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tv   Worldwide Exchange  CNBC  August 19, 2013 4:00am-6:01am EDT

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welcome to "worldwide exchange." i'm carolyn roth. these are your headlines from around the world. this is no time for complacency. german chancellor angela merkel says the election is still a close call as her opponent takes campaigning up a notch. >> translator: it would be extraordinarily careless to think i'll be re-elected chancellor in any case and don't need to do anything about it anymore. more bloodshed in egypt. reports suggest militants have killed 24 policemen in northern sinai. the bottom of the uk market on the back of a report the
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mining giant could write down as much as $7 million when it releases results tomorrow. and chinese regulators clamp down on everbright securities after causing a market spike on friday and admitting human error in a false bond trade this morning. >> announcer: you're watching "worldwide exchange." bringing you business news from around the globe. sticking with the everbright story, we just got flashes out saying that china everbright securities is planning to sell assets, raise money through various channels to cope with the fund shortfall. this is according to an executive of the firm. remember that everbright's trading arm has been suspended after the trading glitches on friday. and again this morning, china's everbright securities saying that human error caused the mistake in the bond trade on monday morning. so tough times for everbright
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securities out in china. again it has said it wants to sell assets or has to sell assets to raise money through various channels to cope with the fund shortfall. let's tell you what's coming up. the uk's property market is said to be witnessing the fastest growth since november 2006. is british real estate safe as houses. tune in for that discussion. meanwhile, china's forecast to twice the co2 produced. we ask what checks are in place as the country's economy continues to grow. treasury yields are hovering around two-year highs amid signs of a gathering economic recovery in the u.s. could a spike in yields upset the fed's tapering planning. we discuss the fed and fixed income plan at 1100 cet. and the department of justice has takin the wind from under the wings of a proposed
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merger between usairways and american airlines. can the deal still proceed for takeoff? we'll take a bird's-eye view at 11:30 cet. if you have questions for anyone on the show, please do e-mail in your questions or comments to worldwide@cnbc.com. let's get back to one of our top stories this morning. german chancellor angela merkel says the election will be a very close call as she made it clear she would not be complacent, despite her christian democrats increasing their lead over rival sbd in the polls. annetta, angela merkel so far in this election campaign has been very constrained in her wording. are the gloves finally coming off? is the tone getting more aggressive on her side as well? >> reporter: not really. i mean, she doesn't even take mr. steinbrech's name in her mouth and wouldn't spell out the
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expression grand coalition. so she's very cautious what she's actually saying on tape. probably that she doesn't want to hear and see that played all over again. so mrs. merkel sticks to her very yet comfortable and very cautious stance, but she now tries to sort of motivate probably voters to go to the polls and to vote for her because she stresses very much, despite the recent showings in the opinion polls that her ruling government is quite strong, that there is still room for a negative surprise. >> translator: i'm not afraid of anything. i am campaigning. i am indeed sure of the fact that the elections will be a very, very close call. it would be extraordinarily careless to think i'll be re-elected chancellor in any case and don't need to do anything about it anymore. >> reporter: the parties here on
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the front don't have a lot of controversies regarding that top topics. when it comes to taxes, there may be a little bit of a different take. despite the fact that the social democrats at least regarding -- judged by the discussion over the weekend -- aren't really clear what they really want regarding taxes but angela america cell quite clear there are no tax hikes with her. >> translator: no, i am not worried about that because we have shown that we have managed both in this legislative period from 2009 to 2013. reducing new debt from $50 billion to almost zero this year and zero next year. while at the same time investing in education and research and spending more on child care and spending more on the higher education pact and even making tax reliefs. what has been shown once will work again and trust comes when you show you can do it. we are not just promising this and that, but we say what measures we think are possible
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and those measures are well thought out. we discussed for a long time what we will do next and we cannot do. we are all parties, by the way, bound by the debt break which will already come into effect in this legislative period for the federation who only in 2020 for the countries. and, of course, we have to stick to the budgetary consolidation. we are legally oblay gaigatobli. we have to continue to make sure to increase employment so more people have jobs. today we have more employed people than ever before. that has led in the last couple of years to more tax revenue than ever before and that is the part we want to continue on and not take the risk to reduce jobs by increasing taxes and then as a result, generate less revenue. >> reporter: so angela merkel promise nose higher taxes. this is, of course, not going down too well with the social democrats who by definition have
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more or by tradition, i should say, have a different stance on higher taxes for higher income brackets. and so that is written down in the party program, and that is where steinbruck is sticking to as well. >> translator: this is the reason why i, which comes as a shock to many of my seasoned election campaigners, we will raise taxes for some in this country. >> reporter: there wasn't a lot of hope that the green and the social democrats might actually win those election, even during that event over the weekend here in berlin, the 150 years anniversary of the social democrats, i spoke to some people or party members, just ordinary people here on the street coming to that event, and some of them even were not really optimistic about the outcome for their party. there really should be right now. on the other hand, i, as well,
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called up the head of the prime minister who surprisingly won the votes earlier this year. take a listen what she has to say about the likely outcome of those elections in september. >> no, we said directly that we will not have a coalition with the far left. we fight for green, and we know that from all of the elections in the german lender that it always has been like we have no chance to win, and in the last weeks, we definitely got through and then we won. that was in north rhine-westphalia so we know that all what we see now in the media is not what the reality will be in the end. so we fight for every vote. >> reporter: of course there's still a lot on the table. nothing yet decided. a russian proverb is saying that
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hopes -- hope dies at last, but if that is really the case for the social democrats, i'm not very sure. yesterday, the mood among people here on the street, as i pointed out, wasn't really overly optimistic. >> it's definitely going to be a very tough six weeks for steinbruck. many people in the market wondering whether he can still turn this around. just a thought out to you annette and correct me if i'm wrong. i feel this election is all about personality. in terms of the content, the platform, the two major parties are putting out there, they are looking increasingly similar with angela merkel making this decisive shift towards the center, even towards the left, many people say, over the summer. so is it really all about merkel versus steinbruck? >> well, it feels like a bit like that. especially because merkel has really picked a lot of the social democrat's topics to
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combine it very warmly into her party program as well, such as at least partly minimum wages and as well cap on rental rates and so on and so that is what social democrats are saying. she's taking all our topics but she probably won't deliver on them. that's the second sentence what they are saying all over. but you are very much right. it's all about personalilities while angela merkel presents herself as a motherly figure to the germans and she promises calm and stability. steinbruck is more or less as well, his character is actually not fitting to the composition. as one who markets his position and being a manager, to being an advocate of change for the country. so it will be very interesting to see what germany is actually buying into here. >> thank you so much for that. we'll catch up later with you
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later on in the show. thank you so much for that initial analysis. and fantastic interviews there on the ground. joining me is chris tinker, founding partner of libor investment services. chris, good morning to you. should investors be worried about a policy shift after the german elections? >> no, i don't think so. i think the -- there's been a long run into the september elections as the real focus for european political certainty going forward. in reality, i think the concerns earlier this year were that the momentum that had been building up on the back of the election, this anti-austerity message that was beginning to build an alternative argument about maybe there's another way, recently, not just from germany but also from places like portugal and ireland where we're seeing that despite everything, these structural changes stlat been forced through the last 18, 24 months are beginning to show through as we held a nerve and
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angela merkel's position is staying the course with what we've already done is a sensible policy. i don't think steinbruck is in a position to turn around and do anything particularly different, although he may try to position himself more to the left of merkel. she is, quite cleverly, making sure he's only differentiating factors, pushing him toward ground that may be eating into some of the far left party voters opposed to creating a situation where he's obviously taking a different suggested route for the country as a whole. >> aren't we getting a little too complac bent what's in store for greece? the opposition parties in germany have accused angela merkel and her government of lying to the elect rat because, yes, we could be seeing another aid package for greece. an osi official sector involvement. that could be on the cards. there's a distinct possibility of that happening? >> i think what the german people have acknowledged with
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merkel over the last 2 1/2, 3 years has been this continued flow of practical response to a situation which is very clearly not either of anybody's wish or anybody's deliberate making. and it has been a model through. we're not setting out to do this, but we've got to manage the situation as best we can with the bigger picture in mind. i think that even though those risks are still throughout for investors and we shouldn't lose sight of that, from a policy or political standpoint, i think the clear ter becomes that merkel is holding sway and in control of the expected policy gender from germany and, therefore, broader europe over the next 12, 24, 36 months, i think more comfortable investors are going to be that at least worst scenario is likely to be put in place. >> thank you so much for that. we'll get plenty more thoughts and investment ideas from you throughout the rest of the show.
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here's a quick check on european markets around one hour into the trading day. the stocks europe 600 is seeing a bit of a pullback to 0.4%. keep in mind that some of the basic resources are the biggest underperformers today. this is in part because there's profit-taking in the markets after that fantastic run-up in these shares over the last couple of weeks but also because of the strata story we'll talk about. the ftse 100 off 0.3%. it's seen two weeks of consecutive declines. xetra dax is down 0.6%. also seeing some weakness by around 0.9%. i want to talk in more detail about glencore. they are trading among the worst performers in europe this morning. this is on reports that the mining giant could write down 7 billion when it releases earnings tomorrow.
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we'll take a look at that story further along with other mining stocks at 10:30 cet with our guest coast chris tinker. shares off by almost 2%. in the bond space it was a very exciting week. at least if you were short treasuries, bunds and yields. i've gotten some interesting figures. the ten-year treasury yield up 10 basis points last week on better than expected economic data and, of course, tapering concerns. also we saw germany's ten-year yields up 21 basis points last week. if you want to get that uk yield picture or number for you, they were up 24 basis points last week to a two-year high. we also saw a two-year high for the u.s. treasuries. and that really has been choking off the rally in the equity markets that we've seen over the last couple of weeks. in the forex space, a bit quieter compared to last week. dollar/yen is currently steady
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at 97.56. pretty much unchanged on the day. and sterling/dollar which hassine more gains last week on the back of better than expected economic data and the market simply not believing carney's forward guidance up by 0.1%. pretty steady at 1.5642. and asian markets saw choppy trading overnight because they are tapering concerns now the the market. a very volatile shanghai market on friday. we'll talk about the everbright story in a little bit. the nikkei 225 doing its own thing apart from the rest up 0.8%. despite that wider than expected trade deficit. we saw the third largest trade deficit on record. also keep in mind for the shanghai markets, china hsbc on thursday. want to revisit that everbright story. china's everbright securities says it will have to sell off assets and raise more money to deal with the fallout of a major
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trading glitch. that's according to reuters. the brokerage has apologized for computer system problems on friday. that triggered this 5% spike in the shanghai composite. the problems forced ever bright to build up big shore positions and the brokerage remains under serious scrutiny. this morning everbright admitted to a mistake in bond trade due to human error. everbright says its proprietary trading arm has been closed for three months and regulators have limited its new positions in stock index futures. its stock was halted today but will resume trading tomorrow. and here's what's still coming up on the show. a slew of positive data suggests the uk housing recover is on solid ground but could a new bubble be forming? our next guest says it's just the sign of a buoyant market. we discuss coming up after the break. [ male announcer ] it's time.
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you're watching worldwide exchange. >> the violence continues in egypt as state television is reporting that at least 24 policemen have been killed in the sinai peninsula. security forces said that police were traveling in two mini buss which came under attack close to the gaza border.
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over the weekend, 38 supporters of the muslim brotherhood were killed in a reported prison break. with more we've got yousuf standing by in cairo. what's the latest this morning? >> reporter: well, caroline, as you said, another escalation in violence. at least 24 soldiers we understand were killed in that militant attack. still different accounts as to what exactly happened. this occurred in the northern part of sinai in the city of rafa which is right on the border with the gaza strip. and it's about 200 kilometers east of the northern terminal of the suez canal. this will have implications on the possible escalation of the crackdown on supporters of mohamed morsi. the cabinet is studying legal ways of dissolving the political party of the muslim brotherhood. the supporters of the ousted president and the muslim brotherhood leadership continue
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to condemn the heavy hand used in some of the arrests and breaking up the protests. they've made it clear they will continue to demonstrate throughout the week calling for the reinstatement of mohamed morsi. now security forces are also engaging in battles elsewhere throughout the country. there have been injuries overnight and there have been more arrests of senior figures of the muslim brotherhood. >> if you follow press reports coming out of cairo, you will read that the muslim brotherhood is that sentiment toward the muslim brotherhood has now turned decidedly more negative and they are even being labeled as terrorists. as far as i understand from those press reports, this is the first time that they were ever labeled that way. can they ever recover from that sort of branding? >> well, a lot of experts will tell you carolyn that the muslim brotherhood has lost significant political capital as a result of
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the violence from some of the more radical of its supporters. it's not necessarily all supporters of the muslim brotherhood. the muslim brotherhood is a large umbrella organization. there are militant factions which the government is saying is responsible for a lot of these attacks. and whether you can bring them back to the table is highly questionable. most people will tell you that is not possible. and because of the lack perhaps of at least any prospects on the political front, that is why we're seeing weakness as well on the egyptian stock exchange which is trading on reduced hours today on the back of some of the precautions taken for the commercial banks. yesterday, 3.9%. first time in weeks we've seen that kind of weakness and that shows you the kind of potential they're seeing in terms of violence for the next couple of days. the unrest in egypt is creating both ethical and financial dilemmas for investors as the unrest threatens businesses and economic growth.
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for templeton's emerging markets group, the violence is regrettable but he told cnbc in an exclusive interview that he holds a long-term view on investing in the country. >> it's very unfortunate as to what's happening, but it is part of this whole process of reform that's taking place all over the middle east. and egypt is the harbinger of what is in store for other countries in the region. there has to be some real changes. and we believe over the long term they will pull through and you'll see a much better situation in egypt and some of these other countries. so we want to be exposed to the country. it's a big country. lots going on. companies still operate. they still are making profits and, of course, we want to be there, despite the fact that you have this unfortunate bloodshed that's taking place. >> benmark global oil markets may already fully reflect the
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effect of political unstability. that's what analysts are telling cnbc. head online to read more about why further oil price gains may be limited this week. that's at cnbc.com. follow us on twitter @cnbcworld. this morning brent crude is just slightly higher around 0.1%. still above that 110 level at 110.54. bovis homes shares are moving higher after a boost. ceo david richey gave his view on the sustainability of the uk housing recovery. >> from our perspective, we've been putting in place for the last three or four years now a growth strategy. and the numbers you see this morning are all about that strategy being executed very well by the company. in the last six months we have seen some market improvement both in terms of transaction activity and confidence of buyers.
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and that is great to see but from our perspective, what is really driving these numbers is the strategy we've deployed over the last three to four years. >> asking prices for homes in the uk are 5.5% higher than a year ago. that's according to property website right move which is urging the government to boost the supply of new homes to avoid a pricing bubble. the right move figures show the price of property coming on to the market has risen 8.8% in the first eight months of the year. joining us in the studio is peter baltin king. thank you so much for coming in this morning. according to this right move house price index, the aefr asking price fell for the first time this year. is this just a summer slowdown or is this
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you're watching "worldwide exchange" bringing you business news from around the globe. >> these are your headlines this monday morning. no time for complacency. german chancellor angela merkel says the election is still a very close call after her
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opponent. >> it would be extraordinarily careless to -- ploodshed in egypt. security force tells nbc that militants have killed as many as 25 policemen in morn northern sinai. a report that the ming giant could write down as much as $7 billion when it releases results tomorrow. and china everbright securities reportedly plans to sell assets to meet a funding shortfall. this after a chinese regulator has clamped down on the brokerage firm for causing a market spike on friday and admitting human error in a bond trade this morning. let's get back to our housing conversation still with me are peter baltan king and chris tinker. let me get back to you because we were wondering whether this
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huge increase in prices for london homes is actually down to the stellar demand or is it just because the shortage of supply? >> i think if you are looking at the prime london market, there's no doubt that it actually is amazing the way things have gone. more property worth over 10 million pounds each was sold in london, central london, than in new york or and other city. that demand is still there. london is still seen as a safe bet. >> come in here, chris. >> yeah, i think we're just going back on the whole concept of supply and demand. it's the ultimate example of that. you are seeing embassies moving out because they realize they are living in old private houses that now people want to return into private houses and will pay any amount of money for that prime location. the difficulty we faced in the uk and actually property globally during the financial crisis is the lack of available credit and liquidity has then been followed through with an unwillingness of people to mobilize supply. we have to recognize that what's
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going on from a policy standpoint now is about stimulating demand, which in turn will unlock that lack of supply. there's no lack of supply in central london property as peter was just saying. but relative lack of supply in the area of the property market that hasn't really seen significant price moves. and it's the pick-up in demand that's going to liberate some of that and create the momentum by not just the existing housing stock but also builders, land banks, dwerps. they'll not put their capital to work if they don't believe demand is there. so the uk authorities decision to stimulate the demand side is going to be matched with the supply side response. we shouldn't act as if it's only stimulus in demand and no supply to follow. that's not how the market has ever worked in its history. and people that run these balloon bubble fear stories around the place simply don't understand the economics hough property markets work. >> peter, are higher interest rates huge risk to this housing market recovery because over in
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the u.s., we have seen signs that it's at least to some extent, choking off some of the recovery there. >> i was reading that over the weekend that there's that concern that's beginning to happen. in the u ku, the haulifax said mortgage interest rates are at a 14-year low. so at the moment, mortgages are far more affordable than they've been for years. there has to be a concern that as interest rates start to go up that could cause a problem for a number of people with affordability. personally, i think they have to go quite a long way before that starts to happen. the problem is, of course, that at the moment, wages are not keeping pace with inflation. so there is that gap beginning to appear. at the moment, there's not that danger but, yes, there could be especially as chris says if supply is not increased which is a major problem over here. >> real wages are still falling in the uk. you have to wonder how sustainable the demand really is. peter, thank you for coming in this morning and sharing your thoughts with us. peter bolton king, residential director at rics.
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here's a check of european markets. a little choppy. the ftse 100 off 0.25%. xetra dax seen the bekleins of 0.6%. we are all those 2 1/2-month highs. we're seeing that miners are the biggest underperformers today on the back of the glencore story which we're going to talk about in a second. the ftse down 0.75%. of course, still those tapering concerns, don't we. we'll get the fomc minutes later. that will give us more direction for these markets. let's come back to glencore xtrata. the mining giant could write down $7 billion when it releases earnings on tuesday. according to reuters, the group has been assessing xstrata's existing assets following the completion of the takeover in may. the writedown is expected to focus on a nickel mine in new caledonia. still with sus is chris tinker.
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glencore knew that it was getting into choppy waters with that xstrata takeover because of its nickel and copper exposure. if this is confirmed tomorrow, would that be a big surprise to you? >> i think it would just be in line with what i think the market has already been anticipating from the large mining conglomerates on a broader basis which is a review of longer term base metal expectations from a value perspective. and demand patents from a cost perspective. the mining industry has been through a cycle. talk about commodity supercycle. it's been through an amazingly damaging cost cycle. and as a consequence, even a modest topping out in demand was seeing margins getting squeezed significantly through the sector. if you look at any sect northe european markets or global sectors and look at the materials in the mining sector, what you see is that earnings and value has been declining in this sector, persistently.
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all we've seen in the recent rally in the mining stocks in europe has been a recovery back to value. but value in our view is still going down. so this is really an environment where when you see the risk gap as we would describe it, which is the difference between where the share price is and where value is. then there's only one real way for the share price to go and that's back downwards as people take money off the table. >> that's what the market is doing this morning. so i'm thinking aren't we overall a little bit too negative on the basic resources given that a lot of people tell me concerns over china are completely overdone. >> i agree. i think the concerns that we have to recognize here are that people see a marginal increase in chinese manufacturing numbers, output numbers, japanese demand numbers, u.s. employment numbers and the macro story is all right. buy the miners. there isn't any value in the miners compared to what the
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expectations have been. the mining sector resources have been the dog of the marked for the first half of the year. it's been suddenly the darling of the market for a month. all of that value opportunity is closed and even with less than negative expectations coming through from china, there's no real further value here. these stocks are starting to become expensive on current expectations where chinese ge mand is going. all that means is we know we've had to be pricing in risk and uncertainty. if you really believe that there is less risk and less uncertainty about global demand than there was, then fair enough you can trade close to value. what you can't do is make value go up just because things are less negative. and that's the difference that we now face in the mining sector compared with technology sector, manufacturing sector, even global cyclical industrial goods stories. they aren't as expensive as the
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miners have become. this is what we're having to adjust to. >> it's a valuation call. >> ultimately that's what investors should always be looking at. is am i being paid to own this stock? we think in this sector you aren't. >> let's move on to another sector you have pretty strong views about. lloyd's banking group could announce the sale of his german insurance unit for 400 million euros. they are reporting it continues to sell off assets in order to help boost its capital base. a number of other insurers and private equity houses have been linked with a possible takeover of the business. lloyds banking group this morning is off by 0.2%. the sale of the 315 rbs branches may be delayed beyond the projected two-year schedule. the disclosure was made by wng investments, one of the three bidders ahead of its listing on the lse. shares in the royal bank of scotland have risen more than 5% over the last week.
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chris tinker, founding partner are of libor investment services. your opinion? >> the banks, the autos, the resources have really been leading this summer rally. again what we've seen coming through from the reporting season that's just drawing to a close on both sides of the atlantic is that we are not out of the woods yet with the banks and, really, again, while we see there are investment opportunities, we don't think at current prices you should be jumping into the banks. you should be looking to take some profits rorks tate away from some of the more expensive banks and there are still going to be opportunities perhaps amongst insurers if you look at how oversold standard life has become. we are not in the deep discount value opportunity financials now. some have rallied very strongly. we'd be taking money off the table. this is saying after this rally,
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don't expect the market to continue to be led by a momentum phase once the reporting season is over we'd certainly be taking an opportunity to take a step back as we come into september, as we come into the whole review on fed policy, jackson hole, fed tapering, all that sort of stuff. the bank's upside momentum is being capped. be sensible about what you want to do with the financials. credit suisse is a buy and barclays, why? >> they still represent for us in europe the kind of news flow that's more positive and that we've seen coming out of the financial sector banks in the u.s. out of the investment banks, if you want a better description. they've got more of the upside gearing into a recovering credit cycle than the more retail banks which are still struggling with having capital, raising requirements and issues.
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barclays didn't really need that regulatory change but i think they are an opportunity to pick them up at more sensible prices so the combination of the investment banking style up side from a returns point of view and relative value calls compared to what's been momentum from the retail banks in europe is probably why we'd have a preference for those amongst the sector. >> okay. chris, thank you so much for that. have a fantastic week. chris tinker, founding partner of libor investment services. the government needs to clear a 1.2 trillion pounds of debt. a donor set up the national fund in 1928 but said it must be held in trust until the country's debt has been cleared. the fund has grown 700fold since its inception and was probably inspired by then prime minister stanley baldwin who asked for donations to pay off national debt accumulated during world war ii.
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last year the fund spent 1 million pounds in expenses to bearing brothers lawyers, and barclays who manage the fund. still to come on the show, china resources power sees a near 80% jump in first half profit but could beijing's climate clamp down give the industry a jolt? we'll discuss. we'll be back in two.
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you're watching "worldwide exchange." >> japan's trade deficit worsened in july nearly doubling from a year ago to $10.5 bill n billion. we have the story live from tokyo. good morning. >> hi. japan's trade deficit worsened in july for the 13th straight month in the red. according to government figures, imports rose 19.6% as the weakening yen pushed up prices. the yen's average trading in july was 19.83 yen against the dollar, down more than 24% from a year ago. actually, the weaker yen is giving a boost to exports, too with the figures in terms of volume increasing for the first time in 14 months. still, the currency impact on imports is much larger, especially as the country relies on overseas resources. in july, the extraordinarily hot summer triggered demand for
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l & g and crude oil with prices already high since the nation halted most of its nuclear power plants after the massive earthquake in 2011. that's all from the nikkei business report. back to you. >> thank you so much for that. meanwhile, samsung electronics may be out to a head start in its race with aple to develop new wearable devices. samsung is planning to launch a watch-like device at the ifa trade show. samsung's co-ceo told cnbc that much will depend on consumers' comfort levels. >> translator: there's no doubt a wearable device will be out on the market. but the issue at hand is how comfortable that device will be for the consumer to the extent the wearer doesn't realize he or she is wearing it. if we can develop a product line like this it will be a great success. >> china's everbright securities says it will have to sell off assets and raise more money to deal with the fallout of a major
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trading glitch. that's according to reuters. the brokerage has apologized for computer system problems on friday which triggered that 5% spike in the shanghai composite. the problems forced everbright to build up big shore positions and index future markets and the brokerage remains under serious scrutiny by regulators. this morning everbright admitted to a mistake in bond trade due human error. everbright says its proprietary trading arm has been closed for three months and regulators have limited its new positions in stock index futures. its stock was halted today but will likely resume trading tomorrow. everbright is also at the center of reports that says jpmorgan is under investigation for its hiring practices in china. "the new york times" first reported that the u.s. bank has been accused of hiring the children of influential chinese officials to gain business, including the son of a former chinese banking regulator who is now chairman of china everbright
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group. the bank disclosed in a recent regulatory filing that it has received a request from the s.e.c. seeking information and documents relating to, among other matters, the firm's employment of certain former employees in hong kong and its business relationships with certain clients. former china economist party rising star faces charges of bribery, corruption and abuse of power when his trial begins this thursday. the trial is likely to last a day or two and be heavily restricted. "the wall street journal report"s that bo's wife will be a key witness. a guilty verdict is all but assured, according to legal experts. and let's give you a look at what's on the agenda. it's a big day for resource earnings with bhp billiton reporting alongside glencore
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xstrata. and costco international and galaxy entertainment inspect australia, we could get hints on future rates decisions when the rba minute comes out and economic ministers of asian nations will be gathering in brun brunei. power sales are up and fuel costs are down at one of china's largest utilities. and that amounted to a 77% surge in first half net profits at china resources power. but the firm has been in the dog house with many investors. a group of shareholders is suing the company amid allegations it overpaid for co-assets. and stockholders rejected a merger with a major gas distributor. as part of a special programming on climate change this week, we're now taking a close look at the world's largest polluter. that is china. yes, the world's fastest growing major economy first surpassed america in carbon dioxide emissions in 2006. and according to the eia, china will emit twice the co2 produced
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in the u.s. in just two years from now. an economist points now the a recent feature the problem is especially acute in the country's largest municipality. pollution levels in the key economic center trump those in beijing and shanghai and sharply outpace levels seen in japan during its own industrial hey day in the 1960s. but chin's government has been tackling the problem straight on pouring money into green technology. the state council recently announced plans to make environmental protection a pillar industry. joining us from hong kong is the head of sustainable research at clsa asia-pacific markets. thank you for joining us. we heard about the china state council plans to make the energy saving sector a key pillar of the economy by 2015. the details on that are pretty scarce right now. do you think this aim is a little too ambitious at this
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point given that the details just are missing at this point? >> yeah, no, actually, i don't. and anyone who has been following china's environment in any way for the past five years or longer is naturally very cynical about any of these sorts of advancements. so initially this year i was quite cynical after the air apocalypse in beijing when the pollution levels literally went off -- completely off the charts. there were a lot of announcements that started to come out at that point, and they've continued to heighten to what you were mentioning and probably will see some sort of concrete numbers come out in october at the big meetings in beijing. the one thing that's making me a lot less cynical about all of these announcements is that we're seeing a lot of activity on the ground. protests that have been going on for a long time are continuing to go on.
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what's different is that there have been a number of successful cases where environmental protesters have managed to get plants shut down or prevent plants from being built on environmental grounds. this is a new development that's really picking up pace over the past year. >> charles, good to hear from someone who is not as cynical about china's projects of late. but i wonder, to what extent will this pressure profit in the heavy industries? do you think we'll be seeing consolidation across the board just because costs are, obviously, going to go up? >> well, yeah, actually yes. and that does tie into the economic targets in place already anyways. they are looking for consolidation. leaders in beijing want consolidation. by increasing the cost of energy or cost of electricity for these heavy industries it will actually accelerate the consolidation that hasn't been happening nearly as fast as
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everyone has been targeting. now there will have to be some subsidies. there will have to be some help for heavy industries and for the power sector in particular as they make the transition. and this is kind of what that money, these big numbers, you know, over a trillion set aside. this is what it's going toward. helping these industries make the transition. >> charles, from an investment standpoint, do you feel these rising costs are actually properly flexed by these companies and just how safe is investing in any of these affected companies right now? >> it's a very good question. it's hard to say. the disclosure so far for a lot of the listed companies with regards to environmental impact assessments or potentially violations of environmental rules has been pretty bad. and in the past, investors have been able to ignore that.
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whether or not they should morally when it comes down to the bottom line. they've been able to ignore these infractions because ultimately the fines paid by these companies will be too small. they'd have no impact on the bottom line. so we can see companies like mining who had a terrible industrial disaster in 2010, that had almost no impact on the share price over a one-month period or two-month period, though it was hit initially and that's because they were fined almost nothing for this. so that's changing. and now there's been a push definitely from institutional investors to get more clarity to get more disclosure with regard to -- >> charles. >> -- environmental issues. >> we're going to have to leave it here. i'm really sorry about that. let's continue that discussion on another day. charles yonts. hundreds of protesters have set up camp in southeast england
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staging a rally against fracking. the demonstrations led uk shale giant to temporarily halt drilling in the area for safety reasons. the environmental campaigners are voicing concerns over the potential repercussions of fracking for water supplies and wildlife. cnbc's special climate week coverage continues tuesday with a look at the cost and benefits of shale gas. here on "worldwide exchange" we'll be speaking to the german beer industry, yes, about why the group is raising a red flag over fracking. that's coming up tomorrow at 10:45 cet. and after the break, we talk more about german elections. chancellor merkel quashing rumors she could retire early and travel farther afield. [ kitt ] you know what's impressive?
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welcome to "worldwide exchange." i'm caroline roth. these are your headlines from around the world. this is no time for complacency. german chancellor angela merkel says the election is still a very close call as her socialist opponent steinbruck takes campaigning up a notch. >> translator: it would be extraordinarily careless to think i'd be re-elected chancellor in any case and don't need to do anything about it anymore. more bloodshed in egypt as a security source tells cnbc that militants have killed as many as 25 policemen in northern sinai. and this is no time for
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complacency. german chancellor angela merkel says she will not be complacent about the outcome. chin afterbright securities plans to sell assets to meet a funding shortfall after chinese regulators clamp down on the brokerage firm for causing a market spike on friday and admitting human error in a false bond trade this morning. >> announcer: you're watching "worldwide exchange." bringing you business news from around the globe. >> good morning, everyone. you are watching a brand new edition of "worldwide exchange." it is monday. the start of yet another trading week. if you are just tuning in, thank you so much for that. we'll show you what's happening with u.s. futures. looking a little mixed this morning, taking fair value into account. the s&p 500 is set to fall just marginally but the nasdaq and dow seen rising. again, just a fraction. this is after a pretty bad week
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for u.s. markets last week to put it mildly. the biggest decline for wall street overall since june and the dow saw its worst week this year in 2013. the s&p off 2% last week. of course, this is all on tapering fears and rising interest rates which have been choking off the rally in the equity markets. the european markets this morning looking a little choppy. the ibex 35 seeing bekledecline. sectorwise, the basic resources are dragging us down. this is released to the glencore story, potentially writing down $7 billion in investments related to xstrata. in the bond space, wow, the moves we saw last week to the down side for some of these safe haven bonds, they were spectacular. we saw a jump in yields on the back of basically investors questioning forward guidance on part of central banks.
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the ten-year treasury yield close to that two-year high. currently at 2.856%. 10-year yields also at a two-year high or around about there at 2.718%. and in terms of the german bund yield, we are seeing 17-month highs. in the forex space, a little quieter compared to last week. dollar/yen up around 0.1% on the day. sitting at 97.64. the aussie dollar almost at that 92 level. so it has been making quite a comeback over the recent weeks. but we get the rba news tomorrow. so that may give us more indication. if there's more weakness to come for the australian currency and sterling/dollar has seen quite a big move again last week after the slightly more hawkish than expected minutes from the boe at 1.5643. asian markets saw a lot of red arrows. the kospi down by one-third around 0.1%.
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the nikkei 225, you know, really moving its own way. it is up by 0.8% today. despite that bigger than expected trade deficit for last month. but again, this market taking that piece of news in stride. fed fap tapering jitters contino worry some markets. but investor mark moebias said the fear of major outflows is simply overblown given the build-up in we've seen in fed stimulus. >> i think what people fail to realize is that the so-called tapering is on top of an incredible increase in liquidity and money supply in the united states. these qe programs have been cumulative. it's not a situation where one stops and all that money goes away. it stays there. stays in the system. so i believe that this fear of tapering is quite overdone and you are going to see more and more money going into emerging
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markets as well as other markets around the world. >> investors will be looking for more clues on tapering when the fomc releases its latest meeting minutes this wednesday. this comes just a day before central bankers and economists meet in jackson hole, wyoming, for the federal reserve's annual economic summit. but ben bernanke is not attending. i hear that mark carney and mr. draghe won't be attending either. some say this could be quite a boring summit this time around. let's give you a look at what's on this week's agenda in the united states. on wednesday, existing home sales for july are out at 10:00 a.m. eastern. the federal reserve will release minutes from july's fomc meeting. investors will be looking to hear any clues as to when and how the fed will begin to taper its stimulus program. thursday, weekly jobless claims are out and the federal housing finance agency's home price index for june is out at 9:00 a.m. and the federal reserve kicks off its annual economic summit
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in jackson hole, wiwiryoming, a just discussed. and friday, new home sales come out for july. zane brown, thank you for joining us this morning. how much in terms of news flow or new information do you expect to come out of the fomc minutes on wednesday? >> well, i doubt that we'll get a great deal because this meeting, of course, took place in july. and at that point, we didn't have indications that higher interest rates, as a result of fear of tapering, were starting to impact retail sales, housing, consumer sentiment. that all just came out in the last week. so i think that's more recent information than the kind of language that we're likely to see coming out of fomc minutes. >> now you are a fixed income person and why don't you explain to me one of the big puzzles that we saw in the markets last week. yields shot up. they are now at 2.8% for the
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ten-year treasury yield. that is a two-year high. but the dollar hasn't been moving in lockstep. why is that? >> well, that is a perplexing question. i think that we did see actually a lot of diversion in terms of what people wanted to react to. and it seems that although we got industrial production that turned out to be flat, that actually should have been good for bonds and instead we saw the stock market focus on that. the stock market went down. it seems like the bond market also went down and now we're suggesting also that the dollar is going down. it just seemed like everybody wanted to focus on bad news for whatever particular sector they were involved in. but you're right to focus on the fact that, you know, there is some incongruency there not only between the dollar and interest rates in the united states but also that same kind of movement where both the stock market and the bond market went down in the
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latter days of last week. >> and then we've got another discrepancy. we've got tapering fears but gold actually made quite a big recovery last week up by around 60 bucks last week. let's come back to the fixed income space. do you feel as though the long end of the curve is now priced for perfection? do you think we could be seeing another short rally in treasuries before they continue their sell-off? >> well, long-term there's probably, as you imply, not a rally. there may be something of this short term. we did see for the first time last week a lot of issuance of corporate bonds in the 30-year area. $4.5 billion and we probably didn't see that much in the entire month of july. so i think it is starting to attract investors. investors are starting to look out in the long end and say, gee, maybe this is a yield area where i can start to play. maybe i can start to justify put something money some money to w.
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the yields are high enough. the ten-year is at 286. we're within 15 basis points of 3%. in that kind of environment you'll get more people interested in fixed income and i think that, you know, you could have, as you suggest, maybe a stable to maybe even a slightly improving market. at least over the next couple of weeks. >> zane, by your end, though, where does the ten-year treasury yield? 3%? >> well, i doubt that they'll get much higher than 3%. even rates where they are today have to be concerning for ben bernanke. already we've seen an impact in housing. housing starts, of course, were down last week. but applications for mortgages are down 15%. that's got to have an economic impact. even more important than that is refinancing since the beginning of may are down 55%. that also has to have an economic impact. so i can't see -- it's going to be difficult, i think, for the
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ten-year treasury to get above 3% but certainly in this 2.75% to 3% is likely where we will be at year end also. >> zane, thank you for that. we'll come back to the discussion around the u.s. markets, equities and fixed income and the dollar, of course. violence continues across egypt, but the nation's army chief tells supporters of the leader mohamed morsi that there is, quote, room for everyone. we're in cairo next.
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welcome back to the show. a massive wildfire in idaho that has been burning since august 7th has now scorched nearly 160 square miles. more than 2,000 homes have already been evacuated. and as the fire grows, more evacuation orders are expected. the massive blaze has been fueled by strong winds and dry vegetation in the area. the violence continues in egypt as the security source tells nbc that at least 25 policemen have been killed in the sinai peninsula. security forces said the police were traveling in two mini buses which came under attack close to the gaza border. over the weekend, 38 supporters of the muslim brotherhood were killed in a reported prison break. with more, let's get back out to
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yousuf in cairo. >> carolyn, as you already mentioned, grisly details are emerging from an attack in the sinai peninsula. close to the town of rafa which is on the border with the gaza strip. nbc news has learned from a security source that at 9:30 a.m. local time, two mini buses with 28 conscripts were ambushed. they were asked to come down and then machine gun was fired on to them, killing at least 25 and critically injuring three. of course, those developments add fuel to the fire. you mentioned the incident with some of the detainees in a prison transporter late yesterday that killed some 38 of the supporters of ousted president mohamed morsi. and thafls comes in the frame of a speech yesterday given by the chief of the military, the defense minister, and the man who has orchestrated this change of government. and he made it clear that the road map remains on track, that the military has no interest in
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governing, and that as you mentioned there was room for everybody in egypt. now the muslim brotherhood has made it clear that they on their part will continue to march and protest. they will do this throughout the week. and with a curfew in place and protests effectively banned, that raises the stakes and the prospects for further violence. now interestingly, though if you take a look at how investors are feeling this morning, perhaps to the surprise of a few observers, the egyptian stock exchange trading to the up side after 3.9% in losses yesterday. we'll continue to monitor that front. for now, it's back to you. >> yousuf, thank you. let me bring back zane brown from lord abbott. zane, it's really fascinating to hear from so many different market participants asked what impact egypt really has both on brent and the u.s. equity markets. some people tell me this is the main driver for both brent and the u.s. equity markets right now. others say the effect is so
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small, don't even worry about it. which camp are you in? >> well, i think it's likely to have less of an impact than tapering and the direction of interest rates in the u.s. economy. certainly it's an underlying worry. it's kind of a cloud over the market as to how bad things unfold. but i think that we're really looking at economic figures as they unfold and the direction of interest rates in the united states to really influence the market on a day-to-day basis this week. >> okay. zane, thank you so much for that assessment. zane brown, fixed income strategist. these are your headlines this morning. campaigning in the german elections kicks up a gear as angela merkel says it's a close call. violence continues in egypt as nbc learns 25 policemen are killed in northern sinai. and after last week's trading glitch, china everbright
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securities is reportedly planning to sell assets to meet a funding shortfall. still to come on this show, we head out to berlin for the latest on the election and find out if a grand coalition between the left and the right could be on the cards. >> translator: i want to continue to lead a christian democratic liberal coalition because we have worked together well and successfully. i am now looking at what is on my plate right now. ♪ [ agent smith ] i've found software that intrigues me. it appears it's an agent of good. ♪ [ agent smith ] ge software connects patients to nurses to the right machines while dramatically reducing waiting time. [ telephone ringing ] now a waiting room is just a room. [ static warbles ]
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time to have new experiences with a familiar keyboard. to update our status without opening an app. to have all our messages in one place. to browse... and share... faster than ever. ♪ it's time to do everything better than before. the new blackberry q10. it's time.
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german chancellor angela merkel says the election will be a, quote, very close call as she made it clear she would not be complacent, despite her christian democrats increasing their lead over rival spd in the polls. let's get out to annette who is in berlin with more. what should she be worried about? she's got a very comfortable 16% lead over the spd. >> she personally probably is not very worried about it, but she is probably worried about her liberal coalition partner because that is very crucial for her ruling coalition to win those elections that they make it above the 5% threshold just as reminder for those not following german politics every day, the liberal is really a shooting star here among little parties.
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hovered around 3% until recently in opinion polls. so by recently, it looks better, but there is still room for surprises. let's switch topics a bit going to the social democrats, the big other party here in germany. they had a big event over the weekend. i had the chance to check with some ordinary people. here's what they said about the possibility of steinbruck as the next chancellor. >> he thinks of all the people, the rich and the poor, and he wants to get through this front years of wealth and poorness. >> it's not so nearby the people. >> there are topics -- >> he has topics. >> yes, in the first place.
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>> merkel is just plain arm of the country. no idea to change something. mr. steinbruck will make germany a fairer country. >> germany is in quite good condition and i'm not quite sure if we really need a change in germany. >> a good prime minister. i think he's the right man for germany as a chancellor. >> analysts i'm speaking to say that this vote will be a lot about character. while angela merkel is more of a motherly type and she's stressing stability and continuity, steinbruck is, on the other side of the spectrum, saying he wants to have changes and be a bit more active. so take a listen and have a look at how he behaves in front of the crowds. >> the 22nd of december is
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election day and i want to become chancellor of the federal republic of germany. i want to be the chancellor of the federal republic of germany because the political stand still of this government is weakening germany because not enough is being invested in the future because this country is being managed and not politically shaped. >> as i said earlier on, the likelihood of him winning the elections as a chancellor, together with the greens are rather not very high. at least looking at the recent polls right now. but there is still five weeks to go until the general elections and recent votes in the federal state have shown that some people really only decide who to vote for in the days ahead of the election. so there is still room for changes. angela merkel makes it pretty sure that for now she doesn't really like the idea of a grand
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coalition. take a look at what she said on whether she likes that idea. >> nobody wants that. i've been saying that and i've been asked from all sides. all i can say is that today i really don't want it. so, no, i will not give it any statistical probability. >> so while people she asked don't really like the grand coalition but according to opinion polls a lot of people like it so it's probably a question of who you ask, carolyn. >> definitely. just wondering how prominently do european matters feature in this election campaign? we know that germans do suffer from this bailout fatigue. is that a big bone of contention in this election campaign? >> well, not at all. it's all about domestic issues. the nsa scandal is, of course, one of the issues discussed here. but european or euro crisis matters don't -- are not discussed at all among
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politicians. angela merkel tries to downplay it, of course, because that little bit of topic can spill over quite a bit of insecurities to her election campaign because there's, of course, rumors that after the election we'll hear the whole truth about the size of the problem in greece and we'll see a new haircut. but so far both parties, as well the social democrats. steinbruck was saying there won't be any new -- the christian democrats are saying there's no reason we should speculate about that. so european politics are nonexistent here. >> that's really interesting. thank you so much for that. let's get back to zane brown, fixed economic strategist at lord abbott. what is the biggest risk emanating from the german elections? >> well, i think everybody will be quite comfortable. global investors will be comfortable with angela merkel. and any change from that
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introduces a fair amount of uncertainty for all of europe and for especially the periphery and how they will be dealt with. so i think the biggest risk would be a compression of that 16-point lead that merkel currently enjoys. she's certainly right to not be complacent and to get the rest of her party and her coalition out to vote so that she can assure herself of leadership going forward. >> zane, i know you are a fixed income guy. very quickly, last week saw the strongest inflows into eu equity funds since early 2008. u.s. fund managers now also turning more and more optimistic on europe. they want to invest into companies that have european exposure. are we getting ahead of ourselves here? >> well, that may be the case. i think when you look at valuation levels, people are looking at valuation in terms of p/e ratios here in the united states. they are looking at europe and we saw, wow, europe is coming
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out of their recession. we actually got positive growth. it was only 0.3%, but at least it was positive and the headlines sounded very good. so i think as a result of that, you saw people starting to consider where else can i allocate my equity dollars. and, of course, europe was the beneficiary and the recipient of that. i would think that could continue over coming months as well. >> zane, thank you for that. have a fantastic week. zane brown, thank you. we leave you with a look at how the futures are trading ahead of the open on wall street.
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welcome to "worldwide xarchlg." these are your headlines from around the world. this is no time for complacency. german chancellor angela merkel says the election is still a very close call. as her socialist opponent steinbruck takes campaigning up a notch. >> translator: it would be extraordinarily careless to think i'll be re-elected chancellor in any case and don't need to do anything about it anymore. >> more bloodshed in egypt as a security source tells nbc that militants have killed as many as 25 policemen in northern sinai. meanwhile, glencore xst. --
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xstrata could write down. a chinese regulator clamped down on the brokerage firm for causing a market spike on friday and admitting human error in a false bond trade this morning. >> announcer: you're watching "worldwide exchange," bringing you business news from around the globe. >> good morning, everyone. if you are just tuning in, thank you for joining us here on "worldwide exchange." this is how u.s. futures are faring ahead of the open. we are expecting to see a little bit of a bounceback. this is after modest declines on friday. remember last week u.s. markets really took a major drubbing. the dow seeing its worst week this year. the s&p 500 off by 2%. this, of course is related to, yes, we know it, tapering fears
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and higher interest rates. the picture in europe is looking a little bit mixed this morning. overall, we are off by modest percentage declines here. the ftse 100 off 0.1%. we heard glencore xstrata is one of the stocks pushing down the index. actually gained a little bit over the last couple of -- maybe a half hour, hour or so because it was down by much more. we are seeing a slowly improving picture in terms of the european session. the italian and spanish market are still down rather considerably. how do you make money in these markets? here's what some of the experts have been telling us. >> you get paid to own equities. a very nice dividend yield out of europe, even out of the u.s. obviously it's calculated differently there. euro stocks still 4 something in terms of the yield.
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you have people's money there. you never have any accounts receivable. it's unlike three go away. it's quite sticky and pays reasonably good fees. it's not a bad way but you really have to have the scale of ubs to make it with the big boys. >> the problem is there isn't any value in the miners compared to what the expectations have been. the mining sector resources have been the dog of the market. there's no real further value here. these stocks are starting to become expensive on current expectations where chinese demand is going. >> the merger between american airlines and usairways came to an unexpected halt last week when the department of justice filed a lawsuit to block the merger from happening. since then they've vowed to fight the suit. a senior equity analyst responsible for the airline and
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aerospace industry joins us from cnbc's headquarters. thank you so much for taking time to speak to us this morning. do you share any of the doj's concerns about higher prices, fewer flights? just out of curiosity. >> just a correction. i am with maxim capitnexum capi. >> i think in the short term they may benefit by having a fourth airline out there, hub and spoke carrier. but long term, the two carriers, the smaller carriers will be strangled by the two larger carriers. the thing i fear the most is that the american airlines, if they have to go it alone, will try and expand rapidly, which will hurt or destroy the pricing structure of the airline industry in the u.s. >> ray, what are the outside
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options for aamr if this deal falls through. are there any outside options? >> american and usairways can make it on their own in the short term. i'm more concerned in the long term as united and delta take away their corporate business. to prevent that, american would have to expand rapidly which means that excess capacity would come on the market in a lackluster economy which would soften prices. if we were to go into a recession, that could be more challenging for them to gain market share. >> ultimately it ms. docomes do whether or not these players are profitable, as to whether they are competitive in the international airline space. are they? would they be if this deal falls through? >> in the international space,
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usairways is very small. they aren't competitive in the international arena. american still does have london heathrow slots and along with british airways, their partner, dominates new york and london. so they are in a strong position short term. now united is big in that market and delta is taking steps with virgin atlantic to be big in that market. eventually they'd chip away at american's market share not only in the world but in the key new york/london mark slet. >> ray, i want to come back to the deal which could potentially fall through. if it does fall through it raises big question marks as to how amr could exit or how it could proceed with its restructuring and exit from the bankruptcy. who would lose out the most if -- are you as a creditor, would you be losing out the most or as a shareholder because i know that under this deal, shareholders would have receive
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someday 3.5% of the new group. >> well it appears neither the old shareholders or the creditors of american airlines would get as good a deal if american did emerge on its own. so i think there's some risk there as well. plus, the labor agreements with the compensation for the employees. that would be endangered as well. >> ray, thank you so much for those thoughts. ray neidl at nexa capital. thank you for that. and let's take a look at today's other top stories. china's everbright securities says it will have to sell off assets and raise more money to deal with the fallout of a major trading glitch, according to reuters. the brokerage has apologized for a computer system problems on friday that triggered that 5% spike in the shanghai composite. the problems forced everbright to build on big short positions in index futures markets. this morning everbright admitted to a mistaken bond trade due to
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human error. its stock was halted today but will likely resume trading tomorrow. everbright is also at the center of reports that say jpmorgan is under investigation for its hiring practices in china. "the new york times" first reported that the u.s. bank has been accused of hiring the children of influential chinese officials to gain business. something that's quite normal in china, at least over the recent years. so they would have hired people including the son of former chinese banking regulator who is now chairman of china everbright group. the bank disclosed in a recent regulatory finding it has received a request from the s.e.c., quote, seeking information and documents relating to, amongst other matters, the firm's employment of certain employees in hong kong and its business relationships with certain clients. meanwhile, former china communist party rising star bo xilai faces charges of bribery, corruption and abuse of power when his trial begins on
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thursday. the trial is like three last a day or two and is expected to be heavily restricted, despite notice of an open court. "the wall street journal report"s that bo's wife will be a key witness for the prosecution. although a reuters source says that she will likely not testify. a guilty verdict is all but assured according to legal experts. coming up in the show, the day the internet stood still. what happens when google goes down for just a few minutes? we'll have a tech check coming up after the break. just by talking to a helmet. it grabbed the patient's record before we even picked him up. it found out the doctor we needed was at st. anne's. wiggle your toes. [ driver ] and it got his okay on treatment from miles away. it even pulled strings with the stoplights. my ambulance talks with smoke alarms and pilots and stadiums. but, of course, it's a good listener too.
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you're watching "worldwide exchange." >> the solution to everyone's problems these days tends to be just google it. well, what happens, though, when google goes down? cnbc's courtney reagan has the story. court, what happens. does the world stand still for five minutes? >> exactly. no one gets any information. we just have to look at each other and hope someone knows the answer. it was really the day the internet stood still. google crashed late friday night. though you may not have noticed, the search engine was off line for a full five minutes. so during that time, internet traffic fell 40% worldwide. that's according to webban lytics firm go squared. all of google's services were unavailable for those five minutes including search, youtube and google drive.
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speaking of google on this day in 2004, google shares started trading for the very first time. big blow for investor carl icahn. a delaware judge denied a bit by icahn to derail a vote on a $25 billion takeover bid for dell. it means the takeover bid will proceed toward a takeover bid for september 12th. and a steve jobs biopic has bombed at the box office. the film starring ashton kutcher opened in seventh place with the weekend gross of $6.7 million. that is a far cry from what it had hoped to pull in. back to you, carolyn. >> thank you, courtney. i wonder whether this is a string of box office bombs and has nothing to do with the topic, the content or whether this is actually related to ashton kutcher and the movie. who knows. >> that's very true. we don't know yet. >> thank you so much. meanwhile, samsung electronics may be out to a head start in its race with aple to
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develop new wearable devices. industry sources say samsung is planning to launch a, quote, watch-like device at the ifa trade show in berlin september 4th. in an exclusive interview, samsung's co-ceo told cnbc that much will depend on consumers' comfort levels. >> there's no doubt a wearable device will be out on the market, but the issue at hand is how comfortable that device will be for the consumer to the extent the wearer doesn't realize he or she is wearing it. if we can develop a product line like this, it will be a great success. >> here's a reminder of your headlines this morning. campaigning and the german election kicks off to gear as they say it's a very close call. violence continues in egypt as nbc learns that 25 policemen are killed in northern sinai. and after last week's trading glitch, chin afterbright securities is reportedly selling assets to meet a trading
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shortfall. wall street opens a new week. taper talk, of course. what else would be it. how and when will the fed wind down on stimulus program. we'll see what traders are looking for this week after the break. blirks taplus, we talk more elections. chancellor merkel quashing rumors she could retire and move farther afield. >> translator: i am perfectly happy and challenged enough with the european alps so it won't be nepal. and on top of that, i want to be chancellor for another four years so let's just wait and see. [ male announcer ] i've seen incredible things. otherworldly things. but there are some things i've never seen before. this ge jet engine can understand 5,000 data samples per second. which is good for business. because planes use less fuel, spend less time on the ground and more time in the air. suddenly, faraway places don't seem so...far away.
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german chancellor angela merkel says the election will be a very close call as she made it clear she would not be complacent, despite her christian democrats increasing their lead over rival sbd in the
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polls. annetta is in berlin. just how likely is a grand coalition? >> actually if you ask voters here in the opinion polls, the grand coalition is what they want to have. neither steinbruck, the candidate for chancellory of the social democrats nor angela merkel of the christian democrats, of course, does want to have a grand coalition, so it will be up to the voter to make their votes that we might get such an outcome. for now the polls are showing the ruling coal cision leading, but there is still a lot of room for change because there is still a lot of nonvoters who might be activated. and a lot of voters haven't made their mind up. so that is why angela america cell quite caution right now. take a listen to what she said over the weekend. >> translator: i'm not afraid of anything.
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i am campaigning. i am indeed sure of the fact that the elections will be a very, very close call. it would be extraordinarily careless to think i'll be re-elected chancellor in any case and don't need to do anything about it anymore. >> both parties are quite similar when it comes to their programs. the only little change, thing which differentiates them is taxes. the social democrats want to hike taxes for high income earners and the christian democrats want to keep them flat. so that's the only big difference between them. >> is greece a big concern on voters minds as we head into the elections in a couple weeks time and how do their policies differentiate on greece? >> well, perhaps i start off with a point how they differentiate. not a lot. both party members are both party bosses, peer steinbruck
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and angela merkel say there won't be any further haircut for greece even after the elections. the euro crisis is not really a topic here in the election campaign. there are occasional interviews where they say it will take time, but it's not a huge topic. the press always starts to regain it as a topic. over the weekend, there were reports that germany is liable to find more money but then it's not really taken up very interestingly by anybody else. >> thank you very much. maybe the media wants it to be a topic. that's an interesting ang tlel. great coverage this morning. as part of the special climate week coverage, we'll look at how environmental concerns are factoring into the german election. we'll hear from the german beer industry. yes, german beer industry in berlin tomorrow about why the group is raising a red flag over
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fracking. that's tomorrow at 10:45 cet. and to mark the special coverage, we're asking viewers, is climate change still a hot topic or is the debate actually losing steam? ash ziovani said as it's an irreversible problem we must continue to educate the public on the effects of global warming. we're discussing the topic all week. if you want to join the discussion get in touch with us by e-mail at worldwide@cnbc.com, via twitter or direct to me. here's a reminder of where we are in terms of the european markets this morning. we're seeing modest declines across the board. the ftse 100 saw another weekly loss last week down 0.2% this morning. basic resources really weighing in on that. the xetra dax off 0.1%. and bigger declines for the italian market and ibex 35. on wednesday, existing home sales for july are out at 10:00
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a.m. eastern. the federal reserve will release minutes from july's fomc meeting and investors will be looking to hear any clues as to when and how the fed will begin to taper its stimulus program. thursday, weekly jobless claims are out. the federal housing finance agency's home price index for june is out at 9:00 a.m. and the federal reserve kicks off its annual economic summit in jackson hole, wyoming. friday news, home sales for july come out at 10:00 a.m. tapering jitters will continue to move markets with the fed back in focus this week. a veteran investor mark mobius tells cnbc's fear of major outflows is simply overblown. >> i think what people fail to realize is that the so-called tapering is on top of an incredible increase in liquidity and money supply in the united states because these qe programs have been cumulative. it's not a situation where, you know, one stops and all that money goes away.
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it stays there. stays in the system. so i believe that this fear of tapering is quite overdone and you are going to see more and more money going into emerging markets as well as other markets around the world. >> joining me now is michael gerka, managing director from spectrum asset management. good morning to you. thank you for joining us bright and early. would you agree with mobius? are fears are tapering completely overdone? >> i would completely disagree with that notion. and i think the markets are clearly the greatest barometer on how that is being taken. and clearly looking at the the aforementioned ten-year yield at above 2.85 right now. i'm not going to say it's alarming, but how quickly it got there is really the point of reference in the market. no question about it. >> i love some disagreements early on in the morning. so you say the ten-year yield level is a big problem for the market and yes we did see jitters in the market. the dow having its worst week
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this year overall. to what extent is it going to be choking off the rally in the weeks to come and what effect is it going to have on the real economy? >> the first thing is that if we were having this same conversation only two weeks ago when i was mentioning 3% yields, i'm sure cnbc's worldwide exchange would probably not want me back for a while because i sounded looney. the way the market tries to price this in, not necessarily as a forward indicator but again, it's the whole premise of where markets are headed. and again, how that affects the housing market will be very important is i think some of your guests earlier today talked about refinancing and the mortgage market as a whole. right now these rates are historically low and attractive but where they were coming from does give a lot of investors the jitters and that's one of the rains noticed you're starting to see the s&p breach the 50-day
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moving average. that might be just profit-take bug look at the way the dollar has really come off in the last couple of days. look how the sterling has benefited from that and the treasury market is really starting to show a lot more of a creeping in volatility and information has flowed into that market. >> i love how you have been following the program this morning. if you have tuned in for the first hour, you will also have noticed that we talked about this disconnect between the u.s. dollar and yields. when will the positive correlation come back to the markets yet again? >> back in '08, '09, all fundamental correlations went out the window. more of catch the falling knife and how bad can things get. we've now ascended back into a normalization into some of the markets in reference to when crude oil trades this way. this is how the dollar would react and precious metals in the same. those are opportunities in the market, not just for traders but
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as a whole as we see asset flows start to shift from one to the other. if we start to get massive flows from bonds, into bonds from out of stocks and vice versa, then we really have something to speak here. but in regards to the disconnect today, i think the dollar is clearly, as you will see with the fed this week, always biased as seeing a weaker dollar helping, you know, a lot of the export market and watching that creep forward. i think that's been the fed premise for decades. >> michael, thank you for that. keep on watching the program. a good job here. michael gerka, managing director. that's our show for today. thank you for watching "worldwide exchange." we'll be back with the same program tomorrow, different topics, though. [ male announcer ] come to the golden opportunity sales event
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good morning. jpmorgan is reportedly facing a bribery investigation deal with the bank's hiring in china. in market news, outflows fr s f bond funds and etfs accelerating in august. and u.s. equity futures pointing to a mixed open on wall street. it's monday, august 19th, 2013. "squawk box" begins right now. good morning. welcome to "squawk box" here on cnbc.
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i'm andrew ross sorkin along with joe. joe, do you have a cold? >> i do. >> how do you go on a vacation for two weeks. you leave us in the summer and then you get a cold. >> because when you sweat and play tennis every day and sweat, it's 100 degrees, and then you go into air conditioning. that's what -- >> the air conditioning did it? >> yeah, and i need a vacation from my vacation. there was paddleboarding. >> which is hard. it's hard on the stomach, right? >> maybe that's why i couldn't do it. you need a core. i fell left, i fell right. i fell center. i fell backwards. i lost sunglasses that i had for 15 years. but i got some really great new ones which are 580 lenses. they're incredible. you have to see them. but my wife have

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