>> you're watching "worldwide exchange," bringing you business news from around the globe. all right. hello. welcome. we've got two hours of the good stuff coming up. we're here at work today. that's the good news. >> i'm still here today and tomorrow. i love working with you, ross. but yesterday i got to work with louisa and we talked hockey the whole time. how do you beat that? >> you don't. working with louisa is an unbeatable experience. >> ice hockey? >> no, field hockey i can do. field hockey? >> i don't know. the canadians, we don't consider

that -- >> you should. >> we have lots of fun stuff to talk about today. lots of politics still. it is day two of the u.s. government shutdown and there appears to be no quick resolution in site. how republicans tried to get three bills passed tuesday to fund certain programs, national parks and operations for the district of columbia. but the measures, which needed a two-thirds majority vote all failed. democrats and president obama opposed the piece mail strategy. aids say the president may introduce different options today and only need a simple majority to pass, but they'll likely die in the senate. treasury secretary jack lew has started to using tools available to him to avoid hitting the debt ceiling. they will have less than $30 billion to pay its bills.

the president is expected to meet with members of the financial services forum at 11:30 eastern, and they'll discuss xhm economic issues, including raising the debt ceiling without delay. and our very own john harwood will be having an exclusive interview with president obama today on closing bell at 4:00 p.m. eastern. that's an exclusive john harwood with the president of the united states. 4:00 p.m. today eastern, 22:00 cet. >> that is a very big interview. >> that is why you watch cnbc. >> when you have all the infor you need. >> so simple question today. ahead of that interview, we want to ask you what would you ask the president of the shutdown, debt ceiling, you name it. you can join the conversation here. the possibilities are endless. you can ask the president anything, more realistically, what would he be prepared to answer?

that's a good one, too. >> it is. >> e-mail us your questions, worldwide@cnbc.com, twitter, @cnbcwex. @rosswestgate, @deecnbc. follow the conversation, look up #obama on cnbc. talking about the partial government shutdown, let's check in on markets in asia, how they reacted. li sixuan is standing by in singapore. there's still a little bit of risk taking, at least. >> you're right. in fact, not factoring in japan, asia traded higher. as the political standoff in the u.s. has investors banking on a tapering free october from the fed. and this is sending the emerging markets higher b, like indonesia and the philippines, gaining 1%

or almost 3% at the moment. but japan is lagging behind, over 2%. also the sales tax hike announcement overnight. now for a look at automakers, toyota may cut its 2014 domestic production as sales are expected to fall on the tax hike. meanwhile, all three automakers saw modest declines in september u.s. sales. as shares of toyota, nissan and hon darp all honda were all in reverse mode today. this on reports with watches over the next 12 to 18 months. meanwhile, prices continue to track higher, lending support to some hong kong developers with holdings gaining almost 4%.

back to you. >> 8-2 decliners currently outpacing advancers on the dow jones stocks 600. we're on the session low. down around about a percent. tenco not doing so well there. the ftse 100, xetra dax and cac 40 all down less than 1%. the ftse mib, there seems to be disunion city in the pdl party. first of all, tesco is very much in focus today. world's super market chain is posting flat sales down in august.

the stock off 4% today. the telephone ringing quicker at smile arrival. the company reported a 2% rise in sales as stores opened more than a year. so it's still down 2.4%. tesco announcing a big deal in china, as well. gives them 20% of the chinese market, albeit they'll lose the tesco brand. euro/dollar, 1.3530. dollar/yen at the moment, 97.43. just off the one-month low and sterling still up at least to nine-month highs near 163. we have construction pmi coming out fairly shortly. and we show you where we stand with bond yields, remember, we hit 2.9% for ten-year treasury

yields. currently at 6.2%. italian yields over here, 4.39%. we're all the way up to 4.79% two trading days ago. >> the prime minister says the country runs a fatal risk if it doesn't back the current government. letta, who says politicians must seize the moment is set to address the lower house this afternoon. meanwhile, sylvia berlusconi is facing his own crisis after the pdl secretary called on the party to back the government. >> meanwhile, we have the latest start for mr. berlusconi. he says he will listen and then decide whether to back letta or not. joining us in rome, claudia. this is interesting.

he said although we're resigning, we think we should support the lesser government in a confidence report. is berlusconi's influence over the pdl splintering? >> clearly, it is at this point. overnight, several members of the pdl have moved over to the letta side of the wall. and it looksic as though they are going to be voting the confidence for letta who, in fact, is speaking right now to senate. in his address, he started out as you were saying talking about seizing the moment. this is a moment in which a decision to support this government could be vital, could be crucial for the italian economy. he made mention of sylvia berlusconi in his speech that is ongoing. but he made mention of berlusconi in his speech saying in a democracy, a sentence must

be served. almost implying and saying pretty much clearly that yes, you are allowed to a defense, and it is not fair to be either against nor to get special treatment, either. so he is speaking, again, about stability that has been the big word that he has been using in the last weeks regarding the future of italy and he has apparently seized the moment quite well in the sense that a break-up of this pdl is a big step. the number is crucial.

they need about 24 votes in order to get a majority and to move forward with this government. so just in a few hours time we will know whether he's been able to do that. >> the ecb vice president who is quoted ahead of the centralback's meeting today in paris, draghi is expected to hold rates at 0.5%. he may give further clues as to the possibility or timing of another ltro to support the currency block struggling lenders. annette is live in paris on germany ahead of the meeting. annette, over to you. >> thank you very much. of course, the lower than expected inflation as is the strength of the euro. of course, the fed's tapering is off the agenda for now. yields are coming down. but the euro is extremely strong

and the implications of that i'm going to discuss now with my guest. chief european economist of standard and poors. thank you very much for joining us. so my first question would be the strong euro, is that a major headache to the european recovery and also to mario draghi? >> well, obviously, what's happened between the previous meetings and this meeting is the fact that the u.s. have decided to delay, to post opponent the quantitative easing in america. maybe it's impact has been felt on the euro exchange rate. we are now at 1.35, 1.36 to the euro. whether the consensus sees the equilibrium rate up around 1.20.

on the other side, the exchange rate does not have an official exchange rate target. this is not part of their fundamental charter. i'm sure during the press conference later today, we'll see many questions about the strength of the euro. and i'm very keen to listen to mr. draghi's answers because, obviously, you know, he should be concerned that he can't say too much about the euro. this is not part of the charter. >> well, the official mandate of the ecb, of course, is price stability, i.e., inflation. inflation, the eurozone is far below the target. do you think there will be another rate cut? >> clearly, it's the inflation rate is well below the ecb

target, inflation is not an issue in the eurozone at the moment. the issue is really the recovery, the strength of the recovery, and the monetary union and how it works. many times, mr. draghi has said that it's a fragmented union that we have at the moment. the transmission of monetary policies to the real economy is not functional. it's not optimal. which is why i don't think we're going to have an interest rate cut today. for the simple reason, which is i think if we had such a cut, it would not necessarily transmit and cut down to the -- which is still seeing interest rates higher than in the northern part of the monetary union. >> one of the reasons that whole transmission mechanism isn't working on the banks, this brings me to a question on another ltro, mr. draghi was already hinting at.

do you think we'll hear more about another lto today? >> i wouldn't be surprised to have more clarification about the key indicators, the key variables that they are following to decide when to trigger this new ltro. excessive liquidity has obviously come down. we are now at about 200 ml billion euros, which is viewed as really getting to the minimum acceptable. so i think an ltro is probably in the pipe. obviously, the price of the euro is likely to come down. but on the other side, i think this is probability a bit more

immature. an ltro around this number or at the beginning of 2014 seems more likely to me, but it's hard to tell. >> what about the voting power -- not the voting power, but the attitude of the bundes bank. what do you reckon? are they further against it and do they have enough power and enough other countryies behind them? >> well, the bundes bank has been playing the good guy/bad guy thing with the ecb. many times, the bundes bank has come to remind the ecb, so to say, of its fundamental charter, its open investigations, etcetera. but at the same time, there is an agreement between the european central bank and the german central bank that germany's problems are very linked to the eurozone problems. of course, the german economy is much stronger, doing much better than many countries -- other countries in the eurozone.

but they are part of the same union. >> thank you very much for your time. ross, that is it for me for the moment. more from paris, of course, during the press conference starting at 2:30. and as well, soon here. with that, back to you. >> thanks very much indeed for that, annette. plenty more to come from paris. it's a wednesday, as well. normally on a thursday. we just heard from the prime minister who said the future of government must be kept separate from berlusconi's legal problems and the government can only continue if there's a firm accord over the priorities. it's only possible with stable government as long-term prospects. euro/dollar is just up at the session high. we're still below the eight-month high that we had yesterday, 1.3570.

>> mario draghi's press conference from 1300 cet. and, ross, maybe later in the day, well be speaking to jean-claude trichet. a russian advocacy group will be in moscow for local reaction in an exclusive interview. >> obama got one, right? it's only fair that putin gets one. you know what else we're going to talk about? a nation on vacation. the ministry in china looks at who is on holiday.

we'll look at what happens when the nation's biggest nation goes shopping. never go shopping in china on a holiday. >> get out of the country before. >> exactly. not when erchblts is traveling the. it is day two of the u.s. government shutdown. who will break? we'll obviously be talking about that. >> and tesco, as well, underperforming rival sainsbury in the latest battle between the uk super market giant. we compare and contrast right after the break. you really love, what would you do?" ♪ [ 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? ♪

because what you dont know can to dhurt you.urance, what if you didn't know that it's smart to replace washing-machine hoses every five years? what if you didn't know that you might need extra coverage for more expensive items? and what if you didn't know that teen drivers are four times more likely to get into an accident? 'sup the more you know, the better you can plan for what's ahead. talk to farmers and get smarter about your insurance. ♪ we are farmers bum - pa - dum, bum - bum - bum -bum ♪

welcome back to "worldwide exchange." sill vooe via berlusconi has called for a united states of europe. he has urged his senators to seize the moment to avoid any risks and says italy must be strong and credible in 2014 eu presidency. fep, this is just ahead of a confidence vote later today. we will see what happens later

today, but this could be a huge knock against sylvia berlusconi's party where some of his ministers have resigned, but some ministers of his party look set to side with the coalition. >> it lit might be one of the few places where actually the local people maybe wouldn't mind a fetored europe. i.e., getting rid of the positions in italy and having a higher level of government somewhere else. the politics are clearly dysfunctional. so they might be the one country that's able to -- you know, a bunch of knob italians running the country. could it be worse? i don't know. >> they could get some americans. maybe that would be worse. >> yeah, who knows. that would be worse. yeah, there's a good vote. what would you rather have, american politicians or italian politicians. >> we did this yesterday with louisa. there were funny comments, one said who is a deeper shade of orange, john boehner or sylvia berlusconi. maybe boehner once he has some vacation time.

>> he has off, by the way, for the confidence vote. he's clearly feeling good about himself, good about his chances of winning, i should say. so the confidence vote is going to happen. that will happen later today. meanwhile, turn our attention to retailers. a battle amongst britain's growth as it's heating up. jay is out. sales of sainsbury have reported flat sales in the uk and they've fallen first half profit. it comes as the joint venture with china's resource enterprise to the tune of $44 million pounds. china res enterprise will hold a 20% stake. i think it gives them around 20% of the chinese market. joining us with his views, shawna. nice to see you. actually, both tesco and

sainsbury stock are down today. so it's clear we didn't like either that much. how much pressure is tesco under? >> i think clearly we look at the uk, it's all very well to talk about tesco and sainsbursa. sainsbury is doing the best of the lot out of the uk. largely because it has slightly higher in demographic. it has more of the southeast which is generally better than the uk. the bigger issue, if you look at the bigger picture, the big four are underperforming in the industry hugely. you've got the discounters, they told us sales were up 41%. running a near double digit like for like. compare this number to that 10% for retro. basically at the high end and at the discount end, these companies are losing significant ground. >> we look at the numbers early. they had about 35 billion pretax profit with just over a billion or something. so they're not making a huge amount on big turnover. >> well, that's the industry,

anyway. generally it's been high turns instead of low margin business. >> is it getting more squeeze? >> absolutely. and i think tesco has the margin down. and it's been happening for some time. the same problems that you're seeing in the uk are spreading into the overseas business. europe is a real shocker in these results. what's happening, again, its convenient stores, it's discounters are eatinger markets for lunch. all these companies are largely exposed to that format. in this is afforded a 70% fall in markets. even though the uk is stabilizing a little bit for them, that was more than offset by the same problems spreading to europe and frankly in asia. >> tesco is retreating from its international market, right? and i want to ask you specifically about this china resource. it's essentially giving up brand presence in china, but gaping a larger share of the market.

do you think tesco could have kept at it? instead, sort of just paring up and having its name sort of replaced. what do you think about this deal? >> i think this is a much more paragraph nationalic tesco. all about we've got to plant a flag everywhere and effectively we are tesco and the market will come to us eventually. if you don't have the right partners, if you don't have the resources, it can take a very long time. there's no real end to this game. i think it is a fairly wide move, but it does flag a slightly broader retreat as far as tesco's focus in the overseas markets. they are going to stick to markets that they will have a chance of winning in. i think china was too far down that road. they were too early.

>> tenco tried to get into the u.s. didn't disease. >> they were trying to do some interesting things like bringing ready meals to a consumer that never had them, things like that. it goes back to the same issue. when you're a small operator that starts to mushroom up somewhere in such a big country, very established players, it's very hard to get on the consumer radar screen. nobody else is going to come such a way to find that. that's a huge scale problem. also, it comes with a lot of prove nens. people have known the name for a long time, but it stands for that whole area of organics and healthy eating. it has a significant brand awareness. it's almost become movement where it's almost like a cost that you create behind something like whole foods which tesco has not been able to. and in at the of the difference performances from the countries, sainsbury is getting more business from its online

site. what is tenco doing on that level? >> tenco is actually -- sainsbury grew 15%, but they're coming from a slightly smaller base. tenco grew 13% in their online business. i think they're doing exactly what they should be doing online. i think the bigger issues for tenco are really in the stores. it's the fact that the stores are generally too big and they need to address some of those problems because people don't like massive stores any more. >> the countdown to christmas, right? >> aren't you excited? i haven't heard any christmas music. >> no. i just -- still not really over summer. thanks very much, good do you see. we'll take a short break. still to come on the program -- >> is the british boom built on solid foundations? we will get the latest check on the recovery with construction pmi figures straight after this.

and it's now day two of the u.s. government shutdown. and sylvia berlusconi is

facing a no confidence vote. the ecb is on the road in paris. but mario draghi and co are likely to be preoccupied by europe's fiscal instability. and there is the possibility of another round of ltros. and tesco signs a joint venture as the retailer looks to put its troubles in the u.s. and japan behind it and cash in on the growth potential in the far east. >> those are nice cabbages in those shots. the u.s. september cips construction pmi strong in september. the market cips construction managing index down to 58.9. it's still well above the 50 threshold. we couldn't keep having improving pmis frankly to the

uk. we've had the strongest pmis i think anywhere on the planet. construction grew last month to the sharpest right since november 2003. and construction i think the point is it's no longer the weakest link in the uk economy. one of the quotes that we've got on that. sterling just coming off because it was a slight tick down. european equities are lower, around about 0.8% for the ftse and the xetra dax. the cac 40 down 0.6%. the ftse mib is up 0.8%. mr. letta has called for a growing no confidence vote. >> pretty good on top of yesterday's gains, too. let's take a look at the bond space. you have the ten-year bund. if yield, slightly lower costs

to the board. ten-year treasuries, they've come back down. they were above the 2.7 level earlier, but now they're down at 2.6. the government, of course, in a partial shutdown as we approach october 17th when the government is expected to run out of money and hit the debt ceiling. the irony here is that investors want bonds to get into safety, but it's these very treasuries that are at stake. of course, let's point out the ten-year italian bond, 4.39. it was at 4.7% when the fears were really there that letta might actually lose. >> currency markets, the dollar is sort of down near eight-month lows on the index. euro/dollar is what 1.3531. i just about can't read that. i md must need to change my prescription. the dollar/swiss frank not doing

particularly well over the last few sessions. >> in the last few minutes, you spoke about cabbages and your prescription. >> that right? i like to add some flavor. >> right. so let's talk about italy. letta has now called a confidence vote in the senate. this is after sylvia berlusconi is facing his own crisis after ang lean know called on the party to back the fwoft. european economic and monetary affairs commissioner ollie rhen says spain may not need more support for its banking sector, but added the commission was preparing other arrangements just in case. speaking around the meeting in paris, he touched on the issue in paris. he added that the impact of what happens in italy does not

quote/unquote unthe country's boarders. >> and the ecb is expected to hold its rates it is worth reminding you that the meeting today is in paris and it's on a wednesday, clearly, which isn't normally the case. annette is there, as well. annette, do you prefer being in paris to standing outside the wind swept reaches of the ecb in frankfurt? >> well, actually, at that time of the year, it's not too bad in paris because it's a lot warmer than in frankfurt. and so my clear preference is paris. where i am right now. so this meeting today will have probably main street topics. you were mentioning the ltro. more details on the potential ltro with timing and its criteria. might be, of course, a topic during the press conference.

it's not really clear whether mario draghi wants to elaborate on that. there will be likely a lot of questions regarding italy. we will probably see more topics coming up for the ecb again and their crisis policy. another topic will be the euro strength. that is a big headache to policymakers, as well as to the ecb because, of course, it strangles the green shoes which we're seeing in terms of growth. and, as well, what's happening in the united states is not good or it's not a positive for the euro in terms of that is even going stronger. and the recovery that you're seeing here in the eurozone, if we can call it a recovery, it is very much expert oriented and, of course, a strong euro is very bad. so we might see some

intervention through the back door here from the ecb to get that currency lower. even though it's not their prime mandate. with that, back over to you. >> thanks for that, annette. >> full coverage of the ecb policy decision and mario draghi's press conference from 1300 cet. later, our colleagues will be speaking with the former ecb tt, jean-claude trichet. and president vladimir putin is being received as an honored guest after a russian advocatety group said yesterday that it was nominating the president for the nobel peace prize citing his proposal to put syria's stockpile of chemical weapons under international control. >> hi, jules. >> thanks very much, ross.

it's interesting, we've got this intervention for a nobel peace prize a two green peace activists in russia. now, what happened, we talked about the impact of the shale gas revolution in the u.s. and the impact to what happens in europe. remember, gas problem supplies around 25% right now of europe's gas leak. so too many questions. they need to find other sources of gas. but they also need to find other export partners. now, i talked to them about just what is going on with regard to supplying gas to china. listen in. >> china, we have twofold target.

this is actually agreed with our chinese colleagues in cnbc all the parameters of confidence besides the price. delays and it's related to market in china. and china substituted for the price mechanism, which will make our negotiation easier. we should not forget the first results in china is naturally optimistic than the united states. >> this isn't about regulations, it isn't about the chinese asking for a gas price that quite frankly you aren't willing

to pay, it's too low? >> no. it suggests that china agrees on consumption at the current local prices, they should find a source of subsidy dieding consumption and growth. obviously, the fight is over subsidies. they don't want to have one-side advantage. >> they ever they are managing to agree prices with other countries. why the sticking point with you? >> we have an idea at which price china's buying guests uzbekistan and now of price for energy.

and contracting in real markets like have done not long time ago with -- which is the fastest growing market. and cries more and more, gas in generation, which we don't see in the euro view. ooelths it's to find a compromise when republicans would like to have a compromise. >> but a compromise isn't coming on your side? >> t a compromise is not anybody to -- but to have aoncerned tha somewhere else could jump in there and turn around and say, you know, we don't need to do the deal with you guys? >> no, but we have a also and signal from our chinese

colleagues how much gild they will need for the next 25, 30 years. >> so you're happy to sit and wait? >> no. but, again, we will produce as much gas as is necessary. inde indeed, along the senses in investments. >> ross, i'm going to hand it back to you. i don't know if you get any sense of how loud is session is behind me that's going on over the speaker phones. but never mind, i'm going to have -- so quick, take it back from me. >> a bottle of vodka will help, i'm sure. thanks for that, jules. good luck with the session. meanwhile, we're keeping our

eyes on italy, of course. the ftse mib is up at a -- where are we? we're up at a fresh two-year high. at the moment, 18108. >> do you think this is sort of market happiness, the era of sylvia berlusconi might be over? >> we'll see what happens if berlusconi's grip on italian politics is weakening. >> the keeping is if we can get this through, we might get a stability and then we can't get fresh elections until we have that. the ftse mib is up 40% or something. >> and the gains keep coming. still to come on the show -- >> we'll be joined by guests who explain why the china in holiday has led to a 66% surge in

property search ises abroad.

welcome back. ross, this is goeltden week in china. i can't say i'm disappointed to be here. the ministry of travel estimates more than a million people will be on planes, trains and automobiles this week. >> not many. >> it's not as many as during chinese lunar knew year. but the largest migration of people in history, something like that. anyway, many will be headed off the mainland to join spas and shopping trips, even countries as far as right here in the uk and the u.s. are expecting pick ups in sales of everything from luxury goods to some is big ticket items like properties by chinese traveling abroad. andrew taylor is the ceo of tui. andrew taylor, you have seen a pick up in the number of on searches. does that actually translate into purchases? >> there is a direct correlation. we have yet to fully figure it

out. our consumers are very private in nature. they like to keep their personal finances and their investments away from anyone. anyone that is outside their family unit. but certainly, we are seeing a huge increase in the last two weeks of september leading up to golden week, which is now. and that's a 66% increase in searches, mainly through the uk, u.s., australia and interesting countries such as greece, portugal, spain, malaysia and singapore. in each of those markets, we're seeing a lead generation of three to six months between inquiry and purchase. so it is an interesting market transition. >> andrew, i wonder, you have here 70% of chinese buyers use cash to pay for their homes in the u.s. and the capital restriction necessary china are very close. how do they get that cash out? >> in many cases, i don't really want to know and it's totally up

to them. many of them have very sophisticated businesses already, many of which are happening outside china. and others are investing from an official level from their countries through china and other countries. basically, it's all about -- not necessarily how they get their cash. in many cases, we have a consumer that will inquire about the consumer property. showing five to ten properties. they might end up buying each one of those from five single inquiries. the fact that they're buying cash makes it more texty for newspapers. >> andrew, what's the afternoon? is there an average purchase price? >> yeah, no. it's a really good question. sort of like you're asking the question, is there any such thing pass typical chinese

buyer. and in the u.s., certainly the average is around about $461,000 u.s. which is slightly above the normal u.s. standards. in australia, it's anywhere between 800,000 to 1.6 million australian dollars, depend on which city you're in. it does depend on the market. it does sdpent where they're investing. and they said they thought they had 250 to 250,000 euro to spend. they wanted to purchase in europe. they didn't care where as long as it was apart. it's really what the chinese consumer is about. >> it sounds like a lot of them are buying for purely speculative reasons.

do you think there will be such an impact in maces sending prices up? >> tease a brilliant question. to answer you directly, yes. in some markets, we're already seeing that. interestingly enough, we're starting to see a more practical and competitive market emerging in southeast asia. and it's in europe, i should say. those are now targeting international property investors and offering incentive programs which allow foreign investment and other things such as secure housing, secure health and maybe access to european unions.

so there is certainly a greater question and greater emerging trend to be seen globally as to which countries are more proactive, which ones are more agnostic and some which want to disway international property investors. >> andrew, many thanks for being with us today. there you have it, if you're worried about a property bubble here, could be getting bigger as the chinese are able to come in. >> it's a little hong kong, right? >> no, long dong. i think you just coined something. you should trademark that quickly. >> thank you, andrew. meanwhile, as china restructures the economy, we're looking at how the younger generation are geared for just that. >> gone are the days when young chinese would hand over their first paycheck to their parents.

>> april nation. i think it's very important. if you're not gaining any -- acquiring any new information, you just not feel you are alive. >> she wants to connect to the world, a luxury her parents didn't have when they were her age. their china was isolated. today, china's 20 somethings have a chance to explore. she wants to travel and is work as a war photographer. >> why not? >> because i have so many things to do before 30. >> shong shau wei feels same way. >> translator: i always had this dream of traveling across the whole country. i really wanted to broaden my horizon. >> song can only afford to live on the city outskifters in a kol

know of young dreamers, dubbed the ant tribe. these peel people are seen as industrius as ants while living in cramped quarters. she has family in beijing, yet she prefers to tough it out here to prove she's independent. a common choice today. >> i have a strong prnlt. i don't want others to see me struggle in what i do. >> not every 20 something's idea of the china noo dream is about their own personal development. young chinese today will inherent the problems of decades of unbridled economic growth. suichi graduated and took a job as an environmentalist. >> in the last decade, maybe three decades, we paid too much attention to economic and we put that attention to -- so now we have to pay attention. because they have to be balanced

right. >> he says he sometimes runs into conflict with the government, pressure he believes that discurbages more young chinese from taking up a greater cause. >> people, if they have the chances, they will take part. but the reason is that we have few chances and to do something, very good. >> today's 20 somethings will one day lead that society. the question is, will all these young people pursuing their own dreams make for a better china? eunice yoon. coming up, our next guest tells us how the u.s. showdown could damage the economy. >> john harwood will have an exclusive interview with president obama today. catch that one.

this is "worldwide exchange." we're on day two of the u.s. government shutdown. and berlusconi is looking at as many as 40 of his supporters will defy his stance. mario draghi is likely to be preoccupied by political instabilities. tesco signs a growing joint

venture as it looks to put its troubles in the u.s. and japan behind it and cash in on the growth potential in the far east. >> all right. if you've just joined us stateside, a very good morning. welcome to "worldwide exchange." it is day two of the u.s. government shutdown. there appears to be no quick resolution in sight. house republicans try to get three bills passed tuesday to fund certain government programs. national parks and operations for the district of columbia. but the measure, which needed a two of had 30s majority vote all failed. democrats and president obama opposed this piecemeal strategy. republicans may reintroduce the bill today under different rules that may only need a simple majority to pass. but they're likely to dye die again in the senate. meanwhile, treasury secretary jack lew says he's begun using the remaining extraordinary measures at his disposal to help the u.s. avoid hitting the debt

ceiling. lew reiterated the government will exhaust its borrowing limits by october the 17th and has less than $30 billion to pay its bills. kevin adams is head of institutional fixed income at hebderson global investors. good morning to you. >> good morning. >> nice to see you. we saw treasury yields hit, what, 2.59%. they've been up yesterday. the ism manufacturing is no doubt helping. how long does this have to go on for before we take more of a fright? >> you've got this interplay between the situation we have now and the debt ceiling, which is probably going to expire on the 17th of october. so as we draw closer and closer to the debt ceiling, the really big is, that's when i think the australian market could start getting concerned about it with possible potential default owes u.s. treasury. >> so this is sort of -- so now we're okay because we think now that they're going to put them

together? >> now we feel as though it's a game of chicken at the moment. and certainly the way risk@assets and credit are performing suggests that markets are reasonably happy that there will be a resolution in the next few days. but the closer we get to that debt ceiling deadline, that's -- it will get harder. >> and this deserves comfort from all that's going on. you know, we've got more -- we've got the figures from the fed and they're likely to stay open. is that sort of cushioning? >> yes, there is that. we've seen this rowing back with the fed over the idea of tapering. that was bizarre, in our view, a bizarre kind of move back we saw at the end of august into september. but, you know, that's been in the background at some stage. >> maybe it's the writing. >> probably. and if you look at the speech that bill dudley gave last friday, and there's five reference necessary that speech of four pages in the written documents that were effectively with that, there's five references in that speech to

fiscal uncertainty as being one of the determining factors in the fed's thinking at the moment. and certainly from that point of view, the fed must have been concerned about the debt ceiling, about the current situation. so maybe that was the underlying reason for reigning back from tapering. >> as we approach the debt ceiling, do you gooi buy treasuries because of the safe haven investment or do you sell them because the u.s. is going to default on them? >> i think in balance what we've seen over the last few weeks is from treasury yields from around about 260s is really kind of a reversal of the psychology that was in place before where everybody got very, very bearish about treasuries. we have now seen a situation where people got forced back into the market. this is the start of u.s. treasury yields. they've been forced back into the market. from this point going forward it's probably better to be selling treasuries on strength raerchb buying them. >> we'll talk about this later. kevin adams, head of institutional income. he will be staying with us. now, hyundai is lend ago

helping hand to u.s. government workers who have you furloughed. the automaker says people who buy or lease cars this month will not have to make payments until january. those who already own a vehicle financed through january won't have to pay until they get back to work. hyundai got a lot of good publicity in 2009 when it offered u.s. customers who lost their jobs the chance to return their new cars for a refund. how about that? >> it doesn't do any harm, does it? people remember that kind of stuff. >> good pr. very smart. on a programming note, john harwood will have an exclusive interview with the president today on closing bell at 4:00 p.m. eastern. that's john harwood speaking exclusively with president obama today, 4:00 p.m. eastern. in london, 9:00 this evening. and we're going to take your questions ahead of that interview. we've been asking viewers, what would you ask president obama? paul tweeted to say, why are

congress members being paid while 800,000 employees are not? >> good point. >> that would be a tough one. >> they would argue they're not furloughed, they're still working to put a deal together, right? >> i think that's a hard argument to make. >> i'm not saying it's a good argument. i'm just saying that's what they might argue. anyway, let us know what you think. join the conversation here on "worldwide exchange." tweet. @cnbcwex. or to me @rosswestgate. and follow the conversation #obamaoncnbc. meanwhile, markets finishing up trade. li sixuan is in singapore with the latest. over to you, sish juan. >> thank you, dierdre.

>> emerging markets are higher as the philippines are jumping over 2%. japan's nikkei 225 lagged behind ending down by over 2% on a stronger yen and the sales tax announcement overnight. toyota may cut its 2014 domestic production as sales are expected to decrease on the tax hike. ahead of the sales tax increase, output in the first quarter next year is expected to accelerate. but the brakes will be put on demand to start in april when that 8% sales tax comes into effect. mean wile, all three automakers saw modest declines in their september u.s. sales and in reverse here today. the hang seng in long come became back after yesterday's one-day holiday. and property developers made strong gains. poa gained over 3% on reports that it may list its personal

chair chain in a separate ipo. property at any prices continue to track higher lending support to some congress long developers. >> we are currently called down at the moment, trading around 69 points below fair value. nasdaq yesterday was just off a little bit, up 10% on the quarter. right now, down 16 points 37 the s&p yesterday up 13 points, up 4% on the quarter. currently, we are trading about 10 points below fair value. european equities two hours into the trading session have been softer today. ftse 100 and the cac 40 down around 0.8%. down 0.5% for the xetra dax. the one outperformer here, the ftse mib up 1%, up to the best levels, as well.

letta is holding his confidence vote. some think he may be able to pass it because of splits within mr. berlusconi's pdl party, as well. let's show you where we stand as far as the currency rates are concerned. the dollar is trying to get off those eight-month lows t moment. euro slrn dollar, 1.3531. dollar/in is down to 97.39 at the moment, near the one-month lows. and the pound is up over 1.62. very strong. and as far as bond yields are concerned this morning, treasury yields, we'll take a look at those. 2763% is where we stand. we hit 2759% on monday. and italian yields are lower. 4.7% we hit on monday when we got that challenge reaction and challenge in the withdrawing of support from berlusconi ministers to the government. but yields back down to 4.37%. >> a lot of happiness in the italian markets today.

still to come on this show, will investors welcome another round of long-term funding support for the currency blocks struggling lenders? we are live in paris to preview the central bank aes meeting right after this. lyrics: 'take on me...' ♪ ♪ 'take me home...' ♪ 'i'll be gone...' ♪ 'in a day or...' man: twooooooooooooooooo! is that me, was i singing?

vo: not paying for scheduled maintenance feels pretty good. no-charge scheduled maintenance now on every new volkswagen. that's the power of german engineering

poib. we are following italy closely this morning. according to a italy center rice source, the entire berlusconi party leaning towards backing letta in a confidence vote as ee infection points to government winning votes. there you have it. and let's take a look at where stocks are going. they have just hit the ftse mib. take a look, we are at 1859. >> it looks like as they get support, they might be caving in and deciding not to take a stand on this particular issue. mean wile, the dead lock in washington continues as the u.s. shutdown now enters its second day. >> this as treasury secretary lew steps up a warning over the debt ceiling. and fears over the political

crisis says ease in this support berlusconi's party is set to back the government. the ecb is widely expected to hold rates steady when it meets in paris this morning. draghi told the ecb was ready to offer more european banks long-term loans if they were needed to keep lending rates low. annette is in paris. the ecb is on the road. it's in paris and it's also for the first time -- i think the first time we've had a once meeting? >> actually, i think iepts the first time. he tomorrow, it's a holiday in germany. that's perhaps one of the reasons they wanted to not have it on that thursday. a very -- it's a future holiday in germany. here in paris, there is a lot of

talk, of course, ahead of the ecb meeting that we hear more details about a potential ltro. but a lot of analyst res saying, wait a moment, we probably won't hear a lot before the end of the year. as well, it's not very important to have a new ltro right now. the reason behind that is we're seeing a repayment of the ltro money which is banks are still having. but if you look at where the remaining ltro money is sitting, it sits with the italian banks and the spanish banks. and it is pretty clear that we need a new round of ltros at the latest probably next year when the current ltros are coming into maturity level only one year. there are still a lot of banks depending on ecb money despite the fact we are seeing a little bit of less crisis in the

banking sector. and, of course, a lot of banks doing rather well. another topic is, of course, the euro strength. this fragile recovery we're seeing in the eurozone is very much depending on experts and that the euro is really strong against the u.s. dollar. this is actually strangling that slow, slow, slow recovery. >> continuing its rise on the back of what looks to be a cave-in from the berlusconi party. the reports now that they may, as one, back letta in his confidence vote later. claudia will join us for the latest from rome a little bit later. kevin adams is still with us. head of fixed income at hinderson global investors. kevin, we were absorbed by politics here. yields in italy spiked up.

they're now, you know, going back down. >> indeed. and i think, you know, wa we've got is hopefully and it looks like a resolution to this current impasse on the political front and a positive vote for the incumbent government. and that is good. it sort of brings closer to the enthe kind of sorry sordid spiral of berlusconi. hopefully by a couple of days time, he may well have been voted out or prevented from being in the parliament. that doesn't cure the underlying issues. the coalition government is quite fragile. from that point of view, it's not like we're out of the woods in italy, but it certainly is a good milestone towards at least getling somewhat of a better functioning government. >> and let's get over to claudia, who is in rome. and joins us for more. claudia, is this a sign mr. berlusconi's grip on italian politics? it's finally slipping?

>> it looks as though, at least in part, it surely is. it's interesting how this is unfolding just meters away. we are about to make history. it really is that the entire bdl if 901 senators were to vote in favor of letta. it's interesting that berlusconi, as he was walking in to listen to the speech, he made a comment saying, let's hear what he has to say and then we'll see. which is quite in contrast to what has happened yesterday, last night, overnight and even this morning when once again he spoke to where he has claimed as a traitor. so as we know, sylvia berlusconi doesn't go down without a fight. it's curious to imagine that within just hours, his entire party could go against him. they're all still there. the speeches have been

concluded. and they are meeting. and after he understands what the intention is at some block -- possible block departure of the pdl, maybe he'll have a statement, have something to say about that. but up until now, the numbers that were running around that were circulating, maybe 21 is, 23, maximum of 40. nothing had ever come out about possibly all 911 senators voting the confidence. as far as letta's speech was concerned, it was a very strong speech regarding the fact that we do need stability. he told everyone to seize the moment. it is a time in which we need to show that we can do this. and he once again committed himself to returning to the 3.0% budget deficit. he is implying once again that the country needs to go forward with the reforms. he said we will do this and we need to pass the stability law. that was one very specific mention, as well. so a strong letta and possibly a very weak sylvia berlusconi.

back to you. >> claudia, thanks very much indeed for that. let's talk about a federal united states of europe. this is what he wanted. let's get your final thought, as well, from kevin adams. >> that's one hurdle that we get over. sort of -- we can put europe in a pot, can't we, for a moment? look, as we go through, as we look at u.s. politics and we look at what investors want, where is the attraction or not? >> i think overall, government bond yields are low. the u.s. treasury market and we think yields will rise over the next three, six months. but there's still value in pockets of the fixed income markets. in corporate bonds, both investment grade and high yield, but it's still a reasonable value. it's not compelling, it's not fantastic value. and we see opportunities there. some of the emerging market bonds have been really badly punished over the last few

years. and -- >> should you be getting into them now? >> yeah. well, they've had a reprieve. most people think that it's only temporary. >> yeah. and there are countries in the emerging debt zone or emerging market sdwoen like mexico where the fundamentals are reasonably decent, reasonably solid and there's value in those markets. you have to be very, very selective in the emerging bond markets in our view. >> good to see you today. thanks for joining us, kevin adams from head of global investors. don't forget, strictly rates. we'll have full coverage of the decision and mario's comments from 1300 cet. >> that's just for european viewers. later today, our colleagues in the u.s. will be speaking with jean-claude trichet at 11:20 cet. and still to come on the show, democrats in congress appear no closer to ending their budget standoff as the u.s. government grinds to a halt.

we're live in washington with the latest, next. [ male announcer ] you know that family? the one whose eye for design is apparent in every detail? ♪ whose refined taste is best characterized by the company they keep? ♪ well...say hello to the newest member of the family. the cadillac srx. awarded best interior design of any luxury brand. take advantage of this exceptional offer on the 2013 cadillac srx with premium care maintenance included. [ passenger ] airport, please. what airline? united. [ indian accent ] which airline, sir? [ passenger ] united. whoa taxi! [ british accent ] what airline, then? [ passenger ] united. all right. [ spanish ] what airline? [ passenger ] united. ♪ [ mandarin ] which airline? [ passenger ] united. [ arabic ] which airline? [ passenger ] united. [ italian ] where are we going? [ passenger ] united. [ male announcer ] more destinations than any other airline. [ thai ] which airline do you fly? [ passenger ] united. [ male announcer ] that's great, big world friendly. ♪

the ocean gets warmer. [ male announcer ] that's great, big world friendly. the peruvian anchovy harvest suffers. it raises the price of fishmeal, cattle feed and beef. bny mellon turns insights like these into powerful investment strategies. for a university endowment. it funds a marine biologist... who studies the peruvian anchovy. invested in the world. bny mellon. 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. [ female announcer ] today cisco is connecting the internet of everything. so everything works like never before.

well, the sun will rise in about an hour and a half over washington. there doesn't appear to be any

quick resolution in sight as republicans and democrats are still at odds over a stopgap spending bill. tracie potts is live in washington with the very latest. any insight on how this is all going to shake out? >> not really. what i can tell you is that today republicans are trying a different strategy to get parts of the government running again. they tried it last night. these votes failed. they're going to switch the rules around a bit to make it simple and try to get certain parts of the government running again. that would be our national parks and museums. some services for veterans and the city of washington, d.c., which is run on federal money. but in the end, that's expected to go nowhere with democrats. they really want all or nothing, not a piecemeal approach to this. and we're learning that there are a lot of people being impacted by this. some examples, there are programs that provide food assistance for mothers and children that have come to a halt. headstart preschool programs for

children have come to a halt. a lot of businesses are feeling the effects of the lack of tourism because of national parks and museums and other sight res closed. and so it's having sort of a ripple effect in particular areas. lots of people very frustrated, not to mention toss 800,000 federal employees who are out of work. >> tracie, what happens if the republicans keep doing these single bills? if they keep putting those bills through and the democrats keep saying, no, we want a whole bill, would the political temperature change? >> it's a very good question. and you've got to wonder if that might be the case because some of these are programs that democrats have championed for years. it's going to be very difficult for the democratic party to explain why, for example, wic, which is food for women, infants

and children is something that they don't want to restore or headstart is something they don't want to reshort. so you're right, the longer this goes on, the more difficult it's going be to justify not restoring at least certain key parts of these -- of the shutdown. >> okay. tracie, good stuff. thanks very much indeed for that. that is the latest from washington, d.c. on a programming note, don't forget john harwood is going to have an exclusive interview with the president, barack obama, today on closing bell, 4:00 p.m. eastern. that's john harwood, exclusive interview with the president only here on cnbc. 4:00 p.m. eastern. if you're watching el where in the world, it's 2200 cet, 9:00 in the evening in london pap must watch interview. >> you can get your questions into us, as well. tweet them. still to come on the show from washington to rome, we're going to take a closer look at political dysfunction and what it means for the markets.

more to come in the next part of "worldwide exchange." mine was earned in djibouti, africa. 2004. vietnam in 1972. [ all ] fort benning, georgia in 1999. [ male announcer ] usaa auto insurance is often handed down from generation to generation. because it offers a superior level of protection and because usaa's commitment to serve military members, veterans, and their families is without equal. begin your legacy, get an auto insurance quote. usaa. we know what it means to serve.

this is "worldwide exchange" and i'm ross westgate. at a stand still, it's day two of the u.s. government shutdown. there doesn't appear to be much resolution in sight at the

moment. and votes among sylvia berlusconi's party could support the italian prime minister letta in today's no confidence vote. mario draghi is likely to be preoccupied by europe's instability with another round of ltros. if university just joined us stateside, a warm welcome to you. we are called lower this morning. as republicans keep chucking individual bills at the democrats so say we're not going to pass them. at the moment, the dow is curre currently, what, 64 points below fair value is in the and the s&p 500 is he moment is around 9 points below fair value. european equity markets, a mixed

performance today. we have seen the ftse down 0.8%. it was pretty flat yesterday. the xetra dax up 0.5%. about .6% lower for the cac 40. the ftse mib is up over 1.1%. we're now understanding that berlusconi moderates are going to file a formal motion supporting letta in this vote of confidence we're going to get in the italian parliament later today and, indeed, all of berlusconi's party may support for forming the government in that motion. day two of the u.s. government shutdown and there appears to be no quick resolution in site. house republicans try to get three bills passed tuesday to fund certain government programs, including veteran affairs, national parks and operations for the district of columbia. but the measures, which needed a two-thirds majority vote, surprise, surprise, they all

failed. democrats and president obama posed this piecemeal strategy. aides say republicans may introduce the bills today under different rules, but only need a simple majority to pass. but they're likely to die in the senate. tina fordham joins us now. tina, this strategy that the republicans are trying to use now, in piecemeal strategy, is that going to actually erode the democrats' position? at some point, is obama and the democrats going to be made to look back because they're fought coming to the table the longer this goes on? >> first of all, i take issue with the term strategy. i think we're talking tactics. we've entered a shutdown and there is no resolution in sight. the republican response to pass these piece mails crs, the president said he will veto it. then i think about the timeline. i ask myself, where is the pressure coming from inspect it's not coming from markets. it's just starting to come from the media and from the public

and that's why i think there will be days -- >> starting to come from the mead gentleman? >> yes. >> hasn't it been there aalong? and still -- that's the problem here. there's lots of pressure. there's the public, as well. i guess what i wonder, is shutting down the government, does that apiece some of those more aggressive lawmakers or does it go -- are they liking this? >> it's a question of time. a shutdown for a short-term probably helps to underscore that the republicans can bring pressure to bear on the government. if it lasts a long tooit and it starts to hit the economic recovery, then i think that's when -- >> what does a resolution look like, tina? tell me how these two sides come together. >> i don't think they know how they're going to come together. i think that's why this -- >> it is a scary thing and they may not. that's why i said this is not strategy, this is tactics. now, i think what is interesting is the markets have barely reacted to this news. >> they might react as we're

seeing here on october the 16th. >> on october the 16th, we're teetering on the precipice and absolutely markets will act. the belief, when you talk to investors, is that a way will be found at the last second, which is the pattern we've seen. >> there's a belief we'll find a way. nobody knows what that way is. >> no. everyone is assuming that both sides will act rationally. what i would say is if you're a democrat defending obama's care, obama care is popular in your district. if you're a republican, the opposite is true. >> and if you're in the tea party, maybe they want to see this happened. what happened if we reach october 16th and we hit the debt ceiling? it may be an opportunity to purge the republicans from the party. >> we've got a few weeks between now and then, right? and we pass the point where a clean cr can be passed.

you get closer to that october 17th kind of date for the debt ceiling. and then it becomes easier to think about one bill. right? and you kind of use your political capital up once and feel the pain once rather than twice. so it's either going to be a clean cr, i'd say in the next week to ten days, or we get very close to that debt ceiling. >> john boehner working how how to keep his job and ditch the tea party? >> he is trying to bring the whole party along with him and that's increasingly difficult. >> at some point, he may have to choose. >> pitch form moments, right? could there be a revolt? and and that's what i wonder. if october 17th going to be that moment? ? i think so. remember, we're heading into midterms next year. so -- >> it's a blow back that suffered equally. if we suffer equally, man it -- this is sort of -- it's strange.

it's like talking strange territory, though, right? is my nuclear fallout going to be less than your nuclear fallout. >> i think you can read the public opinion data both ways. congress had a 10% disapproval rate. which makes president obama's 47% rate look pretty good. cnn says the majority of people blame republicans. >> and it's short lived. >> we take a short-term hit and -- >> and i wonder if that changes, the more obama is willing to not negotiate, maybe he should. but maybe that's what the republicans are banking on the longer this goes on. it's interesting. >> we think we get to a deal, but not soon. >> and we're applying too much logic to this, right? >> i'll see how twitchy we get. >> we want to know how will you

tray the dollar on the continued u.s. shutdown. we have watched a new trader poll question. would you go short, go long or hold? go to trader poll.cnbc.com and post your vote. as the dollar index is down currently at eight-month lows. meanwhile, it's looking more likely that friday's u.s. jobs report is going to be delayed. the bureau of on labor statistics said tuesday it's not releasing data that could -- a government shutdown. that means today's adp report takes on much more weight, acting as sort of a proximate onny for the nonfarm payroll numbers. forecasts of gdp are suggesting 178,000 private sector jobs last month versus the 176,000 in august. an iconic symbol of the new york city sigh line is get ago new symbol today, a ticker symbol on the new york stock exchange. seema mody is live at the cnbc

headquarters with more. >> hi, dee. the company that owns new york's famed building sold 75.1 million shares at $13 each. that's the low end of the expected range. now, the deal raise the just under $930 million, giving the firm a market capital roughly $3.2 billion. the company owns 19 properties in new york and connecticut, but the centerpiece is arguably the most famous building in the world. the empire state building opened in 1931 and had 132 stories. it held the title as the world's tallest building until 1972. analysts say investors may have been put off by the company's unusual structure and had concern about how much revny the observation decks can generate. two other companies will list on the nyse today. above the expected range, raising $194 million. the company was founded in 1973

and now has more than 90,000 real estate agents and 6300 offices in more than 90 countries. burlington stores, the parents of the factory chain crisis offering $17 a share above the expected range about $227 million before the sale of additional shares to underwriters. now, the company which sells is off price brand name shoes and accessories was taken private in 2006. the events in washington could have an impact on the ipo market. the sec has to sign off on the terms of a deal before it starts trading, before the government shutdown, the s.e.c. said it would be able to stay open because it has carryover funds available. it's unclear how long those funds would last or whether the s.e.c. will remain fully staffed. that could affect the filing and approval process perhaps for even twitter. dee, ross, back to you. >> thank you for that, seema. on a programming note, john har would have had will have an

exclusive interview with president obama today on closing bell. that a is at 4:00 p.m. eastern. make sure you don't miss that. also still to come on "worldwide exchange," prime minister benjamin netanyahu has vowed israel will stand alone if necessary to keep nuclear weapons out of iranian hands. lyrics: 'take on me...' ♪

♪ 'take me home...' ♪ 'i'll be gone...' ♪ 'in a day or...' man: twooooooooooooooooo! is that me, was i singing? vo: not paying for scheduled maintenance feels pretty good. no-charge scheduled maintenance now on every new volkswagen. that's the power of germngineering

♪ [ male announcer ] more room in economy plus. more comfort, more of what you need. ♪ that's... built around you friendly. ♪ the ocean gets warmer. built around you friendly. the peruvian anchovy harvest suffers. it raises the price of fishmeal, cattle feed and beef. bny mellon turns insights like these into powerful investment strategies. for a university endowment. it funds a marine biologist... who studies the peruvian anchovy. invested in the world. bny mellon.

. a small group of microsoft investors are pushing the board to force bill gates to step dune. this appears to be the first time they're taking aim at gates, who is one of the mofts respected figures in the tech world. there is no indication the board members will heed the shareholders wishes. gates is the company's biggest individual shareholder. microsoft today is off 0.3%. apple, as you certainly know by now has a mountain of cash. "the wall street journal" setting moody's says the company's $147 billion nearly 10% of all corporate cash helping nonfinancial companies. cash stockpile ves grown from

about 2% from the end of the last year to nearly $1.5 trillion. money is so concentrated. moody's says the top 50 holders account for 52% of the total. despite dividends and buybacks, apple has about the% more cash than it did at the end of 2012. apple up by 0.5%. if you've just joined us this morning, a recap of the headlines. the dead lock in washington continues as the u.s. shutdown enters its second day. >> this as treasury secretary lew steps up a warning over the debt ceiling. and italy's fiscal crisis amid reports the berlusconi party is now set to back the government in today's confidence vote. space is expected to extra diet one of the ex traders in the jp morgan chase.

after leaving jpmorgan's offices he returned to his native france which typically doesn't extra diet its citizens. the attorney general will reportedly sue wells fargo today for failing to comply with the terms of the national mortgage settlement. last year, the top banks agreed to pay monies over the mortgage settlement. mr. netanyahu called iran's president a wolf in sheep's

clothing. in light of syria, how are the iranian relationships developing? iran would like to flog its oil at $100 a barrel to somebody. >> yes. and rouhani won that election on the back of a promise to get iran out from under the sanctions which are having a funive effect on the economy. so it's very much in their interests to move forward with diplomacy right now. >> but can they be believed? we've seen this many times before with iran. what's different this time? >> i think there is a real change from what diplomates would call the mood music. rouhani a has taken a risk. he didn't go as far as many had hoped at the unga. there was no bilateral talk on the sidelines. but what has happened is a break through in diplomatic terms. that's not the same thing as making substantive concessions on the nuclear ram, but anyone

will tell you you you need trust building exercises. thirp there to increase the pressure on the burden of proof and avoid offering anything without any hard concessions coming from tehran. >> nine months was the original estimate, wa do you want to bet it takes longer than nine months to verify and collect this deal in the midst of a syrian civil war. >> we'll come back to you in just a short spot. don't forget, of course, we've got a poll that we've launched today. >> we're asking you, how will you trade the dollar on the continued u.s. shutdown. we have launched a new trader poll question. would you go short, go long, or would you hold? what's your risk appetite?

>> go to traderpoll.cnbc.com to have your vote. and you can join the conversation on twitter using #traderpoll. [ male announcer ] this store knows how to handle a saturday crowd. ♪ [ male announcer ] the parking lot helps by letting us know who's coming. the carts keep everyone on the right track. the power tools introduce themselves. all the bits and bulbs keep themselves stocked. and the doors even handle the checkout so we can work on that thing that's stuck in the thing. [ female announcer ] today, cisco is connecting the internet of everything. so everyone goes home happy. [ male announcer ] when we built the cadillac ats from the ground up to be the world's best sport sedan... ♪ ...people noticed. ♪ the cadillac ats --

2013 north american car of the year. lease this cadillac ats for around $299 per month with premium care maintenance included. building animatronics is all about getting things to work together. the timing, the actions, the reactions. everything has to synch up. my expenses are no different. receiptmatch on the business gold rewards card synchronizes your business expenses. just shoot your business card receipts and they're automatically matched up with the charges on your online statement. i'm john kaplan, and i'm a member of a synchronized world. this is what membership is. this is what membership does. because what you don't know, can hurt you.urance. what if you didn't know that posting your travel plans online may attract burglars? [woman] off to hawaii! what if you didn't know that as the price of gold rises, so should the coverage on your jewelry? [prospector] ahh! what if you didn't know that kitty litter can help you out of a slippery situation?

the more you know, the better you can plan for what's ahead. talk to farmers and get smarter about your insurance. ♪ we are farmers bum - pa - dum, bum - bum - bum - bum♪ after gains yesterday, u.s. equity markets are down at the moment. the s&p 500 is currently, wa, eight points below fair value. the dow is currently offer 6 points below fair value. the futures have got higher, they've come off their lows from earlier. with this market, here is a recap of sorts of some of the guests already today. >> my take on this, actually, it's been a top figure picture. this is likely to have anything,

delayed tapering. and that's a bid for u.s. treasuries. actually, there's a big draw for asset classes. we face a narrowing of personal strength. >> we are still very long on european bonds, european credit. periphery bonds, things like senior bank bonds. so all the things that are still a bit risky in bond markets. >> what you find is all of that underperformance reflects the brix, this is brazil, russia, india, china. if you look at the other emerging markets, they've performed in line with the other developed markets. the u.s., of course, has outperformed within that group. and i think, you know, the question is that going to persist? and we think it is, actually.

the revolt against sylvia berlusconi is here. still with us, tina fordham, senior political analyst at citi. the italians seem to be getting things together. >> it's amazing u.s. politicians are managing to make italian politicians look almost statesman like. >> the political calculus is -- >> and here we are in berlusconi's party. thankf thankfully, if we believe the reports are saying we're going to back this coalition government, it's clearly made a decision against what mr. berlusconi himself was suggesting 48 hours ago. >> well, he did kind of pull the rug out from under them over the weekend, having said earlier that he would stay with the ruling coalition, then instructing his ministers to band in it.

initially, there were signs that they would support him in that. but i think you only have to look at the polls in italy to understand, you know, what is happening here. frankly, the pdl worries that it wouldn't win a new election and so it doesn't want to risk it. >> it's just come down to a clear, practical decision on, you know, is it in our interests or not? >> absolutely. >> well, we've been talking a lot about whether you believe politicians or not. and is it possible, i mean, burl scone kneesny has come from behind to surprise so many times. even if letta wins the confidence, is it possible to think that berlusconi has something interviewing and this political bickering is going to continue in italy or does this look like it's the real thing? >> that depends on what you mean by the real thing. political parties are born and resurrected all the time in italy, in the post war political environment. i think the thing to focus on is that the elections in february delivered the stalemate outcome. the polls since then don't show a whole lot of movement.

a slight decline for the five-star movement, etcetera. the name of the game is winning an election if you're a politician. and right now, given that the outcome is a repeat -- >> and the key is that law, isn't it? >> passing a metro law and that's december 4th. i think that is another very important factor in the minds of politicians. the pdl didn't do very well in the municipal and regional electrics last may when berlusconi wasn't involved. the party's popularity is very much about him. but i think that what you see with those ministers considering staying with elected government is they think their prospects will be better in the next elections which will probably be early next year, first half, first quarter 2014 if they stick around. >> all right. tina, good to see you. thanks so much for join onning us today, senior political analyst. let's remind you what's on the agenda today in the states. it's now something of a proxy for the nonfarm payrolls. today we have the september adp employment report out at 8:15 eastern. forecast are calling for a rise

of 178,000 in private sector payroll. fed chairman ben bernanke speaks at a fed conference community banking at 3:00 eastern. as for earnings look for results theed from monsanto. really, it's about ongoing discussion tactics. and cnbc's john harwood has an exclusive interview with the u.s. president barack obama today on closing bell at 4:00 p.m. 4:00 p.m. eastern today, john harwood speaking to president obama. don't miss that at 22:00 cet in europe, 9:00 in the evening in you're in london and that's the middle of the night if you're in singapore. >> or in the morning. yeah, in the middle of the night, early, early, early in the morning. 4:00 a.m. >> get up early for it. ahead of that interview, we've been asking viewers what would you ask president obama? david tweeted to say if the affordable care act is so good,

why he equipmented himself, congress and labor unions from it? thanks it, ross. >> "squawk box" is up next. xxxx

good morning. it's jobs wednesday. adp report is today. all-important data for the markets since we may not get the friday number. the government shutdown is ruined our jobs friday. now it's personal. treasury secretary jack lew is taking action to avoid an empty government wallet. and a couple of major microsoft shareholders now want bill gates to back it in. how is that for gratitude? it's wednesday, october 2nd, 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. the markets under pressure this morning. in fact, take a look at the futures. right now, you'll see that those dow futures are down by about 75 points below fair value. so this is day two of the government shutdown at some point. jobless claims tomorrow, the friday jobs report will not be reached unless a deal is reached on political. remember, this is not a government number. that's why we're going to look at this one very closely. usually we say what is this number and how is that going to match up to friday's number? this may be the only number that we get. right thou, the increase is for 17