headlines today from around the globe, no margin for error. spain's it finance minister says his government faces a lose/lose situation as it prepares to present the budget to parliament. >> here in asia, australian central bank keeps rates on hold, but signals a readiness to ease a week after the latest inflation data is released. >> to ease or not. today's fed minutes over the debate over whether the central

bank may launch another round of quantitative easing. so welcome to today's program with christine tan, i'm ross westgate. jackie deangelis will join us later from the united states. we'll be joined by a strategist who says buying euro is a good way to hedge against another spike in oil. plus jim rogers calls it an astonishing opportunity. so find out just what frontier market he's talking about. we'll talk to a specialist on that at 10:40. and how exactly do you sell a british sandwich to traders in manhattan? the food retail are's new expansion strategy. it's taking them a while to work out exactly how to do it. before all of that, spanish unemployment has risen for the eighth straight month in march. the number of people registered out of work went up 0.8% with 4.75 million unemployed. the official unemployment rate which includes registered and

unregistered jobless people is 22.9% in the fourth quarter of last year. the highest rate in the eurozone. more important perhaps the youth unemployment rate is now over 50%. this as spain's budget minister whether shortly outline details of the 2012 budget to parly chlt. the government announced a financial plan that includes spending cuts of 27 billion euros. they want to cut to 5.3%, a target that has been revised up. julia is in madrid. youth unemployment over 50%. one in four households are in negative equity at the moment. how is that budget going to help any of that? >> the government have implemented a number of policies to provide growth, also the rain reforms hope eventually will

perform the labor market, but deterioration in the short term. this budget was about regaining the confidence from the markets. they will focus on what spreads were doing. they wanted to regain the confidence of the markets, so arguably the first they've been doing that is the savings measure of the 27 billion euros announced on friday. as you said, they'll present the full details in around 30 minutes time. we're still looking for details on how the regions will half their deficits back in 2011. they were responsible for two-thirds of the slippage and they do control around a third of the spending in spain to give you an idea of just how important this is for the credit and, too, kred ability, too, of the budget p about and ll be little change this bond issuance. public debt will rise ten percentage points to 78% of debt to gdp.

the budget itself split two to one in terms of spending cuts and tax measures. the tax measures were implemented by decree. the spending cuts could take until the beginning of june in order to implement. overall, given the 15 billion euros that we saw at the beginning of this year, around 50% of the policy is being in action. so we just have to wait and see how this is going to impact the real economy. for now, though, we wait for further details from the budget ministry. >> all right. we'll come back to you when we get details. steven isaacs is joining us. julia was saying that confidence from financial player thes to keep yields lower, but the whether is whether it's us a tear it i that chiefs that or is it growth that keeps yields low. where do you strike the balance?

>> you're right, it is a political game here. partly you have the markets that have to be assuaged, but the key component is the eu economics minister and what he almost wants to see is there is serious pain being taken. i think it is an issue of confidence with the eu commission. and i think what actually happens in the economy and markets is a secondary issue. if the eu commissioner gives it the thumbs up, then he's the most important constituency because he has all the money. that and he what we're looking for is nice sounds coming out of brussels. >> so you're saying spanish spreads will be driven by what he says rather than investors making up their own minds? >> he's the first person who will speak on the issue. and he's the most important person. if he speaks favorably and says, yes, they are doing the right thing, then i think that feeds into investor sentiment, that to some extent bolsters the bond

market and then we go go on and hopefully see a virtual sir ket in international markets overall. >> an interesting straw because you could have a situation where financial markets -- you're assuming -- >> i'm talking about politics. >> i know. but you say the markets is led by the politics. you're assuming they're always going to get money in bailouts. >> not always going to get bailouts. >> but in terms of what's the significance of help sthem say' okay, we'll give you support? doct >> greece didn't play the game. they had 24 months to engage in the eu and stay on course and we saw what happened to "greasgre .

>> numbers don't add up in greece. >> that's a separate question. but you play the game, you listen to us, you do what we want, and then you will get, first of all, very helpful comments and let's face it, sentiment is very important, and secondly, you will probably get genuine support. so i do think the politics is the most important thing. >> when do the fundamentals impact? 50% youth unemployment, one in four households in negative quit i. you have a very brutal budget, even though the target's been slightly pushed down, a brutal budget that isn't necessarily going to help. >> it is a tight rope and nobody knows how it will play out. i think the hope is that the generalized backdrop in the global economy, which is more positive now, and in particular the support from the locomotive of euro, which is germany, i was reading over the weekend about

spanish wine exports, they're up 20% in the last 12 months. so i think there is a hope. and i appreciate it is finely balanced. but some generalized back drop will give the support that the spanish economy needs. so on its own, pure austerity without counter balancing is a problem. >> deficit has narrowed. shortfall last month was around 17.5 billion euro, down from the 20.6. what's interesting, i think less

than 1% of total champagne sales go to china. they just don't have the taste for champagne. >> not yet, ross. it takes a while to get the taste of it. you never know. it could be a boone thing one day. here in asia, we did get the strong u.s. manufacturing data. despite that, though, markets looking a bit mixed today as you can see on theboard. if japan, we have the nikkei moving lower, but still holding on to the key 10,000 level. automakers, exporters down as a result. the kospi is up 1%. we had the eight month closing high, strong manufacturing data helping automakers rally. australian market really interesting, because the rba decided to keep rates unchanged. pairing off some gains in this market. a lot of people hoping for the stimulus. that didn't come because they

said let's wait for the inflation data. hot money inflows in the sensex market driving it down. property developers in could i that because of strong contract shares up 1.9%, taiwan weighted index down. the government decided to allow fuel prices to rise, also a move by the government to consider imposing a capital gains tax on stocks. that's weighing on sentiment. so a little bit of a mixed picture this tuesday. ross, what does your meet map say? >> we had strong gains by the end of play yesterday and trying to build on them this morning. we're about 2:1 on the dow jones stoxx 600. so 100 point plus gains for the

ftse and dax. ftse up another third for the the xetra dax after gains of 1 1/2. ibex is fairly flat as we wait for the budget. keep your eyes on what's going on in terms of euro rates. euro-dollar nudging up 1.4345. we hit a week low yesterday. dollar-yen 82.05. a lot of stop loss buying. aussie dollar, keep that in focus. rba staying pat today, but plenty who believe we have an interest rate ghcut in may. and sterling holding on to the gains that we got yesterday post-that improved manufacturing number out of the uk. both the uk and u.s.

outperforming pmi. as far as bond markets are concerned, we'll keep our eyes on treasury yields. italian yields 5.091%. still around that 5% mark. spanish debt 5.36%. ten year bunds 1.82, fairly steady still at these exceptional levels. still to come on today's program, investment advice. >> australia central bank saying it wants a peek at inflation data before considering a rate cut, but with the economy growing more slowly than expected, can it afford to wait we'll ask bill evans. plus as we wait for the budget minister to present his budget, we'll leave you with a live shot of the parliament in madrid. wñwñwñwñwñwñwñwñwñososososvycyíy

air france signal that had drastic cost cuts and restructuring will be key if it's to maintain it short to "mediumedium haul operations.

good morning, stefane. >> the new ceo of the airline unveiled yesterday a plan to reduce the experiences by 20% to reach the standard level in the airline industry. he says the target has been agreed with the main unions of the airline, mainly pilots and cabin crew, but there is no formal agreement yet. air france will submit a proper business plan in the end of june. no indication yet if it will include some job cuts, but air france has been unprofitable for the last four years. it lost more than 800 billion euros last year. but the plan will require more productivity from the pilots and cabin crew. it will imply a new organization that was already tested in small hubs in the french regions. air france is also planning to create low cost airline either from scratch or from its

charter. and in the meantime, it wants to enhance the brand to attract more business customer. there is a plan to return to bric to the point to point service and short and medium haul service, but still air france will need the formal agreement from the union. you knew that it's really critical because this airline has a long track record of strikes. so let's see how the unions will react. but for the time being, the market is positive. >> all right. thanks for that. also still to come, we'll talk to an analyst who says you should be shorting european airlines including air france. that's at 11:20 cet. plus one u.s. airline has announced a surprising charge for its passengers. stay tuned for that. it's not a good charge either. could be very inconvenient, put

it like that. >> i'm guessing it to do with something that all of us need, but i won't say what it is. holding back. >> holding back is exactly what you're going to have to do. >> exactly. wrong choice of words there. but holding back is what the australian central bank also did today. it's holding its cash rate target up changed 4.25% as expected, but signaling a readiness to ease. this may come as soon as its next meeting. may 1st. just a week after australia releases its key inflation data. rba governor glenn stevens says the board's decision will hinge on whether price pressures remain well containeded in the first quarter. and also the economy is not growing as fast as the board had expected. the rate announcement was perceived by lackluster retail sales numbers in february. data adding to expectations for future easing. let's talk more about the rba's move with bill evans.

bill, good to have you with us. do you think the rba made the right decision today to keep rates unchanged and is a rate cut next month already a done deal? >> i believe the case was already there to cut. we thought they would be cautious and wait for the cpi, but my view is that the case is already there. now we've got to get over the hurdle of the cpi, but i'd be very, very confident that that will be a benign number. we're expecting 0.6 underlying to register. that will open up the way for a cut in may. >> what kind of a cut are we looking for, 25, 50? >> no, it will be 25. they're moving in 25 these days. the only time we saw bigger cuts than that in recent types obviously during global financial crisis. they'll move in 25. so the market expects they'll get down to about 3 1/2. it's currently 4 1/4.

so it's not a long long way away and i think 25s would be the case. >> if inflation comes in higher than expected, could that again delay a rate cut? >> i don't think that's a position they want to be in. it's currently 2.5 annual. my view is that they'll be quite flexible in terms of interpreting this this number because as you know, we only get our inflation numbers every three months. and if it was to be a rogue number and did delay the cut by three months, then that would be most unhelpful for the economy. we saw that in 2007 when they knew they had to tighten. they waited for the inflation number. it was a rogue low number. so they got three months behind on the tightening cycle, which meant that in 2008, they had to tighten too far. i don't think they'll want to go through that one again. >> commodity prices obviously are quite a bit off their peak, but they have stabilized in the last month or so.

what's your outlook for commodity prices and how that feeds in? >> i think the other factor that was interesting from the statement today was that the reserve bank had been describing chinese growth as robust and now they're putting a much more moderate assessment on the chinese outlook. we believe it's that chinese growth cycle that will be behind future movements in commodity prices and, therefore, expecting that that low point in commodity prices is likely to be late in the september quarter. the timing will be determined by the turning point of the chinese residential construction cycle, which will be determined by the timing of the introduction of the housing programs. they seem to be delayed a little, so it may be that there will be a delay coming, but that would be the low point we would see for the commodity cycle this time around. >> with the rba sounding so dovish, does that mean gains for the aussie dollar are capped for

now? >> yes, i think the two factors that will bring it back towards parity will be the realization that the rba will be cutting rates at least twice in the next three or four months. and recognition that the chinese economy is slowing. those two factors i think will take the edge off the aussie dollar. but when the rba reaches the bottom of its cycle and when chinese housing cycle starts to swing upwards, which we expect it to be very much the case next year, then that will provide another bid for the aussie dollar. so unfortunately, those manufacturers, tourism have i, education exporters, retailers, that are really hurting under the weight of this high aussie qular, they'll have to put up with it if quite a long time to come. >> you're in charge of economics and research being but in terms of the equity markets, today they managed to close higher even though the rba didn't cut rates. will that continue to spur risk

taking? >> the quit i market has a lot of ground to make up. u.s. equity market is back to december 07'07 levels. europeans because they tend to weigh on our banks because funding issues and the chinese of course relating to the resource stocks. so if we get turning points in those market, i expect we'll start to close the gap with the u.s. market which is off and running but is highly reliant upon qe-3 and things like the payroll number on friday will be very significant as to whether the federal reserve has the scope to do qe-3. >> very good to talk to you. thank you so much for your time today. i know it's late in the evening for you. bill evan, global head of economics and research live from sydney. >> bill talked about the u.s. federal reserve officials are taking a middle of the road stance ahead of the publication of the central bank's minutes.

cleveland president said there were signs the recovery was becoming self sustaining while richard fisher says the banks should stay in wait and see mode. the approach will offer little satisfaction to investments searching for clues as to what central bank officials will consider as their next move when operation twist expires in june. teach is still with us. what's your own view? stronger ism numbers yesterday and the stock market rally is to a large degree predicated on on this time a sustainable u.s. recovery. is it? >> yes, it is. i think the market had a little bit of a wobble last week when bernanke spoke quite dovishly explaining that he was still very cautious about the u.s. outlook. and secondly, some of the data last week was a about more new answer o nuanced. friday we have nonfarm payroll. >> with the markets closed.

>> yes, it's good friday. but i think the trend of the data is quite positive. i think it's more robust than people had anticipated. >> that's sort of a perfect -- if you get the chairman of the fed saying -- still being pretty dovish and suggesting policy will stay lower and the data keeps ticking higher, that's a pretty bullish environment for investors. >> i agree. it's a sweet spot really. i think that's the absolute key. you put your finger on it. the ped are still will. they're still making absolutely clear that if the economy does pal ter, th falter, qe-3 will come through. but it p. it doesn't, economy picks up and you're okay anyway. so i agree, we're in the sweet spot. is it the goldilocks economy people talked about in the mid '90s? you can come up with different references, but still positive markets. sgr ism markets saying that was consistent with annualized

growth rate of 2.5%. it's not bad, but a long way below the trend rate growth of 3% plus and of course it won't do anything really to do an awful lot about unemployment. this is a long slow recovery. >> you don't necessarily need the economy to blaze to have a strong stock market. you think about, will time last year, ten year treasuries were nearly 4% even after the first quarterback up. short term rates are still at very near record lows. so it's simply a question of value. if you need income, then the best place to get it is dividends and that i'm 56 paid is an arbitrage. so ibm did a two year deal, 87 basis points. the stock is yielding over 2%. do you the math. it's an arbitrage. and that's the point, you don't need sort of acceleration in the economy, you just need the economy to at least chug along. >> all right. stick around, more from you.

christine. >> well, we're getting some comments coming up from the wires right now about remember the two billionaire founders arrested. we're getting comments coming out from one of the founders, he says the investigation are will prove his innocence. continuing to say i hope results of the investigation will prove we are fnt aare innocent and th company will become stronger. he's not commenting on the investigation but he says he believes thomas also did not do anything wrong, as well. and he cannot comment on the investigation. so these are some of the things coming out right now from raymond saying the company has sound structure and professional managers at the helm. so the success of the company is not depend eent on the chairmant the moment. so we know that shares are up

nearly 3, remember they were getting hammered in recent days because of the arrest. >> still to come, we'll be joined by steve forbes. he says that higher tax rates in the u.s. are having a negative effect. do you agree? you can tweet us or even e-mail us. this is a couple things that he's proved as he said. >> if obama gets reelected, he will try to make sure that the higher tax rates go in for capital earners and small businesses. and we also have taxes coming in on capital under obamacare, about 4%. so if nothing is done, dividends go from 15% to 45%, capital gains from 15% to 24%. now, congress will be in a mood to do something, but the president is not going to let those tax cuts of ten years ago remain for upper income earners.

no margin for error. spain's finance minister says his government faces a lose/lose situation takes presents the most usaustere budget on recordo

parliament. >> and cba signals a readiness to ease when it meets in may. >> and in the u.s., should there be more easing or not? today's fed minutes may renew the debate over whether the central bank is thinking about launching anymore quantitative easing. construction pmi 56.7 in march, pfs 54.3 in february. and again, another number following yesterday's manufacturing pmi that is higher than expected. in fact that construction net has hit a 21 month high. few orders in the uk construction sector at their fastest pace in 4 of this 1/2 years. ste steven, manufacturing pmi much stronger than expected. and now construction is an

important sector. if we get another stronger number from the services tomorr tomorrow, forecasts will be wrong. >> inks it is wrong. and you have to remember the weather has been fantastic here. it's been a wild winter. so construction spending may have been skewed because of that. but the change in confidence levels that started in the and you item, i think does make a difference and i think that the uq economy -- >> i was just going to say, can it, because yesterday's numbers showed for the first time sort of a divorce there the and you are row zone. i'm just wondering whether that's a one month thing, whether that could possibly be a trend. >> the uk tends to follow the u.s. a bit more closely, so i think it's fair to say that we are slightly more being pulled along by the u.s. engine rather than the eurozone. but generally speaking, i think with the worst behind will us, the blow off low in markets in october, we're quite some time

away from that now and i think gradually confidence is returning. germany never had more than a slight tip. german unemployment is a 20 year low. these sort of things, they're depending i believe in a much stronger position than most pundits would allow. that's the issue. the expectation is lower than the reality even if the reality is relatively weak. >> fair enough. that data just helping us bounce off the session lows for the sterling and ftse. the pound actually still up. our next guest says despite spro supply concern, hedging for another oil price spike is prudent. so what's the best way to protect themselves some joining us is chris walker who is currency strategist at ubs. chris, thanks for joining us. in europe of course the oil play traditionally has been the norwegian crown. but they sur are priced

everybody by cutting rates a month or so ago. so what do you do with the crown and the oil spike risk? >> there are also misconceptions about how should be trade and a lot of people still use it as an oil hedge as you alluded to just because it is one of the major exports as people assume that, yeah, we should buy this and the correlation between brent prices is still positive. but because of some of the in-flows we've seen into norway, we've seen a rapid appreciation of the currency and now they say enough is enough and we want to tackle in the same way that many of the central banks have been doing. so this provides an interesting dynamic. in the short term, we do remain constructive on the and we see some appreciation on a relative basis. but over the longer term, we see that capped. the way the central bank looks at it is by looking at the i-44, sort of import weighted index.

once that moves back to around 85, that's when we sort of see a rough line in the sand. so short term, we remain construction difference, but over the longer term, we sort of fade some of the move. >> what's interesting, consumer debt estimated at 220% of incomes. >> it's the housing market, as well. there are other taxen send differences to get very leveraged particularly in oslo so in some ways they've decided they want to cut rates and perhaps further if the it continues to appreciate, this is fueling housing and property market bubble and also consumer credit bubble. so the fur we go down the line,

there are a the lot of risks involved in this which is why we have a relatively cautious view over a nine to 12 month period. but in the short term, if correlations stay the same, you can see some up side. it's just a matter of when the consumer credit and housing market data becomes the real driver. >> chris, with the rba keeping rates unchanged, a lot of people hoping they would cut rates today, but guess not. does that influence your outlook for the aussie dollar so? >> i think they were eight basis points going into the curve. but then the dovish same as we saw back off again. our overall view is aussie is quite cautious on the rate side. we do expect them to cut in may. in a market with zero, it's

becoming more of a consensus view that we're seeing, increased slow down towards italian this year. i know the pmi was kind of assumed for risk over the weekend, but a lot of that sort of pricing was really due to seasonal adjustment after the chinese new year. so when you sort of take that and look at the other aggregates coming out of china, it's clear there will be a bit of a slowdown which has a natural feed-through effect. and for the first time in sort of several months, we've had a lot of policymakers starting to talk down the aussie before people were talking it up and saying that a strong currency is symptomatic of a strong economy. and now for the first time, we've had a lot of policymakers through the rba or through various trading, lobby groups saying the these kind levels we should look to move a little bit lower. fundamental valuations are about one in four now, its eye quite hard to justify that given once we had the big selloff, we're

back down toward 70. so we still have a good way to go on fundamentals. it's just a matter of are investors still in there. >> chris, thanks for it that. good to see you. >> thanks. mix will the session here in asia because despite that better than expected manufacturing data, 0u69d the u.s., the nikkei 225 managing to hold on to the key 10,000 level. exporters were a drag down 0.6%. strong manufacturing data in the u.s. hope helping the automakers rally, pushing the market up 1%. australian market pairing off gain, but still manage to go close to the positive side despite news that they decided to keep rates unchanged. they're waiting for the next inflation data. sensex pushing the market higher 1%. hang seng off for a holiday.

focus on property developers, developers saying they're doing well because of strong march contract sales not to mention comments about the investigations and that they are innocent. the property developers clearly in focus in this particular market. p taiwan weighted index down 1.9%. the government allowed fuel prices to rise and also might impose a capital gains tax. this decision out within a month. that's weighing on sentiment. down 1.3%. and over in singapore to the up side, 0.3%. so a mixed picture this tuesday. >> and slightly more mixed here, as well. ftse 100 at the moment just up three points despite the good construction pmi.

ebs take dax and crack 40 fairly flat. the rest of the market, i don't know if we'll go to the bond markets, ten year bund, pretty steady apten year spanish yields just down slightly. italian yield hovering over that 5% mark. keep more data coming out of the u.s. today, factory orders coming out. christine. >> well, of course china in focus today. chief of the national pension fund calling for a bigger role for the renminbi. tracy, what you can tell us? >> yes, of course he's the chairman of china's national social security fund. he said the chinese currency could eventually account for about 10% of global reserves.

he sees a more diverse international monetary system made up of several major currencies in the future. like the dollar, euro and of course the yuan. hong kong banks have recently started accepting gun deposits and of course the government has also made sure they expanded their role. enter they welcome the news but beijing still wants to keep it within elements for now. they allowed the renminbi to rise about 30% against the dollar since 2005. for now, china should tip to support the greenback's role as a major reserve currency, but he would like to see washington to cut his deficit. >> thank you very much for that.

tracey chang. myanmar is central stage for a summit. it is just two days after pro democracy leader won her first seat in parliament. secretary general says the successful outcome should contribute to the reintegration of myanmar into the global economy. joining us to talk about this is managing partner and group at leopard capital. thomas, good to have you with us. the recent political developments over in myanmar as well as the freeing up of the exchange rate, does that provide you enough incentive as an investor to consider investing in myanmar? >> i think it's a very good result especially the reaction by the military, there was no reaction and it proves it's one little step into the right direction of the integration of

myanmar in to the outside world. but for an investor, it's only a small step. so then a lot more work needs to be done. and you need to consider that over the last 50 years, last year foreign investments were 200 million u.s. dollars and in order to grow that much more has to be done in the future. >> what do you think myanmar needs to do further to stimulate foreign investment in to the country? >> first of all, the process how to invest is very cumbersome at the moment. second thing is profits is also very, very difficult or even if not possible for foreigners. and myanmar cannot do anything

for that from the outside world, it eat the u.s. and european union sanction which has to be lifted hopefully or will be lifted are pretty soon. >> thomas, i understand you're in the process of setting up a fund to invest in myanmar. what's the best way to play the developments in this particular market? >> the best play is at the moment private equity investment, so direct investments, because listed equities even the stock market in myanmar, there are two stocks listed there, are not open for foreigners yet. so foreigners have to do direct investments if they want to to mining, natural resources, consumer consumption and so on. very attractive. >> and i suppose you could find stocks that have local exposure.

i just want to move away from myanmar. you talk about in your space, the big four markets, bangladesh, vietnam, sir lanka and pack tap. out of those, which right now offers the best combination of value and opportunity. >> at the moment the best value for us is vietnam. the market has fallen about 65% to 70% in u.s. dollar terms from the high and now it's slowly recovering. seems that the government has problem with the foreign exchange under control and might reduce the interest rates in the future. so that will help give back the confidence especially for foreign investors and also to the domesticthomas, thank noss .

still to come, how do you sell a british sandwich to traders in wall street? we'll find out what the recipe for success is for international expansion. %

they're confident about the outlook for 2012 after posting a 15% rise in full year sales. the group adds plans to heavy invest in future growth expanding stores by 44 shops of which 20 will be open internationally. ceo joins us. thanks for joining us. it's taken you ten years to work out how to sell a sandwich to traders on wall street. do you think you finally cracked it? >> it has taken us a long time. we started in 2000. so we first had to deal with 2001, so that was a set back,

but we've now finally i think one man hat an hearts over by a few things. first, we've taught them that the sandwich in a box is actually fresh and secondly, we've made our portions bigger for the males and more salads for the females. >> however suck he isful your model is in one cup, you can't actually just take it and stick it into another country. even -- and you've been very successful in this country. so what have you learned about what is necessary to trance pose one bit model to another country and you would have done a lot of research before you initially launched. >> i think it's a com pin nation of confidence and humility.

americans drink filtered coffee, so we've had to move them out. it's the combination of confidence and humility that makes all the difference. >> clive, here in the united states, i'm wondering about some of the competitiveness that you're dealing with obviously in your space and also pricing issues. how are you managing not just of course on wall street where they have a little bit deeper pockets, but in the other areas that you're expanding to, here are you managing those issues? >> our shops are very busy, so we can lempg ocan leverage will costs. we're reducing our prices in the u.s. and getting busier and busier. >> when i go to hong kong, i see pret a manage everywhere, but in

terms of cracking the china market, how much have head way have you made? >> we're taking the china market very slowly. i don't think we should rush into it. building first our business in hong kong. slowly moving out of say the central districts into western districts and on the hong kong island and gradually moving a bit more mid markets. china will come later on. >> it's basically arise and noodle market. sandwiches not quite the thing that chinese are used to. how do you create preferences or make it more attractive for consumers to try your sandwiches some sflink t ? >> i think hot food is what they want to have. i don't think they regard the cold sandwiches to be the core diet for them. so we have to develop the best kind of hot food we can before going in to the chinese market. >> i'm looking at the u.s. menu.

it's interesting to compare this. >> we were looking it for some free sandwiches this morning. >> a california chubb, hummus and -- i've never seen hummus and garden veggies on a uk menu. would you ever trance pose any of these -- >> we have a professional u.s. menu and i think the two food teams talk and meet once a month, they find the best sellers. so there is exchange, but subtle differences. >> what they don't do in the u.s. is they don't do roast beef and who are, radish. >> they've did done a variety, but not with the horseradish. >> you have to do roast beef, also. get rid of the salt beef. roast beef and horseradish, i'm telling you, you guys will like that.

jackie is not responding to me. total silence. i have been blanked. jackie has for idea what i'm talking about. >> no, i have every idea what you're talking about. i love salt beef, but i love horse beef and -- >> horse beef. go to france for the horse beef. that's the french codo the hors beef. >> we're also in france thousand. two very busy shops. >> food prices just very briefly. >> rising 4% or 5% overall, but trying to keep it lower than that. >> and you're going to float by the way? >> i don't think so. it's a long term investment -- >> are you going to sell yourself to somebody? >> i think the investors like being there and we enjoy having them. >> clive, thank you very much for that. what's the key for investors? does it really matter what

happens in the next six months in the eurozone? >> i think markets are driven by all sorts of factors and i think too much looking at the data is a mistake. i think we need to step back a little pit. there are least articles in the ft just today, all which have were basically still very bearish about the euro. one for roubini talking about divorce, one from the chief economist talking about the 1930s. more and more still, i think the economics and strategic advisers haven't really woe ken up to the the fact that they just got the whole euro crisis wrong. they thought it would blow up. and i think investors are still very reluctant and very slow to have actually turned their imagination to realize we have in a bull market. it is in the early stages. >> if you stick with it. >> it has a long way to go. and one can try to fine tune entry levels, but to me, the euro isn't going to blow up,

political support is there, which is the most important thing. look at the politics. chance la merkel's political position is still riding high. so no pressure to change the policy. >> steven, good to see you today. we'll take a short break. still to come, jackie, pastrami and rye? >> we'll switch gears from horse beef. steve forbes will join us and he'll talk everything from the u.s. recovery to the presidential race.

headlines from around the globe this morning, here in the united states, to ease or not to ease. today's fed minutes may renew the debate over whether the central bank will launch another round of quantitative easing. >> in europe, spain's finance minister says his government faces a lose/lose situation as they present their budget to parliament. >> and property brothers say they are innocent of suspected

corruption. >> good morning. you're watching worldwi"worldwi exchang exchange". great to have you with us. let's take a look at the u.s. futures, see how we're setting up for trade on wall street. the markets were to open now, the dow would be lower by about 22 1/2, nasdaq by 5.3 and the s&p 500 by about 3 1/2. this after stocks kicked off the first day of trading for the second quarter on a very upbeat note after breetter than expect manufacturing reports from the u.s. and china. all ten s&p sectors finishing in positive territory, materials and tech leading the way higher. >> in europe, we've been very fat. had 100 point gains yesterday. that translated in 1.8%. so holding steady. we have the factor orders on the of the u.s. today. and ism surprising on the up

side. producer prices just out of the eurozone up on the month. lowest annual rate since june 2010. so the weaker economy just putting downward pressure on producer prices. we also got a report coming out about portugal. it's suggesting that growth -- or contraction might be more pronounced than previously thought. we'll come back to that in a few moments time. >> meantime the head of the u.s. general services administration has resigned amid reports of lavish spending by the agency on a training conference in nevada in 2010. the gsa is responsible for making the u.s. government more efficient overseeing things like the purchase of office supplies and transportation. and the "washington post"eg org spent $820,000 on this including

320,000 on a mind reader, $70,000 on a team building exercise. white house says president obama is outraged at the wasteful spending. joining us to talk about these issues and everything really on the docket, steven forbes, forbes media. of course the latest issue of "forbes magazine" featuring matt kemp is on news stands right now. thank so much for joining us about. >> good to be with you. >> let's talk about the story that i just read there about wasteful spending in terms of the government. obviously this is not just an issue under president obama. it's a larger issue. how do we rein in and get a grip on some of the spending? >> well, don't do it. cut back what the government does. you can have many agencies, they become emmercied in the bureaucracy syndrome, and at the end of the day, you'll have massive waste and corruption, so cut back the scale of government. the government is doing a lot of things it does not need to do,

so that's the way you do it and uchb fortunately, i love his outrage, but starting with your trillion dollar plus stimulus packages that didn't stimulate but wasted hundreds of billions of dollars of taxpayer money. >> that's exactly the point. we have to cut back, but how can we manage to do that and if a republican comes into the office, will they successfully inmplement the cut backs? >> president obama does not were to cut back on spending. he thinks government is good. he also realizes this is power. when you have resources, you have power. so he has no real intention of cutting back public spending. he could have eliminated departments, massive duplications in things like job retraining, education and the like and saved hundreds of billions. he chose not to do so. >> so when he says he's outraged about something like this, do you think he's outraged about what happened or and he is

outrage that had it got caught? >> i think it's outrage that had something so meaningless as $800,000 in a $15 trillion economy should get such a play, about you what he doesn't realize, small things have hammered home the overall waste in government. 75,000 for team building in nevada? come on. and you duplicate that tens of thousands of times and you get massive waste. >> in your opinion, if we did pull back in terms of some of the goempt agencies, would that be almost akin to what we're seeing in europe as austerity? some people have gotten so used to these kinds of "lifestyles." >> look what's happened in the private sector the last four or five years. painful contractions across the board. every household has gone through some of it. if everyone else can do it, why not government bureaucrats. they're supposed to be public servants, not the other way around. and in europe, while they talk about austerity, so far there hasn't been too much of.

in fact most has fallen on the private sector, not the public sector. >> steve forbes will stay with us. >> great to have steve on. if you have any questions for steve, you can e-mail them worldwide@cnbc.com or tweet us. and talking about europe, spanish unemployment has rin for the eighth straight month in march. a number of people out of work went up 0.8%. it there are now 7.75 million up employed. the official unemployment rate which includes both those registered and unregistered is 22.9%. that's in the fourth quarter of last year, highest rate in the eurozone. perhaps more worrying is the youth unemployment rate is now over 50% both pain and indeed greece. the budget minister is outlining details of the 2012 budget to parliament on friday. the government announced a financial plan that will include spending cuts worth 27 billion

euros. measures are aimed at cutting the deficit, target now 5.3%. it was originally lower than that. it was 8.5% last year. julie chatter chatterly is in m. they talk about freezing the hiring p about public workers. i suppose when you've got that unemployment rate and those negative equity rates of one in four houses in negative equity, does it make -- is it going to help or hinder the recovery? >> that's the key question. there was always going to be a difficult tradeoff between moving to the market, prove to go people that they're willing to commit to getting the deficit down as you mentioned, but on other hand, they also have a problem with growth right now, particularly given the data that we've seen just recently. the unemployment data you just

mentioned, rae tail sales data down 6.4%, remember consumption 60% of the spanish economy. they have tried to boost reforms. a 35 billion euro credit facility. labor reforms should ultimately improve flexibility in the labor markets, but they could actually add to the jobless numbers by 600,000 people it year. the other policy gets credit out to the regions in order to pay off their outstanding debts. it looks like it could maintain or create 100,000 jobs this year. but net those two numbers and we'll see it getting worse before it gets better. we have the final details of the budget being presented to parliament today. we do need more details on the regions. just how they'll cut their deficits in half.

we'd also like to understand just how quickly they can get the remaining spending cuts, and you mentioned how they can get those implemented around 50% of all policies currently in action. so we have a long way to go. >> so that's how it might play out. steve, you said europe doing today what it did in the early '30s. you want the u.s. to cut. are they cutting too much in europe? you can cut yourself into a very deep recession for which you can't get yourself out of. >> well, cutting back in the public sector is all well and good. that frees up resources in the private sector which leads to the next thing is the worse thick they can do is raising domestic taxes. britain as you know, they raised the income tax rate to 50%, now they're gingerly cutting it back to 45. they should cut to 35. put in the massive tax cuts, encourage entrepreneurs, continue with these labor reforms in a meaningful way,

make it easier to set up businesses in countries like italy and you'll see new private sector emerge. and that's ultimately the way you get out of this hole. private economy booming, public sector cut back, not draining the private economy. so you have to do both. cut back the public sector and have pro-growth policies for the private sector. >> the spanish government will tell you we have to have these big austerity measures because the markets won't reward us. our bond yield spreads will shoot up. do they actually have the room to maneuver and cut taxes in the way that you suggest? >> absolutely. markets know the only way the bonds will be semimoney good is if you have a vibrant economy behind them and what they're in is a death spiral now. they do more austerity, that makes the economy contract even more because they don't have the pro private sector initiatives,

so that puts more pressure on the bonds, deficit gets bigger. and so you're in a bad spiral. break the spiral. go against the grain of the so-called convention al which is com from the germans and others and say we tried this in the early '30s, it did not work, so we'll do austerity, pro-growth and bond markets and equity markets would respond very positively. >> is part of the problem the fact that there are too many cooks in the kitchen in a sense? >> the real problem is the lack of leadership from the germans. and when they do lead, it's often sometimes in the wrong way. now, the ecb, european central bank, finally did right getting at lease short termly liquidity into the market so you don't have a total depression in southern europe, but they have to go beyond that. pro-growth in germany. resurrect after world war ii, threw out all the war time press controls, cut taxes, created a

great new currency and the german miracle began. that's the kind of spirit they need today. it's very basic. we have to do the same thing. >> steve, there's a big divergence between pmis of the eurozone and in the u.s. do you think the economic divergence will be maintained, will grow or will they run separately? >> barring a blow up in the middle east which is a very real possibility, i think the u.s. are will do far better than europe this year. i think what's happening in southern europe will affect the rest of the continent, as well. so europe will be very much of a drag. and the key thing is up they get a change of direction and many they'll follow what i hope will be a good example from the u.s. after the november elections, again, austerity in the public sector, encourage the private sector, the only way you'll dig

yourself out of this terrible hole today. >> if you break with seef or if you don't, we'd like to hear from you. get your comments in. e-mail or tweet us. coming up next, air france warns it needs massive cost cuts. plus 5:20 eastern, we talk to a stock pick who are recommends shorting the airline.

welcome back. time if your global markets report. let's start in the united states. the dow would be lower by 17 1/2, nasdaq by nearly 4 and the s&p 500 lower by 3. this of course after stocks kicked off the first trading day in the second quarter to a very upbeat note. better than manufacturing data helping to boost stocks yesterday after we got disappointing numbers out of the eurozone. interesting to note in terms of some stock day it take, apple up nearly 19 bucks yesterday, about a 3% gain there. also some of the did dow leaders

and top contributors chevron and boeing. >> we finished a positive session yesterday. now 5:4 on the dow jones stoxx 600. ftse up 1.8%. right now pretty flat despite performance by construction. cac 40 down six. ibex down 0.75%. euro-dollar, we headed down to a one week low yesterday. we're before that at 1.3352. dollar-yen steady. aussie dollar has weakened a little bit. there's expectations the rba in australia will cut rates next month after not cutting today. and sterling holding on to those 4 1/2 month highs against the dollar. just a reminder where brent is current rly trading.

oil prices brent just below $1925 mark and nymex $104.60. christine. >> mixed picture here in asia. nikkei 225 down 0.6%. stronger yen weighing on the the exporters in the japanese market. kospi up 1%. automakers pushing the market higher. rba signaled it would keep rates on hold preferring to wait for the next inflation data. australian market up 0.2%. the sensex hot money in-flows up, still trading mind you the market still moving. en a the hang seng up to the up side. we had the real estate developers getting hammered recently. realis say the developers moving

back up because of the strong contract sales. taiwan weighted index different picture slumping on news that the government is allowing fuel prices to rise also on comments that the government actually is considering putting in place a capital gains tax or stocks. that is weighing on sentiment. that 1.3% was part of on earlier. closed at 5:00 p.m. pretty much flat. so overall a mixed picture here in asia. that's it for me. i'll be back tomorrow with news making headlines here in asia. air france has signaled drastic cost cuts will be key if it's to maintain its short to medium haul operations.

says it needs to cut costs by 20% and costs are also going up elsewhere. >> that's right. airline fees are flying high in 2012. it will start charming passenger as $35 fee to store bagses in the overhead bins. ryan air enforced a $6 charge for standing room only seats and spirit airlines charges for all carry-on bags. paying with a credit card and even printing a boarding pass. what will they think of next? i'd just rather have it baked in. >> ryan did float the possibility a few years ago of charging passengers to use the restroom during the flight. not the most popular move. >> that is pretty outrageous to me and there also is one airline that wanted to charge for a glass of water. >> yeah, it will happen.

charge you a pound to spend a pen any. but if you don't have the water, maybe you won't need to go to the bathroom. >> a great point. >> we'll stick with that theme. not the restroom theme. we'll talk to an analyst who says you should be shorting some european airlines including air france and iag. we'll be back with more after this. 

we've had a report out from the eu and ecb which now suggests that the portugal government will contract likely more than they originally thought this year and next, as well. the growth next year will be more shallow than the previously thought. and banks will struggle to meet the 2012 recapitalization needs. so one wonders if an urgent resolution is also needed in debt of portugal state and enterprises, as well, whether this is the first step towards a second program for portugal this eu/ecb report. so basically saying the targets all slipping effectively. so most people believe that portugal will have to have a second program.

this may be the first step stored towards monitoring that. >> meantime some of the other stories we're following, the sec is reportedly investigating groupon's revision of its fourth quarter results. the "wall street journal" says the probe is in its early stages and that the sec hasn't decided whether to launch a formal injury. friday groupon said its loss was wider than first reported because it didn't set aside enough cash to cover customer refunds. groupon's auditor calls it a material weakness in the company's internal controls. but the journal says groupon stands by its cfo. and commodity futures trading commission is suing the royal bank of ghan tod canada a rbc created so-called wash strategy in which traders bought and sold stock futures without taking a position in the market. the bank also hid and lied about improper trades.

rbc says the suit sun warned and that the cftc has been a waiver the trade since 2005 and it will defend its reputation. rbc shares fell 1% in after hours. >> next guest says you want to go long drinks and short airlines. joining us for more is barry dixon. good to see you. that seems like a perfect sensible idea. a long dricg drink on a short f is my idea of traveling. the drinks company is cnc. they make cider which is a good irish -- by the way, do they have an adr? >> yeah, their primary listing is in dublin and in london. the interesting thing about cnc is that it traditionally and irish and uk company in the cider market. this year what we're seeing in

the u.s. is that the two big brewers are launching cider products. for the historians among your you viewer, sicider was the choe 50 years ago, so sam adams was probably a drinker of cider. that market was basically overtaken by beer and in recent times, the beer market slowed down and the big brewers are looking for a new product to replace that and obviously cider is seen now as a product which can actually get traction in the u.s. >> bizarrely, the big brewers in the states launching cider, it's not competition,le actually introduce the product. >> these guys will put a huge amount of advertising and promotion behind the launch of cider and that will have help the category. cnc is the number two player in cider at the moment. they bought a brand called hornsby last year.

so it's well positioned to take advantage if you like the growth. >> have you tried it, jackie? >> i haven't tried. but i'll definitely make sure that i comk do. here's my question. in europe we're looking at a lot of key events, olympics and football competitions. do you expect those event 6 events to drive sales and dunk other companies will benefit, as well? >> in terms of the lon dough olympics, it's a driver. european football championship and interestingly it's the times that those matches are on, 5:00, 7:00 p.m. in the evening, perfect time to settle back, relax, watch the game and drink a few cans of cider and hopefully the weather will facilitate, as well. if you get warm weather. it's a good time to own cider company coming in to the summer. probably 40% is consumed in the months of june, july and august. so a good time to own the stock. >> will this is steve forbes here in the u.s.

when you talk about cider, how much of a kick does that have versus beer in the founding father's cider would really knock you out. >> i think they've pulled it back a little bit since then. probably about a similar volume strength as beer. >> meanwhile you want to sort the airlines. you also like -- this is interesting, right? because you talk about the weakness in cargo for international airlines group and air france. but the weakness in cargo, but you like deutsche air which is a low gos ticks company. i'm trying to work out they're both car go logistics. >> absolutely. we commissioneded a survey recently of about 300 transport and logistic services. a couple interesting factors coming out of that. one, the growth in e-commerce will continue to drive this business. two, asia will continue to grow very strongly and probably the lead are player in the transport

logistics market, probably about a third percent of the market. >> so the pie will grow, but the airlines aren't going to take their share of it. >> here he another intere's the. customers are shifting away from high cost air cargo to sea and road transport. so we're seeing that probably having a negative impact in terms of the cargo business and the airlines. if you marry that with the fact that you're getting a big increase in cargo capacity among the network airlines, then obviously pricing will suffer. and that obviously will benefit the transport logistics companies. but one of the interesting things about dhl, it has probably a third of the market in asia at the moment. and in asia, people talk about it in much the same way they talk about fedex. if you become a verb in the market, it's obviously very

important. google, for example. there google it. yeah, if your brand becomes the verb, you've cracked it. thanks for that. good to see you. jackie. switching gears from cider and airlines, we're looking at the markets. the u.s. markets start the second quarter on a positive note after blockbuster first quarter. our next guest says there's still plenty of room for up side as investors pull their money out of the mattress. we'll ask where they should put to work next.

welcome back. headlines this morning, to ease or not to ease. today's fed minutes may renew the debate over another round of quantitative easing. >> spain's it finance minister says his government faces a lose/lose situation as it presents it budget. >> a stark warning for portugal as a report by the eu and ecb predict as larger than expected contraction this year and predicts the banks will struggle to meet their capital requirements. welcome back.

if you're just tuning in, let's take a look at the u.s. futures and see how we're setting up for trade on wall street. it does look like some of the pressure that we're seeing in europe and asia impacting our markets. if the markets were to open now, the dow would be lower by 20 1/2 points, nasdaq by 5 and s&p 500 by 3. this after a pretty big rally yesterday on wall street. great way to kick off the quarter, of course, the first day of trade in the second quarter. some of leaders on the dow, chevron, ibm and boeing. apple a $19 gain. and the dow and s&p hitting new 52 week highs. >> 100 point gains for both the dax and ftse 100, so we are flat today ahead of the u.s. open. we'll wait and see what happens with more data coming out of the factory orders about 2:00 london time. ibex down. good construction pmis out of

the uk and we're focusing in as well on the spanish budget which is about to be presented. we're looking for reductions of around 15% across the different department of ministries. the plan would be to freeze the salary of public workers through 2013 and reinforce the new target that spain will meet its deficit budget target of 5.3% of gdp for this year. that needs to be around 4.2. remember, there's a big discussion with the eu basically saying we're not going to make that and they've revised it higher. still saying 3% next year. the emphasis is on cutting spending, not raising taxes. according to the finance minister. so that budget will be announced in a few moment's time. so we'll have to see whether that engenders confidence or not for eurozone investors. >> that's exactly right and it reminds me of steve forbes sitting here. i think he would like that philosophy. meantime second quarter starts

on an up note as better than expected ism and chinese pmi data ease concerns. april has historically been a positive month for stocks. s&p 500 has seen an average gain of 4.5%. joining us to talk more about it is ken and also steve. ken, let's kick it off with you. the way we teased to this segment before was saying that our next guest says we have to take some of that money out of the mattress and invest it back in to the stocks. but if you haven't really been in the market with the dow over 13,000, would you want to get in now? >> we're seeing corporate balance sheets continue to strengthen, signs of health, employment numbers are doing well. but when you say the word have to get back in, i think people are kind of being forced their hand a little bit because about if you go back, a lot of people three and four years ago in panic mode started throwing money into the mattress, and

buying three year, five year cds that are now starting to roll out and they're faced with do we roll it into a near zero interest rate environment. so all the money from the retail side, not the institutional side. institutional side is a bunch of professionals that have to beat a benchmark by some basis points or come on the air and explain why they didn't. individuals are faced with the daily question of what do i do with this pool of money which is my retirement assets and in many cases it's being handed back to them from banks. with a they maybe locked in 3% three years ago, now they're looking at 1%. that will push people further out on risk. >> and that's an interesting point, steve. to look at what president obama has done, you can say a lot of things about his administration, but he has handled the financial crisis and the markets are doing pretty well. >> the markets still haven't recovered from what they were mostly in 2008, not to mention 1998. and if we had a vigorous economy, if he had donot done a

the programs that hurt the economy, you'd see a much higher market catoday. yields are extraordinary. and so the market in essence has been treading water for 12 years. i think there's a huge break through to come if people really have confidence in the economy, there's literally tens of billions, hundreds of billions of dollars that we used to be in equity funds that are still sitting on the sidelines waiting as it's safe to go back in. >> and it add to what you're saying, one of the problems of the obama administration is it's been a narrative of anti-investing. that's not the climate you want. if we start looking at pro-growth strategies and people start internalizing that maybe that will happen, not dionnizing capital formation, that could be a really positive for the

market. >> we saw such a huge contrast between the private sector, got its act together, increased productive and the government sector, which just is bloated. >> guys, aren't entrepreneurs and business people supposed to just deal with whatever the environment is and invest and make the best use of capital and, you know, i mean, why -- if you're in the business of being in business, isn't that just you go out and do whatever you're supposed to do. >> well, one of the things that businesses are faced with now is what i call the tsunami of uncertainty at the end of the year. new year's eve brings in a whole bunch of changes if things don't kind of loosen up a bit. not only bush tax cuts sunsetting on individual tax rates, but this differential between dividends and capital gains is a big difference to corporate america and investors will how they'll deploy their capital. look at the potential for m and a. there's so much money sitting on balance sheets. if they create this big

differential between dividends and capital gains, you'd probably see a lot more m and a activity. so companies have to manage, but the uncertainty of regulatory change and the tsunami of uncertainty as i said at the end of the year is really causing a lot of companies to sit on their hands and take a wait and see attitude. >> could that be an explanation as to why we might see some of the earnings reports be positive and yet at the same time they're not hiring aggressively? >> yes, because, again, they're not sure of how durable the recovery will be. you may be a business person about, you may want to put capital to work, but about if you you don't see a real return, you don't know what kind of dollars that you'll get back. you'll be cautious or ship it overseas to play select china or other parts of asia where you see much more immediate return. long term investing you won't do until the dollar is stable.

>> so companies certainly treading lightly. ross, over to you. we'll take a short break. spanish government just outlining its budget proposals. we'll get some highlights of that. also still to come, will president obama coast to re-election. our guest says don't bet on it. >

just a few notes out of spain. xwroes debt issuance 186 billion and also a probing launch by the eu. opened investigations in to the way motorola licenses patents follows complaints from apple and microsoft. so the commission is going -- this is just breaking. the commission will assess whether motorola has abusively

used certain of its standard patents to distort competition. apple and microsoft both complained so the eu will launch an investigation. there we go. that may impact motorola stock at the open. >> we'll continue to follow those headlines. and the race for the white house also shifting to the midwest, mid-atlantic states today with primaries in wisconsin, maryland and washington, d.c. the candidates are focusing efforts on the badger state. wisconsin is a winner take all cop test with 42 delegates up for grabs. and mitt romney is leading in the polls there. he's also halfway to clinching the gop nomination with 572 total delegates after picking up a few extra delegates in tennessee and new hampshire. still with us to talk a little bit of politics is our guest host steve forbes. and ken is also here, as well. steve, out of the candidates that are left on the docket, you don't stand behind endorsing any of them.

>> that's right. i backed perry and after he withdrew, i'm on the sidelines. romney will be very hard to derail right now and should you not take too seriously the head to head polls against promise because the gop has been battering each other. remember rob ron old reagan in 1908 was 15 points behind carter and won the election in a landslide. and the big thing that i hope romney is preparing for is what if the supreme court throws out the health care law, what will he propose putting in its place. that should be a huge debate. >> so in your opinion, is time for the other candidates to drop out? >> they don't have to drop out. if they lose credibility, it doesn't matter. they're just new sanuisancnuisal factors. that's why santorum has to big another contest tonight or win a big one outside pennsylvania.

he's lost the three big ones so far. likely to lose wisconsin. going to be hard for him to continue as a credible candidate. >> and we were talking about how important this election is for the markets and business to move forward. if we get a republican in the white house, do you think what we're seeing from someone like romney is what it will take to get everything back on track? >> let me preface by saying wooe we'll have clarity whether businesslike it is or not because they don't like uncertainty. but with that said, i think that it would be refreshing to have a pro business environment where we're not assaulting the investing class. i think one of the kind of unfortunate dynamics of the american election system is that if you don't run in the primaries to the edges, which is to go to the base which are the only people that show up on random tuesdays in april and may, you can't get on the general election ballot. so i do think that we'll see the debate center more around the big important issues as we go

into the general election. so i'm not of the mind that the primary is really damaging anybody because the issues they're talking about aren't the issues that are ultimately going to make a difference. these social issues are important, but they won't shape this election in my opinion in november. >> and one of the things that the primary system has done is make romney a better candidate, finally coming out with a good tax proposal. he started on out with a vague 59 point program. god only has ten. so he's become a better candidate and on health care, he'll have to resolve that. >> and it will be interesting to see what that that romneycare looks like. we'll have to leave it there. but up next, all eyes on the fmoc minutes due out at 14:00 eastern. will we see the fed do the twist again sf stay with us.

good number of ghept comments and questions for steve forbes. mark wants it kn s to know why k eu is worse if they're doing more austerity. >> the last part of the question was -- >> why is the eurozone data worse than the u.s. if hers already doing more austerity in europe than we are in the united states, which is the policy you want the u.s. to pursue. >> because they haven't knolled through on the private sector. i'm dlated spain will not add a bunch of new taxes, but greece is, lust with new taxes.

they don't pay them anyway, so they should be going the opposite direction of something like the flat tax. brits did the same thing. europe is much more dependent on banks than we are. in this country banks lend about $1.2 trillion to u.s. companies. in europe, i think the number is almost $6 trillion. so when banks get in trouble, that has much more of an impact, they don't have the diverse capital sources that we have in the u.s. so you have a banking system under pressure. putting more restrictions on them when they should be doing the opposite. what we need is a county cyclical banking policy, tighten up on capital requirements in good times, ease up on hard times instead of pro cyclical, so you have the pressure on the banks, austerity that tends to the private sector, and not just to the public sector, and you get what if you have europe. they have it free up italy, major reforms on labor, major reforms on taxes. the things like drug stores. but he has to go much further.

>> mario monti trying to change the labor reforms. is he playing a high risk game? he says if you don't back me, i'm going to step down. does that concern you that he plays that sort of high risk threat? >> i think he sees it as that the stage in his life, what has he got to lose. he knows what has to be done. he knows they have to liberalize some of their and itity growth policies in italy, so he puts it on the line. if he throws them out, the markets will react adversely. the man is obviously feeling confident when he could tell the spanish to put their house in order. imagine italy behaving like the germans. so he must feel confident he can get some of these reforms through at the end of the day precisely because will is no alternative. >> let's look at the united states for a second. february factory orders are out at 10:00 a.m. forecast to rise 1.5%. at 2:00, minutes from last month's fed meeting. so people will be watching for comments out of that. automakers also reporting march u.s. sales this afternoon.

it's expected to be another strong month for the industry capping off a sizzling first quarter thanks to the overall improvement in the u.s. economy. and as consumers got easier access to car loans. gm says sales of fuel efficient cars and trucks topped 100,000 last month. so let me kick it back to you, steve. we said this during the break, as well, they're saying a little bit of everything to kind of cover all bases. not necessarily expecting anything out of these minutes per se, but what do you think of fed policy as it stands right now? >> fed policy is still very harmful. the idea that they would even do another quantitative easing i think is a real downer. weak dollar means weak recovery and that's one of the reason why is this is the worst recovery from a severe recession almost in history if you look proportionately at the recovery from the depression, that had a bigger bounce back proportionately than we did from this recession of 2008, 2009. >> and ken, if we do see rates start to go up a little sooner

than the fed is saying, normally that might be seen as something negative for the stock market, but rates are so low that i'm not necessarily sure that it would be. >> and it's been so low for so long. so getting some rate increase will actually be stimulative for businesses and maybe signal the go like the starter gun going off to say things will now get out of cement and change a bit. but you couldn't agree with you you more. the weak dollar that's created by all this printing is not helping anybody other than the pundits that just want to find fault with everything. >> it's government subsidy. >> and a tax on our savers because the government is not paying them anything on the return. >> we will have to leave it there. thank you so much. that wraps it up for "worldwide exchange." stay tuned for squa"squawk box" next.

central bank back on center stage. what is ben bernanke's next move is this we could get insight today from the latest fmoc minutes. and kentucky beat kansas for the ncaa men's basketball championship. tipoff at 9:30. they obviously didn't care whether any of us watched. it's tuesday, april 3rd, 2012, "squawk box" begins rate now.