation lower. we think chinese inflation could be sub, too. these are the positives that will offset some of the weakness coming new frthrough from the o price. but the oil price needs to be

back above 140 we believe before it really starts to impinge economic activity. clearly if we do see tensions a rise and iran becomes a real issue once more, as i say, about we get above the 140 area in to the $200 per barrel, then clearly equity markets will take a hit. and short term we feel the sentiment factors, some of the economic momentum, might leave the equity markets exposed. so if anything like that came through this the very short term, then, yes, we definitely have problems. >> thanks for those spouts. still to come, bmw recalls 1.3 million cars worldwide. ♪

♪ why do you whisper, green grass? ♪ [ all ] shh! ♪ why tell the trees what ain't so? ♪ [ male announcer ] dow solutions use vibration reduction technology to help reduce track noise so trains move quieter through urban areas all over the world. together, the elements of science and the human element can solve anything. [ all ] shh! [ male announcer ] solutionism. the new optimism.

a quick a quick look at how the u.s. markets are poised to open. looks as if we could have a stronger open if we were to keep

as indicated right now the dow jones would open up by about 67 points. s&p 500 would addle. and the nasdaq would continue its nice run adding 13. the nasdaq had its best close in over 12 years. those tech stocks still making a run. we lad a decent amount of money. period of time. >> up some 20% so far this reye. good exactly.ad a decent amount. period of time. >> up some 20% so far this year. good exactly.had a decent amoun. period of time. >> up some 20% so far this year. good exactly.yad a decent amoun money. period of time. >> up some 20% so far this year. good exactly. >> apple a lot of the nasdaq. >> a significant proportion. >> ahead of that u.s. open, we're up 7:3 advances outpacing decliners. we had gains yesterday, ftse up 0.8%. trying to build on that this morning. xetra dax up over a percent yesterday. 0 .9 at the moment. it is a traditional qe play

here. we have banks firmer, insurance, technology, autos up. best performer, basic resources. if you get qe, resources fallly to better on that. as far as euro-dollar is concerned, we got up to 133.68. so we're now right on this resist taps point fance point. dollar-yen still steady, 82.76. we've rebounded. and the key underperformer has been the aussie dollar because of china, but we've bounced off the two month low we hit last week. aussie dollar back up to 105.52. that's on the qe trade. as far a f f f f f f f f f f f f

cotalian debt back over 5%. christine. well, here in asia, markets are mostly up of course on that fed stimulus. the big winner is the japanese market. up more than 20% this year, all because of easing measures from central banks around the world. we had the automakers, the banks getting a lift on the news. only weak spot from china, a lot of people pricing in maybe the pboc might be a little bit late or may not enbe easing policy as much given high inflation, given high commodity prices. elsewhere, a nice session over in hong kong, up 1.8%. mostly on window dressing ahead of the quarter. and we have the real estate developer, financials getting a nice lift. elsewhere, taiwan weighted index

up 0.8%. australian market, a nice session. fed stimulus might encourage the rba to cut rates to help out the australian economy and sensex up 0.7%. so all with the exception of china, a nice session. and that's your global market report. bmw is recalling cars for a possible problem with a battery cable cover in the trunk. autos the best performing sector today. so somehow bmw doing in the mix with that? patricia. >> the recall does not bother investors at least today. the stock is up about 1%. deutsche bank increased their own price target on the stock to 68 euros. so its he an interesting one and

what is really important is to put it into context. of course 1.3 million cars sound a lot before take them in to repair is one thing. it's more or less what they sold in 2011. however, in terms of what is really happening, the fault was reported with nine individual cars and they're doing a preemptive step by recalling these cars and trying to look at it of course for free. it should be done in about half an hour's time. but takes minor problem as an actual level. the other thing, of course 1.3 mill pion potentially at risk. only about a month ago, bmw was fined about $3 million, which is peanuts for a company like that, but it is the actual effect. they were fined because they didn't report early enough potential faults. so at the moment, the cost factor is up, bmw is up, the

traders are in there and analysts still convinced about the stock. >> was the five and six series? what were the years in. >> between 2003 and 2010. so i'm sure you're driving a 2012 bmw. >> no, i'm not, but i don't have those models. so i'm all right. we've had the results of italian bonds. two year auction. the yield down 2.352%. it was 3.1% at the end of february sales. so still good news for italian debt. we did see spanish six month t-bill auction bid to cover a little bit lower in the yields, but euro-dollar helped even higher on the back of that good aucti

auction. >> what car do you drive? >> i drive a bmw, one of the cars that i drive. i do support other makes and models, as well. >> okay. good to know. the nuclear security summit is wrapping up in in seoul. we have the ghun kay larcommuni a safer world for all, but short on many key specifics. >> wasn't anything really expected out of the communique. but some of the key points, a joint call to secure all the nuclear material within four years. also a strong international corporation to fight nuclear terrorism including minimizing civilian use of highly enriched uranium that can be used to page bombs and converting them into low enriched uranium fuel.

also reaffirmed was the roeflle the aiea. and while they say we have moved a step forward from the political pledges mac in 2010, we all know that the summit this time around has been overtaken somewhat by north korea and its planned rocket launch next month. president obama has blasted japan prime minister followed suit. we have heard concerned voices from both china an rush sharks but north korea is not listening. state television agency said the dprk will never give up the launch of a satellite calling president obama's stance confrontational. so again we've seen big words and what we've achieved hey have been symbolic in getting the world together. but there are still a lot of uncertainties.

>> thank you very much for that update. hundreds tied boxes filled with s socks and propaganda aimed to have them fly with messages of reunification between the two koreas. and that's it for me. i'll be back tomorrow with news moving markets here in asia. >> thank you, christine. have a gisood might. is it the end of the line for the ceo of bats some t bats? the latest after that technical glitch last week.

ceo of bats has reached out to the board. wall street journal says the board will meet later today, but who one appears for him to be removed. and mf global's general counsel plans to tell congress she wasn't a waiver how serious the shortfall in customer accounts was until the company's final

hours. she's among the group of current and former mf executives who will testify before a house panel wednesday. and in prepared remarks, she says she resisted having an mf employee sign a document for jpmorgan that fund transfers were proper. regulators are investigating whether $200 million transfer in the days before mf global collapsed included customer money. >> worries over spain's ability to push through austerity measures, a general strike planned just one day before the government presents its 2012 budget. julia is in madrid. there's a fight going on between the spanish government and the rest of the eu here. it's pretty clear of the greek experiences that it's not austerity per se or the lack of austerity that pushes yields higher, it's the lack of growth that pushes yields higher. >> absolutely. we do tip continue to talk aboue

deficit where they came out at the beginning of march and said we can't meet the 4.4% deficit target, we want to bring it in at 5.about 8%. there was then this negotiation between the eu and spain to agree on a 5.3% deficit, but ultimately the deficit aspect is just one part of the equation. on the other side, we have growth and where spain is concerned, the imf are anticipating two years of deficit. and anticipating a fall in growth of 1.7%. citigroup anticipating growth to fall minus 2.7 abo%. so we seat similar problem we had will greece. the unemployment rate here is now approaching 23%. similar to greece. for the youth, unemployment is 49% and that's also why the

general strike planned on thursday reforms are now in place, but in terms of the budget what the analysts will be looking for, they'll be seeing if the borrowing level will be adjusted because obviously we've maneuvered will deficit level up 5.3% and spain have actually managed to raise around 43% of the financing requirements. only 23% done so far.other thing we want to look at is whether there is a softening of the approach that they take in in these regional governments, the 17 autonomous communities, given the election results. don't forget that aspect is important on friday. so a lot of negotiation the next few days will be key for the credibility of the spanish government and how they choose to proceed going forward. >> thanks so much.

ian, what's your thoughts on how the peripheral eurozone crisis still has the potential to upset the equity bull case? >> i think it's one of the factors that could play in on the negative side in the short term. we're concerned the government bonds are still trading like corporates. that means they're geared into the growth story. interest rates in spain we think are almost 400 basis points higher than they should be on a standard economic model. and with fiscal policy set to remain tight and perhaps tighten further, the bottom line is the euro has to give. so today's upward move in the euro just exacerbates the risk that the spanish equity market will be under pressure. >> your call is that the euro will weaken. >> we think it has to come down. we think 110 parity perhaps to

make sure that spanish companies are competitive globally and germany is super competitive so they spend their money in spain, greek, portugal, et cetera. >> okay. courtney. >> forget reading, writing and arithmetic. our next guest says the market will be driven by the three es. economy, earnings and you're rop.

james bullard says quce-3 shouldn't be in the cards unless the u.s. economy starts to fall apart. and leaders in seoul issue an uninspiring communique vowing tough action, but few specifics, in their fight against nuclear terrorism. nice to have you with us on "worldwide exchange."

let's take a quick look at the futures to see how we're poised to open. looks as if we are guiding higher. however, we've lost a bit of steam in the last couple of minutes. if the maush kets were to open now, the dow could add 52, the nasdaq book up by 9. the nasdaq up 20% year to date. almost 2% yesterday with its highest close since november 15th of 2000. the dow and s&p also doing very well. we had a number of records for s&p consumer discretionary and consumer staple sectors. so so par those gas prices aren't impacting those types of equities. >> and nasdaq composite vying with the dax for best performing indices. after gains yesterday, we've pulled back from the best levels of the day. ftse 100 up as you can see about

half a percent. cac 40 up about two-thirds. >> u.s. markets needed just one day to erase all 6 laof last week'ses wills. bernanke's comments sparked a rally on monday. joining us now is senior vice president of the bryn mawr trust and still also our guest host. chip, i know that we have a lot going on that is positive for the global economy, however, there are still some concerns and things you've been following for a while. what could derail the know men up we're seeing in equities? >> it's the same concerns we've been dealing with for quite some time. we look at europe an recognize

in a they ha that they've assisted their issues. we like the fact that they have bean aggressive about trying to correct their situation. so that's a concern that's ongoing. earnings will be starting up next week and we feel very good about the momentum that we've been taking so far, but we don't want to see that pull back. oil prices are certainly a concern of ours. we've seen a sustained rise. whether it's a threat from the middle east or just a lack of an energy policy here domestically, we do have a concern about that. and you mentioned about bernanke's comments. even though it appears interest rates will be lower here for quite some time, there is always still a threat, do they change course, do they reverse and do they have a significant change in interest rate policy, will that go up much quicker than we all expect.

it doesn't their that that will be hear that's the case, but these are all concerns going forward. >> james bullard made comments in asia about a myriad of things, but one of which was the monetary policy, different actions that the fed has been taking. and he note that had operation twist has had modest success. do you agree and what do you think is the potential for qe-3? >> it's quite certain that bullard is behind bernanke regardless of how much he wants to put away quantitative easing. i do glae it is going to be a situation wheric it's going to be one of the last resort type scenarios. the mere fact that bernanke addressed the concerns about the lack of growth especially in terms of hiring and consumer

spending just gives confidence that they're this if we need them. but i would argue bullard is certainly behind bernanke regardless of any other comments that he might have. >> chip, one of the questions we were posing to investors in the states was how would you feel if the fed started to normalize. and the response we got was in equity investors would rather have that normalization process. how do you feel about that? >> i agree with that statement. we value equities mar greater than fixed income at this point. it's quite certain that the equity exposure that we all have at this this point is greatly underweighted.

there is significant cash on the balance sheets. companies have done an excellent job of deleveraging. whether going from completely debt free to restructuring some very unattractive debt in the past. so certainly i think that's a big positive for equities going forward and we would argue that any pull backs that we see on the short end here we would try to take advantage of and deploy more cash. >> i want to thank you both. you'll both stay with us. but coming up, any hopes to serve up tasty profits to investors this week as it's the first of nine ipos expected to hit the market. is the increase in the number of offerings a positive sign on the economy is this we ask a top ipo expert. 

james james bullard says a thirda not necessary. he tells cnbc he'd like the ped to resume a more normal monetary policy as soon as possible. >> i think qe three would require the economy to deteriorate somewhat from where it is now. the basic story on the u.s. economy is that we've had good newsoff the last six months or

so, especially compared to the recession scenario that was being painted in the august shsh september time period of last year. . the chairman was describing will that the improvement in labor markets has been always unexpectedly strong, so that's certainly welcome news. >> most don't think the central bank should pump more into the economy. in a latest survey, more than 06% say the first two rounds were a success, but 81% say the fund shouldn't do anymore bond buying this year. only 6% say rate shoes stay at these levels through 2014. american express is raising its quarterly dividend by 11%

from 18 to 20 crept as shaents . the company said it would return capital to shareholders through a $4 billion buy backs will this year. make he wills stores is starting a new project. reports say blackstone and bain capital are preparing the retail forean i for an ipo. it could be the largest retail ipo this year. the ipo market is heating up with nine companies that debuted this week. among the standouts, annie's, which could price its offering tonight. it's raised expectations now thinking shares can go for between $16 and $18 a share up from $14 to $16 two week as go

francis gaskins is here to talk about all things iipo. clearly it's a very about week for ipos. is the environment right, is it going to be a good week? bats was a disaster, but other things at play there. >> well, i think it will be a good week. what's happening is there's a facebook effect i think on the ipo market and people ask me is facebook going to bring out more companies in terms of the supply side. sure, a little bit, but it's bringing out the indiadianvesti. they want to participate and what's happening is that the online brokerage firms are getting more hits. retail buyers have been shut out, they haven't gotten into this market for a long time.

so i think the retail buyers like things like annie's which is number one in natural organic foods. so you have a company that is dominating its niche, it's doing well, coming out as a discount and something people can understand. they can go and touch and they have a lot of customers. so i think it will do okay. >> what is the impact on companies like kraft and general miles which offer lots of products but not in the offrgan foods category? >> those companies are giant. kraft has a market craft of

something like 15 build. but i'm kind of surprised that they haven't without bought ann. i'm sure they're being targeted by from duct manaproduct manage down the road, it would be a great acquisition. >> i presume private equity groups will be quite interested to see how this goes. whether that change ov will that change over the course of the year? >> 80% of it is being sold by the private equity people. there were a lot of buyouts in 2005, 2006. so this has been there for ten years so it's okay for them to bailout.

it's the top mobile advertising company next to google. sales in 20011 relative to 2010, they were up 110%. that's amazing for internal growth. the market for mobile advertising is due to increasing the 68% compound rate for the next couple years. so it could just ride the wave. it's kind of break even, it's not making money right now. sales up in december 37%. so they're really cranking up the sales. i'm just wondering whether they will show profits. but a lot of people are overlooking the profit making potential particularly in some of the cloud companies. >> not worried about profits.

what do you make of that? >> the question is whether this is indicating the peak of the market or the trough. certainly we think the absolute level of things like ipos is very -- you've seen much higher levels of activity. so short term caution, but this is signally better times to come. >> francis, is this the beginning of a pick up of much greater ipo activity for the course of the year? >> i think it's going to be a good pick up through the facebook ipo and then after, i'm not so sure. i've said it's not the definitely nothing like the dot com. they have loyal customers. the question is can their growth

rates continue. it's not the top of the market. i think it's -- will we're on the way up, though. >> there are a number that are going public this week. we've talked about annie's. and you can give us a run down of other names we need to focus on and what investors should be looking at? >> sure. it covers a broad spectrum. a waste water management and industrial process control business were bought by apollo in 2006, a $400 million ipo, coming in at 90% of sales.

afternoon october being an october acquisition is not included in their statements. so i think that will do well. any company that comes in at 90% of sales in terms of the price is dominant in in market. liquid natural gas carrier business, buying really big top line gas carriers for liquid natural gas around the world. they have a couple, a total of eight ships in the next couple years. so they're paying a dividend. and if you annualize the dividend, it will be about 2.4% and it will go up from there. so those are big ones people should look at. the two stars are the two we

mentioned. other companies, when i was looking i thought they might not do well, but the ipo market has heated up in the last week. so it's morpmed into okay to take. when you have a dog, they price it down and you have a dead cat bounc bounce. >> francis, thank you so much. certainly a lot to watch, a lot of movement there. we will be following it. we thank you very much. bp getting more on its way to divesting # $3 billion of

assets. spreads between portuguese did debt and german bunds below 1,000 points for the first time since september last year. courtney. lots of milestones we're hitting today both good and bad, i suppose about that we'll look at the trading day ahead. the latest reading on home prices due at 9:00 a.m. eastern. we preview what to expect.

we've seen yields bund ten

years just below the spread. so we'll keep our eyes on that yields have been stubbornly high. >> and the case shiller home price index is out at 9:00 a.m. eastern. prices for homes in the 20 major markets forecast to have dropped by 4% in january. at 10:00 a.m., we get march consumer confidence. economists look for a read aing of 70 down nearly a point from last month. and no less than five fed officials are speaking today. among them bill dudley testifies before a house committee at 10:00 a.m. to discuss all the aid the fed provided to help mitt indicate the eu debt crisis. ben bernanke gives another lecture to students at ghornlg washington university. and james bullard continues his tour of asia. let's get a couple final

thoughts. chip, we've had a really impressive run here for equities and i have to ask taking the other side of the coin, are we due for a correction, shallow or otherwise? >> i don't look at a catalyst that will push us down significantly. i think it's more of a breather. but i would take advantage of that situation, look for those opportunities to really try to deploy more cash. but i would leak moreards q3 versus right now. >> ian, you also get in the short term despite your long term bullish call. and chip talked will about

catalyst. >> three main catalysts. economists have started to revise up their numbers so much that beating expectations. so we don't do that then we'll drop back again because accep sentiment is close to record highs. and finally, risk positive, risk on trades are dominating. normally it's always reversed. so we say watch out short term. >> and how long is short term? >> over the next month or so. a number of factors could take off the edge. >> so i'll have the final thought here with chip, if we can. if you have money to put to work in the market today, what is your recommendation?

>> we still favor equities over fixed income. we like companies with a strong balance sheets, companies paying out dividends. you mentioned american express is raising their dividend. we like companies that are in the process of doing that. so we like the industrials, technology, utilities. we think those all fit into our theme of attractive balance sheets. >> thank you so much, chip cobb. and as well as ian hartnet. it was wonderful having you gentlemen on the program. but that's it for today's show. i'm courtney reagan here in the in the u.s. >> and i'm a ross westgate in europe. coming up next is "squawk box." whatever happens, we hope you have a profitable day.

q1 on track to be the best first quarter for stocks in 14 years. huh? huh? four trading sessions left. can the bulls continue their quiet charge? it's tuesday, march 27th, 2012. "squawk box" begins right now. >> welcome to "squawk box" here on cnbc. i'm becky quick along with joe kernen and andrew ross sorkin. the best in 14 years. >> and before it started working, you b