hello. welcome to the show. yields in spanish debts still around critical levels following evidence that it's fallen once again. key debt today as prime minister monti says his country is paying the price for spain's crisis. and in japan, the nikkei 225 drops for the seventh straight session, its worst run in nearly three years. sony and sharp lead the way south after forecasting record annual losses. and in the u.s., they could

be a bright spot. it's kickedoff earnings with a surprise profit. welcome to today's program with chloe cho. i'm ross westgate. jackie joins us in a little while. sony posted a big full year loss. japan's electronics industry hit the bottom? one guest says high oil prices are here to stay. and facebook could kick off. will zuckerberg's $1 billion spending spree delay proceedings? we'll check in on the sector. first of all spanish equities are trying to recover slightly from heavy losses yesterday. in fact, they're just a negative, down 14 points. the fall led by the country's big banks.

the yield on ten-year bond has dropped slightly. we sort of just touched 6% yesterday. this is after data showed spanish industrial production was down 1.5% due to lower productivity. it means output has not increased in a year. and the blame game is on as a result in europe. prime minister mario monti has lashed out. he says italy is paying the price for the crisis. he made the clements on a flight back from egypt after especially italian bank stocks fell sharply in yesterday's trade. down around 8% each. investors still focused the 12-month bund market you can see 5.64%. joining us for the first half of today's program, charlie morris

from global asset management. good to see you. claudia is also with us. let's bring in claudia. do monti's comments stand up, claudia? do people believe what he said or not. >> well, on the one hand it's not surprising he would say that it is the spanish situation. in the last weeks we have seen when the spanish situation has heated up, so has our situation here with spreads going back up again. overall monti has been doing what he has promised in the first three months or so of his government. he has put into place some very important forms and one is the labor market reform which is actually the one he has been stumbling on in the last weeks and the one which the media has been focusing on. the labor reform that he actually had to pull back a bit on in order to get it through to parliament sort of put the focus on the fact that more needs to

happen, and it has not been such a very, you know, brilliant story in the last weeks. but the fact that the spanish situation is affecting italy is clear. i mean the spread had significantly come down, and to see it spike up like this alongside the spanish situation, you know, makes you think that, yeah, it's valid that he could say that. of course, more nights to be done here. in italy, as you mentioned, the banks slid 8 percentage points. this is after the ltro funds. so when an issue comes up, spiking concern on sovereign debt. the italian situation and the italian banks are, of course, put into focus. >> yeah. thanks, claudia. >> charlie -- let's bring in charlie on this. we've made a massive leverage bet, haven't we? we've loaded them up with more of the weakest debt in europe. so if things turn south, the banks are in a worse position.

but how much spills over into other sentiment? >> i think what's important is the buyout after the italian or spanish banks. you know, if there is, it's a really good strategy. if there isn't, then, of course, it wouldn't work well. spanish and italian bonds have been playing a game of cat and mouse over the last year or two. one is more distressed than the other one. they're very much a pair. these two, italy and spay, very much, are joined at the hip. i think that's an important point here. >> i know we had an auction. spain's raised a lot of money here. it's raised nearly 50% of its funding costs. why did we get a dodge in action last week. they've had an amazing run over the last six months. did we get fatigue in this sort of risk rally. you know, anything to do with the timing? >> all asset classes are

expensive on any reasonable long-term valuation measures. it's very obvious that bonds -- distressed europe excepted. the same is for the stock and commodity value. the market's going to struggle to go into the big bull market that we all long for. >> do you get a sense, charlie, that we could be in for another round of capital raisings on the part of banks or at least turn to the ecb for help? >> i really can't comment on that. i really don't know what's going to happen in that situation. but it's very, very clear the banking system is deleveraging and will continue do so. we can't put an end to the problem until the work is done. bigger picture, we look around the world for other clues on what could pull us out of this. i think the earning season won't be quite as robust over the year as we had hoped. >> interestingly, european banks have seen the share prices fall

about two thirds from the 2007 highs, but do you get the sense we're now at the bottom with the anxiety and jitters out there, door we have more downside in terms of european bond shares? >> it doesn't feel like that at all. it's the european bank index. it really dominates it. you can see the share price under severe pressure right now. also its names in italy are struggling as well. you know, wi thought the ltro would work for a while. we didn't know how long that would be. it's come much sooner than expected. we do need to see what the authorities are going do. there is no confidence out there for southern european debt at all. >> yeah. i suppose the thing is, as you said, what are investors to do if everything -- cash looks expensive, bond markets look expensive, stocks look expensive. what are you supposed to do as

an asset manager? >> phone us and ask us to build you a portfolio as we've done. i think the secret is to look inside all the asset classes and see where the value is within. if you look at mainstream indices, they look at ichlt think one of the reasons is the high profit margins. look at the s&p 500. you know, bonds versus equities. if you bought shares, they would have gone down. so, you know, how can you say that shares are cheap when actually they haven't moved pre-lee man'pre pre-lehman's. the other share prices much be very high, and that's how i see it. >> all right. if you haveny thoughts or

comments you can e-mail us at wor wor worldwide@cnbc.com. you can head to our website at cnbc.com. good piece by our columnist brian sullivan. meanwhile let's bring you up to speed with where we are with today's global stock session. chloe. >> the composite did manage to close marginally higher. once again it seems to be bottom fishing in terms of the property plays given there seems to be genuine demand. don't forget that south korea was out of action for parliamentary elections. there's the tension for the rocket/missile launch. take a look here. the seventh straight session of losses. i think the big focus is going

to be on whether the boj is going to ease because the yen does seem to strengthen. we had capex. what's happening on the equity markets, if you take a look at names like sony and sharp, they seem to spell quite a bit of toughness lying ahead. in fact, sony for one has had to double its annual forecast as well. we will find out its earnings in may as well. elsewhere, the hang seng down 1%. australia down also about a percent or so. financials, resources, the usual suspects, cyclicals bouncing. even stevens really advance after big losses yesterday. ftse down a quarter and half. the cac 40 down 3%. we just ticked slightly higher. cac 40 is flat. the ibex is ticking up a third.

down march 2009 levels for spanish market levels. just showing you the banks today, trying to bounce off. nearly 8% in losses for the italian banks. unicredit, we need to change that around. big losses for those banks, really. i think they're down to like 40% in the last year or so. bnp also have some large ones and debt exposure ticking a little bit higher. we keep our eyes on what's going to happen with these three bond yields. ten-year bond yields on record low. 1.65% we hit yesterday. ten-year spanish yields coming back from the 5.92%. we hit 5.62 yesterday. 202 is the yield at the moment.

a sharp situation in gild. we play catch-up post the u.s. employment report. europe dlarks still up. 131. wi haven't been able to get much lower. dollar yen we hit a 2 and a half, 1 and a half. we got to around 80.55. sterling/dollar with a 1.58 handle. we'll follow the yen, because if there's some suspicion, bang of japan may come out with more easing talk toward the end of the much which theoretically should weak about the yen, but it clearly isn't at the moment. chloe, back to you. >> maybe we should have a bet. all right, coming up on "worldwide exchange," despite a recent selloff, our guest host has a much better investment than equities. we're going to talk about that in just a bit.

keep it right here. 

welcome back. well, alcoa kicking off the earning season with a surprise first quarter profit despite a decline in aluminum prices. they earned a share on $6

billion in revenue. analysts had been expecting a lo loss. alcoa is expecting demand to rise and global aluminum demand to pick up 7%. over in frankfurt, also not doing that badly as well. also trading up more than 5%. well, the former pennsylvania senator rick santorum has ended his bid to become president of the united states. officially suspending his campaign, santorum made no endorsement but has now cleared the way for rival mitt romney to become the republican party nominee. his challenge garnered a strong right wing vote and he says his retreat from front line politics will only be temporary. >> we -- we made a decision to get into this race at our kitchen table against all the odds, and we made a decision over the weekend that while this

presidential race for us is over for me and we will suspend our campaign effective today, we're not done fighting. >> greece is going to call a snap election on may 6 according to reuters. they've been run by a temporary government since november. it's suggested that neither of the two mayor parties, the democracy and socialists would garner a ma jofrmt the ruler has so far indicated he would be unwilling to form a coalition. and in france the gap between the front-runners in the election is shrinking. nicolas sarkozy is struggling to maintain his lead. he's now slipped two point, 29%, half a percentage away from his rival. the same poll show ed his

opponent is ahead. pen is in third place but is the most popular among young voters. and asian companies pulling. sony down about 4.50. sharp, 3.21. panason panasonic, 2.25. they plan to lose a combined $21 billion for the past fiscal year. now, remember, sony and sharp had forecast record annual losses that dragged down panason panasonic's shares along with them. tis the loss you saw on the board earlier. flat screen prices now taking a toll. attention shifts to sony's struggling plans. the ceo will be outlining the strategy tomorrow, which will be

a key focus. take a look. notice dollar/yen at about a one-month high in terms of yen versus the dollar. iuorio yen, euro yen also. the boj may ramp up asset purchases and the aussie dollar slipping to a three-month low against global worries currently sitting at 1.03. let's talk with stuart oakley, head of emerging markets for rbs. so a lot of people are putting their bitting on some big eadsing by the boj on the 27th. your thoughts? >> i think when you look at dollar/yen, you know, it's one of the very few places within the foreign exchange universe where you can generate some alpha. it's definitely an area of focus for all the investors we speak to at rbs. look, we've had a palpable

change in policy. introduction of the target rate of 1%. that's a big deal. when you looks at the yields, we've broken a down trend. it's been clearly established since 2007. that's very important for dollar/yen. i would suggest that this marv down toward the 80 level is a tremendous opportunity to buy dollars. >> one thing that conflicts me is almost every person we spoke to on cnbc is expecting easing by the boj on the 27th. if you take a look at the latest surveys, corporate japan's assumptions are 1.8. that'sbewindering. >> invests, speculators. thing it's the real money community. the asset manager, the long yen are yet to turn their positions and actually sell the yen down. i think that's going be the

difference. you know, these types of investors can often take weeks or months to finally turn, but when they do turn, there's a mentality there. and when it goes, i thenk it will really go. i think once we get past the summer, we're going to take out the 85 level, and there'll be no looking back. >> okay. let's talk to our guest host charlie. >> charlie morris here. look here. the yen, it's very interesting the correlation of the japanese stock market and the jen. it's an old story, but what we've seen in the last few days is the yen strengthens, the stock market goes down. the stock market has been weak for many sessions but actually it's outperforming the world. that hasn't changed and that's

inflation target, that tells you they've got to keep undertaking, you know, monetary easing measures until they achieve that target, which could be, you know, ongoing by nature. >> i'm just -- i just wondering on the flip side, when i look at dollar/yen as well, what's your call on ozzie dollar? it's a leverage trade on your view of china. >> yeah. it's a funny one, ozzie. i mean, look. the speculating community seems to be universally bayish on the ozzie at the moment for a number of reasons. the most obvious one is people are expecting china to slow down slightly, and they're looking at the revision down and growth forecasts, et cetera. but let's not forget, you know.

australia is a aaa-rated kpaechlt in the current country where the sovereign sheet ts are permanently in question, that is worth a lot. you know, you can't call an end to the commodity boom. far from it. we've had a bit of a wobble and there are growth concerns coming out of choi na, but we haven't had confirmation of any of that, but i would suggest they're still actively going to pursue the aussie and divert some of that as well. i think it's way too early to say, you know, the aussie's going to sell off. >> it's really interesting. the surprise surplus that we saw, i wonder what that means to the value of it. now that we see the sur plurks what is the fair value of the

rem mb. oo >> as we know, it's a rate that's determined by the central base, a policy rate forecast you like. they fix it every single day. one thing we do know is the trade surplus has come down significantly. you know, for years and years you were seeing $30 billion of trade surplus month after month. we're not there. it's definitely slowed down. look. the way to look at this is as such. the pboc always do exactly what they say they're going do, and they told us they're going to start increasing the flexibility of it. and that's exactly what they've done. you know, it's gone from having a linear appreciation with little volatility to having lots of volatility with no discernible trend. i would suggest to investors there's no trade in china at the moment we just leave it alone. >> let's move on to another trade and get both of your views on. this gold, the pcob gold index

hit a new 52-week low. there's the gold index. 191.86. charlie, if you joined the bullish crowd in september, around $1,900 an ounce, what is the gold story? seems a better trade in a deflationary sort of scare than anything else. >> gold bull market has been in play since 2001, and it's -- there are two drivers really. two things that are really interesting. one is the fact it's beating the stock market and still beats the stock market over any trend horizon. any long-term view is -- >> september is pretty meaningful. >> so the last 15 months you made nothing in stocks and you're up 40% in gold. so it came into 2011 at 1,300 or so and it's now 1,650. so it's in a very, very strong

uptrend as well. the second is interest rates. depending where you are, they're sort of minus 2.5. historically, below 2% is a vor positive environmental for gold. we've got strong rates, long term against shares are the two reasons why we're still bullish. >> what's your view of gold? >> i think this trade's over for now. i think it's going be very difficult to recapture the old highs we receive in months gone past. the most obvious thing for me with gold is many of the risks have disappeared. you know, ltro in europe has significantly reduced the risk of, you know, one of the big european countries, you know, defaulting. you've had -- there's so much liquidity sloshing around the world with other central banks easing measures as well. there is inflation right now. so the world investors need a return. they need to pick up some yields somewhere or some kind of dividend, which many stocks give

you. gold gives you nothing. to my mind, it's no surprise that it's actually come off in recent months. >> just come back on that, charlie. >> yeah. i agree. that same situation after '06. same thing happened in '08 and it happened last year. on both occasions it took 18 months to flush out. i think it's unlikely that we'll get a new high in the gold market this year but i think we will. bull markets don't women per. >> all right. we'll leave that. we're going to leave you there. stuart oakley, rbs. charlie sticks around for plenty more. also still to come, s&p is expecting to become a key player but can they take on the likes of oracle.

this is "worldwide exchange." the headlines from around the world. yields for spanish dead still at critical levels. the debt-laden economy again fell. italy is also facing a key debt this morning. prime minister monti is saying italy is paying the price for spain's crisis. in japan, they drop for the seventh straight session, worst

run in flooerl three years. electronics giants sony and sharp lead the way south after forecasting record annual losses. and in the u.s., alcoa could be a bright spot today in an otherwise cloudy market as the aluminum market kicks off an early season with a surprise profit. the yield on the spanish ten-year bond has just pulled away from the near 6% yesterday but still elevate 5d.1%. the investors are awaiting results from a debt auction in italy. charlie morris is still with us. michael, thanks so much, indeed, for joining us. mike, just explain. what's changed in a week? >> hi. thanks for having me. you know, i don't think much changed except for the fact that things have come to the surface. you know, the sovereign crisis in europe has kind of been an active volcano which has gone quiet. what's changed is the growth in

the u.s. in asia and china have increased. no one's really ll to provide any support to the market. >> what you're suggesting there is a lot of the risk sentiment we've had at the beginning of the year is based on a liquidity rush, which we're no longer going to get or not going to get. >> yeah, i believe that. what we've seen is with the two ltros, money came into the market, money that wasn't rolled over. 65% of it, i think, went in to reflas funding or other financial needs. so that left about 100, $150 billion for new purchases. what we saw in the last euro system release, italy increased its sovereign bond holdings by

$30 million. really, there's not much money left of the ltro money left to be use frd purchases. >> michael, how long do you think this will last for? how many years? in the wars they both lasted for many years with high inflation. how dlong you think this era will last for? >> i thaink that's a great question. the more interesting question is what will make it end. what will make it end is a euro bond or fiscal solidness. so the question, i think, isn't how lock it's going to last. it's how long does it tack for them to realize thatted on & come together for that solution. so for now i think we have to get through the election this year and it takes really a crisis to get europeans to come together. a greater crisis to come together to do the euro bonds. so i think we're a year or two years away. >> in terms of the rates,

though, michael, at what level do yes need to get sorous about wondering whether spain will join the likes of greece, portugal, and ireland in terms of getting a bailout? >> i don't know if it's just rates. it's rates and time. greece is basically going on its fifth year of recession. portugal has gone into two years. and italy has seen a declining pmi, i think, for 30 months -- actually 12 months that it's been below 50 and declining. so what i think is it's rates and persistence of time. the combination is deadly in that the economies can't grow. and so their sovereign situation keeps getting worse. >> in terms of how the spannic banks will cope, if the economy deteriorates further due to austerity and slower growth and that's going to further depress property prices, how much soon can that expedite a potential big bank that could sweep the spanish banking sector? >> you know, i don't know if fw

there is a big bang either. so i think that, you know, initially what we'll see is some sort of a government type of support for the banks. but at the end of the day, i don't know how much that matters when the banks are holding government debt. so, yeah, i think pretty soon in the next month or so, we probably will see the banks go and try to use some sort of efsf or support system within europe. the question is if it happens lockstep together, spain and italy, then investors will lielz there's not enough money for both either way and we're going to need a bigger mechanism. >> very quickly, michael, what's your target for yields on ten-year for italian and spanish debt? >> so i think, you know, in the near term, i think we're going to go back to the highs of what we saw last year. and then it just depends on the response. with an appropriate response, we're probably going to come back down to sort of a 57 level. but in the next month or two or until we see policy support, i think they're going to force the hand of policy makers, so i

think we're going to see the highs and yields of what we saw at the end of last year. >> okay. there you go. you've heard it here. michael plavnik with citigroup. thank you, michael. yesterday down 2% to 3%. we're trading high. cac 40 up a half a percent. the ibex rebounding 1.6%. the bank stocks were heavily hecht yesterday because they hold a lot more sovereign debt than they did before as michael was saying. you have to like u nuni credit. they spread their wings in the database and mobile market. patricia has been joining the study. how is this going, two then, patricia? >> mobilizing the enterprise, this is exactly what s.a.p. is

all about, has been for quite some time, buying also one of those big cloud computing companies for various billions of dollars. so they're leaning up for all of these investors out there for quite some time. it's all about mobilization. whatever business does on the desktop, they want to be able to do wherever they go. this is exactly what s.a. pp. pk up as a market trend and invest too heavily. it's been going on for quite some time and think they going continue to grow like that rather than organically. interesting support comes from a gardiner study saying, for example, mobile phones are going to overtake pcs and your way to access the web, i.e., already by 2013. that's next year. so they're totally up to the beat here with s.a.p. and in terms of stock performance, really lagging what we're seeing on the overall market however, that stock has rallied over 32% over the last six months.

last month is down around 1.2% however. i think the strategy there is very strong. we continually speak with them and they all tell us that mobilization is the way forward for growth and also for the development. other interesting stuff coming through, actually, from the car sector. watch out for bmw. bmw at the moment up around 3.1% coming up with record sales for the brand for the month of march, for the first quarter as well, yet, again, consolidating the fact they're still the number one luxury brand worldwide. all three brands, bmw,my anyup. mini was up by 1%. volkswagen up 2.7%. a little bit more. they came through with sales day tachlt hitting record sales for the month of march. the brand itself up 14.5%. selling over 536,600 units.

it's incredible. the car market is still very hot. when we see a dip, it suffers a little bit alongside the banking sector because we had a fantastic rally previously. ross. patricia, thanks. >> ross, if you take a look at indian airlines, they're hoping the government will loosen foreign investment rules for the company's struggling aviation sector. take a look at the huge price there. let's join ream ba. >> it will allow 39% fdr in the indian aviation companies. it's likely to be moved to the cabinet for an approval as early as thursday this week. so far, according to the indian regulation

regulations. gap will be done as soon as thursday. this spornlt for all the aviation companies. all the key one, spicejet, kingfisher, and jet, they're all doing it. it's extremely cash-starvecash-. this move will indeed be very beneficial. apart from that, the other -- it could be moving kingfisher airlines, newspaper reports indicate that they've got a lot of cash on its books is looking to buy stakes in kingfisher airlines. 34% stake in manual chemicals some of that's the other reason there is an indian party as well who's interested in kingfisher airlines. they have gain of about 10%. in fact, kingfisher airlineses is the indoctrinated found der of today's trade. one is regulatory news.

the government is going to allow direct input in order to defer the fuel costs. the second news, which is helping kingfisher airlines, which reports indicate is interested in kfa. on that note, it's back to you. >> let's just hope there's no policy u-turns this time around. thank you so much, rima tendulkar. tracey chang has been flipping through a number of newspapers. tracey. >> most of the chinese newspapers are filled with beijing's decision to actually suspend prominent politician from his stand. they issued a statement today about his removal, but that included an even bigger bombshell in the arrest of his wife on suspicion of murdering

british citizen mr. haywood. he had close ties with bo's family. he had many businesses. haywood was found dead in chongqing last november. hit death was ruled as alcohol poisoning at the time but according accord ing to the new bus police began reinvestigating. just an aside of how sensitive the topic is ahead of this year's leadership transition, china's government now has censored internet stories. >> ross? >> a quick note from s.a.p. they say it's the least yisk which is always comforting to know. >> yeah, indeed, indeed. and also, ross, let's also pick up on some news coming out of

japan as well. remember, sony, sharp, those shares tumbled big time today. investors pulling the plug on big japanese electronics giants such as these companies because they seem to no longer really be having the market base that they used to back in the heydays, 1980s. and we have more on their challenges. what can you tell us? >> thanks, chloe. those shares took a beating. a day after both firms issued very troubling profit warnings. stiff competition by the your seas rivals. d e spite a series of streamlining efforts, sony's tv operations have not been able to turn a profit due to cutthroat price competition from south korean rivals. determined to turn itself around, sony is pushing through

big changes nchl march the firm agreed to sell its chemical operations. and under the new ceo, the firm is pledging to slash 10,000 jobs worldwide. but while sony has been busy working on damage control, apple and samsung electronics have hit on it. to compete sony plans to compete on money-making businesses. when they announce their new management plan, investors expect him to clearly identify where those growth areas are and talk about the comeback plan. back to you, chloe. >> thanks so much for that. this is going to be bag deal not only for sony, but for the entire space in japan, given the stakes at hand. and we're going be all over this story as well. so you certainly want to stick around and tune in to cnbc to see if sony has what it takes to turn its fortunes around.

north korea plans to show it's serious about launching a controversial rocket or satellite as they want to same. they have begun injecting fuel into the rocket. it could blast off as early as tomorrow. pyongyang's top officials are meeting for a historic party conference and they've name add new defense minister. condemnation obviously appeari appears to be having little impact on north korea's launch plans. richard engle has that story. >> reporter: north korea say its rocket is ready for launch. and in pyongyang, a pronounced announcement. they're designing bigger rockets and bigger satellites and there's more they want journalists to say. earlier we were bussed through the capital along streets lined with flags. we were taken to see a state-run breeding house for turtles.

here, this 36-year-old cleans and feeds the breeding pools with a minder ever present. he says he supports the satellite and rocket launch. he also helped satisfy a curiosity i had about the mass rallies like the one we saw in pyongyang yesterday. >> how do you know when you're supposed to hold up the decorations and when you're supposed to applaud? do you receive some training in this? >> translator: we have a conductor. if you want to learn -- >> you'll teach me? >> translator: we'll teach you. >> reporter: we visited a machine making apple juice. was it tourist show? certainly, but it's revealing how north korea wants to see itself, strong, moderate,

independent. >> reporter: this is one of the most dedicated. kim jong-il's portrait smiles down on what he wants the world to see. richal engel, nbc news, pyongya pyongyang. >> kim jong-un. it looks like they're taking the various motions ahead of this big laun a obviously these launch plans come as south koreans head to parliamentary polls today which could be a key curtain razr ahead of presidential polls and they say his moves have not been part of that. still to come on today's program r program, will the huge acquisition of instagram slow down proceedings? we'll check in on the social

media space when we come back. [ male announcer ] this is the at&t network... a living breathing intelligence bringing people together to bring new ideas to life. look. it's so simple. [ male announcer ] in here, the right minds from inside and outside the company come together to work on an idea. adding to it from the road, improving it in the cloud all in real time. good idea. ♪ it's the at&t network -- providing new ways to work together, so business works better. ♪

down proceedings? it's that time of day when jackie joins me and chloe from the united states. we had smart young producers

explain to me how instagram works. the story doesn't stop with facebook. >> the story never seems to stop in techland. meanwhile the last report says facebook's initial offering may come as soon as mid-may. they're targeting may 16th or 17th for itself ipo with the marketing road show beginning ten days earlier on may 7th. however, facebook's journey to the market is based on the deal to buy instagram. joining us now to talk a little bit more about it is james roger. he's a technology editor for street dauchlt let's talk about the facebook acquisition of instagram. is it going to, in fact, hinder the ipo in terms of the timeline we're looking at. >> i'm not sure. i mean i think when we look at what facebook is doing this week in purchasing instagram, you know, there's been a lot of

attention focused on it. you know, a lot of people are saying that facebook is overpaid for instagram. you know, certainly that could be the case. it seems to be the nature of the beast. i think that, you know, for me, whether it sort of derails the ipo or not, i think it's too early to say at this stage. i do thing it's a positive move by facebook. i think it's a smart move. a lot of it has been negative up to this point, but some people are actually comparing this to google's acquisition of youtube for $1.6 billion back in 2006. i think that what we're seeing here is that facebook has made a smart move to keep instagram away from google. also, you know, by making this purchase pre-ipo, thienk paying less than they would have been if they waited till facebook went public. >> okay. let's also take some of that negative sentiment you mentioned and couple it in with the markets in the united states. some of the down days with

worries about the slower growth, could that impact ipos and how it's perceived by investors? >> i think at this stage there's so much. we're expecting it to happen sometime in mid-may. i think it will push through. thing there will be some degree of negative investment around that's such a big, big deal. but in terms of the broader technology markets, i think that we're seeing a certain degree of caution at the moment. we only have to look at what's happening in the broader economy, what's happening in europe. disappointing jobs report in the u.s. last week. i think that's impacting a lot of technology stocks. apple is a standout with the bull markets and that is going from strength to strength. >> i want to bring in -- charlie morris is with me in studio in london on that point. you sold your position in nasdaq 100 last week. >> last week, yes. >> you clearly thoutd the momentum trade was over. >> it had become very, very extreme and am hit the 20% index.

600 billion dollar market cap, heading to a trillion possibly but maybe not now because it's so incredibly overboard. >> james, wh -- what is the phr you just used to me? the world must be shorter. >> yeah. think the equity investor is under way around the world. >> what do you think of that, jams? >> for me, thenk there's a lot more movement for the stock moving forward. we could see a trillion-dollar market figure in calendar year 2014. i think we might see it earlier. for me i think there's still some very positive catalysts around the stock. probably apple tv later this year. i also think what we have seen with the run-up in this stock is a lot of, you know, institutional investors are getting into it. i think for me there's more movement forward. i don't think that we're going to see the run-up at the rapid rate we've seen so far this

year, but this is a stock -- >> that's great point. that's a great point, james, and, in fact, a lot oichb vefrters are saying that as they look at apple. we're going to have to leave it there and toss it to chloe for breaking news. >> thanks for that. we're hearing geophysical's industry saying an earthquake with 8.9 has occur and a tsunami warning has been issued. u.s. g.s. putting the quake with a strength of 8.9. now, do remember this is the area where that devastating 2004 boxing day tsunami occurred, so something that we need to be aware of. a tsunami warning has been issued. both the indonesian authorities and the usgs putting magnitude at 8.9. seems to have erupted 3.9 miles

west. >> 8.9. pretty big, thii think. >> it's quite huge. >> that strikes me as rather large. we'll keep our eyes on that and see what happens. charlie, in the last discussion, what is the ideal sort of portfolio construction, bearing in mind you come out with a statement everything kind of looks expensive and value is hard to come by? >> with the asset class level, everything is expensive. that's the point i'm making. that's what we try and find. i think, you know, when you look at the consumer staple stocks, they're a good deal, the best in ters of quantity and certainty. you know, if something happens, these are the least effective most predictable outcomes you have. you're paying fair value. they're not expensive. i think elsewhere when you go to look for value, they're in line with the world. and we also earn gold and have traded the nasdaq and we'll get

back to the nasdaq next time. >> alcoa, very positive about it. that's the other thing that came out of its report. what does that -- where does that lead us? >> i think we're economically bearish and we're looking for strong growth. it is chugging along. that is a good thing. it could be inflationary. we have bonds as opposed to c d other. their charlie morris. we'll take a short break. when we come back, more headlines and the update on the tsunami warning as well. see you in a few moments. ♪

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good morning. welcome to the show. the headlines around the world. here in the united states, alcoa could be a bright start as they kick off the early season with a surprise profit. spanish stocks are trading up but yields and spanish debt are critical and there's a key test in italy. and a magnitude of 8.9 quake has struf off s-- has struck of sumatra, indonesia. tsunami warning has been issued. let's bring you up to date with

what's happening off of sumatra. this is the area where the devastating 2004 boxing day tsunami had occurred back in 2004. both the u.s. geological veras and indonesian authorities putting quake's magnitude at 8.9. they're putting depth of the quake at 33 kilometers as well. interesting to note that indonesia lies between the pacific ring of fire, and it would -- and this is the -- this was sort of the epicenter during the 2004 tsunami, and it's eventually spread all along the lines of thailand, isri lanka ad other areas as well. there may be other warnings around the same ring of fire -- the same belt since they all sit on the same tectonic plates as well. another comment coming up from the u.s. geological survey is

the earthquake is near sumatra. so far we don't seem to be it gg e any reports of casualties or injuries be but remember a magnitude 8.9 quake is very powerful tremor, and certainly with the impact of tsunami. the consequences could be devastating to say the least. jackie. >> thanks for that, chloe. of course, we'll continue to monitor that and see if there are any new developments. meantime let's take a look at the u.s. futures and see how we're sitting for the trade on wall street. the nasdaq could be higher been 15.5. and the s&p 500 up as well. this after terrible day for stock. the worst day for stocks yesterday with the dow down more than 200 point, the s&p moving below its 50-day moving average and that's spooking investors. the nasdaq, of course, closing below 3,000 as well. new fears over the contagion coming oust europe and worries

about qe3 in the united states, stoking some of the selling pressure we saw on monday, ross. how does it look in europe at this point? >> edging slightly higher after heavy losses yesterday. the dax in between. in fact, the ftse hit a new 12,000 low and basically it gave up all its gains for years. so we're absolutely flat right now. ftse and xetra dax and cac 40 up. the ibex up as well. italy uny credit down 8%. in spain, the banks up after marginal selling yesterday. what we've done with the ltros, we've loaded up the spanish and italian banks with more of their sovereign debt which means if those yields rise, they're going to be basically under water in the mark to market positions.

we'll take smgs -- something of a nosedive. just a reminder of where we stand with the yields. we have come back. we tur. ed near 6% yesterday. we hit 5.6% yesterday. it is worth pointing out the cds swaps has risen this morning so we're up near record highs as far as that is concerned. so we'll keep our eyes on those yields, and also as we get news as well. we have btp auction coming up and ten-year bund yields pretty much down on record lows when we closed yesterday. again, those yields just higher than where we have been. so that's the recap of the italian and spanish yields this morning. i haven't seen those heights since the ecbs liquidity

operations and investors very much keeping an eye on that, jackie. >> absolutely. and we'll continue to watch it throughout the morning. meanwhile a slew of speakers from the u.s. federal reserve will be taking the podium later today with many for hints. the bank boj will consider more easing at its next rate review and that's according to reuters who's citing sources. joining us now for the next hour is george goncalvez. george, great to have you on this morning. let's talk about some of the renewed fears we're seeing stemming from the markets in the united states. how serious is this? have we seen this before in some senses and should we be really worried about it in. >> if you look back over the last two years during the euro people sovereign debt cry circumstance come this time

period, april/may. it hits the european bond market nd t period and also also this liquidity, the ltros are starting to lose their effica efficacy. they create this kind of turbulence to the markets and it's being driven by it. >> there's a tsunami warning now in the indian ocean. guys, i just have to break in here because it looks like this situation could get a lot bigger than expected. a tsunami warning is now in effect, according to reuters, for the indian ocean after the 8.9 earthquake in indonesia. remember in 2004 on boxing day, they had a quake of a similar size. at that time, they had initially announced it was an 8.8 mackny attitude quake but later it was readvised to 8.9 and 9.0 and

remember indonesia sits in the ring of fire and we saw these tsunamis spread all around from thailand straight down to indiana yand ocean and down south to sri lanka as well. judging from the initial flashes we're getting, it looks like the quake we're reporting is about the size of what we had experienced back in late 2004. remember, banad banda aceh. remember, hundreds of thousands of people had lost homes and we have heard and seen quite a bit of tragic images as well. what we do know at the moment is

that the quake is 431 kilometers southwest of banda acha. for now, the geological survey is saying the quake magnitude has been revised slightly lower to 8.7 and that it hit at a dipth di depth of 33 kilometers. it looks to be what we saw back on boxing day 2004. it's something we really need to keep an eye on. it is huge. 8.7, 8.9 was the japanese earthquake. they felt those tremors and the first waves due to hit sumatra at 9:21 g, which is in around

ten minutes. i can't see where we are on the clock. but the first waves will be hitting in around about 11 minutes onshore from that tsunami. we also head out the results of the t-bill auction. the average, 1.29%. it covers 1.8 and 1.5 respectively. the key point is those yields are substantially higher than the previous tender. so i'm afraid the rise in yields that we saw on the cash market has infected the italian t-bill auctions. they're much higher on both those three-month and the ten-month t-bills than previously. there's plenty going on. we'll keep you up to scratch. the t-bill and as we get the tsunami warning and the first waves expected onshore in

sumatra in around about 10 or so minutes. more when we come back.

good morning. you're watching "worldwide exchange." it looks like it's going to be a higher market. the nasdaq

a second daythe united states. the worst day of the year, in fact, for stocks, and gist want to high light the dow is down more than 200 points. the s&p moving below its moving day, spooking traders. that's the first time we saw that since december. also the nasdaq closing below 3,000 as well and some of these renewed fears over europe. also worries about quantitative easing and whether or not we'll see it in our markets, giving us a little bit of trouble. but at the same time it looks like if the futures are any indication, the buyers might be back in the market today. how's the picture by you? >> we have seen it. they hit, 568 yesterday but we had a very disappointing -- the impact of the high yields, the move up in yields. very disappointing.

t-bill auction. t-bill auction. not as important as other auctions. nevertheless, three-month, the 12-month average t-bill set at 2.84%. so that auction, although we, as i say, moved lower from yesterday's yields, the auction numbers aren't particularly great. we got the ten-year bund yield, as you can see, at 1.68% this morning, just moving high. yesterday we were pretty much on the record low. 1.65. we have got a fresh ten-year jer plan bu -- german bund auction. it's worth pointing out for the first time ever yesterday, two-year bund yields were below those of jjb's, japanese. that hadn't happened before. anyway, we keep our eyes on

what's going on there. jackie -- or chloe. >> yeah, yeah. ross, thanks so much for that. for now it looks like the quake that struck off indonesia's banda aceh has been sleetly lowered. sources say tremors are being felt along indonesia along with singapore and thailand along with parts of southern india. it seems to be a pattern that they saw back in december, on december 26th, boxing day in 2004. and india has issued a tsunami warning for the islands, an eastern coast. and tremors from the indonesian being felt in sri lanka. they're monitoring the situation regarding the tsunami as well. right now where i am in singapore, i can't really feel anything, but then away, i'm hunkered down in the studio, so

i don't think my estimate of how the quake is being felt in singapore. it could be critical based on the previous experience of december 2004. that huge tremor that wiped out about 230 people across 14 countries. interest tremors happen any time between 8.3 and ten minutes. remember our first flash came to you under ten minutes or so. maybe the reports could be more forthcoming as we move forward. let's bring you a couple more flashes. tremors being felt from indonesia's quake of sri lanka and thailand's phuket island as well. a resort destination and where there were also many casualties including many foreigners from western europe as well. so based on the reports that we're seeing, seems to follow a similar pattern that we saw back in december of 2004. a lot of analysts had said there could be another repeat of a

similar pattern given that the volatile seismic patterns involving the pacific ring of fire and indonesia lies right in it. the reports that we're getting, the patterns that we're getting seems to replicate what we saw back in 2004 in december. take a look at the indonesian rue pia against the u.s. dollar. the stock market not a secure gauge. also more reports now suggesting that quakes are being felt in singe a pore, bangkok, thailand, and kwal la mon pure and it no longer seems to be restricted to indonesia. seems to have spread pretty much around the region. based based on the 2004 experience, tremors were felt as far away as hawaii and along the coast of

los angeles as well. something we need to keep an eye on. the 2004 quake initially measured around 8.8 to 8.9. later revised up. they appreciated just a touch to 8.9 and have said the depth of the tremor was around 33 kilometers. for now, tremors really being felt all over southeast asia all the way down to southern india. jackie. >> thanks for that, chloe. we're going to keep up with that as more information becomes available. meantime we're going to be talking more about the markets and bond auctions in europe. stay with us on "worldwide exchange." ♪

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let's bring you up to date with what is happening with this earthquake situation that seems to be spreading from the epicenter to indonesia. more quake strikes being issued and tsunami warnings being issued around the region. for now the u.s. geosays they have not received damage or are not aware of the rises in water levels but do bear in mind that

ban banda aceh is a remote area and in 2004, sometimes it took days to reach the affected villages due to the remoteness of the island. what we do know is tremors are being reported all around there. even way south in southern india in southern sri lanka. these are the same areas, same countries that were affected during the december tsunami that fell on boxing day. what reports are also suggesting is that even countries a little bit further away, myanmar being affected as well and tre moores from the indonesian quake being felt in sri lanka, and as of right now they're uncertain as to how many people have been hurt or injured. the u.s. geological survey initially put the aceh quake magty attitude at 8.9. it looks like they've revised it

lower to 8.7. remember the 2004 earthquake measured -- initially was measured around 8.8. later was revised up to 9.1, and it caused devastation of -- by a perishing 2,030 lives in about 14 countries around the world. what we're trying to ascertain is really the casualty toll. we do not know at this moment. what we do know is based on the 2004 experience, the duration of the tremors only lasted just under ten minutes and it was so great to the extent that it moved the world -- it caused the entire planet to vie brab brateh as a centimeter, and that that would be under half an inch. right now, the reports are very few in the coming. what we also know at this point is that sri lanka has asked

coastal residents to evacuate following the indonesian quake. remember, along the coastal areas, along the southern city of gall was completely devastated. let's check in with frank daniel from reuters who joins us. frank, can you tell us what you see and you know at the moment as far as the situation in india is concerned? frank, are you there? >> hi. yes, i'm here. >> we're hearing of tremors and tsunami warnings around indonesia and asia and parts of southern india. what do you know, and what can you tell us? >> yes. the quake was felt strongly in a number of cities. in bangor, buildings were evacuated.

calcutta, there's reports of cracks in some of the buildings, a certain amount of panic. people running under -- into the streets. there's a tsunami warning for the whole indian coast and the islands. they were hit heavily by the 2004 tsunami, so obviously, you know, there's a high state of alert about this. >> are you aware of any rising water levels along the coastal levels? >>, not so far. i believe it will take some time for that to happen, but, no, there's nothing so far. , not s. i believe it will take some time for that to happen, but, no, there's nothing so far.n, not s. i believe it will take some time for that to happen, but, no, there's nothing so far.o, not s. i believe it will take some time for that to happen, but, no, there's nothing so far. they're predicting waves between 2 and 3 meters and up to 5 and meters in some areas. that's the indian tsunami warning center. >> based on the 2004 experience, do you get a sense the authorities are better equipped

to deal with the situation now? >> i believe so. the warning systems are in place. there haven't been any evacuations that i know of so far, so we will -- we'll have to wait and see. it's very early phase yet. >> do you get a sense of some of the local sentiment on the ground sfl you been able to talk to some of the villagers in the southern part of indiana yad? are they panicking? are children coming out of schools? take us what could be happening through the villages south of india? >> i'm afraid i haven't had much sense to do that. i'm on this call very soon after the news breaking here, so we haven't spoken to many villages yet. i can tell you that in the citi cities, it was felt and people are out in the streets. that's as much as we know so far. >> okay. well, thank you so much for. frank daniels, correspondent of

reuters. he's obviously talking to us from new delhi and has to rely on ground reports from his sources and his contacts as well. once again, sri lanka asking coastal residents to evacuate following the indonesian earthquake. remember, sri lanka was also one of the heavily devastated countries in the 2004 earthquake as well, and more tsunami warnings and quake tremors being reported all around the region. we've heard even from as far as way as myanmar to singapore, thailand, southern india, along with them. indonesian officials have slightly lowered their magnitude estimate from 8.7 to tin irritable sentiment of 8.9. ross, as we report this, thing is something we really need to look out for. and possibly, given the size of

this earthquake, maybe in an hour or so, we could hear some news coming out, even as far as way as hawaii. that was certainly the pattern that it took on when that earthquake and tsunami erupted on boxing day. what is interesting to note is already frank daniels was telling us his sources have told him waves could be as high as anywhere from 2 to 5 meters. certainly the situation is very, very serious. >> yeah. it's interesting to hear frarjs say they've put warnings in around india for waves from 2 to 3 and up to 5 meters high. just to reiterate. we've got prime minister david caron. he's supposed to be holding a press conference with the indonesian leader as well. we'll keep your eyes on that. in the press conference, there may be an update on this tsunami warning. sri lanka has issued warnings across all the islands. so far sri lanka and thailand

have asked coastal residents to evacuate. there are evacuation orders for the residents of the coastal areas in sri lanka and thailand. the first waves were due to hit sumatra by now as well. we'll monitor and see whether we get any news from that part of -- that part of the island. now, once we monitor as well what's going on as far as this is concerned, it's also worth pointing out as well, on the financial side of things, we'll keep our eyes on this. this is a human cost on the financial side of things that we're monitoring as well this morning. dispie disappointing results on the bi t-bill. we straddle both sets of news here this morning, jackie. >> absolutely. as as we're monitoring the events in indonesia, we're

watching the u.s. futures to see if there's any impact. as a matter of fact, we're steady. the dow could be up still by 87 points. i'd like to bring in one of our guests who's just joined us. dan dicker. of course, george is still here. can we talk a little bit about what we're hearing out of indonesia and some of the news flashes and how this could impact the asian markets and some of the commodities in the region as well. >> we do have a little bit of press on this. banda aceh was sur pricely the same spot of the last event in 2004, and that did have pretty immediate effect on the oil market of course, we had that terrible, terrible tsunami disaster in japan, which had a horrendous effect on all the equity markets and oil markets and those commodities go down as all risk assets do when you have a natural disaster like this. we wait to see how bad this is going to be, but i feel better by the fact that the futures haven't immediately hit reverse and started to back up first.

i really would have expected something like that. in many ways the market can be a little more prescient than we on the ground. the fact that the oil hasn't backed up to me is a good sign. we'll see how things play out. that's very nice to see. >> certainly we'll have to monitor the events to see the scope to compare to pastimes that we've seen. i just want to bring the broader discussion out. we're still monitoring, obviously, the eurozone debt crisis impacting our markets and we're watching the latest pictures right now as you can see in indonesia of the quake there and the tsunami warning as well. major, major issues. as you said, the futures haven't backed up at this point just yet, but what point do you think news flashes will trigger a market reaction in the united states? >> right. i saw some of the earlier reports from somebody who was sitting in india saying they were getting maybe five or

six-meter total wave heights. that doesn't strike me as the same kind of danger level that the ban day aceh was in 2004 and certainly nowhere near the kind of devastation we saw in japan, which was obviously a lot more industrialized. at this point, i'm happy, again, to see the futures standing pretty firm here and we'll see over the next hour or so. i think that's when you'll get a good indication of just how much damage will be done and how much damage will be done on the equity markets here. >> and the reaction in 2004 and the oil markets immediately following the disaster. >> it was instantaneous. we got a $2 drop, if i remember correctly. i'm going back in my brain a bit. >> of course. >> that us with obviously followed by nool rally as the effects of it wore off. but we did get an instantaneous drop again. so not seeing the futures react immediately to this news is to me a very good sign we will avert the worst of the disaster

here. >> let's bring it broader to oil and obviously the center space as well under pressure because of the geopolitical tensions we've been watching. in terms of your predicting the praises at the moment barring the catastrophe in indonesia? >> i see it all to the upside, jackie. you have a lot of things forcing the price over the last two, two and half-week period. the spanish bond yeeltds are having more of an effect on the bond yield market. the scenario in oil again remains very, very tight. there is new as couple days ago ahmadinejad said his country could withstand it. that doesn't sound like anyone whose fwiepg to give up

aspirations any time soon. will it cause a certain amount of supply constant into the marketplace. and i see all of those risk, particularly if the i israelis lose their patience with sanctions. despite the fact that we lost the tr price over the last couple of months. >> george, let's bring you in as well. seeing a crisis in europe impacting the markets monday and tuesday, also monitoring the crisis and situation in indonesia right now to see the impact of this quake. what are you expecting? how do you expect the u.s. markets to react to this today, again, not seeing a change in the futures at this point. >> it's been pretty steady.

i think that's what we're seeing in the markets, but it's a fluid situation. we're an asian bank. we hope that people are out of harm's way in asia and it's not as big of a deal as being reported. if that's the case, thing the markets should see through this. everyone's been looking for a pullback. we've had risks of pullbacks and here we are. we're better at discounting a lot of the news and if the european situation doesn't get much worse, this is an opportunity to go back into the markets. >> ross, we go back to you. >> just last november we were worrying about a bund market we had a fresh ten-year auction today. the auction is technically uncovered. they were looking to raise up to $5 billion. they've raised less than that, $3.8 billion because the yields

are so low. the low yields that we've hit this morning was 1.77 for the july 2022. the bid to cover ratio, 1.1. that's why it's technically uncovered. they received 1.1 billion bids. they took 3.87 in total. much of that will be down to the fact that yields are pretty much at record lows. indeed that is a record low yield. so we may not get the sort of reaction that we had in november. we'll watch that. we've got the record low yields. do we -- do we get worried about poor auction results when you've got yields where they are at?

>> you know, actually that's glat question. look, i cover the rates markets and think, you know, europe has its own issues to deal with, and the german bond market and how the auctions -- you know, the results are not as great as you mentioned. but we had this in november, too, basically a failed auction and rates stayed pretty low afterward. i think, you know, in europe, especially with the bund market it's much more technical. there's a scarcity. that's a view that we share. i think, you know, today we have a ten-year treasury auction. really not in the scope of the european bond market but, yet, you know, the u.s. bund market has been hostage to the european stories for the last six months and it will be interesting to see what kind of results we get from today's ten-year bond auction. we're pretty low in rates in the u.s. here and we might see a backup in rates to kind scoff clear this market, this auction today in the market. >> dan, is oil going to trade as

sort of a completely separate story no any relationship between stocks and bonds? >> no, i don't think so, ross. right now the oil is reacting as another risk seattasset and tha outside of it and will continue to surround the oil market. no one should get too excited about a market, for example, an oil market that rallies $45 basically from the lows of last year and then backs off six. and that's really what we have here. think there's a little bit of excitement that maybe we'll get a break in terms of gas prices at the push, and that's something i don't see. despite the fact that the equity markets have moderated and as you said, rates at least in germany and the united states have dropped looking for a little less risk off kind of trade. we've only gotten moderation in brent prices, barely down to

120. that's hardly anything to celebrate. again, all the risks are to the up side. oil traders are going to basically play this from the long side until something breaks. >> dan, we're going to have to leave it there for the moment. dan dicker, a cnbc contributor. chloe, to you for the latest. >> thanks so much for that. so far more breaking ne indones. ban ban ban banda aceh port still open. port operations remain open but do bear in mind these are live pictures coming out of undough nisha. not sure that time if these are scenes coming from jakarta or the actual quake epicenter, which is banda aceh.

what we do know -- sorry, they're not live. they're pictures from earlier today. what we do know is electricity is down at the epicenter, which is banda aceh. and people were scrambling to higher ground and also people trying to cite korans given it's the most popular muslim country in the world as well. also we do know right now tremors are being felt pretty much all throughout the region from myanmar, thailand, the maldives, to southern end ya, to australia as well. the pacific tsunami warning center saying that a tsunami watch is in effect for the entire indian ocean. and indonesia's disaster mitigation agency says that another quake, in fact, an aftershock of 6.5 on the richter

scale has been measured in aceh as well. they're also saying the rescue teams have been dispatched to aceh. it looks like operations are moving very quickly, given the past experience of having dealt with this issue. remember, back in december of 2006 people just did not know what was happening. they had no idea what was happening, but at least what seems evident is that things are -- things seem to be moving along quite swiftly as well. once again, a magnitude of 8.7 striking off the coast of banda aceh. seems to be the same area that struck back in 2004 as well. remember, damages, casualties amount to 230,000 in 14 countries. indonesia is the most heavily hit with more than 100,000 people killed from this devastation. sri lanka also joining in on a tsunami warning after the indonesian quake as well. and also southern india on

guard. also tremors being reported off the resort island of phuket in thailand. so overall it looks like more aftershocks being reported. in fact, to the scale of 6.5. the original tremor registered lower, slightly scaled down to 8.7 from the original estimate of 8.9. what we do know is rescue teams are being dispatched to banda aceh. and so far banda aceh ports remain open and no damage after the quake, but we don't have any idea, assessment, of whether there are casualties or deaths from this interest e more measuring 8.7 in indonesia. seems to be pretty much regionwide if the entire indian ocean. we'll continue to watch this breaking news story and company you updated. remember, no market impact given that indonesian markets had already shot by the time this

news developed. currently the capital of the country, it is about 4:42. elsewhere around asia we're approaching early evening hours, so we'll continue to watch this. currently it could have sizeable impact on the equity markets especially around places like indones indonesia, thailand, as well. guys, let me send it back over to you. ross, jackie, you can pick it up from here. >> thanks so much, chloe. of course, we'll be watching that closely. we're watching and we have held steady. if the markets were opening now, they would be higher. meantime, tuesday was the worst day for the market fierce. the dow and the s&p 500 extending their losing streak to five sessions and the benchmark index dropping below its 50-day moving average for the first time since mid-december. joining us now is emily sanders, chairman and ceo of sanders

financial management and our guest host george goncalvez. good to have you as well. we're monitoring events in indonesia. i want to switch gears and talk about the u.s. markets a little bit. my question to you, how much loylo lower could we go? >> i'm not that concerned, jackie, and em encouraged by the raise. we're due if a correction. the first quarter was amazing. we were due for a correction. so i do believe that, you know, we can continue to test the moving averages and go down a bit more from here. but i do see those as good buying opportunities. >> okay. and after sort of the new year, the mantra here in the states was we're not going to worry about europe so much. we're going to focus on u.s. fund mentals. but now we go into earning season, if that trend will continue. we did have a stellar report from alcoa beating expectations.

what are some of your thoughts on some of the future earnings to come up? >> the alcoa surprise was niechlts as far as earnings, we do expect it to slow down and expect a slow in earnings until maybe the fourth quarter. houvgs the u.s. is still a shining light in the global economy. and with europe in a recession or near recession, the u.s. is a good place for assets to be placed until the global situation resolves itself. >> well, i agree with you that a slowdown was expected burke less than 1% growth perre enren enret percent is the lowest. do you think that will spook the markets if, in fact, that's the case? >> it is a little bit extreme because so much cost-cutting was done and revenues have returned to healthy levels. so i think the u.s. corporations have squeezed about as much as they can, you know, out of the

pie, and now we're in a consolidation phase, and the u.s. economy -- you know, the employment is kind of stable, not great, but it's not getting worse. and, you know, employers are more willing to hire. at least they were until this last report on friday. >> okay. let's balance that, george, and bring you in on this as well. as we look at the u.s. fundamentals and what we're seeing in europe right now, what's going to be the more key role? >> it depends on the time frame. it has a huge influence on our markets. if things were to get worse, there you can believe they would go lower and so on. i think we should start to see through that. we've seen this movie two times before already and we've seen it here in the fed as well as in europe. eventually they get the joke and they provide more liquidity and they make sure there's transitions and the markets don't fall air part. >> i think the markets are woed

this time, that the qe3 might not be there. >> it might not be there right off the bat. you know, you hear from fed members, the more hawkish ones that they don't want to see more additional easing. there's going to be a slight pullback. markets are going to get squared. they' scared. the u.s. has the fund menial momentum behind it. the key here, as emily was saying, there's been all this cost-cutting, they've squeezed a lot out of the u.s. corporates. the next has to be growth. they have sustainable growth. the fed is going to air on the side of caution and provide more liquidity just to get us over that hump, especially as we look forward to the elections. we think that qe is still at a possibility come june. >> okay. ross. >> yeah. just to bring you up to speed. back to the tsunami warnings. indonesian president due to give

a press conference. there was a -- british prime minister david cameron is there. they stood up, didn't say an awful lot. he's going to come back and talk about the latest warnings after this earthquake. we don't quite know whether it's a tsunami or not. we know the port of india has been closed. the president is about to speak. let's just take this press conference. it may be a bit of a risk. it may not be. >> the press conference isn't in english so, we'll wait for david cameron to speak. it is worth pointing out that the indian port of cha nigh has been closed. we're hearing tear an tata

operations has closed as well over concerns about the warnings. the thai prevention center has warned of the tsunami as they've warned six provinces to move to higher ground. thailand and sri lanka have made evacuation orders in its coastal areas. they're encouraged people to evacuate as you can see. let's bring in roger, the head of seismic has ards at the british geological survey while we translate the indonesian president. roger, thanks for joining us. we don't know whether a tsunami has been created or do we not at this particular moment. how soon will we find out? >> the people of banda aceh should know because it should have arooivd ten minutes ago. current thinking is probably there won't be one.

this earthquake seems to be quick an unusual one. it's not at all like the large sumatraen earthquakes we've had in the last few years. it's not on the boundary. it's within the indian quake. it's a tearing that moving the floor sideways rather than vertically. and the earthquakes that cause great tsunamis are ones that move the sea floors vertically so they create that underneath. this one is unlikely to have displaced much water. if there is a tsunami, it's going to be very small. >> that would be very good news indeed, roger. despite the size of the quake being very large it's actually the type of earthquake that's important. it's a horizontal as opposed to a vertical. >> that's exactly it.

initially when we heard of the earthquake, when the seismic earthquake triggered, it was thought it was going to be huchlkt that was absolutely right. the warnings were ordered all over the place and people should get to safe tichlt that was absolutely the right thing to do. it's within more basics come in you can start tracing exactly what sort of earthquake it's been and that really conditions one's expectation. >> as you sate, any washs, the first waves would have hit landfall already in parts of banda aceh and sumatra and other areas as well. how soon can we get reports back from those areas that are liable? >> that i don't know. that depends on people on the ground. >> so we could use social media as well, i guess.

>> certainly. with don't have an instrument. but the people will know and they can just phone in. >> roger, just picking up on the potential for a tsunami, you talk about the horizontal movement. the depth of the earthquake seemed quite shallow. doesn't that also trigger the potential for a tsunami to happen? if so, what sort of wave, how high can they go? >> 33 kilometers is actually not all that shallow. if it was 15, that would be shallow. the other thing is one has to be a little bit weary of things that say 33 kilometers because this is the sort of deep faumt depth level that seismologists use. it's somewhere in the crust, but people -- it's not yet been refined exact i how deep it was.

also, that -- having said that, depth is not quite such an issue when you get to an earthquake that's 8.7 because it's going to break the whole width of the crust, which is certainly not more than 33 kilometers thick in the indian notion. >> explain to us the event use were hearing that seem to be a clear replication of what we saw back in 2004, similar areas being hit, tremors being felt, and also tsunami warnings being issued as well. how different are what we're seeing actually from the 2004 tsunami and earthquake? >> seismologicly this is a completely different event and it's quite an old one. it's going to be interesting to make further analysis of it in the near future. it looks as though -- i am just sort of guessing and speculating, but we had first in

2004 this earthquake ta started and ruptured all the way up to the end men islands. and since then, we've had a large series of -- large earthquakes to the south of thathat all the way down the sue ma tran coast. i'm guessing what it's done is set up stresses within the indian plate where the north has moved in one way, the south of banda aceh has moved in a different way, and that's caused a huge strain at the joining point. and this strain has now suddenly ripped the plate this morning, producing this horizontal tearing earthquake. because i suspect that if -- once we know more about exactly what the fault is that produced the earthquake, it may turn out to be a rather pointing act joined between the southern end

and the northern end that we had in 2005 and subsequently. >> well, thank you very much for joining us. let's hope that your analysis is right. >> i hope so too. >> yeah. and that would be good news for everybody who have been affected by evacuation orders. roger saying the seismology of the earthquake, if you just tuned in, very different to that from 2004 in the fact that it's a horizontal shift in plates, not a vertical one. if it's horizontal, you don't create the huge tsunami that was so devastating back then. this is, of course, as we quite rightfully have tsunami warnings in many parts of the indian ocean, jackie. >> thanks so much, ross. we're going to have to wrap it up. i would like to get final thoughts from george and emily. the dow could be higher by 107. so your take on the impact on

this? >> i was in the australia when the march earthquake hit last year in japan and we're far rae moved from asia so, it seems as if the u.s. at the moment is a save haven. >> the bottom line, keep an eye on the dollar yen. we had this waerk bund auction in germany. they're disconnected from where the fundamentals are. that should mean a weaker auction today that should drive the markets. >> thanks so much to george and emily. if you're in the state, "squawk box" is up next. if you're in europe and asia, chloe and ross will continue. >> thanks so much for that. we'll hear from david cameron speaking from indonesia. you'll take a break. we'll stay with it as far as the uk views are concerned as well as in asia. >> i'm here today with two objectives, to achieve a step

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the race for the white house, rick santorum drops out. the presumptive candidate. newt still in. a earthquake has struck. a tsunami warning has been issued. it's wednesday, april 11, 2012. "squawk box" begins right now.