you're watching "worldwide exchange." i'm ross westgate. the fed is expected to announce today it will start reducing its bond buying program by $10 billion to $15 billion a month. stocks in europe are trading cautiously higher. they near five-year highs. in anticipation of the fed's decision. home prices in china meanwhile soar nearly 20% amid speculation the government might try and call the market down. and changing forchs sales pick up in the third quarter

after a poor first half due to poor weather and a weak yen. >> fingers crossed, everybody, that today will be the end when we have to -- the end of time when we can stop talking about taper. set taper gossip giving away to cold, hard facts when the fed's two-day meeting concludes. the fass dak being up at a 15-year peak on tuesday, u.s. treasuries up for the fifth day in a row and the nikkei up on an eight-week high. investors appeared calm by the prospects of a modest scale back of stimulus. but what if recent data turns

paper light into paper zero? get a look at some of the estimates for more. cnbc.com. right now for more we have our own in-house expert here in london. karen has all the details. >> these are the estimates to how much the fed will taper. we have got -- first up let me run you through the numbers. warptants expect $14.5 billion to be taken off the table, up absolutely from the previous survey which averaged just over $12 billion. the poll of top economists said reduction, which is expected to be concentrated in treasuries, has been largely priced in by the markets. now, jpmorgan analysts have been the most hawkish out there. they're predicting the central bank could taper bond purchases by as much as $20 billion. barclay's expects the fed to drop back by $15 billion, 10 from treasury purchases.

goldman sachs is staying in the middle of the road predicting $10 billion to $15 billion worth of tapering. while that is the speculation, what have the key fomc members been saying? ben bernanke on may 22nd talked about pulling back before the end of the year. jurimy stein was the first to give a clear indication saying the markets need to take effect consideration all the numbers. dudley said he thought a decision could take three to four months which is consistent with this time frame of september. just a few weeks ago, charles evans said he could be persuaded that there had been enough of an improvement in the economy to reduce the flow of bond purchases. but james bullard told cnbc at jackson hole that he didn't think there was a rush to taper

and that policymakers could take their time. that's consistent with the message that he told us a couple of months ago that he wanted to see that inflation was start to go be entrenched in the economy. in terms of one member sure to be voting for tapering that's kansas city president esther george. she calls the asset purchases to be reduced to around $70 billion. that would be consistent with the tapering being taken off the table. eric rosengren is in favor of tapering but only in small amounts. janet yellen has been keeping a very low profile since becoming one of the front runners for taking over for ben bernanke. ross, there's plenty out there with the expectations around the fed. but that is the latest from the individual whisper numbers from key members. >> thanks for that. we'll have full coverage on cnbc followed by the rate decision at

20 cet followed by the ben bernanke press conference at 20:30 cet. peter, good morning. good to see you. there hasn't been very much fed speak around. hasn't been much nudging or winking from members. does that suggest, actually this is a very tight decision? >> i think it's a very tight decision and i think they're wary of how much market reaction was when they said quite a lot back at the beginning of june and the markets responded very firmly. i think we are going to see a little bit of tapering but i think they're going to lay on top of that a lot of very dovish speak, which is going to go alongside their forecast which i think is not going to be that much different from what we've already seen. but they don't want interest rates changing up even more than they have done already. so i think they're going to be cleaning on those as much as they can. >> if they do do a small amount of taper, let's call it 10 billion, round numbers, what the important thing is going to be

then, what they say with it. >> yeah. i mean i think the most important function of them speak background this in the first place is about reminding markets this isn't forever, this isn't for keeps. this low interest rate loss of lid quiddity. so i think that's been an important step in educating the markets as they needed it that this wasn't going to be forever. but now it's really a matter of trying to set out on a time path maybe by the middle of next year this time next year we won't see any additional attette purchases. it's not about changing policy tapering is about taking your foot off the accelerator. >> and they'll make a point maybe they need to buy as much anyway, right? and the government might be issuing less. i don't know. >> absolutely. and i think it's important not to get too hung up on the exact numbers that come out today. i think they might do a little

bit. they might not. they might hold on for a little bit longer. >> would that be a mistake? >> i think it would cause a little bit of consternation simply because they've laid out the table and they might as well, you know deliver the food that they've -- >> the idea for markets is that you can't do this forever, why not? >> exactly. exactly. i mean i think if they err on the other side and interest rates start going up even more quickly than they want that's going to cause problems for central bankers on the other side of the atlantic. that's the other interesting dimension for this. but there's been a lot of collateral implications for emerging markets. >> have we seen market rates rise high enough for the year and the fact that summers isn't going to get -- does that mean 3% is a top for u.s. treasury yields and we've capped out the rising gilt and bund yields?

>> yeah. who knows. it could even ease back a little bit this year. but i mean it's all about time horizon. whether 3% is a peak for this year is one question. obviously, in the longer run, interest rates are going to grind back up. but that's much more about what happens over the next couple of years versus over the couple of months. >> at the same time city's fx team diagnosed the markets with critic fedigue syndrome. this is after taper talk has been sending everyone in a tizzy for months. here is evidence of the affliction here on cnbc. >> since the taper comments on the beginning of map. >> the whole word tapering has taken on a life of its own. >> it seems like we've been debating taper every since the

ben bernanke threw the possibility out there. >> a true taper. >> how much do they taper? >> when we look at tapering in the united states. >> just a few weeks ago, everyone was preparing for september almost unanimously. >> pedalling back from the taper tough. >> filing back. >> reaching in as i like to say. >> totally obviously is the first. >> does this change your view in terms of when you think taper might start sfp. >> september tapering is almost certain. >> every day that gets bit here we're getting closer to taper. >> taper in september. >> your taper call. >> tapering this month. >> taper in september. >> i hate to mention the word taper again because i know we've said it probably a hundred times. >> the beginning of the taper might be the beginning of the end. so how are you investors going to wean themselves off the taper talk? according to the british telegraph paper, the british

government is considering putting in drunk tanks to help to sober up. so we all thought maybe we need a taper tank if we overdo the taper talk should we all go into a taper tank until we have sobered up? send us your cure for taper-toxcation. "worldwide exchange"@cnbc.com, @rosswestgate @rosswestgate. >> taper tank. >> you said it twice in a row. get the gun ready. >> are we trading ahead of the fed decision? could you even see the dow jobs stoxx 600 as you can see at the moment. five to four advancers outpacing decliners. we're up near the session high. the ftse yesterday was down 52

points. but interestingly enough, city is predicting that it will be above $8,000 by the end of next year. right now, the ftse 100, let me pull it up for you. you can see where we're currently trading. tate a bit of a time to pop it through. 6,5811. just 111 points higher. we'll look at individual stocks in a moment. xetra dax is 0.25% higher. along with the cac 40. german elections, finally getting those out of the way this weekend. and the ftse mib, up 0.5%. today we might hear from the senate. there is speculation that berlusconi whatever happens, will reaffirm his commitment to the italian coalition government and we've seen the italian bond yields come down as a result as well. let's get out to stephane for more news on the stocks moving in paris. stephane. >> hey, ross. we've got two major stories today. one of them is regarding peugeot

citron. according to lizico the french carmaker has appointed two investment banks to work on the final shape of the alliance. it has not been decided because peugeot would like to keep its existing partnership with general motors in europe. the problem for peugeot is that gm can cancel the partnership at any time if another carmaker takes more than 10% of peugeot citron. for that reason the french carmaker is working on two scenarios. one is a capital exchange basically. the second option would be a joint venture dedicated only on emerging markets. that's only if general motors does not accept the first option from the strategic point of view 37 that would be very good news for peugeot citron. and also to access to get better access to the chinese market. market reaction positive

although we were gaining more than 3% at the start of trading. so it looks like the speculation is trading a bit. we're up 1.4% ross. >> let's show you where we stands with bond yields ahead of the fed today. ten-year treasury yields 2.8% lower at 2.86% late monday so it's continuing to come down. gilt yield 2.92%. we had that 3.04% last week. but we've got minutes coming out from the uk in around about 27 minutes. sorry. 17 minutes. it will be interesting to see whether anybody has voted for qe because the market doesn't believe the bank of england's forecast that they will stay where they are until 2016. on the currency markets, the dollar/yen, 99 at the moment a bit weaker there. euro/dollar, 1.3354. we hit 1.3 85 which is a 2 1/2 week high on monday for some comparison. sterling, still around the 1.59 mark against the greenback, as

well. property price necessary china are on the boil. home prices in the country's 17 major cities up 8.3% from a year earlier. that's the biggest increase in at least 2 1/2 years. although some analysts say beijing is unlikely to implement any cooling measures because economic growth is still not stable. with that back drop let's find out what's happened in asia today. sixuan has the update in singapore. >> china merchant's property was dipping over 2% in the morning session after unveiling its refinancing plan yesterday. but it managed to end in positive territory, higher by 1.5%. and some shanghai based property developers continued to power ahead, helped by the free trade zone program. in fact searched limit up by 10%. on the whole, the shanghai composite turned higher in late trade, up a modest 0.3% ahead of

a four-day long weekend so people get ready. elsewhere in asia relatively light trading. the nikkei 225 outperformed finishing higher by 1.4%. not much movement in the dollar/yen space but expectations are the fed may only deliver a modest taper or taper light at this time around. in south korea's quote for a public holiday, australia is in the red down by 0.25%. and india action trading higher but modest 0.3%. as for top gainers in japan, exporters will drop higher today. sharp and toyota they both gained over 1% in today's trade. meantime good nous for kawasaki heavy industries. as tokyo reports, the company won a 1.8 billion$1.8 billion mandate as shares jumped by almost 5% in

today's trade. back to you. >> sixuan catch you a little bit later. thanks for now. that's the asian update. meanwhile, china's second biggest wireless carrier says preorders for the apple iphone 5s and 5c has exceeded the 100,000 mark since last week. the new phones will go on sale this friday. and china hushandari is apparently pricing at the top of the range. according to the isr, that would make the hong kong float around $1.3 billion. huishan dairy owns the second biggest herd of dairy cows. china politicians will hand down a verdict to bo xilai. bo is likely to appeal the decision delaying any former outcome. the disgraced politician is facing charges of bribery, abuse

of power. the fed may be the word of the day, but investors will be looking at fedex amid the economy. the central bank extends to london. the bank of england is set to release its latest meeting minutes in about 13 minutes. 9:30 london time. we'll cross to berlin for the final stretch of germany's federal election campaign. is a grand coalition still in sight? we'll have the latest. and japan's prime minister reports he's visiting canada and the u.s. at the end of the month. we'll have more from tokyo. and usairway workers will get set to march on washington. we'll hear from one interview expert the who says the tie-up will eventually takeoff despite recent turbulence. and we'll take a short break. when we come back, if that's not

enough, the formula one team is paying one of its drivers less than 1% of the salary that fernando alonso received at ferrari. coming up we'll look at how the team hopes to stay competitive. we asked people, "if you could get paid to do something i love having a free checked bag with my united mileageplus explorer card. i've saved $75 in checked bag fees. [ delavane ] priority boarding is really important to us. you can just get on the plane and relax.

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it's the singapore grand bre this weekend. graham louden is president sporting director at loricia. graham nice to catch up again. look first of all, we've got the singapore grand prix this week. how is the season sort of panning out for you? it's your third year as this team? >> yeah fourth year. morning, ross. it's good to talk to you again. yeah you know we're coming to singapore ahead of our nearest rival in the which i am. we're currently tenth in the championship. and we've managed to stay ahead the whole season and, as you rightly point out, it's -- formula one is a difficult spot. it's very competitive. there's a huge amount of money

involved and a lot of technology and, you know everyone in the team is pushing really hard from this point on through to the very last rates to keep our place in the championship. always possible to move ahead. >> yeah look, just do the comparison between your budget and that of ferrari. you're going to get ferrari engines, aren't you? >> yeah. we're saying long-term agreement with ferrari, so we start using their power train. it's a very advanced powertrain next season. and, yeah we're certainly looking forward to that. we've been working pretty hard with ferrari over the last couple of months since we signed that deal. i think everyone is excited to see how the car will perform next year. >> yeah. their budget compared to yours, they're worlds apart. is f1 ever going to close the gap between the cars?

they've done certain things like reduced how much testing you can do and, you know we've seen the impact of that this year. but are we going to close the gap any further? how do you survive when you're the small budget team? >> well i think it's very important that formula one keeps sight of the fact that you know formula one is the pinnacle of motor sport. but for the sake of the fans i think it's important that the industry keeps sight of the fact that what should be rewarded in this sport is the world's best drivers racing wheel to wheem and the best engineers, the best minds coming up with innovative solutions. it should not be simply a comparison of balance sheets at the start of the season. as you've rightly pointed out, the industry at the moment i think has too much scope for buying success if you like. and certainly if you compare the sort of budgets between the

teams, you know we probably spend, in a week what red bull racing probably spend in a day. you know that's the sort of difference in spend. so i think -- i certainly hope that the industry will move towards a set of regulations and rules where innovation and, you know and skill are rewarded and not simply financial strength. >> doesn't the more money you have mean there's a chance you'll have more innovation? and where does the money go? does most of it go on r&d or does it go on drivers? >> yeah it's not -- it certainly isn't the case. i think many people watching this in different industries will know that often when you have some kind of restriction or some resource that's restricted that's really where innovation happens. where there's an unlimited ability to just spend your way

out of the problem, then what you tend to find is that the solution could well be very effective. but it's highly unlikely to be efficient. and i think, you know what we find talking to our sponsors and partners is, you know they want to be associated with an individual that's efficient. and that is something that you know they see in value in their own businesses. and so i think, you know i think there's a lot to be said for having a sport which, you know, really promotes innovation and clever thinking and not just you know a fire hose of money spending. . >> all right. graham, always good to talk to you. briefly, how is the grand prix at nighttime? how do you race it? >> you know, i love it. i absolutely love it. it's one of the favorite races. we stay on the whole team. in fact the whole of formula one stays on european time while we're here. so you see people wandering

around at crazy times of the night. but for us it feels like the middle of the day. so it has a unique aspect all of its own. the cars look alive at night and everything. we're excited about it. >> thanks so much. thanks for joining us. all about best this weekend and for transparency cnbc has previously sponsored the marussia team although we're now the sponsor of the lotus formula one team. still to come did anybody in the meeting in england two weeks ago, think we need qe because the markets aren't listening to forward guidance? we'll get a view, after this. ♪ ♪ [ woman ] i'd be a writer. [ man ] i'd be a baker. [ woman ] i wanna be a pie maker. [ man ] i wanna be a pilot. [ woman ] i'd be an architect. what if i told you someone could pay you and what if that person were you? ♪ ♪ when you think about it, isn't that what retirement should be, paying ourselves to do what we love? ♪ ♪

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it's tapering time. the fed is widely expected to announce today it will start reducing its bond buying program by $10 billion to $15 billion a month. stocks in europe in the grooer green nearing five-week highs ahead of the fed decision. home prices in china sore nearly 20% from a number of cities in august prompting speculation the government might have to step in to call the market. speculation today is fairly flat.

you're watching cnbc's "worldwide exchange." just a few minutes away from the bank of england's minutes while everybody has been concentrating on fed tapering. other central bankers have been having to deal with the impact on the rise in the market rate despite issuing forward guidance. they voted 9-0 to keep the rate steady. let me see if we've got any other votes. no member saw a breach. all mpc members voted to keep the qe program at 3.75%. no one voted for more qe. we thought somebody like david miles might have thought about it but they haven't. up there, third quarter gdp forecast compared with the august report. the staff expected to circle the gdp growth around 7% quarter on quarter. the bank of england minutes, saw tentative signs of growth in the fourth quarter. the housing market is gaining momentum. but it's not yet a major

concern. they say oil price rises if sustained would boost inflation in the short-term and all members thought the current policy starts appropriate. sterling, just nudging up after that to the highest in the session against the dollar. 1.5941. peter westway is with us and we're joined by peter dixon, global equities at commerzbank. peter, i thought there was an outside chance must have might have voted for qe because of the rise in market rates the. they haven't. >> it's only a month ago since they signed off on the new forward guidance policy. i think we're in a stage of wait and see with the bank of england like everybody else is waiting to see hey, how the economy develops and b, how the market responds to the information coming out both from the bank and from the wider economy. so i think we're in a wait and see mode. don't expect any changes to policy any time soon. >> the markets are respond to go

economic data they're not responding to what the bank is saying. now, look, i know they say was important is bank rate for firms and households. but at what point do they get concerned that market rights are going up and pricing in a move in interest rates in early 2015? not the middle of 2016? >> yeah. i mean obviously, that is an issue. but i think ultimately what's going to matter here is you know how the events pan out over the longer term. if we get a situation where the value of the economy loses a bit of momentum in q4 and going into early 2014 some of those expectations are to have it pushed back. and we'll be close eer back to the bank of england's path. it's entirely possible that they will have to raise rates earlier, but that's so long a way in market terms that i don't think it's something you can really get too excited about at the moment. at least i'm not. >> i mean i agree with what peter said there. i mean i think in a way what

we're seeing here is a man fvt fesstation of the risk of the forward guidance policy. it's all very well setting out these sort of slightly vague indicators of where interest rates should go. but if you have a situation where the market wants to go somewhere else, it tends to undermine the credibility of the central bank that's giving that guidance. >> yeah. and peter dixon, i mean they tied it. more specifically than the fed did to you know unemployment a specific employment rate of 7% and an inflation. have they been too specific though smp. >> i think that will go down as a mistake. it's all very well saying guidance and the unemployment is the key threshold. but then to come out and say, we don't envision hitting that threshold for two years, that is the hostage to fortune which i don't think the bank of england needed to give. and i think the question which has to be raised is is the unemployment rate the threshold or is it 2016? we're not entirely sure i think, given the formulation of

the guidance as to whether the bank is focusing on the time horizon of this target whether it is focusing on the unemployment rate. and i think it's that which has caused the market so much concern. >> what is the absence in the minutes? is there any discussion as to whether the rise in bond yields is consistent with their policy outlook? some mpc members disagree, what do you think of that that there seems to be an absence of ta discussion present in the minutes? >> well, if you're looking at the bond market don't forget that what happens to the yields is determined by what happens elsewhere. in a sense, we're getting carried away about what happens to the uk bond market. but what we see driving it are fears or otherwise of what the fed is going to do. so i think it's a little bit you know overdone to talk about the gilt market in isolation. we really have to look at it in a broader international context here. >> peter, your view how much is driven by the fed and how much is -- i mean, if we had no fed

tapering and guilty yields have gone up to 3% on their own? >> i'm pretty sure they wouldn't have done that. i think you have to remember, forward guidance is about expectation of on what's going to happen to the policy rate whereas the yield curve is driven by that but it's also driven by the sort of term premiums embedded in yield curves which is really what qe is effectively. and we're a slave to those global forces as much as our own intentions of what's going to happen to interest rates. so it's tricky for central banks at the moment. >> peter, thanks for that. chief european bank of management and peter dixon, thank you, as well joining us from commerzbank. good to see you both. let's check in on the currency markets. sterling up to the session highs post those bank of england minutes. meanwhile, dollar/yen is below 99 98.82. euro/dollar, 1.3349. sterling/dollar, getting back up to 1.5950. as far as european equities are

concerned, we're trending mildly higher today, not much. plenty of caution around ahead of the fed as you might expect 0.1% to 0.2% higher for the ftse 100 and cac 40. ftse mib doing a little better than that. indiex beat forecasts and says it expects continues to improve in the year with sales jumping 10%. barclay's shares are down head heavily this morning. about om of the stoxx 600. bnp paribas in focus amid reports the bellgium government is considering selling some of its stakes. renault has been higher. we'll put the peugeot quote in next time.

>> meanwhile, ahead of some form of tapering announcement from the fed, long-term rates have started to climb. cnbc's adam batia has been finding out which are most prepared for a curve as interest rates rise. >> september, october, november it's coming and the markets aren't just sitting idly by. after years of operating in a low interest rate environment, fed tapering could spell a shift for major banks. when banks are on the rise banks can start charging more for the money they lend out. margins have been very tight with record low rates. both higher rates could discourage more borrowing and leave high le leveraged businesses nomble to liquidity images. and don't forget the giant securities portfolios that many banks hold in the form of mortgage-backed securities u.s. treasuries and any other sovereign debt that moves in

sync with markets. any outflows could mean bank profits and affect their capital ratios. geography could make a difference on how banks will be impacted. here in asia where economies are relatively strong, the first year of a rising rate environment could be a sweet spot for environments. and hong kong banks could be in the same boat. >> because the hong kong banks are -- the interest rate regime here is tight because of the currency peg, i think the hong kong banks stand to gain the most. >> mainland lenders are more isolated from the world as beijing maintain aes tight grip on interest rates. in japan, banks might benefit from extended growth but margins may not get much uplift as the boj just started on its massive qe program to keep rates low. and europe like japan is just start to go recover with risks receding from the dead crisis

financials aren't expecting a sudden rate surge anytime soon. >> frankly, i don't think interest rates will raise that quick. i think there's a lot of on testing of the market to see the sensitivity. but i think we are going to look at the low interest rates environment and otherwise. >> which brings us to the emerging markets whose economy stand to lose the most from the draw down of u.s. easy money. as investors pull money from riskier markets, banks may not be immune to economic pain. >> if we look at the banks themselves, in india, we are a lot more negative in terms of the prospects there. and the reason is because they were already halfway through the a downturn and now there's going to be another step down the. >> so whenever the tapering comes, it will be the lenders that operate in the stronger economy, have diversified revenue stream and customers that can afford to pay out. it may not be flashy but it's something they can bank on. and a reminder of our viewer exchange today.

what is your cure to fedigue? as we like to call it taper-toxcation. e-mail us or twooet cnbc wex or direct to me @rosswestgate. japan's prime minister shinzo abe is looking for ways to expand the cub's military power. he's calling for wider interpretation of the constitution. "the wall street journal" says a panel would likely recommend collective self-defense in november. this is the prime minister also ahead on a five-day trip to north america next week where he'll attend the u.n. general assembly in new york. we have the story from tokyo. >> hi ross. abe is making its first visit to canada in seven years where he will hold talks with prime minister steven harper. free trade negotiations is high

on the agenda. ties in the energy field will be a hot topic. abe will deliver a speech at the u.n. general assembly in new york. abe will talk about japan's vision and stance in addressing challenges facing the international community. the prime minister will host a meeting there to explain japan's economic policy and overcoming deflation. foreign minister fukishida will visit the u.n. next week. he is expected to meeting british foreign secretary william hague and russian foreign minister lavarov during his stay. back to you, ross. >> thanks for that kitadai-san. russia has handed over evidence that syrian rebels have

used chemical attacks. his comments come as diplomates from the five permanent members of the security council are meeting to try and hammer out a resolution to syria. brent, as you can see, just over 108.38. it had skipped below 108. exports have come back online. as far as the agenda in asia is concerned, new zealand will be reporting second quarter gdp. analysts are expecting 12.1% for the year versus 2.4 in the fourth quarter. china and taiwan's south korean markets will be closed for the mid autumn celebrations. meanwhile, only four days to go until germany's elections. the slow return to health, we'll be in berlin after this.

the french fwoft sew going to present a version of its pension reform.

>> the first thing is that the legal age of retirement won't change, still at 62 years old. but in practical terms, people will have to work longer to get a full pension because the government is going to increase the contribution period from 41 1/2 to 43 years. the reform will increase gradually. the financial contribution from both workers and companies thanks to negotiations from the trade unions. the government so far has managed to avoid some massive protests like we've seen in 2010 for the first reform of the pension system. but first, ross the government needs to convince the european commission about the reform, that it's deep enough to sing the system. without the reform the pension deficit would reach 26 billion euros at the end of the decade. it did manage to convince that they're not going to damage the -- they're concerned about

the extra cost for businesses in the country. ollie rhen says even in the reform goes in the right direction he was expecting france to explain how it will compensate the extra costs for company because in the end it's going to increase the cost of labor and will damage further the french competitiveness. this is going to be presented at the cabinet meeting officially and then it's going to be discussed at the national assembly from the seventh of october. the reform is due to enter into force at the beginning of the next year ross. >> all right. stephane thanks for that. into a agree grand colugz is look more likely ahead of germany's election these weekend. we'll look at what has been said about possible coalition.

>> nobody wants that. all i can say is that today, i really don't want it. no, i will not give it in statistical probability. >> a grand coalition isn't likely at all. spd will not be a -- with angela merkel again. we've learned from that. >> it's clear that all the members have made et clear they're backing the very successful cdu liberal coalition. >> we get enough votes, we get enough votes and that's not a question of sympathy. >> of course we're always in favor of talking to everybody. i spoke today with members of the christian democrat party. that's normal for democrats. but here we are speaking about the formation of a government. those talks will probably be rather short. >> all right. annette is in berlin with her own thoughts on this.

the coalition is looking more likely than not, annette ya. what would that mean in terms of the big policy decision particularly towards the rest of europe? >> well actually the big coalition or the grand coalition, as we call it is it's becoming more likely because the levels are extremely weak. in the recent polls. the christian democrats have some sort of weakness if you look at the last pull by the institute. but nevertheless, the call is very close when it comes to the election results and the history as it's well shown at polling institutes can have some standard deviation mistake, i could say. and as well that means that actually what we could see during the election or from the upcoming elections could as well be a grand coalition between the social democrats and the christian democrat union. what that all means for europe

is -- well still unclear. of course the social democrats are in favor of more solidarity but, as well we could call it so lidty and solidarity. angela merkel's stance is clear, do your homework and then we will help you. the liberals say they don't want to have the permanent rescue mechanism. they say when the individual states reach their budget plans, we should get rid of the permanent rescue mechanism. but that is of course highly unlikely because the commission is against that and the liberals, even if they were to form a government with angela merkel's party such a small and tiny partner that they would probably not have a lot to say.

so all in all, there is still a lot of opportunity. at least for those who are small and it's a crucial phase of the election. with that, back to you. >> thanks for that. for more we're joined by nicholas. are we going to get any major break through in the eurozone crisis post the german elections? the reality has been it seems like we've been holding off on these decisions until they're out of the way. >> i doubt that we're going to get any kind of a serious break through. certainly, you're not going to get any major shift in german policy towards the eurozone. in terms of the level of risk rashing and sovereignty pooling that is required in order to shore up europe's vulnerable banks, it's very unlikely that we're going to get any --

>> the big thing would be we're talking about banking unions. the interesting thing is whether post elections they say, look, the centralization you're going to have to have treaty changes. >> what's interesting with regards to banking, to banking union, is that the assumption is that basically the eurozone is currently facing a standoff between a group of countries, a french led group of countries wary of ceding more sovereignty and a german-led group which is wary of sharing more risks. the germans are actually not wary of sharing more risks they're wary of ceding more sovereignty when it comes to the banks. so that's what i'm saying. it's the -- it's the worst of both worlds. as far as german policy towards the banking union is concerned. but this election is still -- is still up in the air. i can't recall a major election

in an important country in which the dominant party was so far ahead and yet still none the wiser as to how it's actually going to govern. >> these are the -- these are things we're going to have to come up. greece looks like it's going to have to have another bailout. portugal looks like they're going to have to have another bailout. >> absolutely. there's a plethora of risks. as far as the markets are concerned, the world is -- the world has moved on. the eurozone crisis as we know it in terms of the debig tating bond market routes has ended. the focal point for market anxiety has shifted dramatically away from the eurozone and towards the emerging markets, essentially towards which had a balance of payments weaknesses. but the eurozone is still in

crisis. the economic and the politics have actually soured. >> and let's just talk about italy, as well. the former italian prime minister sylvia burl scone fee delayed a video message which was thought to have recorded to end the current coalition. the message expecting today's tips by political sources to take a softer line. we're still waiting for the senate committee hearing into whether they are going to kick him out of the senate or not for his tax fraud conviction. there's a line now, nicholas, that even if he was, he would still say, well we need support for government. but how -- you know how do you see this playing out? not only is there this hearing, they still have to then change the electoral law. how concerned are we about the shakiness of the italian government? >> mr. berlusconi's legal woes and his political ones are a fixture of the italian

landscape. it's very unlikely that he would be the person who would pull the plug on the government. he is essentially dictating italian fiscal policy. and -- but there are obviously hawks within the -- within his party which clear won't support that. if they rate vat albeit by one percentage point, that could obviously cause problems. both of these parties, both the center left and the center right are utterly unprepared for facing a snap election. so it looks like -- it looks like mr. let his government will soldier on or at the very least we will certainly avoid a election. >> and will italian spanish yields are now yielding less than italian yields. is that going to remain the case? it's always easier to talk up

spain when you're talking down italy. and vice versa, for that matter. both of them are -- spanish and italian risk are pretty much perceived the same way, depending, of course on the focal point of market anxiety. right now, obviously, it's italian politics. but basically, if you look at the -- if you look at the yields they're pretty much on par with each other. portugal's bond market sticks out like a sore thumb. and i think that is extremely worrying. two-year portuguese yields before the fed tapering were under 2.5% now. they're veering towards 6%. i think portugal is the one to worry about. >> always good to talk to you. thank you very much. have you got any thoughts or comments? please e-mail us. worldwide@cnbc.com is the address. there's a whole second hour of "worldwide exchange" to come.

and, really there's only one topic, markets are holding their breath ahead of a crucial fed announcement on tapering later today. could they persuade chairman ben bernanke to delay the bul pullback or is that more risk for market players? we can expect a taper surprise? "worldwide exchange" continues right after this.

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the fed is likely to announce on today it will start reducing its bond buying program by $10 billion to $15 billion a month. ahead of that gold is just above a six-week low. meanwhile, the bank of england says that it hasn't voted for any more qe. sterling shoots to near eight-month high against the dollar. there's little appetite for more stimulus. and home prices in china saw nearly 20% in a number of cities in august prompting speculation the government could step in to call the market. chinese markets finishing the day fairly flat.

right now we are up some 42 points below fair value for the dow. the nasdaq up 7 points above fair value. european equities two hours into the trading session ftse cnbc global 300 is up 0.2%. the ftse was down 52 yesterday. 6,575. just up five points at the moment caution reigning. the xetra dax, cac 40 up 0.3%.

the ftse mib up nearly 0.5% as well. take a look add bond yields. treasury yields have moved lower today. 2. 2.84% is where we stand. gilt yields have gone higher. there was speculation maybe one member might have voted for qe because market rates have gone on, but they haven't. they have talk about nudging up their growth forecast as well. so yields getting back to that 3%. that has boosted sterling as well. sterling now 1.5961. elsewhere, the dollar index is down near a four-week low. dollar/yen 98.87. and we hit that 2 1/2 week high at the beginning of the week of 1.3385. meanwhile, property prices in china are still on the broil. home prices in the country, 17 major cities up 8.3% from a

year earlier. that's the biggest increase in at least 2 1/2 years. and in the biggest cities prices up 18% on the year in august. some analysts say beijing is unlikely to implement any cooling measures because economic growth is still not stable. nevertheless, that was the bank drop for some of the trading today in asia. sixuan has those details for us in singapore. >> thank you, ross. indeed, no good news for potential home buyers. and with the latest data showing china's new home prices tracked higher for the eighth straight month. shanghai saw prices rise over 15% from a year ago. on the markets, china merchant's property was dipping over 2% in the morning session after unveiling its refinancing plan yesterday. but it managed to end in positive territory, higher by 1.5%. and some shanghai based developers continue to power ahead. helped by the free trade zone

program. first limit up by 10%. and on the whole, the shanghai composite ended marginally higher by 0.3% ahead of the four-day long weekend. elsewhere, the nikkei 225 outperformed ending higher by 1.4%. not much movement in the dollar/yen space but expectations are the fed may only deliver a modest taper this time around. south korea's closed for a public holiday. australia, marginal in the red down by 0.25%. india's sensex less than an hour from its market close, higher by 0.1% and india's jakarta composite down 1.2%. as for tough gainers in japan, exporters were broadly higher. sharp and toyota shares gained more than 1% in today's trade. meantime, kawasaki industries got a nice pop as the company reported a mandate to main train

cars for new york's long island railroad. shares jumped almost 5% today. back to you. >> thank you so much for that sixuan. that's the wrap today from asia. meanwhile, the fed is wrapping up its two-day meeting. that will be followed by ben bernanke's news conference at 2:30 p.m. the fed is widely expected to start tapering its bond buying program. now it's clear that the impact in tapering will be felt far beyond the united states. we spoke to peter sands and asked him about speculation that lenders who have rolled over emerging loans will stop the credit when short-term treasury yields are climbing. >> i think that's a little simplistic, really. and certainly it's not something that we see as a major issue.

>> why is it simplistic? >> tapering is a dollar if a no one nom nonand much of the lending in emerging markets is in domestic currencies. and also even within the dollar markets, the availability and pricing of dollars is not going to be a sort of mechanistic function of what's happening with tapering. and secondly also banks don't manage their balance sheets in a sort of passive way. one is anticipating what is going to be happening. and particularly with us we have actually a very short tenor balance sheet. two-thirds of our hotel banking balance sheet is less than a year antenna. so we're able to reshape and reprofile the nature of our exposures quite dynamically as we see the markets unfolding. >> new name was in a mix of

candidates, the bank of on england governor. that job is now going to mark carney. how would you rate his performance? >> it's very early, i think mark was a very very good appointment. and early signs are very encouraging. i mean from a bank perspective, actually, what happens in the uk is actually relative lyly unimportant to us. because we don't have a significant sterling balance sheet. we'll much more focused on the markets of asia and the middle east. it doesn't make that much difference to us. >> is forward guidance an effective tool for central bankers? i don't think there is any perfect tool. i can understand the logic of why mark carney has chosen to use a form of forward guidance and i can see the logic of doing that. but we're in an interesting place in the way central banks works at the moment.

we're in unchartered territory, given the degree of extraordinary measures given the measures that western central banks have taken. so i think there's some interesting risks facing all central bank governors right now. and i have to say, there is a logic to things like forward guysance and i can see why the bank of fwlnd is doing it. but there's no simple recipe that provides all the answers. >> all right. peter is joining us now. also with us out of the state, craig dismute of ibg. gentlemen, good to see you. craig, what do you think is going to happen today? then how are we going to react? >> good morning, ross. you know i think we've been anticipating this for quite a while now. there was a famous britain that once said russia was a real mystery inside an enigma. i think today we're going to get a taper inside a dovish comment

wrapped in a lame duck. first, the taper, probably 10 billion. i think the market is expecting something like 15 billion. the fed doesn't -- they've prepared the markets that they're going to start slowing purchases. they're going to start to adjust that and make it data dependent. they don't want to give up the place they've already gotten to. so i think they're going to go ahead and take placer just to get it under their belt. if they do less than what the market expects you could see pressure on yields lower. the second part of that is i think they'rere's going to be a dovish target. when the next overnight rate increase will be or they could simply change their forecast for when their next rate increase will be in the summary of economic projections where they plot out the dots of what each member thinks -- when each member thinks the next rate increase will be. that would be more of a subtle way to do it. i think they'll wrap it in a dovish context. and the last point is that it's a lame duck. we're still looking to see where leadership is going to come from

the fed. for the last several years, we count on bernanke to guide us and tell us where he expects things to go and we could count on that to end up coming to fruition. right now, we don't have anybody like that. the one good thing as far as the bond markets are concerned, anyway, is that the most hawkish candidates are off the table now. we'll have to see which way the administration was leaning. >> as it pans out, if it does is that a reason for equity investors to continue a rally? >> i think craig is absolutely right. it's going to be a big jan. and ben bernanke is not in the fireworks business. this has been well telegraphed on with all wall street in the past couple of months. i think the details of the taper, it really doesn't matter. >> 30 billion would be a shock, wouldn't it? >> i don't think it matters. we're going to get to zero by the middle of the next year. bernanke has said he wants to get to zero by the time unemployment gets to 7%.

we're now 579.3% and falling at a roent pace. it's not going to have a huge impact. >> does that mean we can get through it and if you like buying stocks yesterday, you'll like buying stocks tomorrow? >> i don't think it makes any difference. i think what the whole debate does highlight is that the way the fed looks at tapering is very different from how will how wall street is looking at fed tapering. we're carrying on buying bonds, we still have the acceleration of the economy. tapering is slowly easing your foot off the accelerator of the economy. wall street is looking at it differently. wall street is assuming that because they're slowly taking their foot off the accelerator, they're immediately going to stand on the brakes. >> is it binary? >> the u.s. economy is no formula one race car. you don't get screaming into a bend with your foot -- >> i get nap but when you have a choice, craig, of either buying or selling right, it is binary

isn't it? >> it is. the markets -- i agree. i think the markets live by an action of don't fight the fed. so when they think the fed is going to be buying, they get in front of that. when they think the fed is going to sell they try to get out ahead of it. so i think if you come in and do 30 billion, i think that would be more than what the market is expecting. i agree with you eventually we're going to get to zero. it's interesting that you started this conversation with the bank of england and their decision because if you juxtapose what they've done from the u.s. central bank they've learned from the u.s. central banks that the risks from quantities tafb easing are likely greater than what you anticipate going into it and using forward rate guidance is a cleaner way to stimulate the economy. so i think the central bank is going to try to get back to the point where they're using forward guidance instead of quantitative easing simply because they think there's less risk.

>> i'm interested to hear you say it sort of doesn't matter hugh, it doesn't matter. because howl you compare the importance of this with then the government you know having another argument about debt ceiling and the politics? which for you is actually the more important? >> the debt ceiling is hugely more important. put the context of a few billion here and there in terms of bond purchases, in the context of a $3 trillion $4 trillion central balance shoout sheet. and then the possibility of a repeat in 2011. and when you had the downgrade of u.s. debt. it's a magnitude more important than what happens tonight. >> craig, what do you think? is that going to be more important than this decision once it's out of the way? >> i think that's right. and to quote churchill, again, he once said america always does what's right once they've exhausted all the other opportunities.

i don't think there's any question in the markets that the u.s. is going to pay their debt. but if you get another one of these showdowns, that could be paralyzing to the markets at a time when the global economic trajectory is tenuous. i don't think the markets can handle that and you can easily tip the scales to a point where you have contraction and you have some real bad outcomes. so i think that's more important. >> craig, good to see you. hugh, thank you very much as well. hugh grieves joining us as well. we'll have full coverage of the fomc meeting decision at 20:00 cet followed by ben bernanke's conference at 20:30. citi fx team diagnoses the markets with chronic fedigue syndrome. how will investors wean themselves off the paper talk? here is one idea. the british government is now considering putting in place

so-called drunk tanks. this is for people who are too intoxicated to take care of themselves. they put them in the drunk taip tank to sober up. so we all thought maybe, you, us if we get overtapered should be in need of a taper tank to let us cool down. let us know. worldwide@cnbc.com. @cnbcwex or direct to me @rosswestgate. what else is on the agenda in the united states? there is other stuff beside tess fed. august housing starts are due ott at 8:30 eastern forecast to rise 2.1% to 950,000. building permits are expected to slip 0.1% and fedex reports results before the opening bell as does general mills, cracker barrel and manchester united. a year on from the close. we'll hear from oracle, as well. cer ] this store knows how to handle a saturday crowd. ♪ ♪ [ male announcer

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time to taper? a draw souven r down is expected today. golded slated to a six-week low. further stimulus measures look less likely. gilt yields rising while treasury yields have been coming

lower. we'll take a short break. coming up next us airways and american airlines are set to march in washington. but will regular ta lower turbulence keep the deal grounded?

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hundreds of american airlines and us airways are in washington today. a rally comes as america's board is set today to discuss the deal. ahead of that u.s. heirways stock if frankfurt is down 1.5%. this is a day, after jpmorgan upgraded us airways saying it sees a 50/50 chance the merger with american will get done. they cited improving continues for the sector, including a pair back in oil prices. joining us for more is arthur capatino anc. nice to see you here in london arthur. it's early in the morning in boston. jpmorgan is calling it 50/50 as the deal gets done. you're more optimistic are you, from that? >> yeah. after the initial shocks the complaints from the department of justice wore off.

i started researching it more and i'm more optimistic on this. they start off in their complaints with a lot of statistical data on market shares and things like that. say you don't get into that case until paragraph 10 which talks about concentration at washington -- at reagan airport. so when you read this it's just they don't want a merger to happen because they think fares are too high and operating margins are too high by default. but you look at this business it's a network business like a cable business and it's margins. it's about 16% at delta or something like that where comcast could do maybe 30 plus percent. this legacy thinking where they didn't want the merger to happen because they didn't want to lose another airline, a legacy carrier, if you will it's a merger. >> wa about the low cost guide,

the jet blues and -- they're providing it aren't they? >> i think everybody under 50 years does not know what a legacy is or doesn't really care. in their analysis they ignore southwest. they exclude jet blue spirit airlines frontier. >> do people not buy their tickets and are they not part of the airline market? >> that is how these guys are looking at it. but when you're at terminal c, all these guys are at jet blue and they don't care. if you pick up terminal c, you can't get out of there because the ju jet blue people are waiting in line and crowding you out. people don't care if it's legacy or nonlegacy and that's the issue. >> but these guys do care

right? >> they do. and at the end of the day, you have to take this to trial to complete it. >> how long will it take to get this sorted do you think? >> well they're going to trial november 25th. the government originally wanted marceau you'd have american in limbo for this period. i think the trial would be about 10 to 14 days and the judge may rule about maybe seven days after. >> you're also looking at high yield trade and fed tapering as well. high yield looks overvalued. what happened now? >> i think high yield has been overvalued and i think it stays overvalued for an extended period of time. if you look historically periods of high yield where we thought it's overvalued it can stay overvalued for a year or two years. there's a lot of month money flown into high yield. i think it will continue to flow in. >> even with tapering? >> even with tapering yeah. i think it will flow in. eventually, though you get

periods where it starts flowing out as you did in may or june and it puts pressure on the market. i think the high yield market as of last week was down 1% and equities are doing what they're doing. i think eventually this will change and when it does it will be very painful. >> it's easy to get in and harder to get out. >> particularly post '08. all the investment banks, they can't make markets as they did before, right? so now if you go to jpmorgan and bank of america and you're an etf and high yield and you want to sell 10 million or 50 million, those prices to get that liquidity is going to be very painful. we will get there and history tells us we will get there. >> have you got an idea of when we might get there or what the trigger might be? >> trilgggers are hard. but more important than the triggers is to avoid them right? because to pick the exact days you can't do it. you're better off not -- >> makes you -- >> i get it. >> arthur, always good to see

you. we'll take a short break. still to come will the u.s. republican party shut down government in an attempt to cut off obama care funding? the conflict is reaching boiling points. as we go into the break, reminder where futures are right now, we are implied higher at the open today. implied higher on the s&p by 3 points, dow jones 46 and nasdaq higher by 10 points. begin to describe it. my cashflow can literally change with the weather. anything that gives me some breathing room makes a big difference. the plum card from american express gives your business flexibility. get 1.5% discount for paying early or up to 60 days to pay without interest or both each month. i'm nelson gutierrez and i'm a member of the smarter money. this is what membership is. this is what membership does.

this is "worldwide exchange." the fed has announced it will start tapering its bond buying program today. gold is just above a six week low. sterling is up at a eight-month high against the dollars. >> announcer: you're watching "worldwide exchange," bringing you business news from around the globe. all right. if you've just joined us stateside, just tuned into cnbc a very warm welcome to you this morning. we had a rally yesterday on u.s. stocks. right now, futures indicating we're going to start higher again today ahead of whatever the fed announces.

we'll see what happens during the course of the day. right you to the s&p 500 is currently around 3.5 points above fair value. the nasdaq some 10 points above fair value and the dow at the moment is some what 50 odd points above fair value, as you can see. the ftse cnbc global 300 is currently up 11 points. up near the session highs. this morning, it is higher. not by a huge amount but nevertheless up 0.2%. up nearly 0.5% for the xetra dax and the cac 40. similar performance from the ftse mib, as well. investors don't believe the bank of england's forecast at rates to 2016, but the bank not choose to go react to that with any vote for qe which has sent sterling higher and gilt yields higher, as well. so ahead of the fed vote what

are investors to do? and what are they to do depending on what happens? here is a recap of some of the thoughts we've had today on the channel. >> we like aussie higher for a change actually to try the slowdown story, regardless of the numbers today. it's fallen by the way side a little bit. it's clearly very liant on the forward guidance message that comes out this afternoon. but i think that that's one that potentially could benefit by quite a lot. >> actually our biggest overweight is mexico. i think the interest rate cuts from the bank of mexico two weeks ago, i think, would reinforce the view that the bonds are quite cheap. you're talking about 6% and you're talking about a percentage of the country that is going -- and the one last smaller bet close to my hard but with the smaller ems, we are bullish on columbia these days.

>> we began with year polish debt, sold down to zero, cut down the currency exposure on the mexico side, as rates backed up opened up more current exposure and built in a new position. >> all right. some of the ideas we've had. that all ahead of the fed wrapping up its two-day meeting today with an anounsment at 2:00 p.m. eastern. it's going to be closer to watch right around the world along with updated economic projections. it will be followed by ben bernanke's news conference at 2:30 p.m. the fed is widely expected to start tapering its massive bond buying program. most economists expect the bank the reduce its monthly purchases by between $10 billion to $15 billion with a bigger reduction in tresh requires than mortgage securities.

joining us for the last part of the show today, david blitzen. >> good morning. >> good morning. i am very pleased that we have gotten through today. >> if they do what's expected which is taper maybe $10 billion, $15 billion, everybody has a slight relief they know where they are. >> and racked in some dovish comments, right? >> exactly. the chances they have to be much more aggressive 25 30 years beyond will be terrible. the chance that they put this off for another month, everybody agreed is bullish. so it looks like up a little or up a little. >> do you think so? because if they delay it then everybody would think, well the economy is not quite as good as we saw. >> well, i think there's already certain questions out there about the unemployment rate.

it's 7.3% really say what it says or is the hidden number whatever you want to call it higher and that kind of thing? >> the unemployment rate is with the participation rate. >> it's a participation rate, questions about where are the jobs they're mostly well paying. >> is it structural in the jobs market? >> all those kind of arguments. the truth is we'll find out in six months to a year. so we might as well take the number and leave it at that. and so on but larry summers having taken himself out of the picture over the weekend, janet yellen is seen as dovish very much in line with bernanke. i'm not sure we know that much about her. i think if inflation reared its head she would turn out not to be dovish at all. >> if she did become the fed head, she has more experience than previous -- i mean there is a record as long as her arm.

>> been there, done that and i think that's one of the reasons why she is a very good choice. she knows more about the fed than anybody except bernanke, and we could argue about that. >> your base case whatever happens today, theoretically should be okay for those who want to keep -- who want to stay long on the market. >> i think so. the only love in there is that buy on the rumor, sell on the news. so there may be profit taking later in the week. >> yeah. there was a case wasn't there, of selling on the rumor and buy on the news. there was an attempt to bring some of that forward. >> yes. it's like when a ceo falls under pressure and all of a sudden the stock jumps in. >> we have full cover ageage fed

decision followed by ben bernanke answers conference at 2:30 p.m. mike tweeted us to say take the national credit card away from the benny hill show and once people start sobering up in a hurry. linda ramadan got in touch to say economic management to monetary policy where banks buy their own bonds. are you fed up with the whole tapering? >> that's why i want it out of the way. i don't want -- it's consumed us for months now. >> yeah. i think it has. i'm not quite sure who created the term or whatever but it wouldn't have been my favorite. but nobody wanted to say move the title policy or something like that. >> no that wasn't the -- maybe the fed. i can't -- maybe we should find out who first coined the phrase. maybe it did come from the feds

themselves. look, away from the feds house republican leaders are in focus today. they may be shifting course to use a vote this week on a stopgap government funding bill to try to block president obama's health care law. eight say the strategy would link a defund provision care to the funding bill and send it to the senate. the democrat-controlled senate would likely strip out the health care provision and send it back to the house, raising the possibility of a showdown. but that could lead to a government shutdown next month. no fund decision will be made until leaders present the idea to members at a closed door meeting today. they thought this was far more important than the fed's tapering discussion. >> well, yes. this would bring us to the edge of the cliff. it's not over and so on. i think in the background, obama feels very weak. he sort of almost got taken for a ride on the whole syria issue. and he's changed his position, you know, six times in two days or something like that.

he clearly wants to hang tough and push the position on this. right now, the republicans will get more than the democrats. everybody sees the republicans in the house have a huge given. i would describe it as a three-way argument between the democrats, the republicans and the republicans. the last two guys have to get their act together. defunding the health care bill this is sort of dirty pool. this is the law they enacted. they want to unenact it two years later. but let's be up front. instead of play these games. >> yeah. the politicians are -- >> it's all politics there's no question about that. i think there's a good chance we get a government shutdown for a couple of days. >> then we'll see who blinks.

>> we'll see who blinks and -- or who is the masterful mrirvean. clinton did it 15 20 years ago and came out smiling at the end. >> all right. we'll see. stick around. more to come from you. mean wile, wall greens is set to become one of the biggest u.s. companies to make major changes to extend health care. they're shifting 160,000 eligible workers and family members from company provided health care to health care exchanges next year. the company cites rising health care costs and expenses related to comply obama care which is supposed to launch in october. wall greens stock in frankfurt, pretty flat. still to come, as well, fedex is going to report earning eggs in just over two hours. what will the shipping giant say about the state of the economy? we'll have a preview.

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and a recap of the headlines today, it's time to taper. a long expected drawdown of the federal reserve's bond buying program is expected. ahead of that equities in europe have opened up while gold face aes six-week low. and minutes from the bank ooh england boosts sterling even further as stimulus measures

look less likely. and while the fed may be dominating discussion today, investors will want to take a look at fed equities for another temperature check of the global economy. the package delivery giant is reporting earnings. seema moody has a look from the states. >> fedex reports fiscal first quarter results at about 7:30 a.m. eastern. the company is forecast to earn $1.50 a share on $11 billion in rev few. both numbers up slightly from the year ago period. fedex is considered an economic bellwether because so many people and companies use it for their shipping needs. over the past several quarters fedex is high and express delivery service has struggled as customer ves decided to borrow the company's old motto. they don't, quote, absolutely positively have to get it there overnight. switch to go cheaper and slower shipping options. fedex is in the middle of a

campaign to cut annual costs by $1.7 billion by 2016. that includes employee buyout toes trim the workforce by at least 10% by next may. last week analysts elaine becker cut her first quarter forecasts particularly in the asia pacific region. but becker says shipping companies could benefit from reductions in capacity and she expects fedex to see a pick up in demand in the second half of its fiscal year which ends next may. so far this year fed ix shares are up more than 20%. back to you. >> seema, thanks for that. and keep your eyes on fedex, as seema says. it will be worth looking at besides what else is going on today. it is zee roar hour for fed tapering. how have markets positioned themselves? we'll take a closer look and see what it might mean to the currency markets when we come back.

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if you've just joined us stateside, this is where we stand on european equities. ftse 100 up 0.1%. u.s. futures are up again yesterday. the s&p up 7 are pointing higher again. right now, the dow is called up some what 48 points or so. the nasdaq is currently trending 1 1 points above fair value and the s&p 500 is around 4 points above fair value. this of course is the day of reckoning has finally arrived, at least we hope it has, september finally giving away to cold hard facts a little later today. so are we pricing in a tapering move from the fed? what if weaker data turns taper

light into taper zero? we'll take a closer look at some of the estimates. to help us do that our taper expert here in europe carrie. >> thank you very much for that ross. we have been looking at some of these numbers and crushing them out. let's take a look at what the participants in cnbc's federal reserve survey expect. $14.5 billion is to be tape off the table according to our experts, up slightly from the previous day which averaged just over $12 billion. the poll of top economists all say reduction which is expecteded to be concentrated in treasuries has been largely priced in by the markets. jpmorgan analysts had the most hawkish expectations. the central bank could taper notices by as much as $20 billion. but they expect the fed to draw back by $15 billion. that's 10 from treasury purchases and five from mortgage-backed securities. and goldman sachs is staying in the middle of the road predicting 10 to billion$10 to billion burls

bill worth of tapering. what exactly have the fomc members been saying about tapering? ben bernanke began talking of winding back purchases back on may 22nd in that crucial testimony on capitol hill. in terms of some of the others well the board governor game mere stein was the first to give that clear indication on a september taper day saying markets needed to take into account all of the data since qe began, not just on payroll. william dudley said he thought a decision would take three to four months, which puts us bang into this time frame of september. and just a few weeks ago, you may cast your mind back to what charles evans said. ekdz he could be persuaded there has been enough improvement in the economy to reduce the flow of bond purchases. but james bullard, who has been a bit of a wild card on the fed board, he told cnbc at jackson hole that he didn't think there

was a rush to taper and that policymakers should take their time. that was consistent with what he told us hoping to see more trenched inflation before tapering began. one member sure to be voting for tapering is the kansas city tt esther george. she's called asset purchases to be reduced by around $7 billion a month. and the head of the boston fed, eric rosengren, he's in favor of tapering, but only in small amounts. the woman in the headlines at the moment, janet yellen she's been keeping a very low profile since she became one of the front runners to take over the chair from ben bernanke. ross, there's been a lot of markets up following the individual comments from the fomc members. but it all comes down to today. >> yeah. absolutely. thanks for that. the chat out of the fed minutes has been fairly quiet. cnbc will have full coverage of

the race decision starting at 20:00 cet followed by the press conference at 2:30 p.m. eastern time today. so joining us with their thoughts steven england, global head of 10 fx strategy. still with me here in the studio, david blitzer. steven, let's kim kick off with you, first of all. let's say we get the consensus. 10 to 15 billion wrapped in dovish comment. what do dollar players do with that? >> well, i think wa really matters is whether they change the type table for tapering. obviously, if they start with 10 or 15 it's worth doing. if they give an indication that they're considering extending the middle of the year that would be dovish. i think if they stick to the timetable of 10 to 15 there's a lot of volatility in the air,

but at the end of the day, i think the market will pay attention to what the fed does rather than what they say they're going to do two years out. >> well pick up on that in just a second. i want to know what is the positioning like going into this fed meeting today? >> well i think positioning particularly in rates markets, dictating the markets is very low. weir coming from a lot of volatility. if you take a look at day-to-day volatility in the treasury markets, it's gone up significant ly significantly. and the problem the fed has today, there's one, maybe two dimensions you have to worry about. now you have to worry about the time fable, you have to were

about the amounts, you have to worry about a change in the unemployment thresh hole the change in the forecast. i think that's making them very wary of going into positions when the order of the headlines may determine the -- you know the first 10 20 seconds of fluctuations in the market. >> yeah. complex, david, the way stephen puts it. >> yeah complex. if they do it today, as everyone expects, we're on a whole new road. we've been on a road for a few years of rock bottom interest rates. the question is where it hits. emerging markets is one spot where i think it will hit where it's going to have a substantial impact much more than it will have an impact in the u.s. economy, much more of an impact than it will have in most of the european economies. so that may be one of the first places to watch. >> let's pick that up. stephen, em has been hit pretty

hard without anything happening, so what's the outlook for em and those most exposed with concerns about deficits? >> well i think if they turn out to be dovish, the worse your numbers, the better your currency act. what we've seen since may is vulnerable em currencies selling off on the back of the view that liquidity is tightening. if they're dovish and the sense is that they're not going to tighten, all of the currencies have been losers and one of the metrics we've proposed is summing up their interest rate at the measure of risk premium, the current account deficit is a measure of their funding needs. that's a pretty good metric saying which ones will respond most positively on a dovish fed and which will respond most negatively if they spry and they taper more and the market begins to think that they're on the road to pulling back liquidity. >> yeah.

we'll see what happens. stephen, always good to see you this morning. plenty to keep you focused ahead of global fx strategy at citi. david, thanks for joining us today. on the 500 index committee at dow jones s&p 500 committee. earlier, we asked you to send us your cure for fedigue. david tweeted and said take the credit card away from the benny hill show and watch people start sobering up in a hurry. keep it here on cnbc. coming up next the conversation continues with "squawk box" as they countdown to the open. whatever happens, we hope you have a profitable day. good-bye.

good morning. will the central bavng finally say it's taper time? and how much is in the and beyond that speculation, what do the markets have priced in? plus a budget battle looming in washington. house gop leaders are said to be moving on a tough stand on a funding bill and how it relates to obama care. and in corporate news apple launches its newest operating system today while blackberry unveils its latest devices. it's wednesday, september 18th, 2013, and "squawk box" begins right now. good morning, everybody. welcome to "squawk box" here on cnbc. i'm becky quick along with joe kernen and andrew ross sorkin who is reporting live from chicago this morning. andrew is getting ready for an

exclusive interview with goldman sax chairman and ceo lloyd blank fine coming up at 8:30 eastern time. we'll have more from andrew on that conversation in a minute. first up the fed is set to announce its policy decision at 2:00 eastern this afternoon. chairman ben bernanke is going to hold a news conference 30 minutes later. the central bank is expected to announce it's winding down its $85 billion asset purchase program. the question is by how much? also on the economic agenda today, we have august housing starts and building permits. starts are expected to rise by 2%. permits are expected to fall