♪ you're watching "worldwide exchange." i'm ross westgate. >> and i'm deidre -- >> your headlines around the world. no deal in a government shutdown in an exclusive interview, the president has expressed his frustration. >> am i exasperated? absolutely. this is entirely unnecessary. >> italy of all countries sidesteps a political crisis. there is upheaval ahead for

italia which could see its ceo tender his resignation today. >> antitrust regulators ready to charge gazprom. it is politically motivated, say some. >> some of these are far away from reality and i'm afraid that they generate on political motivation and not anything else. >> china's largest online game developer surges scoring bonus point force retail investors that piled into its ipad. . >> all right. a warm welcome to you. we have a little bit of data at the top of the show. out of eurozone ticking up 52.2

in september from 51.1. improvement from 50.7 in august and saw germany again providing the bulk of this number but france and italy, returning to growth for the first time in a year on the surface. euro dollar 1.3609. just down from the 1.3623 which is about the highest we've been since early february over the last 24 hours. but, again, that data just reconfirming a return to growth for the eurozone. it is still fairly fragile. >> right, as far as politics concerned president obama met with top four congressional leaders at the white house yesterday to try to break the budget deadlock that led to the u.s. government shutdown but after more than an hour of talks no breakthrough. both sides are continuing to blame each other. >> the president reiterated one more time tonight that he will

not negotiate. we've got divided government. democrats control the white house and the senate. republicans control the house. we sent four different proposals over to our democrat colleagues in the senate. they rejected all of them. we've asked them in a conference to sit down and try to resolve our differences, they don't want to -- they will not negotiate. >> i thought that they were concerned about the long-term fiscal affairs of this country and we said we are too, let's talk about it. my friend, john boehner, i repeat cannot take yes or an answer. >> in an exclusive interview with our very own john harwood president obama expressed his frustration with the tea party faction who have been dead set on tying the debate over the u.s. debt ceiling to efforts to defund his health care reform law. >> during the course of my presidency, i have bent over

backwards to work with the republican party. and have purposely kept my rhetoric down. i think i'm pretty well known for being a calm guy, sometimes people think i'm too calm and am i exasperated? absolutely i'm exasperated because this is entirely unnecessary. >> well, despite that u.s. markets have been relatively calm this week amid the government shutdown and budget impasse in washington but president obama says wall street should be genuinely worried. >> i think this time is different. i think they should be concerned. when you have a situation in which a faction is willing potentially to default on u.s. government obligations, then we are in trouble and if they're willing to do it now, they'll be doing -- willing to do it later. >> and coming up, our own john

harwood joins us to discuss his exclusive interview with president obama. he'll be live from washington on this show at 11:30 c.e.t. ross, this is my last day in london. >> i know. we've got to make the most of it. >> we'll have lots of fun without upsetting our directors to move things along. >> i wouldn't worry about that. >> we have a full show and picking up on that, great obama interview and that key point about we're saying this time it is different. you should be worried. now, so the question we'll talk about today, have investors got it wrong? tell us what you think about president obama's wall street warning. is it a play to push congress into action or is he genuinely concerned. >> that's the question, right? it was very smart of him to say that if we see a reaction in -- this could is a domino effect and markets could get worried. congress could get worried or could not mean anything which is the scarier scenario. >> is the congress that cried wolf too many times and now they don't believe it. >> yesterday one of our guests

said this isn't a strategy. these are tactics. childish tactics, so we want to know from you. tell us what you think, join the conversation here on "worldwide exchange" and get in touch with us, we will try best to respond. we read all of them. e-mail us worldwide @cnbc.com. get ross into the action. @rosswestgate and i'm @ dcnbc. >> you night technologies may have to furlough up to 5,000 workers if the u.s. government closure extends through next week. that would be followed by pratt & whitney and aaerospace. their stock in frankfurt today off a quarter of a percent.

>> well, it's not just the american people that are upset over the congressional stalemate. china says the shutdown could affect the world economy. certainly its comment. a xinhua news comment tray said the ugly side has been exposed which could lead to the u.s. missing its debt obligations. there is reason for beijing's concern. china is the largest holder of u.s. government debt holding about $1.3 trillion worth at the end of july. that's a lot and it's kind of interesting to hear china talk about other politics, i guess. >> well, you know, everybody has their beef. joining us for more is the head of research at variant perception. claus, good to see you. you should be concerned, says president obama. are you more concerned? >> well, given the market seems sanguine, yes, we're starting to get concerned. we're seeing the dollar is

selling off so suddenly the market has taken its cue. normally once you move into this kind of situation, and the market gearup for a risk off event you see the dollar rallies and bonds rally but here in this situation with the homegrown u.s. crisis, those two variables are very much in play now. right now the dollar seems to be selling off once you get -- when you get news about this stalemate so this is a very interesting dynamic. we think probably that the stock market is a bill too sanguine at this point. >> u.s. treasuries. it's so strange to look at this risk on risk off, you see the dollar soing off but bonds rallying a little when we approach the debt ceiling. where do you expect them to move approaching october 17th? >> the knee-jerk reaction for me would always be and for us at variant, if you have a riskoff event in the markets, the dollar

will rally and so will u.s. treasury, the yields will come down but this exact point in time, for example, default in u.s., as well, what happens to bonds when you move closer -- obviously you would expect bonds to drop and yields to gup. this is a very delicate situation. we expect brinksmanship. you have to expect it in the u.s. but the interviews we just saw in the introduction, i mean it's just a mess. the one side saying they want to talk. the other side -- it's very difficult. >> this wing of the republican party, the trouble is that tea party wing, this's got religion. >> right? >> when you got religion you kind of -- you know, this is not what anybody else might call a logical discussion. >> that is true. we still have some time to go. right now we have the government shutdown which in historical peers we've had that before and the market has kind of managed to shake that off but you have that debt ceiling coming on fast and, of course, you have the specter of 2011 and 2011 you a bit of the same situation coupled with the crisis in the

eurozone and one of the worst rolldowns in the market for a long time. >> do you think it will last for a long time or resolved quickly? >> i think if it's not resolved this week, next week could be quite different place for risk assets. >> maybe we'll ask you later what conditions need to be in place. right now we seem so far from any kind of resolution. claus vitiseen will be staying with us. ross. >> thanks for that, so we are here just an hour into the trading session, hour and ten minutes in europe and pretty even stevens much the advancers just about have it 5-4 at the moment and we're in sort of the middle of the trading range so far. ftse 100 down 22 points. this morning it's up 18. so just wiping out those loss, xetra dax, flat, cac 40 down 7 and ftse mib up 0.6%.

individual stocks, let's kick off with fin mechanical. the biggest gainer on speculation italy's lender cdp may buy a majority stock in one of its units. they may discuss the offer tomorrow. easyjet up 1.2% in london after it raised its fully pre, thatted profit guidance and bp shares up 4 ticks winning a legal prereef in a case related to settlements over t2010 soil oil spill. bond rate, ten-year treasury yields, 2.63% is where we stand. sort of 2.65 was the yield late tuesday. 2.59 was the yield we hit earlier in the week. look at spanish one later and

italian yields as well, 4.38%. keep our high on other ones, as well. and on the currency market dollar till down near eight-month low, our joe dollar, 1.3599. not far away from 1.37 level. that is a point where previously we've been concerned but yesterday they didn't sound that concerned. abe a green light for that. dollar yen just below 9 and the pound, as well, just below its recent sort of nine-month high at 1.62. dee. >> markets in asia where equities haven't been particularly rattled by the government shutdown. let's get to lisa in singapore for all the details. >> thank you.

as this drags on asia is quiet with china and south korea out for holidays. china's strong services pmi is helping sentiment. the nikkei finished slightly lower after tumbling 2% on the sales tax announcement. the hang seng index made decent gain of 1% with mainly blue chip names higher. minors helped push up the australia's asx by 02%. tokyo electric teppo tumbled almost 5% after reports of a new radioactive water leak found at its crippled fukushima power plant and investors could fear it could delay the process of its other restart applications. let's move on to some big gainers in hong kong. hutchison still in focus. shares gained by 1% today. this after yesterday's 3% rally

on spin-off report of its watson health care and beauty retail. carriers of apple's latest iphones in mainland china among the top gainers in hong kong, shares of china telecom and unicom gained over 7 and 8%. china mobile, an official deal is still yet to be confirmed. >> it doesn't happen. look at how much china mobile is missing out on that despite being the world's large telco carrier. sixuan. i'll see you next year -- next week. that was wish phil -- wishful thinking. >> what are you doing -- >> i was thinking about my long trip back which will feel hike a year. i have to go like 24 hours.

>> a year, oh, my goodness, i better get back to the sunshinesingapore. i think i need to go haver rather than later. anyways we'll keep on china, right? >> do that. >> and the latest service sector reading suggests the country's slow some might argue slow shift toward a domestic driven economy may be under way. official services pmi rose to 55.4 in september, a six-month high, the jump comes just as china's factory growth gauges appear to be scaling back. ross? >> and the latest eurozone pointing to a pickup. the highest level since june 2011. claus is still with us. on the back of that and mr mr. jargy, some say there's no point in discussing interest rate cuts anymore. is this a green light for euro bulls. >> sort of. i think -- i'm a bit surprised

people are talk -- >> inflation down at 1% and reference target of 2%. >> but the economy is doing quite well at the moment so maybe you want to save those bullets for when it's needed. certainly a technical argument. the ecb is not -- it's not engaged anymore and as the banks pay back that money, interest rates are starting to move and ecb certainly said yesterday it would stand ready to make sure that rates stayed within line of some of this kind of forward guidance we've gotten from the ecb, in general on the euro we've been fairly positive on the euro, it is trading toward the top end of the range and will take a lot of new -- >> 1.40 the target? >> yeah. >> i know much more depending on what happens with the u.s. >> right now it's a u.s. driven story in the euro dollar but real money growth, the current account, these things which were

a big problem a year ago have improved a lot. >> does that high yield threaten the very nascent recovery we are seeing? >> it will but a certain lack of things, 2014 story in terms of, for example, its impact on german exports. >> look, italians did it. got through the vote. claus. >> yeah, italy got through. for us the outlook is still very dark for italy. the thing is that you have a very difficult environment still for reforms in italy so now you can say the political situation has cleared up a little bit but the economic situation is still very difficult. there's -- it's really quite simple. you still have bond yields which are much, much higher than growth rates and when you have that situation, it's pure math, gdp continues to grow year after year and whatever reforms you put into place today will have -- will take a long time to affect itself so the unfortunate story is in the eurozone, more

debt reinstruction, more brinkmanship is coming. >> claus, thanks for that. good to see you from variant perception. plenty more to come. syria may have been making headlines recently, the u.s. has been continuing with itsers to find peace in the middle east. hadley gamble sat down with a billionaire palestinian involved and will join us from dubai. spain sells five and ten-year bonds in a closely watched auction with results around 10:40 cet. >> we'll ask if this ipo is a sign of times to come for the industry in china at 10:45 ces. >> could the political stalemate on capitol hill translate into trouble on main street as the holiday season looms? we are joined by a guest who says there is no reason for retailers to be optimistic.

that is at 11:45 cet. >> rather pessimistic. as the telecom italia is expected to hang up at a board meeting what next for the operator? the opinion of an equity analyst with we come back. at farmers, we make you smarter about insurance. because what you don't know, can hurt you. 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♪

welcome back. well the response to the syrian crisis continues to develop, the u.s. has been keeping a close eye on the middle east peace process. president obama met with benjamin netanyahu on monday at the white house and met this week with palestinian leader mahmoud abbas. our middle east correspondent hadley gamble has been speaking with one of the palestinians involved. billionaire businessman munib al masri. hi, hadley. >> reporter: good morning. so basically it's going to be a tough sell. the two-state solution for both sides of the leadership in israel and with the palestinians, as well. the u.s. has made a point of not taking their eye from the prize despite the fact they've had the distraction of syria over the last few months about you ta talking about an economy with a current account deficit of 600 million and talking about major challenges to that economy to

growth in that economy and i spoke with the chairman of the palestinian development and investment company. and i as such he controls 25% of the palestinian economy. we went to the west bank and sat down with him for an exclusive interview and i asked him what is the biggest challenge to economic growth. >> well, biggest handicap is occupation. you are not free. your mind is not free. you're thinking about the checkpoint, the next checkpoint so the palestinian mind is good, but we are handicapped by mostly the disease, the cancer is occupation. >> how much more growth do you want to see on your stock exchange? >> maybe 200%, 300% because it's undervalued because people, they say, capital is very coward because they want stability, they want environment investment environment but this in

palestine a lot of possibilities but with occupation all these possibilities, they will completely be erased. to tell you the truth it's almost or almost impossible to do business here but because we feel this is our country and this is our duty to do it. >> so you heard him talking about some of the many challenges that face the palestinians. there are over 500 israeli checkpoints that dot the west bank and that makes business very difficult. now if you want to hear more of this exclusive interview with munib al masri, check it out. >> a bit of ago apology for the picture interruption. the dramatic events in italian parliament. survived a confidence vote. moody's, though, has maintained its negative credit outlook and says it expects italy to miss

reduction targets. speaking to the lower house, the italian premier looks to the future. >> translator: i don't want to hear any more saying we either do this or the government falls because we showed that the government will not fall if this will be the behavior. >> jules is in rome and joins us for more. particularly for silvio berlusconi. how big are the challenges now? >> reporter: well, they've got bigger challenges, haven't they? this was a lot of political noise. this looked like the worst case scenario and it didn't happen. now letta has to see if he can capitalize. the coalition couldn't agree on steps to get the deficit under control down below 3%. that's still a problem. still have all the structural reforms to go. things like the role if we had

to go to an election we could have ended up back where we were, let's look at the polls as of next week and just see what damage has been done to the perform dl and the strength now that perhaps prime minister letta can garner. it's still politically a really tough situation and a difficult role now for the coalition, but the first thing is likely to happen behind me, what is the future of bers coney and his party? well, they're expected to make a statement behind me in around 40 minutes just to explain what happened with the factions in the party and perhaps how they're going to go on from here so that will be interesting to see. the second thing, of course, is that senate vote tomorrow on the future political career of berlusconi. i've been fascinated by all the press coverages is the end of berluscon berlusconi, is it not people still believe they will vote for him. he is a nice guy and smiles on tv. he puts nice movies on the television was one comment to me, so i don't know. don't bet on the end of bers

coney yet but as for italy, tough measures to try and push through now so down to the economics here. >> yeah. >> ross, back to you. >> he caved because he knew he wasn't going to win and if he fought and lost that would have been the end of him but stepped back. fight another day so he's kept some proud dry. jules, for now thanks. we'll come back to you and go to our website to find out some of silvio bers coney's greatest hits. >> i like that. >> i don't think they're talking about him hitting people. >> all you have to do is smile on tv and gain popularity. >> i thought one of the most interesting, angela merkel's visit, he was on the car on his phone and she was waiting for him and he sort of just stopped -- i've got to finish my phone call. extraordinary. he doesn't care. >> yeah, you know, he still -- >> jules has spoken to people on the streets and they still like him. why don't we ask our guest.

joining us peter shafrick. i don't know if you've been listening to our correspondent julia out of rome but, you know, a lot of questions over is berlusconi going to be able to come back once again? we've seen it happen so often. also i want to know, is enriqco letta going to use this breathing space to push through real reforms that the italian economy needs. >> i think we can certainly all hope for that because one of the stories over here in europe and what acb president outlined clearly is the country is doing reforms gaining the reward for it. you see, for instance, if you look at the spread between italy and spain where spain for the first time is trading through italy so clearly see that. whether or not we get that is not clear to me yet because i mean we had more or less stable government until about two weeks ago and there was not a lot of reform forthcoming so we'll have to see. certainly get a bit of momentum behind it and the market will

clearly appreciate it, that's for sure. >> uk pmi, higher than the poll, 60.5 in august. athis growth is the strongest quarter for the uk services sector in 16 years. what do you do with all this data? >> i think it's a funny one. i mean certainly the number in itself is still rell it i havely strong. if we zoom in on the pmi number, one of the things that's interesting and we've seen it with other numbers before that, as well, they come in strong, but they cannot contain the upward momentum we had to the same degree and also i think going to be difficult to beat the consensus whereas previously if you look at the behavior of these indices and releases, very strongly beat the consensus for the last six to nine months and that gap is narrowing, as well. overall i say the numbers itself

are still strong but the consensus kept up with them quite a bit and going to be difficult to continue -- the improvements at the same pace. >> yeah, clearly because we've had -- but if this growth stays teddy at 1.2%, i mean sterling is clearly benefited from problems elsewhere. up at 1.62. is the bank going to be wrong with its guidance? i don't want to say forward guidance but guidance on interest rates. >> interesting way to put it. let me be very clear. the way we look at it, it's not likely that we're going to sustain the same kind of pace in the uk economy. so the numbers are probably going to be come down to what we say a more reasonable level because let's look at it. it's not very likely that we can sustain the same kind of pace and, against that backdrop and the forward guidance you probably get a little more forward in the guidance to use your terminology. >> yeah. i think the forward is

superfluous. peter, tay there. al still to come -- >> the european commission finds gazpr gazprom. we'll bring you their response.

these are the headlines from around the globe. president obama and congressional leaders meet but no deal is it struck in the u.s. government shutdown. in an exclusive interview the president expressed his frustration. >> am i exasperated, absolutely i'm exasperated because this is entirely unnecessary. >> meanwhile, italy sidesteps a political crisis. but there's upheaval ahead in the corporate sector. first up telecom italia which could see its ceo tender his resignation today. >> europe's antitrust regulators ready to charge gazprom. they say the move is politically motivated. >> some of this information is far away from the reality and i'm afraid that they generated

on political motivations, not on economy performance. >> china's largest ongame developer soars. retail investors piled into its ipo. >> well, just over an hour and a half into europe's trading day. equities trying to trend, well, trending lower right now. ftse down a third of a%. turnaround in the last half hour. xetra dax off two-thirds and sector pmi 60.3 higher than the consensus of 60 but a strong number and the composite numbers are pointing now to quarter growth of 1.2% according to market. that would be the strongest quarter for the sector in 16 years on the services side. bond markets. >> let's take a look at the bond markets to see where they're sitting, ten-year bupdz at 1.83.

ten-year treasuries have pushed up 2.64. overnight they were down at 2.62 so hovering at that low level, the yields at least. the price has got a bit of a bid in the u.s. session. remember we had that weaker than expected jobs data, the adp report, as well as the government shutdown so did see a bid to safety. look at the ten-year italian yields down at 4.38 coming off from when we saw the political crisis there but still up a tad in the session. so we are mostly up a little bit as investors get a little jittery about perhaps hitting that debt ceiling in the u.s. and just to mention, spain is -- spain's auction results expected shortly. we'll bring those to you, ross. >> yeah, currency market, sterling reaction, it is steady against the dollar, 1.6220 and dollar yen, euro/dollar just below the 1.36, 1.3623 we hit in

the last 24 hours which did pretty much near the february 1st peak of 1.37. well, cnbc is asking viewers how you plan to trade the dollar on the continued u.s. shutdown. are you going to short, go long or are you going to hold? >> head to traderpoll.cnbc.com to cast your vote and straightaway see the trend. or #traderpoll. log on. shares in telecom italia opened up ahead of a board member where the ceo is expected to resign over a row over the strategic direction of the troubled operator. the meeting comes in a big week of italian corporate news. it follows the ousting of enrico cuciano. prosecutors have reportedly requested that jpmorgan stand

trial over financing of a 2008 purchase of abanco novito. julia, over to you. >> reporter: thanks so much. well, quite interesting. normally talking about the old guard versus the new guard when we're talking about politics in italy but there's a question too about what's going on at the corporate level here in italy, as well. you mentioned telecom italia. 10 percentage outperformance versus the broader markets since the rumors started about the ceo moving on. we can't escape the fact there have been management issues but there's an interesting story that the fact his idea for shoring up the financials of this business was seeing capital raise up to 6 billion euros, something his shareholders didn't like, talks generale and over in spain too and a similar story when we look at what happened in kuccino of intesa.

second quarter results from that, he said, you know, this is a great time for 230r7b investors to get involved. gain something that the share tolders in intesa and a foundation in italy didn't like the sounds of. we start to dig into the details and see a web of ownership between corporate, between share holdings and corporates and the banks and also these foundation holdings of the banks, them not willing to let go of the ownership or dilute the ownership that they have too. so while we're seeing positive noises from the likes of mediobanca loosening reins, who will win the battle to relax the domestic holdings of some of these corps which ultimately is needed for restructuring and further growth here in italy, so

big question here, not just over politics but the economics on that guys, back to you. >> absolutely, and we'll ask christopher nelson some of those questions. thanks for being with us. let's start with italia. so the executive chairman may be out. what's the solution? how they turn the business around? should they be selling off american assets. >> good morning, deirdre and ross, thanks for the invite. should they be? well, an interesting question. telefonica's perspective would much rather they were sold off. if you're trying to be rational is the only serious candidate for this. you could look at deutsche telekom but from telefonica's point of view that makes an awful lot of sense and means they might be able to pick up those assets as opposed american mobile which would be competitively nice for them if they were allowed.

secondarily it means if they did want to get control or make a bid for a further stake of telecom italian, the idea not only would there be less debt but the debt rating outlook might have a better quality because the reality is for us, telecom italia is an asset someone else needs to control really outright but as your nice piece there illustrated that is not straightforward. italy seems to be saying we need more capital and would somebody kindly provide it and incide incidentally just provide it, we'll let you know. >> provide it without getting any control over the company. what was with bernabe's views? try to cut the debt and fund some investments. what was wrong with that. >> i think the problem with that plan is that that assumes that telecom italia is got an ongoing business profile as an independent business and look at it back at the history. if you do that raise you're

saying, telecom italia has a growth future and argument being, that's where it will be driven. that has been the story that the up story for telecom italia for possibly a decade and hasn't come true because the italian home market has pulled it down and if you would look back a little bit basically it started about ten years ago and essentially opi smashed their mobile business to pieces. opi at the time if i recall correctly was run by vittorio kalau and now he runs vodafone and makes shareholders pleased. when you contrast that to bernabe, it's his second go, when you contrast that with bernabe shareholders are showing they're not delighted with is performance so don't think it has a long-term future unless propped up by the state. >> can i ask you a general question about the industry as a whole. i went in to buy a sim card and was amaze the with the number of

companies and options. back in canada you only have a few options. singapore, a few. china, only three telcos. i had so many different options. what's the future of the telco future? >> you can look at it from a macro economic perspective and most of the markets can support three players with some hope of maintaining a stable margin base. you've got to look at the regulatory profile which we dealt with on the show and on "the pulse" and that profile is essentially if you reduce the trade you get economic growth in europe and those tariffs are a barrier to trade between countries so you have two things, need them to merge some of the operators with a flat regulatory base which reduces transaction costs, so if we say, you know, maybe three operators can be supported, remember, also that the diversity of options you get when you're buying a sim

card a lot is to do with diffusion brands and a lot with players who do not own the network but have set up and rent space on the network and that's all healthy and the premiums you pay a lot more for that kind of disposable sim card market. but on a per minute basis but much more controllable in terms of your monthly outgo. >> you won't get stuck with that 500 euro bill. >> can reduce your calling outlet. >> spanish auction briefly. reports about vodafone going to be in play? for the likes of at&t or not, do you think? is that realistic? >> i think it is now realistic with the disposable essential disposable verizon's stake. it's a company you could handle and don't have the verizon issue. whether or not it'll happen is completely different issue but as a potential to be in play, yes. >> okay, good to see you. thanks very much. dire spanish auction, 3.5 billion and

sold -- let me work this out, 1.378 million euros and 995 with the coupon of that, 4.5% coupon was 2 points -- looking for the yields. why is this not giving me the yields. that's what i want. here we go. i have the yields. maximum yield on the 2018 bond 2.82% lower than the 3.47% we had in september and 3.16, that's on the 3% coupon and 3 1/2% as far as the ten-year is concerned maximum yield 4.29%. it was 4.5% on september 5th so yields have come lower. deirdre, 1.3, 1.2, 2 1/2 plus just under a billion.

they've raised about the 3.5 million maximum as well so i have to do that out loud in my head. >> you've worked it out and they're in demand. the recovery seems to if you can call it that seems to be going forward. >> hasn't dimmed demand for paper. peter schaffrik head of european rate strategy at rbc and with us. yields are lower and seemed to raise 3.5 billion if my math is right, peter. how would you compare demand for spanish paper with that over italian right now? >> well, i mean it has clearly been overshadowed by the entire political situation in italy most recently. one of the things is clear that if you look at the behavior of both markets over the last six, nine, even 12-month -- what is very clear is that italy got the message through the markets that spine is doing their homework and italy is not because the spread has compressed quite a bit as i was saying earlier throughout the political crisis in italy now spain was trading

through italy the ten-year -- basically across the curve for the first time in a while and i think that's a clear message, do the reforms put political stability or political stable government in place and the market is going to help you out. >> yeah, have we reached sort of maximum spread compression, do you think, for italy and spain versus bonds. >> no, i think there is more room to go both in absolute yield levels and also in spread levels versus bonds, that's again the entire curve so for the front end of the curve for the two-year part i can see them trading at around 1%, not tore from where we are in the ten-year part of the curve i can definitely see a spread compressed between below 200 basis points. i can certainly see that. >> okay, peter, thanks for that. good to see you. peter schaaf africa from rbc joining us today. still to come -- >> that's right, chinese gaming online gaming company forgame.

it's not chinese formany game's ipo surges. >> for play, i don't know. >> retail institution alt ambassadors piled in but as game development competition inten intensifies in china, formany game, will they hold on to their market share for long? coming up after the break.

the european commission is ready to charge gazprom with anti-competitive practices. the chief says he expects moving into the investigation. speaking exclusively to cnbc the ceo said the action is politically motivated. >> we mentioned competition. i will meet this week and we will try to give answers. questions have been raised but some of these questions are far away from the reality and i'm afraid that they are generated on political motivation, not on economic performance. >> gazprom shares trend down. russia just down, what, 2/3 of a percent. >> reports of a new leak in

fukushima are sending power shares lower. we have this story live from tokyo. over to you. >> hi, another tank was found leaking contaminated water. part of it possibly flowing out into the ocean. tokyo electric power says it was not standing straight as it was built on a sloped area. still water was poured into full capacity leading to a spillage. chief cabinet secretary suga says the government will work with tepco to prevent additional leakages and reiterated the fukushima issue is under control. the nikkei reporting that they will get a new waterproof system in order to speed up the decontamination. the new system will be jointly developed by toshiba and hitachi and can purify toxic water to double the capacity of the current one much the government is steadily taking steps to resume operations of the

nation's nuclear power plants. the nikkei is reporting that the system will be revamped. a number of hospitals will be ramped up to give immediate care to those exposed to radiation. that's all from nikkei business report. back to you. >> yukako, thank you. asia tomorrow we'll watch shares of samsung, rising ahead of the guidance. the latest policy decision after a tax hike announcement and india, the pmi due there. game on, investors, cannot seem to get enough of the chinese internet space and the largest game developer forgame saw a huge jump closing 32% higher. enormous interest in the $206 million ipo which was 313 times

over subscribed. eric cho analyst at ccb international joins us from hong kong. eric, the chinese internet space has been doing incredibly, incredibly well this year. this is quite a difference, marley firms listed in the u.s. they've had a bit of a downturn over the last few years when investors lost trust in chinese companies overall. do you think this revival will last and was this latest ipo an indication of that from forgame? >> yes, today this year the china internet behaves quite good in terms of share price and a lot of companies buying the q to get listed. i think it's a very good signal that the marketing like the forgame company and china internet. we believe more china internet companies will come to hong kong for listing in next one year's time. >> eric, do you think that perhaps those involved in the ali baba ipo is looking at this

latest offering and say, i don't know, maybe she should have done this in hong kong or perhaps charles lee from the hong kong exchange is looking and think, we really missed out on one with alibaba. >> as far as i know, alibaba does not give up the hope for listing in hong kong. i think they're still in some negotiation with hong kong regulators, but we don't know the outcomes but i think for hong kong and also for alibaba, the top choice was to get listing in hong kong because hong kong market is more close to the china mainland here. maybe more familiar with alibaba as its companies and also in the u.s., there are too much other e-commerce companies that would not give that high to alibaba. >> charles lee, very strange dream with mr. practical. no mr. solution. aside from that let me ask you

forgame, do you think it's an acquisition target? we've seen enormous activity among the big ones. do you think it's a target? s>> i think there's a chance fo this acquisition but as long as it has been listed separately in the hong kong market a trend has been diminishing. a bunch of more web game companies in china that's not got listed yet. they could have very big chance to be buyed by albie baba or asia listed companies. it has been happening over the whole industry before the last of the few months we see a lot of asian companies aggressively buying different kind of web companies ford to boost their net income. >> a lot of chinese internet companies trying to find out how

to monetize the mobile side of their businesses. has forgame figured that out? >> currently forgame has been very strong in web game development. it has been starting its mobile ga gaming development but as far as i know currently the revenue contribution from the mobile game is still quite small and we expect to see some large progress on the mobile game side for the next 6 or 12 months. >> okay. >> it has been valued somewhat in the share price, i think. >> okay, eric, thank you associate. eric qiu joining us from hong kong. >> plenty more to come in the second hour of "worldwide exchange." what is going to happen with investors and the budget talks? also get into global ipo wars. >

exchange." i'm ross westgate. >> i'm deirdre wang morris. >> no deal struck to end the government shutdown yet. in an exclusive interview with cnbc, the president has expressed his frustration. >> am i exasperated? absolutely i'm exasperated because this is entirely unnecessary. >> meanwhile, italy sidesteps its political crisis. upheaval ahead in the corporate sector. first up italia which could see

its ceo tender his resignation today. europe antitrust regulators ready to charge gazprom but their ceo of exports say the move is politically motivated. >> some of these are far away from the reality and i'm afraid that they're generated on political motivations, not on economic ones. forgame surges scoring bonus points for retail investors who piled into its ipo. so president obama met with the top four congressional leaders at the white house wednesday evening to try to break the budget deadlock that's led to the u.s. government shutdown but after more than an hour of talks, there was no breakthrough. both sides are continuing to blame each other.

>> the president reiterated one more time tonight that he will not negotiate. we've got divided government. democrats control the white house and the senate. republicans control the house. we sent four different proposals over to our democrat colleagues in the senate. they rejected all of them. we've asked them in a conference to sit down and try to resolve our differences, they don't want -- they will not negotiate. >> i thought that they were concerned about the long-term fiscal affairs of this country and we said we are too. let's talk about it. my friend, john boehner, i repeat cannot take yes for an answer. >> well, earlier in an exclusive interview with our very own john harwood president obama expressed his own frustration with the tea party faction of the republican party who have been dead set on tying government funding and the debate over the u.s. debt ceiling to efforts to defund his

health care reform law. >> during the course of my presidency, i have bent over backwards to work with the republican party, and have purposely kept my rhetoric down, i think i'm pretty well known for being a calm guy, sometimes people think i'm too calm and am i exasperated? absolutely i'm exasperated because this is entirely unnecessary. >> u.s. markets meanwhile have been relatively calm amidst the government shutdown but the president says wall street should be genuinely worried. >> i think this time is different. i think they should be concerned. when you have a situation in which a faction is willing potentially to default on u.s. government obligations, then we are in trouble, and if they're willing to do it now, they'll be

willing to do it later. >> coming up, john harwood will join us to discuss his exclusive interview. you just saw a clip. live from washington in just under 30 minutes. joining us now is the head of investment strategy at brooks mcdonald. gemma, we've been talking about it for a long time and keep going around in circles, it feels like, because u.s. politicians keep going around in circles. what i'm wondering, the tea party faction which seems to be driving this impasse, what is going to happen? what is go going to get them to relent. >> one concern is if there's a prolonged shutdown. the reason it's such a concern unlike previous shutdowns, this time it's different for three reasons, economically we're in a much weaker position, growth is very fragile. and we actually heard coming out of the u.s. the jobs data very disappointing. secondly we've got the debt ceiling looming and finally look where markets are. markets are elevated and this is a prime time for people to actually take profits, take that

step back and reassess things when the volatility -- >> so you're saying we should be concerned but the pricing -- that price action doesn't suggest that we are. so how long does the take before you see those things you've talked about reflected in price action? >> there's a lot of complacency in markets and they're swinging from concern to relief about dodging a bullet so what markets are priced in is a shutdown but only lasting a matter of days so that's -- we're putting a time cap on it to go from days to more than a few weeks. >> but it doesn't look like that at all. the next big event which is much bigger is the debt ceiling and the u.s. government expected to run out of money on october 17th. do you expect -- i mean even looking at the do you futures it's not a huge sell-off even after president obama's comments to us on our show. so what is going to take? why are they so complacent and will we start to see a sell-off

as we reach october 17th. >> well, the reason why there hasn't been so much of a sell-off is that it's due to this complacency and investors trying to grapple for the positivity and there is a belief we will muddle through so one of the concerns with the debt ceiling is if u.s. debt is downgraded and it would be downgraded for two reasons, if there's an impasse but also a lack of a long-term solution, and that's where the concern lies. however, there's more risk in the equity markets than in the bond markets because as we saw previously even if there is a debt downgrade, people will shrug it off because there are so few alternatives. >> still be a demand for treasuries and the fed is still buying a billion dollars' worth of -- well, combined of bonds and bank security, as well. interesting thing, there is an economic impact. for every week of shutdown and deutsche bank after two weeks it's 0.2%. there will be an economic impact here and maybe that would be something that you have to think.

>> if it lasts a month 1.4% of gdp and we're talking about very fragile growth already and talking about it from a financial standpoint, the previous shutdown in the '90s in today's money lasting a month had an impact of 2 billion but actually today if we saw that for a month it would be 8 billion so things are a lot tougher than they were before and this complacency is a concern. >> absolutely. you already are starting to see the economic impact. announcing layoffs and we'll continue talking to gemma and been asking you guys -- >> that was good. >> i got the ready -- i brought in cupcakes, as well. yes, yes. >> those look pretty good. >> vanilla cream. >> the trick is to be able to eat a cupcake in between the bits when we're not actually on air. >> ross, i think you have 30 seconds right here. you can eat one quickly. oh, no. anyway you're still on camera. cupcakes aside maybe we'll give you one if you answer a few questions. what you maid of president's wall street warning.

was it genuine concern or just plain politics? gemma says they might be complacent, but john from hungary tweeted us to say obama is exasperated -- exasperated with the negotiations. but he says he won't negotiate. what a bunch of complete dot, dot, dot. i wonder what that could be, you can fill in the blank yourself or send us another one. do you agree, disagree. join the conversation on "worldwide exchange," get in touch with us. e-mail us. see the twitter handle @cnbc ash i'm @deecnbc. >> thanks for that, dee. the dow down 5 points. yesterday right now the s&p's pretty much trading on fair value. well, we're about sash sorely seven points below, the nasdaq is right now 11 points below

fair value and dow at the moment is about 60 points below fair value as you can see. as far as european equities are concerned, just the ftse up 0.2%. flat for the xetra dax and ibex and out of the uk they're staying up at extended levels. take all that pointing to quarter third quarter gdp growth of 1.2% for the quarter, the cac 40 is down 0.2% and a look at the bond markets for you, auction out of spain. spanish yields contained a 4.28% and currency market, as well. the dollar index still near these eight-month lows, euro/dollar, 1.36, not far away from the 1.3623 level or 1.37 level which is the peak we saw on february the 1st. dee. >> a check of markets in asia. mainland chinese markets till

closed for that week-long but sixuan is there for us. >> thank you, deirdre. china's data helped offset worries over the u.s. government shutdown. with china and south korea out for holidays most other asian markets ended in the green but even with the weaker yen, the nikkei finished lower after tumbling 2% on the sales tax hike announcement. what has been weighing on the nikkei, tokyo electric shares tumbled almost 5% after reports of a new radioactive leak at its fukushima power plant. investors fear it could delay the process of its other restart applications. meanwhile, mainland blue chips helped the hang seng eke out its biggest gain in two weeks. china telecom and unicom surged 7 to 8% on speculation

authorities will lower settlement fees for users at these two smaller operators. that will also ensure fairer competition with the number one carrier, china mobile. shares of which slipped 0.7% today. if you don't know about this, china mobile has over 750 million users so that's more than double the population of the united states. while china telecom and unicom are iphone carriers we're still waiting for china mobile to strike a deal with apple. back to you. >> thank you, sixuan. the country's low shift toward a dose mess trick driven economy may be under way though still a long way to go. pmi rose to 55.4% in september. a six-month high, the jump in the services number comes just as china's factory growth, that manufacturing pmi appeared to be slowing down. and it's not just the american people that are upset over the congressional stalemate. china says the shutdown could affect the world economy.

xinhua says the ugly side has been exposed which could lead to the u.s. missing its debt obligations and the concern is real. china's the biggest holder of u.s. government debt around $1.3 trillion worth at the end -- i think the if he had is now the biggest holder of government debt. isn't it? >> more than china? oh, right, because of -- yeah. >> i think. i might be -- i've -- what am i supposed to do with this? >> i would say eat it. >> i've got one too. >> gemma brought us in cupcakes. >> our guests out there, this is very, very much appreciated. >> i don't know if there's anyway i can -- >> like a doughnut without licking your lips. >> right. >> i to eat mine during the break. >> all right. well, while we ponder that challenge, more to come. >> that's right. the european commission is set to antitrust -- to deliver -- cupcake on my mind.

antitrust charges against gazprom. the oil giant's response after the break. [ 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.

just joining us, a recap of headlines. president obama and congressional leaders meet as the u.s. government shutdown enters its third day. >> antitrust regulators are ready to charge gazprom with anti-competitive practices. >> and forgame scores big on its hong kong debut. the european commission is ready to charge russian gas giant gazprom with anti-competitive practices. they're anticipating into moving into the next phase of the investigation into the form's export monopoly. speaking exclusively to cnbc the ceo said the action is politically motivated. competition amid this week and we will try to give answers.

questions have been raised but some of these questions are far away from the reality and i'm afraid that they are generated on political motivations, not on economic performance. >> italy had to lunch a rescue operation after a migrant boat has sunk near the island of lamparduzo. as many as 60 or 62 have died. this huh-uh cording to the italian transport minter sinking off the coast of italy. sub-saharan african migrants. we'll keep our eye on that. u.s. appeals court ordered a lower court judge to halt payments to some gulf coast businesses claiming damage from the bp oil spill and could slow the pace of hundreds of millions they're making under a massive class action settlement. when the deal was approved last year bp estimated it would have to pay some 7.8 billion u.s.

dollars. it now says it cannot estimate costs because a court appointed fund administrator miscalculated claims resulting in payments that were too large. take a look at bp shares. trading higher by 1.10%. okay, well, still to come on the show, joy and despair from silvio berlusconi. >> can investors be any more confident in italy? we'll have the latest from rome. [ taps baton ]

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a bit of world news following this morning. the italian coast guard launched an operation after an immigrant both from sub-saharan africa sunk off the coast of lampedusa. death toll up to 62 according to the italian transport minister. 60 people have been saved but there at 100 more who were in the water. we'll keep you up to speed with that. and we have another flash, as well. from reuters, passenger plane crash lands at nigeria's lagos airport domestic terminal. smoke is seen rising from the direction of the runway. let me see if we have any more news on this if you bear with me. that's all we have so far but we will continue to update you on both this and the boat incident,

as well. okay, telecom italia's ceo is widely expected to resign amid a row over the strategic direction of the operator. the company's board meets later and will likely discuss an internal reorganization and a possible spin-off of some of the firm's business divisions. italian prosecutor going after jpmorgan over its deals in a takeover of a rival banker. they want them to stand trial for the probe into the 2008 deal. the new york based bank financed it to the tune of $1.36 billion. seven others including monty dipasci is being asked to stand trial. historic day for democracy in italy how enrico letta described the events in rome which saw the prime minister in the end easily survive a confidence vote in the senate.

speaking then to the lower house he said his government must now look towards the future. >> translator: there must be no more blackmailing in this government. i don't want to hear any more saying is either we do this or the government falls, because we showed that the government will not fall if this will be the behavior. >> choking on some cupcakes here. julia is on the streets of rome doing, you know, some real hard work there talking to people on the streets asking them whether they would still support silvio berlusconi and they're still supporting them out there. this may not be the end of him yet. >> reporter: dee, i can tell you the union protesting, i could not hear a word of what you were saying. they are making a racket so i'll talk to you about what happens next for italy. all over the papers today splashed the failure of berlusconi and will will make the coalition government now stronger because he's taken such a huge knock.

i think there has to be huge question marks over that. they were failing to agree on economic reforms, on bringing the deficit down. >> unfortunately we've lost julia due to a technical reason. maybe she was having cupcake issues, as well >> that's just me in gemma trying to sabotage the show. head to cnbc.com to find silvio berlusconi's greatest hits. we saw this week that the eurozone crisis is over. >> everything is over. let's just celebrate. >> a reaction of the way investors have been pricing it. >> exactly. the way that the markets have been moving, assumes that that's the crisis is over. there are no more debt problem, no more deficits. everything is wonderful and as we know that's actually one of the main risks when markets are so complacent and are so overexcited about certain area and you are seeing this flow even from u.s. investors back -- >> you say a big institutional

flow back into european -- >> exactly. it's at times like this we will see a few things come back in the headlines in terms of greece and portugal and obviously italy affecting italian bonds. >> but what we're saying, never an existential threat to the euro and we could deal with muddling growth and deal with protracted political -- doing nothing, no? >> the things that are needed to ensure that the eurozone can stay in its present state for how many more years in the future are you need closer unity in terms of sharing their budgets and a banking -- >> you could do that over 30 years. >> yeah, just slowly. >> that's what's going to happen because there was no appetite to break it up or make it closer, just live with it. >> but you'll still have these shocks. >> i think it's crazy sitting here and talking about europe sort of in recovery mode and that's a given. just like what's going on in the u.s., that clearly must be a threat to european investors here because i mean if the u.s.

falls off the cliff i'm not saying that's going to happen but if we see the slow growth and can't come to an agreement over the budget and reach october 15th how does that affect europe? >> the problem is this whole cross correlation we're seeing and the tack that companies aren't insular. companies are international. so the important thing as the investor is to when you're looking at investments looking at the companies and the stocks you're investing in where are their clients based? where is the customer based? the reason why it does affect europe is that a lot of european companies sell to the u.s. likewise, the reason why europe's important for the u.s. is the same reason. we saw coca-cola come out and disappoint the market with their earnings? why because their demand for europe didn't come through. you are seeing that and it's important globally. >> gemma, thank you for that and these, these cupcakes. >> what's the investment trade at the moment. >> the investment trade is to focus on purchasing power, so if

there's a company that actually in this type of environment where consumer spending, uncertainty will hit consumer spending and will potentially delay it slightly. if you're a company that has strong pricing power you can protect margins a lot more. that's the theme we're playing on the stock level. >> i apologize. i thought we were saying good-bye but now we are. thank you for the cupcakes as well. >> you ate yours pretty quickly. >> i might have squeezed it in. >> i'm surprised you're not the one choking. with all eyes on the debt lock, i like that in washington what would you ask president obama if you had the chance to sit down for an exclusive one-on-one? >> yep. we'll speak to john harwood who did that. "worldwide exchange" continues after this. u.s. futures indicating a negative start this morning for wall street. [ 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?

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this is "worldwide exchange." i'm ross westgate. >> and i'm deirdre wang morris. these are your headlines from around the world. >> president obama and congressional leaders meet at the white house. no deal yet to end the government shutdown. in an exclusive interview with cnbc the president has expressed his frustration. >> am i exasperated? absolutely i'm exasperated. because this is entirely unnecessary. >> europe's antitrust regulator is ready to charge gazprom with

anti-competitive practices but they say the move is politically motivated. >> some of this information is far away from the reality, and i'm afraid that they're generated on political motivations not on economic performance. >> foreplay is scoring bonus points for retail investors who piled into its ipo. >> and a very good morning. stateside. just joined us welcome to your global trading day. softer at the close, dow down 58, s&p down a point. open softer once again, the s&p currently trading around 7.5% below fair value and the dow is currently some, what, 55 points below fair value. european equities have been mixed during the session much

the ftse 100 up a quarter of a percent. pretty decent pmi coming out, an indication of quarterly growth for the third quarter of 1.2%. xetra dax and ibex is fairly flat. post the survival of let's government if that coalition government, dee? >> u.s. government shutdown enters its third day today. some action, but no major breakthrough on wednesday as president obama brought the top four congressional leaders together for a meeting at the white house. both sides emerged from the talks blaming each other. before that meeting president obama sat down for an exclusive interview with cnbc's john harwood who joins us now from washington. john, great interview and, you know, we've been asking people on twitter throughout the show whether they thought his warning for markets they were maybe a little complacent was a tactical thing, part of his strategy or

real concern. what was your impression? >> reporter: my impression it's real concern. now, i do expect that it'll get resolved in the end by the time we get to mid-november and our -- in danger of hitting the debt limit of the united states and needs to be raised but i think the president has drawn a pretty hard line saying he's not going to negotiate over budget issues until republicans re-open the government and raise that debt limit. that's a hard line for the speaker to cross and the president wanted markets to know he needs their help and the reason he needs their help is it's going to affect them in a negative way. he's trying to wake them up. here's the president. >> i think this time is different i think they should be concerned. when you have a situation in which a faction is willing potentially to default on u.s. government obligations, then we are in trouble, and if they're willing to do it now, they'll be

willing to do it later. >> so we've got to those meetings last night with the bipartisan leadership. that didn't produce anything and i think the administration's view is that when you look at the polling, which is shows the democrats have the high side of the argument, they're waiting for republicans to decide to give in. >> yeah, and you said you think there will be a resolution so what would that resolution look like? what would the give-in look like? >> reporter: a surrender on the issue of funding the government and raising the debt limit. that is just doing it. and that may require the speaker of the house to, in effect, cut loose the 30 or 40 tea party members who have caused him to take this up to the brink. he didn't want to do this. this wasn't his strategy. they forced the strategy upon him. the party's divided and the

white house believes that they can drive a wedge through that division so that republicans will give in. now, once that happens, then you've got a negotiation which is more conventional and understandable. what programs get cut. which ones don't, do any taxes get raised? the president did not draw a sharp line saying that he's insisting on tax increases. he took tax rates off the table and said, while we want to close loopholes, he wasn't emphatic about it so suggests the possibility of a budget deal in which you would not have tax increases which has been the biggest problem for republicans to reach such a deal but that's a different kind of negotiation than the one we're in now where republicans are saying in effect we're not going to let the government function unless you troy your health care law. >> john, how long before boehner does -- crossing it and cuts those members of the party loose as you put it and what happens to him when he does?

>> reporter: i think the rubicon comes into view around october 17th which is when jack lew, the treasury secretary says we will run up against the debt limb and i think the approach of that deadline is likely to drive both side' strategies, being merged into one, i do think that john boehner, he did not want a government shutdown, but he doesn't want a u.s. debt default even more because the republicans have a majority in the house that is difficult for democrats to break, but if republicans are seen as responsible for driving the u.s. economy back into recession for raising mortgage rates, for raising interest rates, that is a recipe for democrats winning back control of the house and i think john boehner even though individual members don't feel that pressure because many of them are from safe districts john boehner feels that pressure. >> yeah, and so what, you think

we'll get sort of a budget and a debt ceiling resolution all rolled into one, one sort of bill? >> reporter: well, the -- yes, narrowly that is to say budget and debt ceiling meaning a temporary spending bill. there would be a subsequent negotiation over a longer term budget. right now they're only talking, ross, about a budget that would go through mid-november. it's not even all of the fiscal year and democrats, remember, have conceded at least for now the spending levels that republicans insist on. democrats want more spending, they're not insisting on that right now. democrats are making no deparndzs in this process other than re-open the government and that -- that is why the american public, if you look at polls, thinks that democrats are being more reasonable and the president being more reasonable than republicans are. >> okay, john, great interview by the way, thanks for that and thanks for coming on this morning and talking about it more. we appreciate it. john harwood. >> we talk about this and

so-called cutting loose the tea party members. what the future of the republican party looks like in the u.s. >> yeah. i mean, john makes that point. i mean those elements of the, you know, the tea party members who -- in their constituencies they don't feel any pressure at all because they're representing the interests of their -- >> they're doing exactly what's right for hair constituents who don't care about a government shutdown. >> isn't right for the overall country. >> we have been asking you what you made of the president's wall street warning in particular. now, was that genuine concern or was it just playing politics? we asked john that. he said that he thought it was maybe a little bit of both. lou tweeted us to say "i think he is serious. also i am a government worker on furlough. why should the military be paid and not me? am i any less of a person than the military? wow, pretty powerful tweet there. >> thanks for that. let us know what you think as well. join lou on the conversation, "worldwide exchange."

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recap of the headlines today. president obama and congressional leaders meet as the u.s. government shutdown enters its third day. europe's antitrust regulators stands ready to charge gazprom with anti-competitive practices. and big game developer foregame scores big in its hong kong debut. >> all right. talking of flotations the u.s. ipo market appears to be healthy when they show not a bad appetite for new deals. we have more from the hq in cnbc in the states. hi, kayla. >> hey, ross, well, the ipo market is dough far delivered its best performance in six years on a year-to-date basis, come a long way following the financial crisis. wednesday you saw three of the latest big deals come to market. empire state realty, the owner of the empire state building

road nearly 1%. outshined by residential reestate company re/max and burlington which soars 23 and 47% on their first day. now 158 ipos that are priced this year and according to renaissance capital that's up 52% from this point last year. there haven't been this many companies going public since 2007 when there were 213 belief the financial crisis. so far this year they have raised $33.3 billion down about 6% though from last year so they're raising less money overall. the of the deals that have come to market most in health care and technology. the most anticipated deal of the fall is twitter. it's already made a secret filing with the s.e.c. and under the new jobs act companies with less than a billion dollars in annual revenue are allowed to keep those details under wraps until about three weeks before the start of road shows where the company goes out and meets investors to encourage potential

investors to participate. twitter's prospectus is expected in the coming days and cnbc confirmed they would make it public this week. that suggests the road show could start later this month and typically last a week or two and twitter could come to market as early as november. we're certainly watching that one. we have all eyes on twitter before the end of the year. >> yeah, you bet. thanks for that, kayla. >> i'm just as interested in the alibaba one which potentially could be in the u.s. we'll have to wait longer for the details. maybe that's because i'm usually sitting in asia. game on. they can't get enough of the chinese internet space. foregame saw a huge jump. reformous retail interest in the $206 million ipo which was 313 times over subscribed. expansion is high on forgame's agenda with 60% earmarked for takeovers and new game licenses. so which markets are proving to

be the most popular and what impact would it have on listings globally. joining us now john jenarone and haley inwebrahimi. >> john, you were saying in europe it may be the most interesting. why is that? >> all the attention is on, of course, hong kong versus new york with alibaba. europe has taken off. a januaryoff. the market ground to a halt but in match buyers and sellers kind of found a price they agreed on. i'd say it started with the countrywide deal back in march. that was apollo and oak tree were selling that and as kayla was talking about real estate in the u.s., these are real estate deals too. very cyclical stuff and -- >> in the uk -- >> you're right. we have no ipos in the uk for

three years because fund managers just spat everything out and said no way. that seems to have changed. foxton traded up. when you speak to bankers they're talking about the equity markets outbidding private equity and that hasn't happened for years. pets home, these were deals that were dual track. the fund managers got very annoyed with because right at the 11th hour you'd have a sponsor walk in, bid more and get the deal so i think you're seeing a reversal because the kind of ratios that fund managers are paying in equity markets are paying in europe which is different. u.s. has been fairly resilient especially with tech deals, it's huge at the moment? right, a lot of what we're seeing in europe i think is u.s. money because everyone was afraid of going into europe so what i understand a lot of these deals have been supported by u.s. institutional buyers. and there's as you can imagine a big backlog of deals. >> private equity groups must

be -- they haven't had many hoops for exit. pent-up demand for sale. >> there was also pent-up demand for european assets so at the moment things feel pretty good. >> you have things like kind of merlin though which is a huge uk ipo. >> jumping into this one. >> i did. i did jump into this one but actually you might see a bit of an effect. you were talking about the u.s. shutdown and how will that play out. companies like merlin were expecting them to do their intention to float next week, but that could actually be delayed because a lot of their buyers as you say are american. you know, huge kind of hedge funds and big money market guys that would own things like seaworld out in the u.s. very interested in the merlin deal. but would you go next week if you've got potential sell-off in the next fortnight so what's happening in the u.s. could have a detrimental effect at the moment at least till the 18th

anyway. >> yeah, i mean i think -- again, i mean when you've got so much supply there, i mean these guys have been waiting a long time. you have to think about the life cycle of these private equity funds. probably a fair amount of companies out there sitting on they'd like to sell into the strong bid and, you know, it's been a long time since you could say what you said before, that the public market is actually the preferable way. it wasn't that long ago, remember it was off the table. right. ipo exit. it was something people weren't thinking about. >> we're talking about the reversal and bring up the asia point of view, as well. hong kong used to be one of the pose popular ipo markets in the world and now with alibaba potentially choosing new york over hong kong how does that hurt hong kong? are we seeing a real slowdown will. >> i don't think so. look -- there's luxury companies that went to hong kong and seem happy with that. although getting back to europe, i was talking to someone from -- who is close to montclair who

makes ski jacks and they'll go to italy. it's tough to say. i don't think -- my understanding the real story with hong kong, albie baba they couldn't do the dual share class thing. >> but that company is expected to be worth -- could be worth more than facebook. $16 billion ipo. >> it's going to be huge. >> okay. >> i was just thinking other people that will be happy is the brokerage houses, no deal flow and -- >> rights issues tomorrow with barclays, royal mail and this kind retail sell-off. thank god bonuses are back in the city. >> makes an ee norm always difference to me. thanks for that. well, coming up could the u.s. government shutdown be the grinch that steals christmas for retailers? that doesn't sound too good, does it, ross? >> i don't like that. >> we'll discuss and find out what the experts think after the

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a look at what's on the agenda. weekly jobless claims out at 8:30 a.m. eastern forecast forecast cast to rise by 9,000 to a total of 314,000. the september ism services index is out at 10:00 a.m. analysts expect a rating of 57. down about a point and a half from august. august factory orders scheduled to be released today but the commerce department has postp e postponed that report due to the government shutdown. a pair of fed officials, john williams and dallas' richard fisher speak today. as for earnings look out for numbers from constellation

brands. the national retail federation is out with its u.s. holiday shopping forecast. they predict sales will rise 3.9%. but economic concerns might impact spending. the nrf says it things on whether congress and the obama administration are able to resolve their differences over the government shutdown as well as the looming debt ceiling debate. joining us from cnbc states is jan niven. good to see you. thanks much indeed for coming in. how do you think we're set here ahead of the holiday season with this government shutdown? >> well, i think retailers are a little less optimistic looking for 3 plus and estimates all over the board. shopper trak came at 3.4%. i think we've had a tough

back-to-school season. all the money has been going into houses and cars and tech, so in general, retailers are going to inventory, leanly, they'll hire as few people as possible. they're going to hunker down and hope we don't have a debt limit issue that's a big problem just like the continuing resolution has been a big problem. none of this is going to help retail and we have the shortest retail selling season for holiday we can get so nothing is going the right way at the moment for retail sales for christmas? what you just said based on the assumption this government shutdown lasts only a few days versus a few weeks, what are the implications of the length of this shutdown? >> well, if the shutdown is all that happens we'll see tough business around the d.c. area as we always do, you know, we've been through this 17 times during my career. so it always hurts retail sales but in general, my bigger concern is not the shutdown. this will eventually get done. let's pretend it lasts a week, i

don't think we'll see much impact on national retail sales. do we see any hiccup in the economy and get to the brink and do have dislocates in the economy that will certainly affect the consumer. but, you know, the consumer is not really paying much attention to the shutdown. however, people who respect getting paychecks, the government employees, they are paying attention. they won't be spending around the d.c. area and other parts of the country where the government is a big employer. >> if things aren't that great why is sam sohn hiring 70,000 seasonal workers? >> boy, that's a good question. amazon sales will be up 22%, 23% for the holiday and they've hired 40% more people. so you say, what are thinkingy well, they've opened a lot more distribution centers to be closer to the customer so they have to staff them. so they're hiring a lot more people than they'll have sales. >> the that the -- >> which means they'll be losing money. >> they always lose money.

nobody cares. the stock price stays up anyway. >> you need to attract the chinese buyers, i think. let me ask you, the national retail federation, pretty optimistic, forecasting a rise of 3.9%. i know you mentioned that at the beginning. but what's behind their optimism? >> well, i think the nrf has been generally more optimistic and believe i think that they will transition to discrest nary sales away from houses and cars. i think that will happen, as well but i would still think if we get to 3.9 we'll all be popping champagne corks in the retail sector if we get to 3.9% this year. as a matter of fact, i'm not sure we can do 3.9%. we don't have enough inventory. >> oh, interesting. okay. well -- >> buy now while stocks last. jan, good to see you. thanks so much indeed for joining us. jan, ceo of kniffen. the president and the

shutdown, jay says, i believe he is exasperated but i also believe he is trying to turn the heat up to force their hand. thank you so much. >> it's been fun. i'll be back soon.

good morning, president obama tells john harwood wall street should be worried about what's going on in washington. while house speaker john boehner says the president just won't negotiate. dow component united technologies may be able to furlough thousands of workers if this shutdown drags on and despite the d.c. dysfunction, the markets will get one bit of government data today. we'll still get weekly jobless claims at 8:30 a.m. eastern time but no employment friday, tomorrow, i don't think. it's thursday, october 3rd, 2013. "squawk box" begins right now.

>> good morning, everybody. welcome to "squawk box" here on cnbc. i'm becky quick along with john kernen. andrew is getting ready to talk to warren buffet and hank paulson. today's top stories. president obama says that he is exasperated over the gridlock in washington. in an exclusive interview with cnbc's chief washington correspondent john harwood the president said that wall street should not dismiss the battle on capitol hill. >> i think this time is different i think they should be concerned. when you have a situation in which a faction is willing potentially to default on u.s. government obligations, then we are in trouble, and if they're