hello and welcome to today's "worldwide exchange." i'm kelly evans and these your headlines from around the world. in italy, the outcome of the elections still remains highly uncertain. following an hour's time by the european commission's winter economic forecast. alcatel lucent shares trading higher after vodafone executive michelle kohn is its new ceo. >> announcer: you're watching "worldwide exchange," bringing you business news tr around the

globe. >> now, the eco index in germany is expected to rebound in february. it should be crossing the wire any second now and we'll bring that number to you. ahead of trade, you're looking at the euro/dollar up about 0.2%. it looks as though the february ifo fund index has risen. in fact, it's risen to a level of 107.4, well above the level of 104.7 that was expected. also, depending on the consensus, it was looking for a reading of about 104/105. current conditions index, 110 versus the expectation of 108.5. message here from businesses surveyed by -- in this survey show the expectations the current climate and the general feeling among businesses in germany is on the rebound. so this does jive with what we've seen out of several other surveys, including the zew index, also the pmi numbers, as

well. let's get more on what this means. not much reaction across the euro. hans rhettiker, good morning. >> it is a very important number, especially in the context of what happened recently in europe where we had very bad gdp numbers. we had weaker pmi data than assumed and, therefore, it was data on this side. if the ifo would have come on the weaker side, then i think under those circumstances, people would have been quite negative for european credit. but, of course, you would have negative economic growth implication implications and the credit issue might come back. therefore, this was very important for us to stay in

positive risk environment. >> hans, we're seeing the response to the upside now. second highs, 1.32. are you sticking by your thoughts that it is still heading towards 1.30? >> we have to make it clear that in the next quarter or two the euro has upside potential and not downside potential. then the longer prospect for the euro is still very swb very negative. why is this euro overshoot taking place? it has a lot to do with the increasing negative correlation with the yen. so the euro is the anti-yen. that implies that when we were seeing the yen coming under selling pressure, japanese investors, where are they currently investing? investors are investing in fixed income. in many cases, very little yields left so that actually means the peripheral of europe

sticks out. you need to have some preconditions. the most important, the yen has to stay weak, but secondly we should not run into any politically motivated problem with the euro. that would be a killer for that type of trade. >> and on that note, the european commission today is due to release its winter economic forecast for gdp, inflation and employment. economic monetary affairs commissioner mali rhen will hold a conference. any major revisions won't be taken lightly by markets. hans, what are the red lines? >> both countries are at risk or undershoot on the fiscal side and there's very good reason for that. in spain, we have the ongoing problematics with little access to credit and in france, there's the impression that the country goes the wrong way on the supply

and reform. and that is dampening growth expectations in france. that has negative consequences on their budget situation. so i think that is important and could lead to a market reaction. but i think it is not really the driving force for the trend.the the driving force for the trend is what is happening in japan. we as european investors need to understand. and the other driving force is that definitely on growth and political stability in europe. >> hans, i also wonder, given the weakness that you're talking about with france, you saw the weakness in the flash pmis yesterday and yet the german figures come out strong. just to recap, we're showing the greatest increase since july 2010. manufacturers are considerably more optimistic. all of this coming off a really negative period of growth for germany, but how much more complicated does european policy making come if germany and france continue to die verge here?

>> that is exactly the point. why we think there is a long-term outlook for the euro is not good. we have still not a homogenous environment. instead of that, you see that germany is pressing ahead and on the other hand, france is set to undergoing the necessary reforms, that maybe the markets are hearing at the moment the wrong signals with france. the spreads have come in considerably over the past half year. so if you sit in the french government, you may procure this as the market agreeing with french politics. but i think the cost of a lack of supply reform in france could be considerable. and when that comes to the surface and i think that is going to come to the surface after the german election in september this year. then the euro is very likely to come under renewed selling pressure. so to make it perfectly clear what we think is happening now is the euro overshoots and that is going to be corrected by the end of the year and especially next year. you have to do one consolation.

you have to understand when you look at the fair exchange rate for europe, on an aggregate level, the fair exchange rate is 133. when you look at that from an italian perspective, then it is 1.19. when you loot it from the perspective of france, then it is 1.23. so it's always relevant to economies in europe. they are facing an overshoot of the exchange rate, but it is too high for their purpose. that is going to bring the tension back into euro net. >> and speaking of italy, we79 to remind folks what else is coming up on today's program. the final countdown is under way for italy's election. we'll get a check on europe's growth process spengts for the eu forecast. we'll head live to brussels for a live press conference. in other news, boeing is set to

unveil a plan to help its troubled dreamliner to take flight today. and we're rolling out the red carpet. we'll head to tinsel town to the biggest night in hollywood. find out which films are tipped to win big at this year's oscars. fears are mounting that an inconclusive election this weekend could undermine the euro and set back markets in italy. hans, as we edge closer to that event, polls open sunday and they close on monday. we've seen the two-day sell off. is it related to the outcome here? >> well, i think the italian election has had an impact on market performance for the past few weeks. i guess that markets became much more cautious in investing in the debt market in italy and maybe as well as the debt market in spain, the cause of the potential inflation risk here. now, if we are getting an

election result which markets may like, then the very clear majority left and under those circumstances, you should have a market reaction to the positive. you should have the european caps in the market doing better. >> we'll leave it there. hans, love those data points. 1 is.19. that's what fair value would be for italy, but 1.33 for the eurozone generally. in just a couple of times, we'll hear from the ceo of borsa i'll tannana. and a year ago, mario monti took over for berlusconi with the intent to go through the polls. who is italy going to vote for? the womanizer or media tycoon berlusconi, morrow monte or beppe grillo? see what experts have to see at

cnbc.com. and we have recall news here in the uk. birds eye is recalling some of its meals as a precaution. it has to do with the ongoing investigation into horse meat getting into supply chains of beef here. we'll keep an eye on earth news as we get it. alcatel lucent has approved the director of michelle kucombes as its new ceo. the company is battling low sales in europe and a write-down of its wireless optics businesses. now, air france klm trimmed its full year net loss. the carrier reported a 300 million euro operating loss that was slightly better than the reuters forecast. the company is cutting over 5,000 jobs to cope with soaring fuel prices and competition tr

low-cost airlines. the response is relatively flat. shares down about 0.1%. not a ton of move after those latest results. take a look at merck shares. they have reported better than expected profits, citing higher rates. but the data shipping giant warned this year may not be as profitable as last year. in an interview with cnbc earlier, the km's ceo neals anderson outlined the market. >> infrastructure in developing markets is a real growth market or growth area. and there's, there's a lot of northeast need for it because this is a pre-rick sit for the developing world to keep growing and be into the global economy. so that is really a growth market. but, of course, the oil market as such is a relatively slow-growing market. but don't forget that we are impeding the issue resources in both oil and gas and that means

some of the additional capacity that needs to come on stream will be offshore deep water and that's where we're investing. >> so how are markets trading on this friday? after a chart two-day sell-off and heading into the italian elections behind me, it's a mirror image of what we saw yesterday when there were only about a dozen stocks in the green. today there are very few in the red. bankia is down about 3.5%. the fta reporting it will record the biggest loss in spanish history next week. the cac 40 adding about 1.3%. the ibex up better than 1%. the xetra dax adding 0.7%. this follows the ifo survey just out at the top of the hour. ftse 100 adding about 0.8% for its part. we'll see if this positive move carries over to u.s. markets

when they open in just a few hours time. as for the bond rates, it's been surprisingly quiet were as well. same happening with spain to 5.15%. so some movement out of gilt. that yield up to 2.12. it's moving out of bunds, as well, although we're still below 176%. no major change from trade levels that we've seen for the last couple of weeks. finally, forex, let's take a look at the euro. this has been important setting the tone for the trading session here and again in the u.s. the last couple of days today. it's adding 0.3%. 1.3233. we saw it jump up nearly 0.4% after that ifo data. the dollar/yen, the yen is weakening again today within adding about 0.4%. so we'll see what impact that has had on trade across asia. let's get straight to li sixuan for more. hi, sixuan. >> thank you, kelly. asian markets wrapped up the wobbly week on a mixed noed

note. the shanghai composite lost 0.5% today and slumped nearly 5% on the first trading week on the year of snake. investors cautiously positioned themselves ahead of key economic data. they're looking out for clear policy cues in next month's all important annual session. financials, energy, majors and auto marks lacked behind, but busted downward trend on speculation beijing could develop a nuclear powered aircraft carrier. the hang seng down about 0.5% with blue chip names lower. financials in chinese consumer stocks were among the market lagger owes concerns over a tighter monetary condition in china. in japan, the nikkei recouped early losses to finish higher by 0.7% while investors watch if the u.s. backs aggressive economic recovery plans. .some european sensitive stocks were weaker over concerns about the u.s. economy and data but

heavy with stocks. south korea's kospi managed to finish largely in the green. australia's asx 200 finished about 0.75% in the green. india's sensex now trading higher by 0.3%. back to you. >> sixuan, thank you very much. a lot of key levels on global markets this week. still to come on the program, we'll be live on the ground. here are some highlights of what we've heard from the candidates so far. >> i've never spent that much on something for any girlfriend. an incredible sum. it's the most interesting i could do. we've announced the wish to make a gesture from the state aimed at renewing our closest and

peaceful relationship with the people. >> translator: we'll put italy first. we need to pull out of this. we don't want to have enemies. we want to use our ideas to call italy out of this situation. and i also want to speak to those who are no ill at ease and are protesting to say anger by itself does not solve anything, nothing at all. >> i would try and explain to grillo that many things can and should be improved. the italian government is fighting and has fought hard for that. he shi think before going into a situation which would be very dangerous. great, everybody made it. we all work remotely so this is a big deal, our first full team gathering! i wanted to call on a few people. ashley, ashley marshall... here. since we're often all on the move, ashley suggested we use fedex office

to hold packages for us. great job. [ applause ] thank you. and on a protocol note, i'd like to talk to tim hill about his tendency to use all caps in emails. [ shouting ] oh i'm sorry guys. ah sometimes the caps lock gets stuck on my keyboard. hey do you wanna get a drink later? [ male announcer ] hold packages at any fedex office location.

welcome back to "worldwide exchange" been we are learning that birds eye foods is recalling its beef lasagna, spaghetti bolognese and shepherd's pie. premiera has been struggling to find a buyer for birds eye.

this goes back to before the horse meat trouble, so i'm sure that doesn't necessarily make this process any easier for them. the ceo said he would be stepping aside. it comes, by the way, we understand they own, as well, sindus, one of the first brands to be caught up in the horse meat scandal as it's swept across europe. it certainly has implications for a lot of these companies. as we get more news on this front, we'll certainly bring it to you. now, tightening concerns are back in the spotlight in china after the latest home price data confirmed what we expected for a while, that the country's top market is start to go heat up again. new home prices in seven major chinese cities row rose an average tr a year earlier. that's much higher than expected and it's the first time prices rose across the board after ten straight months of decline.

>> the layest property data comes at a time when they might tighten policy. home prices across china gained on month .on year continuing the defy government efforts to cool this market. beijing has led a crackdown on home prices for the last three years. but chinese real estate has been showing signs of a revival since the middle of last year. investors struggled to digest the data. it seemed like they were trying to figure out whether the data had hit a sweet spot. was it a big enough contain or was et small enough to pass under bay ying's radar, yet still confirm signs of a recovery? in any case, the property market is essential to china's overall economic recovery making up more than 10% of gdp. it's a sector that investors and we will continue to monitor closely. back to you guys. >> and on that note, we are learning from hong kong the government has unveiled fresh measurer to cool its property market.

it follows prices of around 120% from their low in 2008. for more on what's happening across china and hong kong, joining us now is tran sis lune. thank you for your time. is this the start of china and hong kong tightening? >> well, it's a continuation of the policies that has been in existence for the last three years. and actually, the chinese government has done quite a lot to try to cool the property market with limited success. although property prices just rose slightly. but this is in spite of the government measures. the conclusion can only be the government measures are not tightening up. they want to put a brick actually to the property prices and increases. premier wen jiabao wanted property prices to fall 20% to

30%. obviously, he has failed and property prices are still out of reach for ordinary people in the first line and second line cities. so the government will introduce more measures. >> what kinds of measures and are they going to go beyond targeted property measures to tightening monetary policy more broadly? >> yeah, well, one thing they can do is stop the property mortgage market completely. and that actually happened at the end of the 2008 property market in china and property share prices crashed 70% n during that period. and i think short of debt, i

just don't see chinese property prices falling any time soon. because what they say is genuine, elastic demand. because the people enough money, they have enough savings, they want to buy property for their own use before proch l property prices rise again. this is a rush to buy property in china. >> well, if they were to pull mortgages altogether, that would certainly put a break on the market. i guess what investors want to know is whether china will be more involved in trying to tamp down property price appreciation especially when officials are getting more aware of the lavish consumption. is this a time when we might see them be more aggressive on this front? >> yes, maybe. i think property prices and food

prices in the forefront of their fight against inflation. and, actually, if and when property prices rise, it really filters down to the entire price change in transportation and everything else. so unless property prices fall by 20% or 30%, it will satisfy the counsel. but the problem is, you have a growing economy and people earning more money and they want to buy property. so this is the tall et of the contra decision in china now. then the government wants to control inflation and in particular would aim to control property prices before they run away like hong kong. so excessive price increase will feel popular discontent, like what's happening in hong kong.

so the government is really serious in controlling property prices. >> that's for sure and that's the latest out of china and hong kong. francis, thank you so much. in our news, bo xilai is reportedly not developing with an official corruption probe. reuters says it's been half a year since bo was expelled from the inner circle. no formal reports have been made. mr. abe goes to washington. the japanese prime minister has arrived stateside ahead of a meeting with u.s. president barack obama later today. abe is looking for u.s. backing with japan's diplomatic disputes with china. meanwhile, abe wants to clarify the terms of entry into a

trans-pacific trade pack and win america's blessing for his aggressive economic stimulus. mauri taylor is standing by comments calling french workers lazy and overpaid. speaking to our colleagues on u.s. closing bell last night, he defended his decision to write a letter to the u.s. government refuse to go buy a tire company on the verge of collapse. >> the minister was trying to use us as a billy club, figuring that most ceos will not say anything. they just keep quiet. b but, you know, he picked the wrong guy and i'm going to tell him what it is. what i said was true. and they admitted it. they laughed about it, okay. and that's where this union president, this michael -- i call him spike because he's got his hair all up. they're devout commis and they

said that's the french way and i said well, i'm not going to do it if it's going to lose money and that's what you're always going to do. a multi year guaranteed employment, guaranteed everything and i said, okay, we'll do two years and they said, oh, this is a sham. and my question to them is you mean i would spend tens of millions of dollars and you think this is some sort of a sham to close the plant? you're all nuts. >> you're all nuts. he calls them devout commies. some of the strongest language we've ever heard from a ceo in this situation. who has it right? is it the americans, is it the french? is it your country? join the conversation here on "worldwide exchange." e-mail us, worldwide@cnbc.com, tweet us, spls@cnbc.wex. let us know what you think about all that. straight ahead on the program, with just days to go until the

eye tannal election, we'll speak to the ceo when we come back.

welcome back to "worldwide exchange." germany's ifo boosts market sentiment. the index jumping to its highest level since july 2010 and suggesting germany's growth engine is regaping momentum. but the uncertainty of the italian election this weekend looms large with candidates this a final race to sign up votes. alcatel lucent shares move high higher as new ceo is unveiled. let's check in on markets. you're seeing the rebound take place across the european space this morning. the cac 40 leading the way up 1.3%. the ibex doing well, up over 11%. the xetra dax adding 0.7 5% after that higher than expected data. not quite recovering losses on the last couple of sessions, but still a pretty strong end to trade potentially shaping occupy this tri. now, the bond space, too, shows you what's happening in italy where we're seeing yields fall

heading into those elections sunday and monday. 4.45 bers for italy. 5.16% for spain. we can show you the euro/dollar rallying today about 0.25%. the dollar/yen is adding about 0.25%. so we saw stocks on the nikkei do pretty well overnight, too. the sterling/dollar climbing back above 1.52 this morning. the european commission is due to release winter economic projections for economic inflation, employment and public finances across the eu. ollie rehn will hold a press conference in about half an hour's time. the focus will be on the french and spanish forecasts. analysts are saying any major revisions won't be taken lightly

by markets. take a look real quick about the news out of novartis. vasella is saying negotiating a noncompete agreement was a mistake and also saying -- well, he's saying i made two mistakes. one appears to be negotiating a noncompete agreement and otherwise suffering from the public fallout on the back of that disclosure. carolin roth is following this story for us. carolin, what can you tell us? >> let me add a couple of comments from the outgoing chairman of novartis. there's been a lot of public outcry over his being awarded a $7.2 million golden handshake because he's leaving the firm. also, this included a six-year noncompete clause. earlier this week, novartis said it would cancel that severance pay and the noncompete close.

but at today's agm, we're still expecting a lot of very, very angry shareholders. we're going to ask why that severance pay was negotiated in the first place. you mentioned that mr. vasella said i made two avoidable mistakes. first was to negotiate the noncompete clause in the first place and the second one was to believe that waving and giving the pay to charity would be perceived as positive. those 72 million swiss francs would have gone to charity. he also said, it may sometimes be difficult to deal with, but i accept public criticism and this shows that we take shareholders' concerns very seriously. now, kelly, i want to add two big shareholders groups groups today have said they're going to vote against the firm's future compensation plan which will go into effect in 2014, even though that vote is nonbinding.

but they still want to vent their anger, kelly. >> why, carolin, is he coming forward now? is it as some speculate, that he wants to take another job? >> there isn't a lot of chatter about this in the press. i think it was about the political backlash, about the backlash on part of investors. some had filed claims against mr. vasella. i don't think there's any job that he wants to do among his rivals. hit hard his history is with novartis. but i highlights the furry in switzerland over the fat cat pay. there is going to be a referendum early march where the swiss vote on whether swiss executives should be paid these massive amounts. >> carolin, just how high profile is the case for the swiss? certainly there's focus on it from a broader financial markets point of view. but, you know, there is -- does the name resinate with people on the ground? >> oh, yeah, definitely.

this was -- you know, this was really the biggest topic and the press over the last couple of days, as far as i can tell. now, again, i just mentioned the referendum that's going to take place here on march the 3rd. this is about giving shareholders say in limiting the executive pay. i just want to remind you that the swiss executives are among the highest paid in the world and investor res scratching their heads and they're wondering, are they actually worth that? now mr. valella, his actions will make way want to alleviate some of the correspondence the part of investors, but still a very, very important topic in switzerland. >> carolin, thank you very much. boeing will meet with the faa today to propose possible fixes to the lithium ion batteries o ground for the 787 dreamliner jet. boeing's team will be led by the head of its commercial aircraft business. the solutions boeing will reportedly propose is resigning

the batteries to insulate cells to prevent them from overheating and new tools to allow crews to monitor batteries for problems. united airlines is dropping the dreamliner from its flight schedule through june 5th. united has six of those jets in question in its fleet. take a look at boeing shares adding 0.6%. it's a consistent theme, reading stories about its troubles and seeing the shares hold up reasonably well. japanese chemicalmakers may be doing pretty well today. a solution perhaps to end the dream liner nightmare from boeing. tushiko, what's the connection between these chemical companies and boeing? >> hi, kelly. the majority of companies associated with the boeing 787 dreamliner crisis have had a bumpy landing, but there's one who is taking off. materio could be a possible

solution to the dreamliner's nightmare. they had developed materials that would stop lithium ion batteries tr bursting or catching fire under extremely hot conditions. the chemicalmaker has invented two liquids, an inhibiter and a flame retardant. the inhibiter corrects the normal breakdown of the electrolize light when temperatures exceed 80 degrees celsius. this liquid will prevent flammable gas and stop internal pressure from building up. even as the battery catches fire, the flame retardant will put it out within five seconds. these materials will be used in batteries in aircraft and electric cars. the company is now working with domestic batterymakers to check on the material's performance. the material produces 10 tons of substance a year in its factory in japan. they start mass production in 2014. shares surged today, ending the

trading day with 4.3% rise. back to you, kelly. >> okay. thank you very much for that. staying in the region, we want to bring you the news out of india, that the indian budget according to a reuters poll is expected to encourage foreign investment. we're going to get this budget shortly here. it's a major topic. economists are split on whether the indian government will borrow less in 2014 and india is expected to cut spending on defense, subsidies and rural projects. gm says it will invest $7.3 billion in its south korean unit over the next five years. the money will be used to improve its manufacturing and engineering base and put direct ongoing fears of base there. about $320 million to build a new plant says the nikkei. the newspaper reports honda wants to expand its motorcycle sales network in india by 40% this year. a cyclone is expected to hit

australian's iron ore belt this weekend. western australia could be hit by severe winds either late saturday or sunday. the region ships nearly half of the world's iron ore mostly to steal mill necessary china, japan and south korea. they're monitoring the situation closely and will shut operations if necessary. let's get a look at what's on the agenda after the weekend. china's manufacturing recovery will be under secretny as hsbc's flash february pmi is due. we'll get january's cpi. as for earnings, machinery giant sani reports. now, still to come on the program, which country is britain's favorite business partner? find out when we come back from a short break. to grow, we have to boost our social media visibility.

more "likes." more tweets. so, beginning today, my son brock and his whole team will be our new senior social media strategists. any questions? since we make radiator valves wouldn't it be better if we just let fedex help us to expand to new markets? hmm gotta admit that's better than a few "likes." i don't have the door code. who's that? he won a contest online to be ceo for the day. how am i supposed to run a business here without an office?! [ male announcer ] fast, reliable deliveries worldwide. fedex.

a little bit of news out of germany with regard to cypress. a german lawmaker talking to dow jones says the size of the cypress bailout is negligible but nevertheless saying they should involve cypress bank

shareholders in that bailout. not a huge reaction to these comments, but we have seen the euro give up some grounds with initially shooting higher on the ifo survey out of germany. perhaps some concern about the precedent this would set for our bailouts and other european countries. could be knocking some of the wind out of its sails. moving on, uk policy dud david miles says england is on the wrong path to balance its economy. he's voted to increase the size of the bank of england's bond buying program every month since november. he also said annual inflation is likely to rise in the near term. and a growing debate surrounding britain's future in the european union, no evidence suggests the uk is increasingly looking across the pond to conduct business. 50% said they are most likely to buy goods and services from, yes, the united states. overall, britain is expected to do the most business overall

outside of europe. second only to germany. welcome. >> good morning. >> what were you strike to find out here? >> well, in our business, we're a major events facilities and events are about connecting the right people to each other. so as we grow our business, particularly internationally, we really want to understand the buying patterns and if we can connect the right nations with each other, then hopefully we can mutually grow businesses together. >> what surprised you most about the findings? >> i think maybe the american 50% of the poll voted for america. i think perhaps the -- still the glamour of america, the american lifestyle still appeals to people. but interesting, as well, it was followed by germany by 40%. perhaps the efficiencies and the guarantee, if you like, of german quality is something that's still high in the british mind. >> and were these businesses or is this just the british public?

>> this is the british public, yeah. and so that starts to give us a sense of where the mind-set of the british public is. >> and is that indicative of a special relationship? you know, there's been a lot of focus on that certainly politically when it goes back to the u.s. elections last fall. a lot of discussion as to whether there is still a special relationship, if there ever was, between america and britain. but as you suggest, perhaps it's more an aspirational thing, that they seek after u.s. products, i guess. >> well, i think that what you say is very true. but what we're seeing now is as american organizations look to globalize, london is a great opportunity for those businesses as they want to get out and whether their association or a corporation. if they want to run their event, lobbed is a gateway and a gateway city and we're very welcoming as we demonstrated in the olympic games last year, great at welcoming the world. >> but what about europe?

it's right on the doorstep and only germany popped up there as being a top business partner. >> well, germany is high, but interestingly, on the mail answers, america and germany were very high. from the female respondents, italy was very high. perhaps sensing a bit of romance and africa, as well. >> really? >> yeah. africa was much higher on the female side than the male side. >> why do you think that is? >> perhaps a sense of adventure and maybe romance, as well. perhaps the guys were answer bing in a businesswide fashion, but the ladies were perhaps a little bit romantic about that. >> what do you now do with these findings? >> for us, our business, as we said, we're an events business and we can drive economic benefit to our city. so we want to bring that information to government, to local government. we already have great support from mayor boris johnson in our

city. but we need to educate and continue to educate politicians to see that the events industry is a win-win business. we're private sector. we can drive economic benefit. no take on the public finances and we can drive new business into our city. >> james, thanks very much for coming by. >> thank you. today is the last trading day until the italian election on sunday. how will markets react to the outcome? julia just spoke to the ceo of borsi italiana. is it snowing there? >> yes. it's very pretty, isn't illustrate? but i can tell you, it's absolutely freezing. now, i did speak to the ceo of borse italiana.

first, i want to show you one of the headlines suggesting that the parties are fearing the polls right now. what we're seeing is that beppe grillo has actually now, according to one of these secret polls, pulled ahead of sylvia berlusconi. interesting question, of course, what this means for a future coalition because mario monti has not seen in the secret surveys to have increased his number of votes at all. so question marks over whether they're going to be able to get enough votes to form any coalition here. as you can imagine, plenty of uncertainty here and that's one thing thatdy talk to the ceo about. how concerned is he about the process beyond this election and what it means for the future performance. here is what he had to say. >> even if the election result will be uncertain, i think that we are in a safe zone. so for quite a long time. so eventually, we will have, you know, probably to think about

the reform of the electoral system. this is one important thing that we need to do. >> and, of course, what we've been talking about all week, as well, is this idea of macro reform needing to go hand in hand with reform at the macro level, particularly given the scandals that we've seen in the corporate sector hoop the. now, i also asked him whether what we're seeing in terms of a slowdown potentially of reforms at the microlevel is going to impact business. and he said actually that he believes that that is not an issue. listen in. >> the more we are going to progress towards convergence, the less you're going to be relevant and important what the local government is going to do. not saying that it is meaningless. clearly, it is important also for other cities and in general. but i'm sure that you know the main driver will be europe. so europe will be the driver and then, of course, the other countries we follow. >> and there's going to be plenty more of that interview,

kelly, come up on closing bell. i'm going to throw back to you as quickly as i can because i'm having trouble forming words because my teeth are chattering. back to you. >> just to torture you, i'm going to ask, 3.9 billion euros, there just seems to be so much focus on the state's involvement in the private sector in italy. this support here is sending shares higher. but broadly speaking, what's the perception among the italian public? >> yeah, it's interesting, isn't it? it's one of the questions that i posed to the ceo of borsa i' italiana. wa we've seen in the elections here is the political fall out from some of these stories is having the biggest effects of the like. so i think the results of that are showing quite clearly in

what we're seeing ahead of this election. >> julia, thanks very much for that. go inside. get warm. we'll see you hopefully back here in the next hour of the program. now, just to bring you back to this story we've been following, maurice taylor, the ceo of u.s. firm titan is standing by comments calling french workers lazy and overpaid. speaking to our colleagues on u.s. closing bell last night, he defended the decision refuse to go buy a tire factory on the verge of collapse. >> the minister was trying to use us as a billy club, figuring that most ceos will want say anything. they just keep quiet. but, you know, he picked the wrong guy. and i'm going to tell him what it is. what i said was true. and they admitted it. they laughed about it, okay? and that's where this union president, this michael -- i call him spike because he's got

his hair all up in a deal. and they're devout commis and they said they're the french way. you have to do the french way. i said, well, i'm not going to do it if you lose money and that's what you're going to do. a multi year guaranteed employment, guaranteed everything and i said, okay, we'll do two years. and they said, oh, this is a sham. and my question to them was, you mean i would spend millions and tens of millions of dollars and you think this is some sort of a sham to close the plant? you're all nuts. >> not mincing words there. we asked earlier, who has it right when it comes to work will have life balance? is it the french, the americans, someone else? jeff tweeted that titans ceo maurice taylor should build his plant in the u.s., anyway, not abrood. john says the u.s. has the hardest workers. they're dedicated and loyal. you know, we try. keep the responses coming.

e-mail us or tweet us. the final act of the bumi saga on nat rothschild defeated. despite a pretty public war of words today, nick von shernling said he's keen to put the past behind him. >> i would say to matt and those shareholders, please, come behind us and support us. we have to get through this. otherwise, i'm not sure where we go. we're on the cusp of that and we can have a very exciting prospect in the next few months with a clear strategy and fresh board. citigroup is bowing to shareholder pressure. the bank has overhauled its investor pay plan. citi will now better tie annual bonuses to performance and profitability and this news comes as the company has disclosed the new ceo michael corbatt was paid $1 1 million fr

his work last year. take a look at citi shares, not moving much on a day when the xetra dax is up by 0.8%. heinz's third quarter profit gets squeezed. that offset higher sales in emerging markets. global ketchup sales rose nearly 5% on strong growth. total revenues were up 2%, which was slightly shy of forecasts. the organic growth, though, and the emerging market potential potentially helping investors lay some concerns. shares down about 0.3% today. david einhorn takes his appeal directly to am shareholders. thursday, the green light capital founder pushed him to join his plan to get the company to share more of its wealth. apple is trapping $14 a share in earnings by hoarding its cash. and the plan could boost the stock by $150. green light has sued to block a

proposal next week on apple's proxy statement as to how the preferred stock can she issued. apple shares responding positively up 0.7%. we're going to take a quick break. it is green arrows across the board. we are looking for a healthy rebound after the two-day sell-off that we've seen. helping to lift stocks across the region, the cac 40 up 1.3%. the bond space shows there's not a lot of concern several in the italian sovereign space before the election owes sunday. those yields are, in fact, falling today 4.6%. spain down 5.17%. bundes and yields are inching higher and the euro/dollar is rallying. up about 0.25% the last time we checked. sterling climbing back above that 1.52 level. still to come on the program, a day after disappointing eurozone

pmi data spoox investors, we'll get a closer look at the economic outlook. we'll brng it to you right when we come back.

welcome back to "worldwide exchange." ross is away. i'm kelly evans and these are your headlines from around the world. germany's ifo boosts business sentiment. this as european commission's winter forecasts are crossing the wire. candidates are many scarbling in italy to thigh and secure last-minute votes. hewlett packard's profits slip, but come in above forecasts. ceo meg whitman says hesitate turn around plan is starting to take hold. welcome back to "worldwide exchange." the european commission is releasing its winter economic forecast for gdp, inflation and public finances in the eu. economic affairs commissioner ollie rehn is holding a press

conference. we'll bring you his comments live as it happens. in the meantime, we're going to start to pull through some of the figures we're getting out of the eu. lots coming through. there are many different nations there addressing. we're looking in particular for any comments on spain and france, any increase in particular in the did i have deficit projections. here is what the eu had to say about spain. it sees the government debt at 101% of gdp in 2014. it sees spain's 2012 deficit at 7% gdp excludeing the bank rescue. it sees the 2012 deficit at 10.2% of gdp, including the bank rescue. it sees spain's gdp shrinking 1.4% in 2013. now, we know that 7% figure, the 10.2% figure may spook investors to some extent. what's interesting, though, stho look at the reaction and spanish bond yields are still falling across the curve. the 10-year, 5.17%.

the three-year, 2.89%. even though spain's deficit targets are 7% excludeing the bank rescue, not too much of a reaction there. the ibex 35 still up by 0.8%. it has come off its session highs, but not significantly so. now, let's see if we've gotten the numbers on france, as well. it looks as though we're still waiting for some of that detail. we'll go through and try to comb through some of the other news out of the european commission. they're talking about italy ahead of the italian elections on sunday. they're expecting italy's gdp to contract by 1%. another year of significant recession for italy. 2014 is expected to rebound to show growth of 0.1%. we are seeing the euro fall on the back of these forecasts, even though the italian bonds are holing up okay. the 2013 structural budget

deficit for italy, 0.1% of gdp. 2014, 0.5%. italy, in fact, expected to run a current account surplus in 2013 and 2014. also sees italy's jobless rate rising through 2014 to 12%. and on the back of that, you're looking at the reaction in the euro. it's now up about 0.1% for a full check on markets, let's first start with will i sixuan in singapore. hi, sixuan. >> thank you, kelly. asian markets wrapped up a choppy week on a mixed note due to global growth concerns and uncertainty ahead of the italian election this weekend. the shanghai deposit tumbled nearly 5% on the first trading week of the year of the snake. investors kaus are looking out for clear policy cues in next month's all important financial sessions. financials lacked behind. latest home prices data

confirmed that the country's property market is heating up again. still, property stocks finished flat after the sell-off yesterday. mainland bores says weight on the hang seng down 0.5%, with blue chip names broadly lower. financials in chinese consumer stocks were among the market laggers on concerns over tightened monetary condition in china. elsewhere, japan's nikkei 225 gained 0.7% ending the week on a positive note. investors closely watch if the u.s. backs the expansionary agenda as the prime minister shinzo abe meets with u.s. president barack obama. elsewhere, south korea's kospi managed to finish marginally in the green. the gains in automakers were lost. australia's asx 200 raced to a solid finish after yesterday's 2.3% tumble up by about 0.8el%. this lifted by the rba governor's comments on the economy. india's sensex just paired down

early gains, just finished lower just by a touch. back to you. >> okay, sixuan, thank you very much for that. as we turn our attention to the u.s. session, dow jones industrial average is looking to rebound today, adding almost 40 points at the open, not quite recapturing those 1400 levels. the s&p 500 trying to hang on to the 1500 level today. the same has been seen across europe. in fact, europe has had a lot to the with the weakness we've seen in the u.s. the last couple of sessions. let's take a look at the cnbc ftse global 300. adding 0.1% after selling off by almost 1% yesterday. stokes are giving up their gains across the board after the europe commission's latest forecasts come out and show europe is not expected to return to growth until 2014. the recession last ago year longer than expected. spain in particular holding up reasonably well, though, even

after the ec has come out and said it expects the deficit for 2012 to come out over 10% including the cost of the bank's bailout. the kospi is largely shrugging it off. let's take a look at the yields. there is talk about italy running a surplus in the european commission's latest projections. forex rates, the euro as i mentioned added about 0.4% after the ifo data. earlier, it's up by about 0.1%. barely clinging on to the 1.32 level. let's focus on individual names. hewlett packard's earnings beat forecasts. david faber has more on hp's results. >> i'm david faber at hewlett packard's headquarters where the hobbled giant has reported a better than expected first fiscal quarter of 2013.

revenues declining a bit less than anticipated by the analysts that followed it. hewlett packard reported 28.4 billion in revenues and produced earnings per share of 82 cents a share. it also produced cash flow of 2.6 billion and free cash flow of $2.1 billion. again, more than had been anticipated, allowing it to reduce its net debt to 4.7 billion dollars. among the its bright spots, the printing business where it was able to pick up margin doing better with higher end customers than had been anticipated. ender surprise group, enterprise services coming in better than had been anticipated by the analysts who follow the company, again, contributing to that better than expected bottom line. the company also point to go a better than expected second quarter, but has not changed its overall guidance for the full year. one reason may be that an

enterprise services and key accounts were expected to come off the rolls, if you will, during the first quarter, stayed on, but they are still expected to come off towards the second half of the year. consumer deterioration, though, in the pc business continues the pace. down 13%. notebooks and pcs particularly weak as was business overall in places such as europe. so that will continue to be a pressure point for a company that only now from its key busies $223 million in operating profits, roughly 10% of the total. back to you. >> and don't miss david faber's exclusive interview with meg whitman, live from the company's headquarters on "squawk on the street" late today at 9:00 a.m. eastern time. elsewhere, aig swung into the red in the fourth quarter. adjusted results beat forecasts and it was first quarter since the u.s. government sold its

remaining stake in the company. the ceo tells cnbc business is gradually improving, but a dividend and buyback will have to wait until aig has sufficient liquidity. >> our loss ratios for eight quarters now is slowly coming down. so the day-to-day results are terrific and we had a couple of headline problems which kaut caused a quarter, but still with the huge loss of sandy of $2 billion pretax, we still made a profit in the quarter. >> aig shares are up 4% after hours. nearly 5% in german trade this morning. now we just want tory cap for you what the european commission has just released in its projections for winter. it's not a pretty picture for the european union. it says the eurozone will be the return to growth until 2014, the recession last ago year longer than initially expected. there's weakness in particular in the deficit targets that we're talking about for countries including spain. the eurozone economy is still expected to grow at 1.4% in 2014. this follows a contraction of

0.6% in 2012. and the contraction of 0.3% now for 2013. its initial forecast was for 0.1% growth in 2012. these have repeatedly proven too optimistic. and you can see the reaction across european markets. we are seeing still a rally take place after two days of sharp sell-off, but the euro in particular dropped below that 1.32 level. it is trying to hold higher now, up 0.1% on the day, much weaker than where we started the session. u.s. stocks fell for a second day thursday on the back of the sell-off. that was after the disappointing german pmi numbers yesterday. markets did manage to close off their lows, but the dow posted its worst two-day drop of the year. joining me now, bill trazulo at bell curve trading. bill, at a time when the fundamentals can be a little confusing, what do the charts tell us here?

>> well, kelly, on a shorter term basis, we've been if you will bullish for the last several months. the shorter term has been positive for the last of november when the s&p sit down in the 1350 areas which was very important to pull it off the march '09 lows. we drove that to 1500 and basically told our clients, we think we have a shot, maybe even getting as high as the old highs, 1576 in the s&p 500 futures. but the bottom line is, we think basically in this area above 1500 that you really have to be very careful. historically, if you look at what the market has done in this 1500 to 1550 area, it is not a pretty sight. this is not a place where you want to get caught with your maximum equity exposure. just go back, look at the peaks in 2007. and so our feeling is that, you

know, whether the dow move has started over the last couple of days or started in the next several weeks, it will start from this area. and i think easily you're going to see the s&p pull back at least to the 1400 area and maybe even as deep as 1300. >> well, i mean, 200 points would be a sharp sell-off. where do you suggest people put their money, then? >> well, look, if you go back the last couple of years, last year we had a strong year, but we still, in the midst of that strong year had a 10%, 11% sell-off. the year before we had a 20% sell-off. so this isn't unusual to have this corrective price action. i think what you want to do is try to weather the storm, number one. as i said, they've had a great rally, boost the money into cash. i think some of the sectors that will low you to weather the storm better will be things like biotech, consumer staples, some of the utility names, but

basically play defense here because i think we're primed for, you know, a decent size correction here. bigger picture, you know, we'll just have to see on the whole downplay move. again, historically, go back and look at what's happening when the market has been in this 1500, 1550 area. you know, we've had some of the biggest sell-offs we've had over the last 20 years. so the point is, take advantage of the rally. take some chips off the table now and i think you'll get a much better opportunity to put that money back on the table later in the year. >> has it been kind of moving up and is down with the s&p? >> well, look, we've been twel bearish gold since mid-september. that was pretty much the time when the qe3 announcement came out.

our feeling was at that point in time, you pretty much had every good piece of news priced into gold. so we've been negative on gold since the down side area. you could easily see gold trade down to the 1400 area before it finds its footing. everybody, at least over the last couple of years, has been a big bull on gold and been talking about gold going to 2,000, 3,000, etcetera. that's not the trade right now. the right question to ask is how low can gold go before it stabilizes? again, we think you could see the market down in the 1400 area before you start to see some real good long-term buying come in. >> all right. it seems to be the rates of 1400 for gold in the s&p. that's what bill is suggesting this morning, bill, tr bell curve trading, thanks very much. equities may have peaked down bonds on their way to ae

rebound. that's what mark faber has to do to say. faber warnings if we don't get a correct now, we could be setting up for a big crash in the summer. anyway, the full interview is at cnbc.com. you should take a look. and here is what's on the agenda today in the u.s. no economic data, but alternatings calendar does include numbers from agire interpublic, abercrombie and fitch and "the washington post." eric rosengren and jerome powell will be speaking at 10:15 a.m. james bullard will be on squawk today at 7:00 a.m. eastern. ♪

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welcome back to "worldwide exchange." these are your headlines. brussels warns the eurozone economy will contract for a second year in a row in 2013. more optimistic tone out of germany's ifo. the business confidence survey jumped to its highest level since 2010. and c he o meg whitman says the turn around is still on track.

now, just about a week to go before automatic spending cuts go into effect. but one high profile investor tells cnbc all the focus on the sequester is obscuring the real issue, the exploding costs of entitlement programs. >> the hype oversee quest ragz is a joke. >> same thing about the fiscal cliff? >> it can net out sandy. you're talking about a quarter perts of gdp. read more about that and the budget battle in washington as well as the fed and see his interview with maria bartiromo on our website, cnbc.com. do that while we take a break. still to come on the show, we'll be live on the ground in rome and milan. who is going to join us? you'll have to come back to find out. l stations come over to mission a for a final go.

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european market res rallying on the last doppler radaring day before the italian elections on sunday. what more can we expect from the various outcomes? julia joins us from milan and michelle caruso cabrera joins us from rome. it's great to see you. julie, great to see you, as well. first out to rome, michelle, because i love this quote from

paul donovan. is says ancient rome may have managed its voting in the. and in the modern day it takes two days of polling. >> there's so little clarity about what the outcome is going to be at what is one of the most important times in the history of italy because of the weakness in the economy, the worst since world war ii. so two days of elections already the markets are extremely nervo nervous. they may be rallying today, but the lead headline in the major business paper is the fact that the markets in milan fell dramatically yesterday, nervousness about what the outcome is going to be. you have two candidates who have criminal convictions. i think that says a lot about the state of italian politics in general. you know all about sylvia berlusconi and the underage prostitute, etcetera, etcetera and grilliot who julia has done

a wonderful job of profiling who has this man slaughter conviction from 1980. two out of the four are probable candidates. then you have the left center who is going to have to form a coalition with somebody. poor mario monti doesn't get any credit for lowering the country's gdp down below 5%. it looks like he's last in the polls. even his closest allies will admit he may be a very good bureau accurate, but he is not a very good politician and is they be grudgingly admit that silvio berlusconi is an incredible politician. so it's going to be a real nail biter as we go into monday, kelly. >> and, michelle, i have to wonder if the italians are nervous to see you there. the last time you popped up in greece, it wasn't the best moment for the country. michelle will be filing updates for us throughout the weekend.

overto milan where julia is there with an eye towards the business community. jul julia, what's the general consensus among people? do they teal as though there's a more business friendly candidate who might be able to keep italy on the reform path it so needs? >> you know, i think there's a general consensus that ultimately what's needed after this election is a continuation of the reform process. anything that throws us into question or concerns the market about the ability to continue to implement these reforms have to be a concern. that's the overriding message of the people that i've been speaking to you here. to borrow the words of the head of the biggest retail bank here, he said to me no matter who wins this election, they have no choice but to continue their reforms. and i think that's the overriding message here. we can't get away with that. as michelle quite rightly mentioned, what we're seeing here is a growing momentum towards an anti-austerity, anti-european sentiment. what we're looking at at the

moment, 49%, 48% of people suggesting that they're going to vote for parties that won't continue the reforms, don't want to -- in fact, want to repeal them and you have to be aware of the -- around this coalition and how difficult it's going to be ultimately for a coalition to be formed. >> that's the real worry, as well, that any coalition might be too weak to last beyond a year. julia, thanks very much. joining us there from milan again with the business perspective. ollie rehn, meanwhile, after the latest forecast which showed a significant downgrading of europe's growth projections, he's calling europe economic data disappointing. no kidding, saying the economic data is not feeding through to the real economy. europe must stave a of reforms. we're talking about austerity, stimulus, structural reforms,

much lessons learned after a difficult period across the country. we'll bringing mow comments as we get them. here is a look at how futures are trading ahead of the future on wall street. dow looking to rebound. can it stay in the green? we'll be right back.

welcome back to "worldwide exchange." i'm kelly evans and these are your headlines. germany's ifo struck a more optimistic tone. the sentiment index hitting its highest level in 2 1/2 years. but uncertainty over the outcome of weekend's italian elections hangs over markets. candidates are scrambling to try and secure last-minute votes. hewlett packard profits slipped but came in above forecasts. ceo meg whitman says her turn around plan is start to go take hold. >> you're watching "worldwide exchange." bringing you business news from around the globe. >> well, the dow is trying to recapture the 13,900 level this morning, adding roughly 50 points in early futures trade. we should mention what's been happening in europe overnight. the initial positive mood, the rebound following two days of sell-off across the u.s. and

frankly across much of the globe has been dimmed by the latest projections out of the european commission. we'll get to that in one second. first, we'll go over the cnbc ftse global 300 and we have seen a bit of a rebound of 0.6% the the no enough to offset the sharp 1% decline we saw yesterday. as i mentioned europe, we are still remarkably seeing markets generally in the green. rebounds were stronger this morning after germany's ifo index came out. business sentiment is pretty high, higher than expected. nevertheless, german projections painted a grim picture for the eurozone. it's higher than targeted. when you don't have growth, it's harder to make those levels come down. the ftse 100 adding 0.7%. 0.5% for the xetra dax. the ibex better than 1% and 1.3% to the cac 40. there's a bit of a different between the financial markets and the real economy. how do you make money in these markets? here is what some of our guests

have been telling us this morning. >> the thing that has been driving the euro higher has been positioning people to leave and that things are getting better, willing to put their money back into italy, back into spain to capture yields. but suddenly now if politics go the other way, all of the -- has been placed in the periphery in the eurozone, then it would be proven that all of that faith had been misplaced and things could, again, unravel. >> consolidation, my advice is just sit where you are. if it's a correction, there's opportunity for technical movement, maybe go further up the risk level if it is a correction. wait a bit for markets to come down, maybe 3%, 5%, then up on risks. >> why is this overshoot taking place? it has a lot to do with the increasing negative correlation with the yen. so the euro has to come actually the anti-yen.

>> was a golden rebound taking shape? our next guest suggests it could be a signal that a bull market is ahead. he's sandy dejasha. the welcome. >> thanks, kelly. >> first of all, do you believe in this golden cross death cross stuff? >> it's a market technician, so yes, i do believe in technical indicators. the golden cross is looked at by most trend traders. they're looking at an opportunity to position themselves for a move that could last several weeks, several months and in some cases several years. recently, we have seen the market movements coming up with the golden cross and also the death cross. we'll talk about what's happening on gold right now. as you've said, we've recently seen something called a death cross and that occurred yesterday. >> that's what we're looking at on screen here? >> absolutely. we're looking at two moving averages and it's a 50-year

period average. and a death cross is when the 50 period moving average crosses below the 200 period moving average. so it's suggesting on a short-term basis at least that gold is probably going to still head lower. now, previously, back in october, i suggested that we could be seeing some resistance at 1775 and revisit 1550. it's pretty much where we're heading to right now. but it suggests that we may see even lower prices, down towards 14, 15 in the coming months. >> and that echos what we heard from bill at the top of the hour. he said the same thing, it could be headed down to 1400. >> absolutely. >> so why are we talking, then, potentially longer term about a resurrection here? is it because once you get down to those levels, people start to come back in? >> well, there's two ways of looking at this. are you a short-term trader or a long-term trader? we talked about gold. the golden cross occurred back in september last year and then we saw pretty much a sell-off from there. but something really interesting happened back in april 2002 and also 2003.

we saw gold price owes a weakly basis create a golden cross. since then, gold has risen by 530%. so on a long her term basis, gold is still bullish. what we're seeing is this d divergence taking place. gold is still bullish, but longer term worry seeing a pullback. so over the next few weeks and next few months, gold will pull back. that's where we're getting these prices at 14, 1415. >> i love the name of some of these technical indicators. are there other ways of evaluating what is happening here that you can kind of use to check to signal what may be coming from these? in the past, they haven't always been 100% reliable. nothing ever is. >> absolutely. and that's the key thing. you have to manage risk. but there are other things to look at. the dow jones has given up a signal on the 3rd of january last year. we're up 12% from the golden

cross movement. what i personally like is taking a look at price patterns. what we're seeing right now, 14,000 psychological level. here is something to really look out for. when we see a weekly close on the down side and then the following week takes out the low, especially when we take out three week lows, that's indicating that on an int intermediate term basis, that's what's happening. >> when we see a weekly close on the negative side -- >> which happened when? >> well, we saw something called the herabi pattern which is pretty much where prices close even. we saw that last week. this week we're seeing a pull back and the even balancing out. but when we see that weekly close on a negative basis and the following week takes out the low -- >> so two weeks in a row negative close? >> exactly and a break of a three-week low, that is really giving you a price signal to say, hey, you know what? the top is already in place. maybe it's time to take the money off the table and watch for a pullback. we'll leave it there, sandy

signi. thank you very much. the red carpet is being rolled out for sunday's academy award ceremonies. amid all the glitz, gowns and glamour, who will go home with a piece of oscar gold? stay tuned. [ male announcer ] this is not my home. there. i said it. they don't have pictures of my kids. they don't have my yoga mat. and still, i feel at home.

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in some cases, raising deficit targets for eu countries, as well. ollie rehn is speaking and we wanted you to bring you his comments on france in particular. we said france needs to pursue structural reform including growth and employment. okay. france reform process must continue, including on pensions. he says he could consider a france deficit extension if france takes the necessary measures. france steps the target will be revisited in may. as we said, the euro has come off its highs earlier in the session following the release of those figures. but it's a different event we now want to talk about. the 85th annual academy awards are being held this sunday in los angeles. some of the films vying for best picture include "ar go,"

"lincoln," and jane joins us now on set. is it all locked in? there's now so much when it comes toon event like the oscars. we have all of these film eventes and ceremonies from around the world building up to this event. any surprises this year, do you think? >> i think the surprise will be in the supporting actor and actress categories because that's still a little bit -- nobody really knows. but we know that for best picture, best actor, best actress. >> what do we think we know at this point? >> i think we know "argo" is going to get best picture. ben affleck will get that momentum and it seems to be that that is what people are thinking. possibly ang lee will get best director for "life of pi." daniel day-lewis is getting best actor for "lincoln." it's probably likely.

>> but, you know, obviously, ann hathawaw for her beautiful singing, crying and hair cutting. she'll probably get best supporting actress. >> people always sympathize. it drives me crazy sometimes because it's like, is it the performance itself, really, or is it what they went through in order to deliver the performance that really went? >> yeah. and they always say you can win an oscar based on that one theme. and then that scene where she's having her hair hacked off, it's in the bag and she manage toes cry beautifully and a lot of audiences have went over this one scene. so -- >> i still didn't love the movie. you know what movie i loved was silver lining's "play book." terrible name, but it was a really good movie. >> but oscar doesn't necessarily lime comedy so much. >> it was hardly a comedy. it was a couple of laugh lines and i was crying my eyes out. you mentioned "life of pi."

and what was really interesting about this film is 80% of its box office takes have been international. >> people love that film. it has such strong scenes. it looks beautiful. you don't have to understand what's going on if you just want to look at it, it's so beautiful. i think it will be rewarded in the technical category. it's quite ground breaking in terms of 3d and cdi. richard, the tiger alone deserves his own special oscar. it's amazing. >> they are the premier global event. sunday night, you're going to stay up here to watch? >> yes. >> brutal. >> everyone around the world does. it attacks millions and billions of audiences. >> can we ask l.a. to move it up a couple of hours? >> i know. why can't they? >> jane, thanks so much. now moving on to boeing, the company is set to lay out a multi point plan to fix the battery problems on board its dream liner 787 when it meets

with fa regulators later today. phil lebeau joins us on the line from chicago. phil, good morning. great to have you back with us. how significant is this today? >> well, this is really a watershed moment, if you will, as we look at the investigation into the grounding into the 787 dreamliner fires. essentially what's going to happen, kelly, is that you will have ray conner, the head of boeing commercial airplanes lead a team of boeing executives and engineers to a meeting of the federal aviation administration with michael fuerta, the head of the faa, and leaders within the faa, and being is going to lay out their plan for what they believe needs to be done to resolve the battery situation with the 787 dreamliner. and especially it comes down to accommodation of prevention and containment. and prevention in the form of redesigning the battery, the battery case, essentially taking

greater steps to ensure that there are no batteries that overheat in the future or catch fire. and this containment aspect is if there is a situation in the future with lithium ion batteries, boeing will make design changes to, a, make sure that any fumes that come from a battery overheating or catching on fire are vented outside of the plane and also that that fire is contained within that area, that box in the apu section, the auxiliary power unit section of the airplane and that nothing else can catch on fire. that's essentially what the plan comes down to for boeing. and keep in mind, kelly, they have been working hand in hand with the faa for the last 38 days as they've been trying to figure out a way to get the dream liner back in the air. so this is not like they're walking in and the faa has no idea what boeing is going to prevent. they're fairly familiar with

what boeing is going to say. the question now is is it rigorous enough? will it work? >> and, phil, we're looking at shares rallying about 15% today. thanks very much for calling in and you can head to our website for more of phil's coverage on the boeing dreamliner fix. all of that at cnbc.com. if you're just joining us on the program, good morning. these are your headlines. brussels warns the eurozone economy will contract for a second year in a row in 2013. business confidence index out of germany jumping to its highest level since july 2010. and hp profits shrugged but managed to beat forecast as ceo meg whitman says a turn around is on track. and u.s. stocks are heading lower for a second day. traders used this week's fed minutes and disappointing european data to sell. can we break the trade heading into the weekend? we'll head out to the bond pits in chicago for some insight when

we come back.

welcome back to the program. hewlett packard's first quarter profits fell 16%. but results did top forecasts and the company's second quarter outlook beat estimates. the ceo meg whitman says the turn around plan is taking hold, although there's still work to do. she reiterated hp has no plans to break up the company. there was a major spike in volume, about 10% ahead of earnings yesterday. the s.e.c. has so far declined comments. hp did rise in after hours trade and look at that, a rise of better than 7% in frankfurt. don't miss meg whitman's exclusive interview with cnbc at

"squawk on the street." elsewhere, aig's adjusted results did beat forecasts and it was the first quarter since the u.s. government sold its remaining stake in the country. the ceo said business is gradually improving, but the dividend and buyback will have to wait until aig has increased liquidity. >> our loss ratios is slowly coming down. so the day-to-day results are terrific and we had a couple of headline props problems which caused a quarter. still, with the huge loss of sandy of 2 billion pretax, we still made a profit in the quarter. >> and aig shares responded in the tune-up 4% after hours, roughly the same amount in frankfurt trade today. heinz's third quarter profit was squeezed falling 5% on profits approximately that offset higher sales in emerging markets. global ketchup sales were up nearly 5% boosted by russia,

latin america and dan da. heinz shares falling on the back of that news, down about 0.3%. citigroup bowing to shareholder press your. the news comes as the company has disclosed new ceo michael corbatt was paid $11.5 million for his work last year. he was named ceo in october. shares just barely higher in germany this morning. david einhorn is taking his appeal to shareholders. the green light capital founder pushed them to get his plan to share more of the wealth. his plan could boost the stock by $150. he wants apple to issue perpetual preferred shares when he calls ipref. you have to love it.

pretty genius marketing strategy. apple shares responding positively, up 0.75% in frankfurt trade, roughly in line with the market this morning. and nielsen is changing the way it tracks how you watch tv. the ratings company will start measuring shows downloaded and watched via broadband such as itunes or hulu. currently the tv shows aren't count counted. video from demand on cable and satellite providers won't be included. but nielsen says it may track shows watched on tablets and iphones in the future. nielsen holdings down more than 1% in u.s. trade yesterday. look at that. up 13% over the last quarter. not too shabby. take a look at what is happening across the index. they're holding up remarkably well after the european commission came out with projections well below what they had earlier targeted. showing that europe will be in recession for a second straight year in 2013.

no growth till 2014. higher deficit and did he have debt levels because that typically is what happens when growth goes away. the ftse 100 among the major indexes responding positively. the cac 40 in paris up better than 1%. the ibex doing well, also, even on the news that bankia will be announcing the largest spanish loss in xetra dax history. also showing better than expected business sentiment. u.s. futures are trying to rebound after that two-day loss, looking to add in the range of 50 points. that's the word i was looking for on the dow jones industrial average. 13,904, the s&p trying to cling on to that 1500 level. we've had no shortage of analyst oets program this morning warning that the charts don't look good from the s&p from here, however. there's one week to go before $85 billion in automatic u.s. defense and domestic spending cuts go into effect.

but one high profile investor tells cnbc all the focus on the ee quester is obscuring the real issue, the exploding costs of entitlement programs. >> if we don't deal with it in the next four or five years, the same thing is going to happen. we're going to wake up, interest rates are going to explode, and the next generation, they're going to have a very, very tough time and it's so unfair. >> todd joins us now. any response to those comments from stan druggenmiller or what do you think generally is on the market's mind today? >> good morning, kelly. i think this morning's market and today's market will be a little bit about a row bound. there's a lot of talk about the sequestration and all the nonsense. but that will always be taken care of and the market has a way of pricing that in. if you ever look at one picture, we've had a market up seven weeks in a row and the s&p is down about 1% for the week. you really can't call that, you

know, major technical damage. i think that somewhere here at 1500 we have to hold or we're going to get some mysterious selling pressure. i do believe that we had a temporary top in place as you've seen some of the action, you know, in the gold markets and the crude markets, a lot of the riskier assets are starting to get sold off heavily. it seems like the risk has been coming out of the markets and going into the telecons and the safer stocks. that has caused some of the problem here. but it looks like we're going to churn up here a little bit and probably hold this 1500. i think we'll probably turn between 1500 and 1530 for the next couple of weeks. if we break below 1500, all betts are off. it looks like we have a chance to go into the correction that everybody is looking for. >> and how do you read gold here, todd? >> i think gold is at a very crucial level for the little yellow metal. i think 1550, if it doesn't hold 1550, it's going into the 1400s. it is in a solid down trend, a six-month down trend, it looks

like it had a nice blow out to the bottom here. 1550. if it can hold, it's going to go lower. i think we'll see some short bounds here, but i believe the joef all trend can hold and i believe it will break this 1550 shortly. >> okay. i think i still see the horns there, todd. a gold bull perhaps, a loan or lonely one these days. that does it for us on the program. i'm kelly evans. thank you so much for joining and keeping me company while ross is away. he'll be back next week. i'll be away. in any case, it's time for u.s. "squawk box." we hope you have a wonderful weekend. join us back here week.