hello. welcome to today's "worldwide exchange." i'm ross westgate. here are your headlines from around the world. sterling hits a 2 1/2 year low after moody's strits strips britain of its aaa credit rating. george osborne, still defiandef. >> brittant cannot let up dealing with its debt, dealing with its problems, cannot let up in making sure it brings the -- to the world. chinese factory activity in february heads to a new two-year high. and voting is under way in italy in one of the most unpredictable elections in the nation's history.

welcome to today's program. kelly is not here because she is somewhere else. to be fair, she's in barcelona. that's where the wireless provider with big hopes for 4g technology in the uk. we'll find out why the industry is looking forward to the next big things. kelly will be talking to everyone from everywhere at 10:40 cet. yumm brand sess trying to prepare its reputation after a chicken scandal. and delivering a sharp warning will be in seoul for the latest at 10:30 cet. plus, bp's highly anticipated trial kicks off in

new orleans as the blame game continues over the deepwater horizon disaster continues. that's at 11:20 cet. but first, b the british government insists it will not budge in its austerity drive despite pressure following moody's stripping the country of its aaa credit rating on friday. the agency warnings the british economy faces sluggish debt for years. the finance minister george as born standing firm despite questions over whether he'll announce new growth measures when he presents his budget on march 20th. >> i don't think the budget should be about a change of economic strategy. it should be about making sure we deliver that strategy with these, the jobs being created, protects those low interest rates which are so important to people with a mortgage or businesses with a small business loan. it goes on making sure britain says to the rest of the world, we're not going to run away from our problems. we're going to take those problems head on.

>> as far as sterling is concerned, you can see we're currently trading at 151.44. we did get down to 1.5073. we had a 16-month low of 87 of 75 against the euro, as well. darren maher joins us. there's been quite a big move already in sterling before this announcement, one wonders actually whether the ratings downgrade, now it's on a stable outlook, is perhaps the end of the weakness in sterling. >> i suspect not, to be honest. we can talk about it being a move and certainly over the last couple of years, there has been a big shift in cable. frankly, this has been a relatively small move. we can't say as of yet it's overshoot. i don't think the market will take great solace that we're now in a stable outlook from moody's because i think everybody

recognizes the uk is still fragile and the growth position is more fragile, so i think more down side is possible. >> but what is in the price, darren? >> i think from this point forward is how much slippage do we get. i would say it's more what's in the price and what's in the price for sterling is the market has given the uk a lot of good will that it will be able to mix this wonderful growth of austerity. i think what the market is now doing is reappraising that. that now is coming out, but it's not by any means all the way out of the price. >> is there the chance now, if the focus is on growth, is there a chance now on the bank of england stepping up to the plate once again? >> well, you got that from the minutes. you know, the vote was a lot closer than the market was spething, talk about more qe. you still get a sense that the majority of the bank of england, if there is going to be more stimulus, it won't necessarily be this gilt buying that will be

the tactic. but yeah, i think there is an appetite and obviously the market is waiting for carney and thinking that he'll show even greater appetite. so both on the monetary cycle, maybe from the fiscal side, growth initiative in the budget, it does feel as though, you know, things are changing, but not necessarily the better for sterling. >> what's the target for cable and euro/sterling? >> we've got 1.48 on cable. we've got 91 on euro/sterling. >> stay there. we have a report suggesting japan's government is set to appoint kuroda as the bank of japan's next chief. he's more likely to take radical steps to fight deflation, but japan's chief kap cabinet secretary has not a formally approached the candidate for the bank of japan governor and deputy governor positions. nevertheless, we have seen the nikkei at 53-month highs, dara.

how much further is that a go on this rate? >> well, on friday we recommended -- actually, last week we recommended going long euro/yen and our target was around 1.2850. we think that has more legs. you're right, these announcements if they're confirmed, if they're approved by the upper house, they would mean a much more dovish election for the uk and the market will be anticipating something more radical. will they deliver? we don't know. short-term, the yen will remain on the defensive. >> yen on defensive, the pound on the defensive. the euro, look, you know, we're looking at weaker growth and bigger budgets in spain and france with the eye 258an elections still waiting to hear the results of. the dollar by default, the index is up at a five-month high. can you put your money on the dollar when we're waiting for bernanke to see what the fed does and the sequestration? >> i don't like the dollar, either.

the difficulty in g-10 is finding anything to like. i think bernanke is going to be dovish. got this march 1st deadline which would be a downside risk to growth if the sequestration comes in so we have more qe3. i think in this one it's the euro that's going to go into the battle again particularly from the kind of levels that are out now. that's why i say euro/yen rather than dollar/yen. it is a relative story. it is a relative ugly game still. >> and the euro is for the moment is going to win the beauty ugly parade. daragh mayer, thanks for that. yesterday, millions turned out in the snow in italy to cast their votes in what's been called the most unpredictable election in italy's history. mario monti, sylvia beryl skonny and bersani cast their votes.

we'll have coverage on that as soon as the polls close, 1500 c.e.t. london time. nicholas anastasia swept to an election victory on sunday. he pledged to work with the country's eu partner toes secure a swift rescue package, insisting that the new government would prepare such an image around the world. and a slowdown in chinese exports has been pulling back on the economy. it posted a fourth consecutive month of expansion. china's hsbc flash pmi index for february slipped to 50.4, the lowest reading in four months and down from a two-year high in january of 52.3. no one is hitting the panic

button just yet. >> while the flash pmi slipped from a two-year high in yarn, it tells us china's economic recovery is intact. 6.4 is considered that the week long lunar new year holiday fell in february of this year. look back at lunar new year last year and you can see some of the distortion effect it fell in january 2012. what may be worry background this month's flash pmi is the new export orders subindex. it inched down to contraction territory, add to go existing worries about this sector. taken as a whole, the flash pmi number is the earliest indicator of china's health and the hsbc and the official data have been steadily improving. the hsbc category track tess official firms. the official is represented by green line here. now, all eyes are on friday when we will get the final pmi readings.

back to you guys. >> all right. that was diedra. joining us for more, darius. it's weak but it's still expansion territory. of course, we saw export growth at a 21-month high in january. what do you take away from today's number? >> i think that the main take away is do not draw firm conclusions yet. it's just one month of data, it is distorted by the lunar year effect and it turns out manufacturing output in china is not that well core racorrelated. they do not give us a clear picture of economic activity. i think in broad terms now, out of the latest data suggests in the current quarter the economic cycle is peaking. the government is trying to slow the economy a little bit down, especially in terms of the real estate sector. and from the second quarter on wards, we are going to see gradual deceleration of china. and not in a dramatic fashion,

but growth has definitely peaked. >> and i mentioned the january export numberses. the export order subindex is just down into contraction territory slightly. exports have been something of an achilles heel. is that anything to worry about? >> because of the data effect, i would not judge that, we need to wait for the march readings. we were comparing it to last year when activity was slower because last year the lunar new year fell in january. so the picture is not as fantastic as the exports for january show that. overall, china is growing at a steady pace. but the pace is about 8% right now. so people who are used to double digit gains and, you know, compare the manufacturing pmi now to what it was before the

crisis should accept that china will grow around 8% the next year. the growth industry is too slow, but still, 8% growth is decent. >> we'll get the forecast for growth, as well. where do you think they are trying to peg that? 7.5%? leave them some wiggle room? >>. >> exactly. i think china will not change the growth target. precisely because their growth potential is lower right now and they're focusing on restructuring growth away from export and towards consumption. they cannot expect too much. and i think that that target will be easily beaten this year. our forecast is 8.5%. china will be doing pretty well. but other important decisions

made during the congress will be inflation target. we think it will be lower to 3.5% which will require higher interest rate to meet the more ambitious target. we think china will be increasing their interest rates and in the first half will be pushing up money market rates to slow the housing market. a little bit of tightening and that should help the renminbi resume its appreciation against the u.s. dollar, especially one that the depreciatation of the yen stalls, we expect renewed gains and our target at the end of the year is 6.10. >> all right. darius, good to see you. thanks for that. >> thanks for having me. no problem. >> we're just over an hour and 30 minutes into trade in europe. around about 7 to 3, 7 to 2, advancers outpacing decliners at the moment. as far as the uk ftse 1 00 has been something of a laggard early today. it's up 0.7%.

ibex and cac 40 up 0.5% respectively. now, as far as debt markets are concerned, really, the focus will be on italian yields. they are a little bit higher today. or lower, i should say. 4.43% in italy. spanish yields, 5.1 is 3%. we have some zero coupons coming out in auction in around about an hour from now. we'll get the results. uk gilt yields, they are higher. 2.12% is where we stand at the moment. but it's worth pointing out, of course, that we have been up to 2.2%. in fact, if anything, the reaction fairly measured. let's show you where we are with sterling. we saw that just a short while ago. 1.5147 sterling. we did get down to 1.5743 which is a 41-month low. pmi, aussie -- slorl, 1.0292.

dollar/yen, 93.88. again, back from that 33-month low of 94.77 or high for the dollar. and euro/dollar steady at 1.323137 friday we hit a six-week low of 1.34135. that's where we stand right now in europe. let's bring you up to speed with more reaction to that chinese pmi number and the rest of the asian markets, as well. sixuan joins frus sing boar. >> thank you, ross. it's a good start to the week with the nikkei soaring to a 4 1/2 year high. the market jumped 2.4% as the yen weakened to a 31-week low. japan's shipping stocks climbed after morgan stanley raised the outlook for the transport sector. the sharp shares itemeled over on 5% after reuters say

discussions of a tie up are expected to end without an agreement. in china, the manufacturing sector showed signs of a restreet, as you just mentioned, after hsbc flash pmi for february slipped to a two-year high. but the shanghai composite slipped. brokerages made a comeback after it was reported chinal soon relax rules for qualified foreign investors to invest their offshore holdings into mainland stock markets. hong kong fkd marginally in the green. real estate was under pressure after the city government imposed higher loans. the kospi ended weaker by 0.5%. australia's asx 200 moved back towards its 4 1/2 year high gaining 0.8%.

as we had the strong gains in retail and financial stocks. india's sensex are trading higher by about 0.25%. back to you. all right. thanks for that, sixuan. catch you later. still to come on the program will be adam barcelona. taking a look at the hottest trends in the space, find out what the ceo of deutsche has to say about the challenges of taking on the american market. kelly is there. she'll join us in just a few moments.

the mobile world congress is under way in barcelona. there's a new hand set based on its firefox web browser for mozilla. the reason i'm on my own is because kelly is there getting all mobile and wired and super fast. hi, kel. >> ross, it is great to see you guys out here in barcelona. i wish i could say the weather is a little warmer. it's surprisingly chilly here. and the chilly economic environment across europe also having an impact. some of the bigger european and

american names have skilled down their presence a little bit. the focus is shifting to emerging markets. deutsche telekom, you mentioned, ross, when they talked about this partnership announced last night, it has as much to do with opening the web the way mozilla had months ago. poland is the next frontier, ross, it's aimed at that next generation of mobile users. we know the market has matured in developed markets and the economy isn't that great, either. here is what renee obermann had to say about the demand that he sees in the years ahead and, by the way, what's going to happen to his own career once he leaves the company at year-end. take a listen. >> i think there's nothing new to say. i have said what i intend to do next year. but i have still, you happen, a number of things to accomplish this year. >> and what do you hope the legacy of your time at d.t. is? >> i think the company is much

more competitive. the brand is well recognized now and the service quality for our customers has improved. and overall, somebody said at a recent management conference we had, whether people had noticed that the company had developed a heart. i thought that was very good. >> and what about taking on competitors like sprint, at&t and the u.s.? >> look, the company in europe has become very competitive and also we are defending our market shares very nicely. in the u.s., we have a challenge still and we have found some answers to this challenge over the last 12 months after the at&t deal collapsed. but we have taken a number of steps to improve our situation and we have a great strategy and that will materialize. i'm very optimistic for u.s. market now. >> what about the european crisis inspect how has that affected your company? >> the euro crisis has

eventually hit us. but look, for me, one recipe out of the euro crisis is to simulate private investments. our industry is ready to make private investments, big time, as long as there is an investment friendly regulatory environment so we can actually, you know, make money in an appropriate way. i think this is part of the solution because a lot of growth and productively growth comes from the existence of ict infrastructure and we're part of that. >> and who are you going to vote for in september? >> are you kidding me? that's an interesting question. i am entirely unpolitical. >> now, ross, he also said to stay tuned for more news about a tie up potentially with fone, a spanish company that used wi-fi user generated networking hot points that put so much demand on companies like do you have ya

telecom. deals may be a real theme coming out of this conference. when we spoke with some of the other mobile executives here, they all see more consolidation here as companies have to avoid, that is, several different kinds of networks. they all have to get up to speed and in order to do so, we could see a lot more deals. >> yeah. well, we'll have to see how that pans out, kelly. what else are you focused on? what are you going to be focused on, as well, over the next couple of days? >> well, ross, just for you, we are going to take a look at a couple of cars. this isn't just a show about smartphones. ford is here. i don't know if you can see them. they have a set up behind me. gm, as well, will have some news with at&t they will be able to bring viewers later in the day. when it comes to what happens with the next generation in the mobile world, it haas to do with finding these devices in your car, this in your fridge, in a number of city elements that are on display behind me. shortly, we'll be speaking,

we'll get some better sense of what it means to have machines talking to one another. that's with ericsson, hans vesberg. we just spoke to him. but again, you might think the smartphone world has matured. not exactly. you get those devices talking to one another and you're talking about millions more in the next generation. >> machines talking to one another? that's just like another day on cnbc. >> exactly. >> we've got the machines talking here all the time. you get disruptive, they like people and things being disruptive. >> i'll do my best. maybe i'll run around here a little later and try to cause some disruption of my own. >> you are our own disrunive technology, kelly evans. i hope you're having fun and using the spanish. kelly will be joining us a

little bit later by ola swansea, as well. >> and if you can't recollect enough of this show, head to on website for the latest mobile trends including waterproofing, new operating systems and wearable gadgets. it's all there on cnbc. you never know in the tech world, waterproofing could mean anything. plus, we want to know -- but i think in this case it is waterproofing. we want to know which mobile trend you are most excited about. e-mail us, worldwide@cnbc.com, tweet, @cnbcwex or me directly. still to come on the show, south korea swears in its first female president. before being sworn in she has

some words for north korea. 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.

sterling hits a 2 1/2 year against the dollar.

piling pressure on the government to rethink austerity for the chancellor, george as born, remains defiant. >> britain cannot let up dealing with its debt, dealing with its problems, cannot let up in making sure it brings rates to the world. >> the yen drops and the nikkei surges to a 4 1/2 year high on reports that japan's government is set to take policy kuroda as the next bank of japan governor. new exports slipping to contraction in hsbc's pmi reading the. and voting is under way for a second day in italy in one of the most unpredictable elections in the nation's history. right. post february, we have a little data out of the uk. mortgage approval down to 15,000 in january with 33,840 in december. it's the lowest since september,

down 1.4% on the year. net mortgage lending also down in the biggest fall since august 2012. mortgage approval down 14% year on year. we've also got gross mortgage lending, 7.7 versus 8.4 billion in december. so it's very disappointing mortgage approval data. they had been bouncing off those lows of -- well, we hit 1.5073 on cable during the asian session. we had bounced off that and this data not necessarily helping out. meanwhile, as far as european stocks, they fell on friday. we are bouncing back today. the ftse 100 up around 0.7%. the xetra dax hab up around 1%. let's just show you where we are on credit markets. there we go. i didn't lie. 10-year bund yields in italy are lower, 4.4% as we go through as

they are in spain. 10-year gilt years, 2.12%. they got quite a bit boost on the session on friday. gilt yield had been around 2.2%. so post the downgrade and they had already got a big -- before the downgrade, they had already got quite a big lift from their lows. on the currency market, as i mentioned, euro/dollar is steady at 1.3241. again, we hit a six-week low of 1.3445 on friday. the aussie/dollar impacted by the hsbc pmi data. aussie down to 1.0290. we'll stay in asia. south korea's park has been sworn in as the country's first female president. in her inauguration speech she

vowed to press ahead with policy engagement. chery is here to tell us more. >> hi, ross. yes, and this actually takes president park geun-hye back to the top office. quite meaningful there more than 30 years after she left the presidential compound after her father, former president pak geun-hye was assassinated. her message was she would try to make people happy while she try

toes improve the economy. she also said people, individuals are the core elements of economic growth and she calls it economic rejuvenation when the korean economy is showing signs of a slowdown. and by bloog looking at her education background in engineering and her vow to bring back a korean talent that went overseas, it looks like she's aspiring to have a korean next mark zuckerberg and korean steve jobs. now, of course, she has much more on her plate with the currency issue which she didn't really touch on and the north korea factor that you mentioned earlier on, as well. ross, back to you. >> thanks for that. catch you later. park faces significant challenges at home as many south koreans are struggling to cope with rising prices and a slowing economy as is suggested in this report. >> mrs. tan yao ha has high

hopes for south korea's first female president especially since the economy has lulled. >> translator: the economy is really bad. it's even worse than last year and people are just not spending money. >> she's not the only one feeling the pressure. >> translator: the number one task is improving the economy. prices have to stabilize and we need more jobs. . >> house wooichs have been particularly overwhelmed by the prices on the table and want the government to do something about it. >> we can't buy anything with 10,000 won any wore. prices continue to pick up and the amount we earn is limited. >> many south quay kaans complain about not having little spending power once monthly mortgage payments are made.

>> even if i have a job, we can't get married unless our parents can afford to help us with a house. these things are a problems. >> they also want pledges on free child care services to be kept. >> it costs so much to raise a child. we have to start teaching them glem english when they're 4 or 5 because every other parent is doing it. >> and as the population ages, the older generation expects the government to help them prepare for the second chapter of their lives. >> translator: south korea has improved in many ways like social welfare, but it would be nice to provide jobs to the elderly so they can at least earn their transportation costs. >> translator: the incoming administration is focused on economic -- but they should also

focus on economic growth. the growth rate has fallen to the 3% level recently. if it grows by 1%, it will add 60,000 to 70,000 new jobs and will mitigate income differences while meeting the welfare budget. a former member of the ruling party's leadership council says communication will be key in the early days of discoverime discoveriment. >> the 2k3w069 is conditioning. people are unclear about what if there is change rate important policy is going to be, and i think those kind of things have to be cleared in the very early days of the administration. >> for now, though, park has promised to improve the lives of the people and unify the nation and failure to deliver will not easily be forgiven. >> all right. joining us for more, james,

thanks so much indeed for joining us. we heard park suggesting that she wanted everybody to reinvigorate the export economy. how much of a problem have they got, bearing in mind that they're competing with an ever weakening yen? >> yes. i think korea's exchange rate policy is certainly one of the levels that she ought to examine closely. the korean won has been strengthening versus the japanese dollar. the real benchmark is competitiveness with china. in my view, the korean won ought to be benchmarked to the renminbi. not just the level of the won but the volatility of the won has been hurting a lot of korea's smaller companies who don't have the sophistication to manage hedging against that as well as the loss of competitiveness. i'm not sure that in the context of china japan is an important competitor. so i think more importantly is being competitive in the large

chinese market that is gradually becoming the world's largest consumer market. >> yes. she has talked about the volatility of the won. and how at risk is the korean exchange currency from intervention? >> well, what's interesting is korea has extraordinarily dooel deep foreign exchange reverses. but if you go into the market, you would think that it was a very thin market. in other words, there isn't enough of that liquidity being provided in the market to stabilize that exchange. i think it's something that korea can address simply and straightforwardly. but they're gun shy over the use having been criticized for so much management of that currency and yet the realities is most of the countries around the world seek to manage their currency in one way or the other, certainly china relative to the dollar and the japanese yen versus other currencies. i think korea needs to we a bit

more proactive in determining what level of competitiveness it would like the won to have and using those currency reserves as the ability to keep the market operating smoothly. but i think exports are only a -- go ahead. >> no, no, sorry, exports are only -- finish the sentence. >> yeah. so exports are only a part of the challenge. korea is continuing to do very well as the next exporter and hopefully, you know, it's basically a net -- it's a country that has to import everything that it converts into finished goods, so it needs to be able to buy at good prices, as well. but the real challenge for korea is to revive its own domestic market, to restore consumption in korea, to revitalize the domestic economy in all its shapes and in my view, the focus there is on jobs, on job creation. the last decade has not been very successful for keeping the korean economy on its historical track which is something like an

8% average growth rate. but about 15 years ago, when when korea suffered its so-called imf crisis, one of the immediate focus of kim de-jeung was on job creation. over the next five years, the korean economy created 2 1/2 million new jobs. if we can have the same attention from president park today on the issue of job creation, i think the korean economy can become very robust again and is this will put in the shadow a lot of the challenges like high household debt and other problems. and, of course, korea is facing lots of opportunities, as well as challenges. it's facing a wave of tourism that is just beginning and that tourism is largely middle income people from china who are starting to go outside of their home country and looking for interesting places to go. they want to do shopping, they want to enjoy themselves and you see them today in the streets of korea. it's a tsunami of a wave that's coming and it's not a short-term factor. it's a 15-year play before we see it fully manifesting itself.

hopefully she will prepare korea for that and she's emphasizing creativity in that space. >> james, thanks for joining us, ceo of market force in seoul. thus mounting speculation about the nomination of the head of the bank of japan. >> hi, ross. the japanese government is likely to name agent of the bank of japan president kudora as the next bank chief. the process of choosing a candidate is over, the political deal making begins to ensure that the nomination clears the diet. the government wants to avoid losing even one round of voting.

getting support from the opposition is crucial. the largest party in the upper house, democratic party seems to approve kuroda. however, the upper house has rejected the idea of nominating a foreign ministry official. the confirmation votes could take place early next month. in the meantime, the approval rating rose 70% according to a survey by the nikkei. the strong approval rating will give abe more support to pick his own choice. the survey was conducteded to a sample of 900 households. >> thanks for that. is 4g changing the way providerings make money? we'll check in for an interview with the largest mobile provider. everything everywhere.

kelly rejoins us in just a moment.

general motors has announced that next year selected models will be equipped with 4g lt

connections. passengers in the back will be able to stream music. how is 4g going to revolutionize the industry? kelly rejoindz us from barcelona. as i like to say, she's got a guest who knows all about this. hi, kel. >> ross, hi. nice pronunciation there of barcelona. i'm with olaf swantee. there's no one better to talk about 4g with. what are your lans? >> our plans is to further roll out 4g. we already have it in 46% of the country. and it's very exciting for the uk because consumers can do more in more places and businesses can make their places more productive. >> why haven't consumers been quicker he to adopt this

technology? >> we already have today one in four customers that are in a 4g area buying the service. and we already have over 1,000 companies deploying 4g. so it is a big success and is our plan is absolutely on track. >> and what in particular are people going to see now when it comes to 4g adoption in 2013? >> well, what is really exciting is first of all, you see new applications being adopted. so we start seeing video being used, video conferencing, and new applications, like mobile banking or online shopping. and businesses are using it typically to make their employees more productive. so we have seen cases where companies rolling it out like kier, a construction company, where they create broadband areas in areas where there are no fixed raw bands. so it is really exciting to have your broadband in your pocket with 4g. >> broadband in your pocket. i wonder, though, with all of this potential why is it that

the uk spectrum option for 4g didn't go off, didn't raise more money, didn't value this spectrum as much as expectsed. >> well, the price sg in line with european countries. and i think it's good because now there is significant money available to roll out 4g quickly. if you remember, when 3g came to the uk, all the money was spent on buying the air waves and it took years to getg out in the country. now we have the opportunity to roll it out really quickly in the uk and that's important because the uk is using more mobile stuff than any other country. and it is a country that is commuting much more than other countries. so it needs a great 4g network. >> you're a joint venture between orange and t-mobile. in other words, a french and a german company. so can you testify that there is still cooperation across france and germany in these tough economic times? >> absolutely. ee is one of the most successful

joint ventures out there. and it is a corporation of german, french and dutch ceo. so it's working. >> very global, indeed. and what about the challenges for the uk market just in terms of the economy being tough, is there any prospect for you to target markets that might be faster growing? >> no. we are really pleased to be in this area because mobile is at the center of what people do and with new applications coming up, we will always see this area will drive the economy and new usage. >> and finally, what does the uk need to do to ensure that 4g continues to draw the attraction from customers and companies that it deserves? >> well, we, as ee, we need to continue to market as we are the pioneer here with 4g. so we will continue to talk to people, advertising, managing, explain the benefits and then 4g will be deployed even further in the country so that customers can use it anywhere in the uk. >> perhaps finally picking up

some momentum, olaf swantee, thank you very much for your time. back to you, ross. >> kel, we'll catch you a little later. i think you'll be joined by ed mcglauklin from mastercard. >> that's right. yumm brands is looking to win back diner necessary china who have avoided the kfc outlets after a recent food scare. yumm is going to phase out smaller chicken operators. let's get more on this. eunice has been meeting up with the vice chairman in china. she's now with us in beijing. what do you think, eunice? what do you think of its plan? >> well, he was very determined, yet humbled. he was telling me he was using this market strategy in order to

rebuild the brand in china. china is a very important market forum brands. the company stock took a knock after a scare of antibiotics in kfc's chicken. the company says that that is not going to happen any more now that it's rolling out not only a marketing campaign but also that it's strengthening its supply chain. >> the single biggest risk element is some of the chicken houses, they're just very outdated, they're small, the management is not up to par. so the first thing is to just elimination some of the high risk. and invest in the economy, the industry you have very high standard in the chicken houses in china because of historical reasons. it started with smaller ones and now there's big ones. they're perfectly okay. but the smaller ones, it's a certain level of risk. and unfortunately, it's just

sporting and the tarnished image of the whole district. >> why weren't you doing this before? >> many -- have been eliminated. what we are doing now is to get more good ones into the system. but that takes time. >> how quickly do you think your image will recover? >> that's for the consumer to decide. i don't know. anytime you respond to the consumer's concerns about concrete actions and you will earn their trust back. >> where did you think you went wrong? >> we have created a much better environment than before. but we also have to admit that it's not perfect. you know, we have learned a few things this time. it's not about requirements or any of that. if we implement this system, we should have and could have made it perfect. back then when we did it, some of the environment wasn't there. it just wasn't available. but testing, so on and so forth. so we didn't do perfect. so we should have innovated along the way, got better .all

that. those are the things i think we're missing. >> should investors be worried about your future in china? >> we have been rewarded recently since we came to china. but at the same time, china has the other coin, that is it doesn't represent a challenging operating environment for anybody. that is continuously improving. so you can't take the good and not the bad and you have to accept china as it is. when you look at it, we still think this is the best margin we have. we will continue to invest in china, knowing the risks, we just have to do a better job. >> already the company has stopped sourcing from a thousand chicken farmsers. ross, back to you. >> thank you. it's always good to see you. the evening drawing in there from beijing. now let's give you a look at what's on the agenda in asia tomorrow. more out of australia.

we're awaiting numbers from virgin australia. in economic news, australia's fourth quarter account balance is due. we have singapore and taiwan's january industrial output releases. we saw the eu downgrading france's budget deficit forecast last friday. the defense finance minister just came out and said we're maintain the cutting deficit concerns and 2013 will be a year of major structural reform in france. we'll see what he delivers. david einhorn has been pushing his own plan to get apple to unlock more cash by issuing p perpetual preferred shares. his request was denied to seek an advisory vote on executive pay. apple is holding its shareholder

meeting on wednesday. sgha l. ny capital is reportedly selling a bond trade. one of the companies that came to its rescue. the deal could be announced this week. it reportedly clus knight's institutional bond trading business. nye is pretty flat in frank frurt. still to come, plenty more to come with kelly in barcelona. in the meantime, head to our website for the latest in mobile trends. we want to know which trend you're most excited about, as well. e-mail us, or tweet us. still to come on the show, the blame game continues over deepwater wore rideson as bp

heads to court today for a civil trial in new orleans. we'll have the latest on that as "worldwide exchange" continues. the second hour, right after this.

this is "worldwide exchange." here are the headlines. sterling heads to a 2 1/2 year low after moody's strips britain of its aaa credit rating. george osborne is still defiant. >> brittant cannot let up dealing with its debt, dealing with its problems, cannot let up in making sure britain can pay its way in the world. >> the yen drops and surges to a 4 1/2 year high to pick policies up. kuroda is the next bank of japan governor. new exports slip into contraction territory in hsbc's pmi reading. boasting and under way for a second day in italy in one of the most unpredictable elections in the nation's history. >> you're watching "worldwide exchange," bringing you business

news from around the globe. >> all right. a very good morning. welcome to the start of your global trading week here on "worldwide exchange." kelly will be joining us from barcelona, the world mobile congress fairly shortly. that's why she's not with me in the studio. u.s. futures right now calling a little bit higher. we did have the dow s&p up 0.9% on friday by the close. the dow right now is called up some 15 points at the open. the nasdaq is called up around 6.2, 6.1 points and the s&p, it snapped its seven-week winning start to the year. consecutive winning start to the year last week. it still was up on friday. right now, that's just up about 3 points. the nikkei having a great day today, up 2%, hitting 53-month highs as the yen weakening.

kuroda. cnbc ftse global 300 up 13 points. the ftse 100 despite the downgrade for moody's on friday, it is up 0.5%. we were up 0.9% about an hour ago. the xetra dax is up 1% still building on the recovery gains we had on friday. boosted by, of course, better than expected ifo number. the ibex is up 0.7% and the cac 40 in france is up 0.5%. plenty of focus on where we stand with yields. italy, as we go through the election, steady 4.46%. we have key bond auctions coming out on wednesday. today we get zero coupons and bonds in inflation and index link as we get the results of those in the next 15 minutes. don't expect them to be unduly impacted. gilt yield here in briptan, starting to recover. 2.10%. last week, these yields were 2.2% before the moody's downgrade. so not much of an impact on gilt year. more of an impact on sterling. this just shows you where we

stand with cable. sterling/dollar, 1.5137 at the moment. we did get down to, what, a 31-month low of 1.5173. we bounced off the low. there are those out there who think we won't see an enormous market reaction because we had seen yields push up and the pound weaken ahead of the moody's decision. auss aussie/dollar, 1.0293. we did get down to around about a little bit earlier, around about 1.0275. dollar/yen, 93.76. we did get up to a fresh 33-month low. 93.77 for the yen. and euro/dollar, 1.3247. that's where we stand in europe. let's bring you up to speed with what's happening on the first trading day of the week in asia. li sixuan joins us on out of singapore. >> thank you, ross. the market jumped 3.4% to a 4 1/2 year high on talk about adp

president kuroda will be named as the next boj governor. kuroda is seen as an advocate for aggressive easing, someone who will take radical steps to beat deflation. sharp shares tumbled over 5% after discussions of a tie up are expected to end without an agreement. in china, the manufacturing sector showed signs of a retreat after hsbc slipped to a two-year high. the shanghai composite slipped today. brokerages rebounded on reports about a move to expand a pilot short selling scheme. hong kong shares finished marginally in the green up 0.2%. but realistic plays were under pressure today after the city government imposed higher property stamp duties and home loan curves. elsewhere, south korean banking

stops stocks jumped on hopes that the new president will take steps to boost the local economy. but that is not enough to let the kospi, which closed higher up, closed down by 0.5% as automakers were in reverse gear. this lifted by gains in ree tail and financial stocks. india's sensex just ended flat. back to you. >> thanks for that, sixuan. have a good evening in singapore. more in china, slowdown on exports put the pressure on the economy. the manufacturing sector has taken a step back from two-year highs despite posting a second consecutive month of expansion. february's flash pmi slipping to 54.5, the lowest reading in 54 months. but no one is hitting the panic put withon just high. >> it tells us china's economic

recovery is intact. 50.4 is still in expansionary territory and considered that the week long lunar new year holiday fell in february this year. we have to take into account seasonal distortions. you can see some of the distortion effect it fell in january 2012. what may be worrying, however, about this month's flash pmi is the new export orders subindex. it inched down to contraction territory, 49.8, adding to exiting worries about this sector. taken as a whole, the flash pmi number is the earliest indicator of china's economic health. both the hsbc and the official data have been steadily improving. now, remember, the hsbc survey tracks the smaller private chinese firms or the official one track tess giant soes. the official is represented by the green line here. now, all eyes are on friday when we will get the final pmi readings, both official and hsbc. back to you guys. top u.s. economists are nearly unanimous in thinking the

looming across the board budget cuts and other fiscal worries will be a drag on growth in 2013. the latest survey from the national association of business economic sess 2.4%, which compares favorably with 1.5% last year. nearly 60% believe the sequester will take effect fully or partially as scheduled on friday. more than half think of uncertain surrounding the fiscal policy will cut half a point or less from gdp. the white house, meanwhile, is pressing republicans to renegotiation the budget cuts. the administration is detailing their impact in all states warning of delays in aprils and cuts in unemployment benefits. speaking to the national governor's association sunday night, president obama didn't mention the sequester but says he's looking for good partners.

>> to move forward on. and i'm looking for good partners. because while nobody in this room sees eye to eye on everything, we know that when we work together, democrats and republicans, north, south, east and west, we can accomplish so much more than we can on our own. >> and congress does return to work today from a week-long rece recess, attention shifting to the next budget deadline, as well. passing continuing resolution by march to keep the u.s. government running. senior aid for house speaker john boehner and harry reid have begun discussing a deal to fun operations through to september. and the pentagon says the grounding of lockheed martin's jets last week won't deliver the aircraft. there was a crack on a turbine blade on a test plane. speaking from australia, the fa

says that type of problem is unfortunate but normal during development and testing. lockheed stock down 1%. as the number of global smartphone users has reached the 1 billion mark, there have been a number using their mobile to make purchases. that's the subject for kelly in barcelona at the world mobile congress. do you have to use your spanish down there or you're okay, kelly? >> si, senior. i've been using a lot of spanish here, ross. right now, i'm joined by ed mcglaughlin from mastercard. ed, i haven't been speaking spanish with you necessarily. >> no. >> but we have been talking about the language of payments. and it does seem as though we're moving from, as you've said, a

cash list to a credit card list society. what exactly is mastercard doing here? >> well, what we're announcing today is what we call master pass. everything starts becoming digital, it's device based, master pass is basically mastercard beyond plastic. it enable you to, from your hand set, your pc, your tablet, bring all of your payments together. >> it's basically just about embedding a bar code in whatever the device is and mastercard is just the payments processor. >> well, if you think about it, it's the ability to make transactions in all sorts of new shopping experiences. so if i want to tap and go to get out of a taxi or in a transit system, if i'm in the aisle of my favorite store and wanting to make a purchase, it's on my desk at work, my pass at home, master pass makes this possible. >> what if i'm out, i have a couple of drinks and i walk by a shop window and i go, oh, that would be a good idea? >> we make it easy for you to

shop any place that you want to, so that's up to you. >> i suppose there's still personal responsibility as it comes into the equation. what's interesting about your platform, as well, is you're opening it up to allow competitor, is that right? >> well, it's an open platform. mastercard brings that altogether for you. so whether in store, if you're at home, using your mobile, using your tablet, anywhere, any card, we can enable. as you think about that world beyond cash, this is a world beyond plastic. it gives you everything you get from a genuine mastercard transition, all the benefits in a new environment. >> how big is the growth opportunity? >> well, we think the growth opportunity is two things, one of which is better shopping experiences for all the transactions you have today, anywhere you want to shop and all sorts of new ways to shop. whether it's transit, whether it's being able to go online, imbed it in your favorite app, all of that is enabled as we move from plastic to digital. >> and we talk about other kinds

of emerging payments. this is a space where we've seen some traditional players like pay pal. they act as an interface. how are you going to be able to distinguish yourself in this market as other rivals move into it? >> well, i think what's happening is there's an overall movement to digital. it's not about a 15-year-old check out page model. it's not necessarily about simply what i do differently at the cash register and the till. we're giving people the ability to use their mastercards, any of the cards they have in this native digital environment. it's not about replacing what we had before. it's about all the things we can do to deliver better shopping experiences. >> and finally, what are you most excited about here at mobile world? >> master pass, obviously. anyone who wants to follow it is get us. i know you're talking about everywhere, everything. how to be bring this to the

population? working with technology partners like verasign saying how do we re inveinvent the shopping experience? you'll see a whole set of announcements to work with those we have. >> ed, thanks very much for your time. ross, back over to you. >> will do, kel. we'll also be joined by hans vesberg a little bit later. kelly doing a fine job down there in barcelona. i mentioned we have this zero coupon and inflation link auction from italy. the two-year zero coupon yield, the highest since december last this is we are in polling today in italy where those polls close around 1500 cet. there will be some extra programming on cnbc world and cnbc europe after that. the yield, the bid to cover 1.65

versus 1.45. the yield 1.68 to a high than the yields we got in january. we're also looking for the btpei, the inflation link, as well. i'm looking for the amounts that we sold. 2.8 billion. a little less than the 3 billion maximum we were looking for. so it does show perhaps a little bit more caution than we might have expected out of that. we've got a big auction coming in on wednesday. we've got a new ten-year and a reopen five year, as well. that is the two-year italian. the yields as we go through this auction today have been steady. we'll take a short break, a recap meanwhile of the headlines as well, we'll get to the latest on yum brands. plenty more to come on "worldwide exchange." we'll talk about bp starting its trial, as well, for the united states. see you in a few moments. all stations come over to mission a for a final go. this is for real this time.

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sterling sells as britain is stripped of its aaa status. japan prepares for the next bank of japan governor. and chinese exports push hsbc's pmi back from a two-year

high in february. staying in china, yum brands is threatening to increase its supply and increase quality testing of its poultry products. this after a recent food scare. eunice has been meeting up with yum brands vice chairman. that was earliered. she's now with us live in beijing. eunice, how are yumm feeling at the moment? what are they going to do to put things back on track? >> well, they're going to do two things. first of all, they're going to market heavily to consumers in order to win over those customers. they're going to be putting up more ads and posters and coming up with different products. they also say that they are going to be strengthening the supply chain. they're going to really focus on eliminating some of the weaker players in that supply chain. in fact, they said they've already cut out a thousand small time chicken farmers the. >> the single sort of biggest risk element is some of the

chicken houses, they're just very outdated, small, the management is not up to par. and so the first thing is is to just eliminate the higher risk. in this new economy, the industry generally you have very high, you know, standards, but in china because of historical reasons, you're start, smaller ones. now there are big ones and they're perfectly okay. but the smaller ones do have a certain level of risk. >> but the company still has a long way to go, the reputation as well as the stock took a hit. and this is after antibiotics were detected in kfc's chicken. . can has since been cleared by the authorities, but the reputation is still tarnished. in fact, just over the weekend, some pooeg people were blogging about how kfc was disgusting and one user said that they were

walking by a kfc and they used to enjoy the smell, but now they just can't bring themselves to eat it because of these antibiot antibiotics. ross. >> we'll have to see what happens. eunice, good to see you. thanks so much. that's the latest from beijing. a reminder of what's on the agenda today in the united states. there's no economic data, but investors will be keeping a close watch on capital. atlanta fed president dennis lo lockhart speaks about the economy this evening. then first energy, hertz global, lowe's among those reporting earnings today. still to come, bp facing billions of dollars over the gulf oil spill. [ male announcer ] any technology not moving forward is moving backward.

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bp heads to court today for the start of two trials over the gulf oil spills. the reports suggest the justice department in the gulf states are crossing a testament in which bp would pay $16 billion covering fines under the clean water act.

joining us now is steve garrett, trial attorney for the law firm and special counsel to florida governor chris ong. good to see you, steve. thanks so much indeed for joining us. >> you're welcome. >> i guess the first thing is whether bp thinks it might be able to persuade the u.s. district judge carl barbiere that that the company was not responsible for gross negligence. what are their chances of doing that, do you think? if they do that, the fine would drop dramatically. >> they obviously think they have a shot. they have been settling, settling, resolving. but at this juncture, given the demands of about $16 billion, i think that's the offer on the table, bp has dug its heels in. it says no trial or bust and it could be bust because the charges, i was with this case almost since the onset tragic, worst manmade disaster in our history. but that man slaughter may be

difficult. they're looking at a not only percentage allotment of fault, the actual findings of what went wrong and why, but they're looking at taking a big load and a big chunk if they go the wrong way with this case. >> they seemed to be working on a settlement around 16 billion. is your sense that bp aren't going to take that? >> my sense is a lot of trial lawyers, quote trial lawyers posture up until the eve of trial. unfortunately, it's a little after 5:00 a.m. here in tampa and i'm not aware of whether the settlement has reached fruition. but there's a lot of saber rattling in this trade and in this profession. we'll see if the court actually convenes or the 11th hour of settlement is reached. remember, in a settlement, both

sides get a little bit less than what they really desire but avoid the catastrophic down side. ite not so sure the states will back off of their demands and i'm certainly not confident that bp will maintain its regular yid posture. they graphically and to the world showed negligence. the degree of negligence we can argue about, but they're already starting on with at least a couple of strikes. >> bp has said it's set on regional terms. how much is sentiment also made more complex by -- or made more difficult by the complexity of the case, a number of parties, of course, involved in the outcome? >> well, ross, you really have focused on the pulse of the problem. the pulse of the problem is prior to costal times, the states are pretty much unified.

those are the states lining up with the spill area in the gumt. now it's become fragmented because the varying states are jockeying not only for money, but for the position on how the use of money that is obtained through a settlement would be put to, i guess, use. remember, bp's big issue -- and this will be a little repugnant to our taxpayers, but bp's big issue is the fines are not deductible. the payments of economic losses, even in the billions of dollars, are tax deductible. so there is a great incentive for bp to categorize its downside in terms of damage which are deductible as opposed to penalties which are not. >> i didn't know that. that is interesting. just finally, i mean -- >> well, if we go to trial, how long might this last? because i suppose one thing bp is going to have to face, over a

long period of trial, they're going to have to face a damaging barrage of accusations over quite some time. >> remember, also, another excellent point by you. remember also, the financial worth of bp took a real big hit. i was involved in the early days. a real big hit. stockholders, the company value, that has pretty much recovered. in fact, they're turning a profit even after paying these great settlement sums that they've already paid. not the ones that are in the future. but bp are the campaign with the good corporate citizen. unlike exxon valdez, look what we've done. all the of that can be eroded. in addition to a long, drawn out trial which would be expensive, it would be a lot of negative exposure and i think it would be weeks, months, not days our hours. so you remember the video feed

that produced. that will be their worst nightmare. i think there's a motivation, money on the side of the coastal states and lack of negative exposure on the side of bp. we'll watch and see. >> yeah. that's all we can do. steve, thanks for joining us this morning. >>. >> you're very welcome. still to come on the show, we'll head back out to the mobile world congress. we have an interview with hans vestberg. he'll be telling kelly why machines will be trading more. we also want to know which mobile trend you're most excited about. let us know, e-mail, worldwide@cnbc.com, tweet,

@cnbcwex or directly to me. [ male announcer ] how can power consumption in china, impact wool exports from new zealand,

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get you, get you with your saturday night in barcelona, hey? >> what? >> oh, look at me?

this is "worldwide exchange." i'm ross westgate. a reminder of the headlines today. sterling hits a 2 1/2 year low against the dollar after moody's strips britain of its treasured aaa credit rating. chancellor osbourn is defiant. >> brittant cannot let up in dealing with its debt, dealing with its problems. cannot let up in making sure that britain can pay its way this the world. >> the yen drops, the nikkei surges. harihiko kuroda is pegged as the bank of japan's new governor. and voting is under way for a second day in italy in one of the most unpredictable elections in the nation's history.

yep. the reason kelly isn't here is because she is in barcelona for the world mobile congress and ericsson is saying they want machine toes talk more to each other. kelly has been speaking to the ceo. i'm not sure about this idea, kelly. i mean, you know, i have an issue in trading. we've got too many machines already in control. i get a little worried about, you know, them just taking over. >> ross, i -- yeah. i get a little worried, too, about removing humanity from the equation. nevertheless, a lot of companies here see it as big business. yes, i caught up with the ceo of ericsson, hans vestberg, the world's largestmaker of mobile systems. what happens when you reach penetration rates of 80%, 90% across the world's population? does that mean the end of making devices? no. it merely means making devices that speak to one another. maybe it can bail us out from the current economic climate of

turmoil that we're generally in, but we're talking about going from something like 6.5 billion mobile phone devices to 50 billion devices that can talk directly to one another. take a listen. >> it's the next step in our revolution. think about we have 6.3 billion mobile subscriptions in the world today. that will go to 92%. when you have that, of course, you can connect any type of device to get efficiency. and we're using our standards, we can bring down the cost. so i think it's a big change of getting efficiency by connecting devices and we have additional 50 billion connective devices by 2020. >> so this is a world where it's no longer humans talking to humans. it's devices talking to devices. >> absolutely. .not only four or daily lives, for you and me, but to address some of the challenges that we have today like co2 emissions, even the right guidance in order to take down traffic management. using the energy in the power

grid at the right time. all of it will be based on machine to machine to get the most xwelgs on the networks and bring efficiency back. >> wa does this mean for ericsson as a business? how does the profit model change when you shift from the traditional networks that we're talking about to the future? >> i think the future, when you come to this type of innovation is, of course, very much cloud based solutions. our machine platform is a cloud base. we're going to partner with other companies to support operators that address this market. we're partnering with s.a.p. and they will come with solutions on top machine to machine and then you're bringing out the operate so they can address the interbased market. you do it quicker by using the scale, but you need to be innovative, have new type of offerings like we have in the cloud solution there. >> it's fascinating. there are plenty of examples here, guys, of the device that's talk to one another, whether it be cars or traditional smartphones and tablets. i also want to mention, speaking of connectivity, protecting those systems. keeping them secure. we'll be talking to mcafee later

in the day. we'll also be catching up with viber, which is a disdisrupter. facebook is looking to get in on this space that will allow people to talk directly to one another in video chat form. those are coming up at the top of the hour. randall stevenson of at&t. i mentioned car pes.they've got something special, ross, going on that front, so you won't want to miss it the. >> no, we won't. kel, good stuff. thanks very much for that. see you a little bit later. plenty more to come from world mobile congress. kelly is there for the next couple of days. now, as far as futures are concerned, we are indicated a little higher. right now, the s&p, which snapped that seven-week winning start to the year last week, right now it's caught up, what, just under seven points higher. the nasdaq is around about 16 points higher and the dow currently is called up from 48 points. european stocks by .large have

been firmer. building on some of the gains we saw on friday. the bounceback from losses on thursday help the stronger ifo numbers. the ftse 100 up 0.6%. it's still up despite the moody's downgrade. the cac 40 is up 1.3% and the ibex is up 1.5%, as well. here is a recap of some of the ideas expressed by our guests on cnbc today. >> you've got to be looking at the euro, i would say probably eu euro/yen. eye stallan bond yields are probably not priced in. the election risk is higher than we would expect euro/yen to come down to. >> it's difficult to find yields, the corporate bond so, you know, that's mostly very high percentage on the government. so it's quite like the russian government debt, as well.

and the yield is pretty nicely for retail investors. >> the momentum is such that you have to buy this. this is not a sell the value. it's a buy the bid moment. people have just got conviction. you get involved. there are uncomfortable moments where if you try to look at fundamental valuations, of the earnings profile, you're not going to get too excited. you have to hold your nose, close your eyes and get involved. >> those are some of the thoughts already. still to come on our program, sterling is under pressure as the market digest the loss of britain's aaa traiting and the prospect of further quantitative easing the.we'll look at the latest price action and get some forecasts as we come back. today is gonna be an important day for us. you ready?

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all ght. sterling/dollar at the moment, 1.51343. we did get down to a 31-month low of 1.5373 against the greenback. you can see already, though, that the pound has been weakening in the course of the career, down around nearly 7% against the dollar. daniel harden, senior commercial dealer at global reach partners,

daniel, good to see you. we've seen, as uite a bit of weakness in the pound this year. ten-year gilt yields over 2.2% before the downgrade last week. there will be a question of how much is actually already of this move is already being put in the price before it happened. >> that's completely right. and it seems that most of it was already priced in the market this morning. you would see normally the downgrade of a country this side like the uk, you would see much more of a move. i think it's more about what we saw last week. the bank of england comes out much more dovish. i think that's what's caused the sterling weakness. >> the question is with the focus on growth and -- from moody's and the government unlikely to be able to stimulate, the question will be whether it will stimulate and put more pressure on the bank of england to come out with more qe. is that what's going to be the actual driver? >> i think so. i think it's interesting to note last time we had a 6-3 split as

you saw in the minutes last week. the following month was a 50 billion pound increase in stimulus. i think all this fear sess uncertainty. what does the government do, implement austerity to keep the aaa rating? they've now lost that. what will they do, austerity or growth, how do they get out of this situation? >> yeah. look, the yen hit a 33-month low against the dollar. they might get an expansionist bank of japan governor kuroda there. with sterling down, yen down, the euro was weak at the end of the last week, the dollar index his a five-month high. who wins the ugly battle at the moment between, say, the dollar and the g-10? >> g-10, well, you have to look at what the euro has been doing so far. euro, aussie, kiwi, the dollar doesn't win because they're still easing. >> tossy was hit by the pmi data out of china. >> yeah. and while they're talking about bringing rates lower, they

haven't. and they're still notoriously high compared to the risk of the g-10. your kiwi, aussie and your euro as a yield, the yield advantage at the moment, definitely not the pound, definitely in addition not the yen -- >> and we're talking about .spanish yield rather than the german yield. >> germany is getting dragged down by being part of the eurozone. it's a difficult one, but i think you have to look at what's the worst and the worst at the moment is japan, the uk and u.s. >> thanks for that, daniel harden. at the same time, portugal is preparing for a review by troika officials. the country's economics minister told cnbc that lisbon has no intention of leaving the single currency despite portugal seeing its deepest downturn since the '70s. >> the shock of the euro

happened about ten years ago. and it was liberalization of the world markets and especially the interest, some big economiest of wto. and all the shock has been fully absorbed right now and. >> and you can see the full interview with alvaro santos pereira at closing bell here on europe at 700 ct tonight. meanwhile, just a reminder of the headlines, sterling has been feeling the heat as britain has been stripped of its prize aaa status. speculation mounting as kuroda might be the next bank of japan governor. and new exports as a result of hsbc pmi. it's back down from a two-year high in february. also, still to come, the fiscal fight is set to resume on capitol hill. will washington have a major impact on washington this week?

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some of the stories you need to be aware of this morning, barnes & noble chairman is considering a possible buyout of the bookstore chain at the present. he would take the bookstore business private, splitting it from the money losing nook tablet unit in barnes & noble college store chain. last year it said it may spin off nook and said the losses or the business would be bigger than expected this year. barnes & noble stock in front further up today over 16%. chalk up a victory for david einhorn. a federal judge has sided with the hedge fund manager, blocking apple from moving ahead with a

shareholder vote to a proposal to limit the issuing of preferred stock. iron horn has been issuing his own plan by issuing perpetual preferred shares. the judge denied his request to block another proposal to seek an advisory vote on executive pay. apple will be holding a shareholder meeting on thursday. and knight capital is reportedly selling a bond trading unit to nicholas, one of the firms that came to its receipts cue as a trading glitch nearly sunk the company last summer. the deal could be announced this week and report itly knight agreed to sell itself for $1.4 billion. and the 85th annual academy awards ended just a few hours ago in the usa. jennifer lawrence took home the prize of best actress for her

role in silver lining's play book. while best actor was for daniel day-lewis. daniel day-lewis made history with a third acting win, this time for his portrayal of the american president abraham lincoln. since the town's biggest night proved golden for ben aflex whose "argo" took home the academy award for best picture. that's only the second time i think that best picture has won when the director hasn't been nominated. first lady michelle obama presenting the film with the top prize, as you saw. what's on the agenda in the united states, there's no economic data today, but invests will be keeping a close watch on capitol hill as ben bernanke testifies before congress on the economy on tuesday and wednesday. atlanta fed president dennis lockhart speaks about the economy this evening. that's at 7:00 p.m. eastern. on the results page, first energy hurts lows, realology,

autodesk muck notable names reported today. how are we set up for this week? michael gurka, good to see you this morning. hope you had a good weekend. we snapped the seven week of straight gains for the s&p at the beginning of the year. still, not a bad close on friday. we have the sequester at the end of the week, bernanke at the elsewhere.nd everything else how do you see it playing out? >> well, ross, i wonder if we're going to go satellite hook up to michelle obama again so she can give us the okay on the sequester and then we can put some more glitz to that, also, because that's how you want -- the market has jitters right now. and fed bernanke's testimony/fed talk this week is also going to be slightly riveting because of where the yields are, speciality in the ten-year. the market right now is focusing on a couple of thing. one of them is the stealth move that we've started to see in the

dollar as it continues to keep its bid here in the g-7 currencies. that's something that's been the theme for most of this year and we're not surprised. just a reference to what you said in the s&p. we're halfway home to smovt returns i'm looking at for the year. i think some of these pullbacks are healthy and they're not necessarily profit taking so much as they are with the emphasis on deficits. >> yeah. look, just taking the dollar index up at a five-month high, this is not because of anything dollar specific. it is because the yen is getting weaker because we might get a new monetary policy. the uk losing its aaa rating. we've finally joined here in the states, michael. the euro has been a bit under pressure after gains. can the dollar maintain the gains that it's had? >> well, actually, ross, i think it can because of those stated reasons. it doesn't sound right, but it is the stability in the dollar in the cross currencies that you're mentioning that is

probably one of the reasons you're going to see this maneuver. i don't think we're going to see the sterling retrait back to those march of '09 lows against the dollar in the 1.38 area. there clear is more room to breach 1.50. and for the reasons being maybe this house is in order in the states, you're going to start benefitting from some of those kind of maneuvers. my queue here, ross, is the divergence in the way silver is trading versus gold. and how poised goal gold is to rally off of some of these levels in regard to watching the way the dollar trades. there's a heck of a lot of room here for that maneuver and the trigger was the spread between maybe close to $100 platinum over gold. and now they're quivering around 25 $25 to $38 of a difference. so, again, watch the pressure metals against the industrial he. copper is a barometer of the economy is start to go look

rather weak again, also. >> mike, good to see you. thanks for that. all the best to our friends in chicago, mike gurka at spectrum asset management. european stocks, just to remind you, have been firmer today, near the best levels of the day. the kax 40 and ibex up 1.25%, as well. the xetra dax up 1.9%. how are markets doing as we poll in the second day of elections? claudia is in milan. those polls finished, what, 3:00 your time this afternoon? >> absolutely. we will get the first exit poll results and the first official results are expected to come through at around 4:00. they will be, of course, representing just a very small percentage of votes, but we will know something already as early as 4:00 central european time. the market seems to be so far in a good mood, higher by 1.69%. you're seeing the banks in positive territory, actually, everything pretty much is trading in positive territory, even though citibank warned on a

cut by 3% of eps for these banks, as well as concerns about nonperforming loans set for italian banks continue to be a very large problem. but today, the focus, again, is on the vote and we will see what happens as the voters have turned out less than in 2008. this is due to the fact that we did see a lot of bad weather in italy yesterday as well as today. but we will know how many of the 51 million eligible voters did, in fact, turn out later today. back to you. >> claudia, thanks for that. special programming as those polls. otherwise, "squawk box" coming up next here on cnbc. we hope you have a profitable day. see you again tomorrow.