hello. you're watching "worldwide exchange." i'm ross westgate. the headlines today, the dallas fed president richard fisher says the central bank's bond buying program can't go on forever. he also told cnbc the fed could be more clear with its guidance on monetary policy. germany's economic model, is it hurting europe? former central bankers speaking exclusively to cnbc disagree as the eu launches an investigation into the block's biggest economy. >> studying why germany is so

successful internationally in my view is a lot of lessons in particular the periphery can learn from that. >> my friend is brilliant, but wrong in this particular case. germany is doing the wrong thing in five different ways. >> meanwhile, china's leadership prepares to release its economic reform plan to the world. and on the on earnings front, vodafone unveils a $7 billion pound spending plan as weak trading in europe results in a record fall in core revenue. a warm welcome to you. the it's has pledged an aircraft carrier and other vessels will

go to the island as recovery efforts deny in the wake of typhoon haiyan. we'll have the latest from manila. back in london, sotheby's is preparing to sell some of the world's most expensive whines at its auction tomorrow. at 10:45 cet, are china's debt levels heading to a breaking point? china's debt policy could be on the brink of some kind of default. and our innovation cities week continue. we'll look at how van could you have ser heading through urban planning. initial enrollment estimates for the president obama's health care reform program fall far short of expectations. get the full story at 11:00 cet. but first, the dallas fed president richard fisher says the central bank's conservative

easing policy can't go on forever. the fed has been criticized for not being clear enough with its guidance, confusing estimates as to when it might start tapering its massive bond buying program. speaking to cnbc in australia, fisher admitted the fed hasn't communicated as effectively as it could. >> from my point of view, from the federal reserve bank of dallas's point of view, the efficacy declines with each dollar of bonds that we buy. the real issue markets care will is what is the forward guidance? what will we do after we stop this program and slow it down and where will we go from there? markets want to discount information as far forward as possible. >> and fisher says the fed does have a clear road map of future monetary policy. and while he's been critical of janet yellen in the past, he went on to say the perspective new fed chairman will work to create consensus among fomc

members. carolin is at the ubs conference at the landmark hotel in london. carolin, your next guest has been very clear about what he thinks communication policy should be for central bankers. if you say it, you've got to do it. >> yes, absolutely. i'm now joined by lorenzo's executive board member at the ecb. thank you so much for joining us. richard fisher there saying that the fed koovk somewhat clearer in terms of its communication. would you agree with that? >> it certainly creates some uncertainty. now the markets are asking themselves, when? how much? what factor will influence? last week we had a good employment number and the markets reacted negatively, which is really strange. so these -- i think these delays of the tapering has to be resolved sooner or later. >> it is clear that the fed to some extent by continuing to buy bonds in the market, by not

tapering, it could create asset bubbles and one of the fed members is quite concerned about that over the last couple of months. do you think that there is the risk of an asset bubble? >> well, if the economy recovers and strengthens and you continue to inject liquidity in the economy, that means that you're becoming more and more accommodating. and so the risk of fueling a bubble is certainly there. >> asset bubbles are great, aren't they, because equity investors feel better about themselves, they've got more wealth, they can spend more. >> they can burst. when they burst, then everybody gets hurt. so you have to be very careful. i think we have the experience of 2007, 2008. we have the experience of the high tech bubble. so when the bubble bursts, i think you have to be -- the idea was that monetary policy would take care of the bubble bursting. but the experience we are living through shows that there are limits. so it's better to avoid bubbles,

to prevent bubbles, than to try to deal with them afterwards. >> so basically, fed should have tapered in september and should be tapering as soon as possible. that's your view? >> i shouldn't say what the fed should do, but i think they should be more clear and guide the markets in an explicit way. as the economy recovers, i think it's better to do a little bit than uncertainty. >> talking about central bank communication, the market was shocked by the ecb rate cut last week. that would indicate that the ecb hasn't communicated as clearly as it should, otherwise the market wouldn't be as surprised. >> well, i was shocked that the market was shocked. to some extent, they had said they were going to cut. it was not clear when. some numbers going in that direction, inflation rates went down, the euro strengthening. the last number on credit was showing a sharp contraction.

i think what else did they need to cut rates? i think it was -- maybe it was not that surprising in the end. >> there have been some press reports about the ecb. those press errors says a quarter of the governing council disagree wes mr. draghi. they were saying he's helping the italian companies, the italian economy. >> i think my experience also is that the governing council always looks at the european economy. if you look at that type of economy, inflation is far away from 2%. credit is slowing by 3.5%. on the euro area average. the euro, which is the currency of everything, is -- was appreciating and was create ago problem for exports all over europe. so i think it's unfair and it's not -- i think it misses totally

the point of how the ecb works. i think the ecb looks at europe and europe is not doing well. we have to realize that. the last forecast by the european commission has slowed down the forecast for all european countries. so i think it's -- it loses the point, i think. >> okay. that's good to get some perspective. do you think this rate cut will actually help? >> well, let's put it in this way. had they not cut rates, it could have made things worse. so it's one contribution. it may not be sufficient because you need to bring inflation up. you need to stop the euro from appreciating. this morning it's again appreciating. so i think it's another step. i think if the fed starts tapering, there is a rebalancing because the european economy is worse, in a worse situation, so you need more accommodation. and so it's -- i think it's -- you know, some more steps are needed down the road.

>> quickly want to get your take on italy. it seems as though berlusconi should be pushed out of the politics. would that be a major catastrophe? could we see the break-up of the eurozone or does that even matter any more? >> i'm not an sxrert on this. but what italy needs is a government that implements reforms. that's what we have been missing over the past year. so it doesn't depend on the whole power, but it depends on who has the strength of doing these reforms, which is italy. >> i want to thank you for your time this morning, lorenzo. and, ross, a little later on in the show, we'll check in with michael petty from the university. we'll talk about china's reforms and talk to michael abraham is the program of cosponsors group at ubs investment bank. back over to you. >> thanks for that. plenty more to come from them. meanwhile, china's economic

agenda for the next decade is expected to be revealed in the next few hours as a major policy meeting has drawn to a close in beijing. let's get out to the chinese capital. eunice joins us from there. we'll await the huge anticipation for what we might get. what's the risk of disappointment? >> well, there is a big risk of disappointment because the expectations have been set so high. but what's interesting at this moment is that people are getting very excited about some local media reports. they're recorded first as saying beijing is about to change its one child policy. there have been growing expectations that beijing would loosen the policy. there have been more and more reports out in the past couple of minutes and people are talking about how beijing has been wanting to do this just because of the potential impact it could have on the economy. the population here has been aging very fast. pension systems are weak and many people fall through the

cracks. behind these smiles are very tragic tales. li ming an and a dozen other women dance every weekend at this park in the chinese city of yohan. they share an experience with china's one child policy. all of them have lost their only child. >> we can't talk about it with regular people. only we can understand each other. >> a member of li's support group lost her son to bone cancer. she and her husband now fear growing old alone. >> translator: we are really worried what we're going to do when we're old, whether i die first or he dies first. what happens to the other person? >> they have reason to be concerned. traditionally in china children take care of their parents when they grow old. so having only one child or no children means less support for the future.

despite the government efforts to improve pension systems, a recent survey of china's elderly found roughly nine out of ten have citizens depend on their families to survive. nearly one out of four live in poverty on less than $522 a year. and even though over 90% of the elderly population is covered by health insurance, out of pocket costs remain high while depression is on the rise. all of that means a bleak picture for the generation that built the nation's economic boom. mu and her husband live off factory pensions totalling $6 on 20 a month. >> we watched him grow up and thought his life and our lives would become better. >> translator: this is the paying of my whole life. i will never forget my son, never. >> eunice yoon, cnbc, beijing.

in addition to pension system reform, people here are hoping to see a whole host of economic reform ones in that communique, ross, which is supposed to be released until the next couple of hours. >> all sorts of things. land reforms, bank reforms, liberalization, also things we'll be looking for, eunice. thanks for that. we'll come back to you shortly, as well, during the program. plenty more from beijing. meanwhile, the extent of damage caused by typhoon haiyan is slowly being uncovered. thousands of people are expected missing or dead with many more homeless. the uss george washington aircraft carrier has been mobilized to help support the relief efforts. for more, sri is in manila. what's happening today?

>> well, ross, the problem here is that it's an agonizingly slow process in terms of getting all those essential supplies to the people who need them. so what we are here on the ground in the affected areas is a mounting sense of anger, desperation, and unease. these are very, very desperate people who have been reduced to begging for water and for food from even visiting journalists. so a desperate situation, indeed. what could change is the arrival of the uss george washington, en route from hong kong, carrying supplies, carrying much needed aerial support in the form of helicopters. britain is contributing military assets. and that could really change the game. that's what the relief agencies really need. they need aerial support because, remember, the storm

surge that this super typhoon caused generated a tsunami type of episode. that has washed out roads, blocked the roads, knocked down vital infrastructure including communication and power. so that is hampering the relief effort hugely. let me just give you an example of this. the icrc on november the 6th, dispatch, relief convoy of 11 trucks, she still haven't reached the affected areas yet. this morning, i talked to a rep who said the convoy is stuck because of a downed bridge and they're stuck about 50 kilometers away from the affected area, from tacloban. so they're tantalizingly close. if the roads were passable, they could get there in a matter of hours. but this is an excruciatingly slow process because of the logicist difficulties involved here, but the arrival of helicopters on board the uss

washington and the military asset that the u.s. and britain and a host of other countries can bring to bear could change the game here. ross. >> sri, thank you very much. that's the latest from the philippines. right now, we're 1:15 into the trading day. the trading day in europe, i should say. we're down 0.5% on the stoxx europe 600. right now, the ftse down 0.5%. vodafone is weaker. we'll get into that fairly shortly. the zet ra dax is off 0.3%. cac 40 down 0.3% and the ftse mib down 0.5%. treasury yields because on the rise. right now, 2.78%, so heading higher once again. and we'll keep our eyes on gilt yields, as well. we have the latest inflation print for the uk for the month

of on october coming out. the annual rate a nudge down from 2.5%. the gilt yields are high, heading back towards this 3% mark. sterling ahead of that, back below 1.60. aussie/dollar is weaker again. so it's a seven-week high for dollar/yen. once again, ironing up that 1100 level. and euro/dollar, steady at 1.3371. that is where we stand right now here in europe. let's update the trading day in asia. not bad. sixuan has the details for us. >> thank you, ross. asian markets are broadly higher today. the nikkei 225 led the gains as the dollar crossed inched closer to the 100 level. in china markets, mostly higher ahead of the party plenum

outcome. we are watching two ipos on the hong ko hong kong borse. and shares jumped 14% in its $127 million ipo. yet a flat start for hui suang bank. the soft listing comes as many other chinese lenders eyed hong kong's listings, aiming to raise over $10 billion within the next year. meanwhile, the kospi rebounded by about 1% from a two-month low thanks to bargain hunting and large caps. and australia's asx 200 up by just a thin margin of uncertainty over the fed tapering capped further upside. and due to the same concerns, india's sensex now trading lower by 0.6%. that's a look out of asian markets. back to you, ross.

>> sixuan, thanks for that. still to come, vodafone has beefed up its investment sales as core phones fall. we'll see why some think the stock is certainly worth looking at. welcome back. how is everything?

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. vodafone is pouring $7 billion into its. the british telecom giant did see a net profit for the first half of the year. joining us with his thoughts, guy pelli. good to see you. the chief executive says it's a very tough at present, but he's come out and said europe's at the bottom. do you agree with him? >> my feeling is close to there. things are tough. vodafone is struggling more than some of its competitors. >> is this the trough for the disappointment with vodafone or not? >> it's been called a few times

before, but i would probably say the full year fy 13-14 would probably end up being the low point, whether it's the last corporate. but the outlook for fy-14-15 will be better. >> i mean, the shares have rallied certainly since august and, clearly, when they did the deal over verizon, that was a big lump of cash for shareholders. >> it was a great deal, great valuation, great deal. since then, expectations have been that perhaps at&t have been more interested in european telcos and vodafone is one potential play for them if they want to expand into europe and it's big in cash again igenerat. >> there is a question mark, what happens first? does vodafone buy someone or do they get bought? do we have any clarity on that? >> you think if you weave

through their network on the next two years, they're signaling for the large cap m&a. they're going to invest in their networks, in their major core market, build on their portfolios. there might be the odd asset here and there in sub-saharan africa. >> what is the key for project strength? >> the key for vodafone is network. networks matter. that is having very good high quality networks that the consumer believes are high quality that the consumer will pay a premium for. and vodafone is trying to accelerate that process, perhaps in some markets from a position of relative weakness. but in general, what it's trying to do is get their lead on net worth so -- >> upgrade networks as well as have more of them? >> yes. increase the scale and increase the debts so we can do more greater, faster and higher data, higher quality voice. it's a bit of both.

in the uk, for example, they've got to widen their networks in london because they can't sustain the traffic that they need to do. in other on network he, it's about upgrading speed and capacity. >> who's going to benefit from them spending this money? >> the obvious one is equipment vendors. a large part of project spring is going to go on basic telco equipment, be it capacity and/or antennas and stations. that is the vendor's name. >> they have large sustain on distribution capabilities and things like that. >> where would you compare vodafone as an investment compared to some of the other opportunities in the telecom sector? >> the interesting thing about vodafone is that mobile has been underperforming fixed lines. clearly, it's experienced in the major european markets. we're probably a few quarters, perhaps a year away from getting absolute confidence on that. the incumbent competitors, how

winning in the mobile battle because they're perhaps a little more advanced on networks. vodafone is interesting long-term. but in the next 18, 24 modz months as he spends the incremental 7 billion is there's hope in in respect they have to spend the money before you see the benefits towards the end of the decade. you're being asked to buy your way through or hold the position through that period of uncertainty. >> guy peddy, thanks for that, head of media at macquarie. still to come, wine lovers over the world for centuries, what would you pay to get your hands on a single bottle of the 1865 vintage? find out if the price is right. we'll preview southby's finest and rarest wine auction in london, coming up after this.

and the headlines from around the globe, dallas fed president richard fisher says the central bank's bond buying program can't go on forever. he's told cnbc the fed couldn't be more clear with its guidance on montana tear policy. is germany's economic model hurting europe? former central bankers speaking

exclusively to cnbc disagree. >> studying why germany is so successful internationally in my view has always warranted a lot of lessons for europe in particular can learn from that. >> save my friend axle is brilliant, as usual, but wrong in this particular case. germany is doing the wrong thing in five different ways. >> china's leadership plans to release its economic plan for the world as they wrap up their key policy meeting in beijing. we have the latest snapshot of the uk inflation. october cpi up 0.1% on the month. the annual rate 2.2%. that's a sharp fall from what we were expecting. it was 2.7% in september. we thought that annual rate would come down to 2.5%. the annual rate is the lowest

since september 2012. core cpi was running at 11.7% on the year. that core annual rate is lowest since september 2009. we know there's been quite a big falloff in petro prices. that has undoubtedly played its part here, as well. rpi, tannul rate flat on the month, up 2.6% on the year. we thought that would come in at 3%. rpi is what you pay wages off. we hear the wage has been low, indeed. rpi, the lowest since september 2012. we got output production prices contracting 0.3% for the month, up 8.8% on the year. that annual rate is the lowest since october 2009. it was forecast to be up 0.9% on the year, as well. as far as input prices are concerned, input producer prices contracting at a minus 0.3% on the year. that's the lowest since

september 2012. we've got uk september house prices. flat on the month running at an annual rate of 378% on the year. nevertheless, inflation number, weaker than expected. that has sent sterling -- we were at 1.59. we're know at 1.5855, so a sharp reaction on the pound from the weaker than expected inflation print. tomorrow, as well, we get the quarterly inflation report. many analysts suggesting a rate to be brought forward which may lead to a region in the bank's forward guidance, but certainly an easing of pressure for the bank from that latest inflation data. sterling around 1.5910 before that number now down to 1.5850. we'll have all the details from the bank of england's inflation report tomorrow from 11:30 cet. a big day for uk watches. now, we're just getting

rates out of china. they are approving the reform plans, this is according to shinwah waibo agency. we'll have to wait to see what the details of those are over the next hour. we may well get more details out on that. also see whether they're going to be relaxing the one child policy, as well. the guidelines have been approved. we'll have to wait for details on what the guidelines turned out to be. deutsche post was among the big names reporting this morning. but the biggest mail company reported he's not optimistic about the outlook. annette has more for us out of frankfurt. >> he is about all talking in his comments about the incident her national core business. the international express business is very much depending on the economic outlook. and here they have considerable weakness as we have them in the european markets. take a listen of what the ceo

had to say when we spoke to him earlier about the european recovery. >> we see a slight improvement in our own numbers, but in europe, but the question is is that a recovery or is that because we are gaining market share? overall, we have not seen, really, a strong recovery for the world yet. >> well, looking at the share price reaction, actually, it's now positive trade has to have concentrated here on the positive number sets. deutsche post has delivered for the last three months. and above all, germany's mail unit has been surprising on the upside. and that is because they have increased stem prices here in germany, but as well, the unit inside germany domestically is doing very well because more and more germans are ordering their goods online and that is delivered by dhl, as well. on the same time, the business

internationally is doing pretty well, as well, for the last quarter. only revenues have came in slightly lower than expected. and that is because the currency effects have been weighing on those results, as well. with that, back to you. >> okay. thanks for that, annette. meanwhile, the ceo of unicredit says there's a opportunity for the bank, not a risk, after reporting a 40% slide in third quarter net profits. if ceo added he was confident the lender would pass the test. he said it had been a challenging quarter, but he was still pretty optimistic. >> i'm happy to say about the results because in any case through cost management and lower provision, we have been able to reach 200 million. we can do better, this is clear. but considering the market can be -- i think is a decent

result. >> mr. ghizzoni speaking. european equities, we are down around about 8 to 2 decliners outpacing advancers at the moment. let's take a look at where we stand. the ftse 100 off a third. xetra dax and the cac 40 off a similar amount as well as the ftse mib, as well. i imagine gilt yields come back slightly after that inflation print. 2.78%. st sterling has lost ground against both the dollar and the euro, as well. sterling/dollar, 1.5857. we were 1.5910, the print before that inflation number came in weaker than expected. the annual rate, remind you, 2.2% for october. that's where we stand. dollar/yen was nudging back up to 100. japanese earnings under the spotlight again today. mitsui financial group enjoying a boost because of stock market

gains. fushiko has more for us from tokyo. >> hi, ross. mitsui financial group said its first net half profit increased 3% on the year to $5 billion. the firm previously forecasted a year on year decline net profit for the april to september period. but thanks to the lower than expected cost for bad loan disposals, it managed to bring up a stronger profit. abe-nomics helped the combination of surging stocks and low interest rates benefiting earnings. smsg lifted its full fiscal year net profit forecast to $7.5 billion from $5.8 billion. with this positive outlook, japan's third largest banking group revised up its dividend. the new dividend would be 120 yen per share this fiscal year, which is up 10 yen on the year. many japanese banks have benefited from a stock rally with abe-nomics. another japanese banking group

also reported earnings today, lifting its full fiscal year forecast to $1.8 billion from 4 $14 billion. ross, back to you. >> thank you. jack lew has been visiting the land of on abe-nomics today. while he applauded japan's efforts, he sought reassurance that the end wouldn't be kept artificially low. on the on flip side, japan's wanted assurances that the u.s. would work out default issues. on to a different subject, sotheby's is said to hold its finest and rarest wine auction on thursday with highlights including wine from the 18th and 19th centuries. it's timed to celebrate the 250e anniversary featuring grand

vintage champagnes spanning nearly a century. and earlier, we asked what would you pay to get your hands on a single bottle of 1865 chateaud'yquem? it can be yours for around 3,200 to 3,600 pounds. joining us for more, director and worldwide head of wine at sotheby's, serena. thank you for joining us. i'm a bit worried that you only have to peel off the wrapper and you've blown the money. >> you could droipt, of course, which i advice against it. the best thing is to drink it. >> really? >> yes, it is. >> why not keep it? won't it go up in value? >> wine is a living thing and it does change all the time. and you've got to monitor that change. and the main purpose of it is beauty is actually in the

tasting. >> yeah. and how can you monitor the change of a wine over time? this is a 150-year-old bottle of wine. how can you monitor the change of it? it shouldn't be changing much now, should it? >> you can read about how it used to taste when it was younger. and then you can see when you do open it if it has changed, and it will have. they mature and get more complex. but there comes a moment -- >> where it goes bad? >> it can, but if it's well stored, it can have a long life. >> okay. the investment market is bordeaux and germany, as well, which presumably will be a big part of your auction tomorrow. what happened to the mark? there was a bit of a bubble, a bit of a blowout. where are we now? >> there was a huge bubble the end of 2010 beginning 2011 for very top bordeaux, wa we call the first growth.

it has fallen a bit from there, but it is nevertheless still very healthy because it's finite markets, only a certain amount is made. and the market has become more and more global, so demand is there. >> you talk about the global market. a lot of the extra, i presume, correction to that bubble is because of new money coming from asia. what is the lesson that's been learned and how does that change that investment market, if at all? >> it has changed, obviously. asian demand has added a great deal to the market in the last ten years. and particularly in the last five years. and its pan asian. obviously, china is very important and hong kong, but it's across the board. and there are people who have a real, shall we say, thirst for the good things in line. obviously, wine is one of them.

>> is that market appreciating, start to go move down lower down the scale? not lower down the scale, the less known names, i should say? >> it percolates down, you're right. it's led always by the very best. i think that's trou of most luxury products. but, obviously, you've got to have things that you can drink every day as well as the top things. >> what's going to happen with this auction that you've got? what are we going to learn from it? >> i think we're going to see we'll, really passionate people who understand about champagne and how it ages and gets more fascinateling, that it isn't just a party drink. it's a very serious wine. and we have vintages that go from 2004, which was the most recent great vintage, back to

1914, which was historic in, obviously, a lot of ways. and i think it will -- i've tasted them all. and they are simply fabulous. and, of course, they've never left the very cold cellars in champagne. >> just very quickly, 2010 vintage, just start to go be -- i guess coming off auction now, what is that shaping up to be like? >> champagne takes a few years just before it comes out, of course. we've just had the harvest of 2013. it was a fairly difficult year across the board in europe in 2013. but there are great vintages still in the pipeline for champagne like 2009 and '10. >> good to talk to you. thanks very much indeed for coming in. >> thank you. >> director and international head of wine at sotheby's. we have news out of russia.

i think. there we go. russian central bang sees an increased risk of inflation. it will remain above the year-end target of 5% to 6%. still to come on the show, as the world awaits news from the chinese communist plenum, we'll have more to come after this.

all this week, we're turning our attention to technology. today, could the way we design our open areas be set to change? tom mac kenzy has been investigating. >> it's an all-to-common sight in urban areas across the board. and it supports a multibillion dollar industry. is there a better way we can go about constructing our cities in the future? >> people have done things one way for a very long time. it's actually requiring almost biological mind-sets for them to consider alternatives.

>> meet bim, building information modeling. the newest innovation in computer aided design software which brings together every aspect for the construction industry into one handy place. >> if anything, b.i.m., is very much in the 21st century has people around to make well informed value based decisions. >> what is it? it's a collaborative procedure that utilizes every aspect of data in the construction process and brings it all into one handy, virtual place to contest any scenario. >> you can understand if we were to construct another skyscraper, how might it affect the way wind moves on the street and, therefore, changes the experience for a retail shopper, thereby, the experience for a local business? >> and a good example of a city embracing this futuristic modeling is vancouver. it's created a 3-d city model to

prepare for potential infrastructure projects. >> without that model, we would be doing so in the real world. they would be spending huge amounts of money on various economic assessments, on various environmental impact reviews, and sometimes even having unintended consequences and taking the leap and investing in an infrastructure project that they then regret. >> this new technology not only helps stream line production and reduce costs, it's create ago whole new sector. >> it's a new revolution. it's reshaping jobs. what we're seeing is the creation of roles such as the data manager, people that essentially maintain the data set to make well informed decisions. >> but big data comes with big issues. but getting the public on side seems to be key. >> we hope that cities can put a lot more emphasis into

understanding big data and to play out different what if scenarios to engage the public. and to put through policies that otherwise perhaps would never even see the light of day. and our innovation cities coverage continues all week. tomorrow, we'll find out what's being done to get city dwellers around more quickly and cheaply with the latest impact on the environment. head online to innovation cities.cnbc.com. join the discussion on twitter yug the #innovationcities. >> we're trying to get some details out from the reform program that has been agreed at the chinese party plenum and what they're saying is that the market will play a decisive roll in allocating resources and they're thinking of setting up a state security committee.

this is the way we're probably going to get this information according to the xinhua news agency. it's also something that's under consideration at the ubs conference where carolin joins us from. carolin. absolutely. ross. thank you for that. i've got my next guest waiting in the wings, michael peddy. thank you for joining us. the details of the third plenum are trickling through. what are you expecting? >> i think we're too excited about what's going to come out of the plenum. at the end of the day, most of us in china and abroad know pretty much what china has to do. for many years, china has grown quickly by investing huge amounts into infrastructure, into manufacturing capacity, etcetera, etcetera. so you build up these powerful constituents behind that.

but as that's being increasingly misallocated, china has to reduce that into those areas and growth will slow down significantly. they have to now transfer resources towards small and medium enterprises and towards the household sector. that's a political problem. in a nutshell, we've been growing rapidly for 30 years. but the elite in the state have benefited disproportionately for that growth. we now have to move to a system where we're going to grow much more slowly, but households and small and medium companies have to benefit this proportionately. so it's a political problem more than anything else. >> so let's say as an investor, how patient do you have to be to see the real reforms coming through? is it something that you can actually invest on on the next couple of months or do you think it will take years and years, even decades to see what the real legacy of this third plenum is? >> well, the adjustment process is going to take at least a decade. it's a very difficult process. historically, these adjustment

res always very tough. the problem if you're an investor is that we're not really moving smoothly into whenever it is we're going. we're sort of doing these jerky stops and starts. bay jik gets nervous about credit growth, puts on the brakes, growth slows down more than we expected. beijing gets nervous. so for an investor, what you really have to do is play these sort of jumps rather than play any long-term process. >> even if we do get economic reforms, let's say financial market liberalization, if we see a break-up of the state monopolies, how much of a reformer will be president will see on a political front? we've seen him crackdown on social media, we've seen him crackdown on the press. what is his legacy going to be on that front? >> well, i think the most important legacy he can leave to china is an orderly adjustment process. and political economists will tell you that these adjustment processes typically take place

in companies with competitive political systems or countries that have highly centralized political systems. so perhaps china. countries in the middle, like maybe the soviet union in the '70s and '80s have a difficult time making the adjustment. i would argue since it's unlikely we'll see a rapid move towards democratzation, probably it requires increasing concentration of power with president xi and his allies. so i'm not as worried about that as other people have been, because i think it may be necessary for a smooth adjustment. >> another big concern within china is the huge debt that the local governments are sitting on. that was one of the big worries over the summer. one would argue it's not a problem at all. we shouldn't worry about it because the pboc has plenty of reserves. essentially the debt is still backed by the central government. would you agree with this view? >> no. the argument that reserves back

the debt is nonsense. remember, the united states had the highest level of reserves in history. at the end of the 1920s, we had a terrible decade. japan had enormous reserves at the end of the '80s. reserves don't really help. you have to remember that the central bank isn't just sitting on a pile of cash. it's balance sheet. it's borrowed renminbi and it's used those to buy dollars. so it has debt against all of those assets. it used those assets to shore up the banking system. all you're doing is borrowing money to solve the debt problem and that doesn't really solve the debt problem. >> what do we do with the debt in china? is it a bomb about to explode? >> it's a slow motion bomb. the local debt in china and lots of other debt represents an overstatement to the gdp for many years. money was going into the investment projects that really didn't justify the investment costs, but they weren't written down. so that's the problem.

what are the problems from the 80s? we're going to go many, many years writing that stuff down and under conditions of sloerl growth. >> very quickly, michael, japan, the september trade data, japan logging a bigger than expected surplus. but if you correct, the largest ever deficit. that's puzzling. i thought abe-nomics was helping the exporters. >> yes. >> is abe-nomics due to fail? >> i think abe-nomics is going to have a huge on problem with its own success. if they have successful in bringing both inflation and real gdp growth, we're talking about raising nominal gdp growth to 4% or 5%, let's say. and when that happens, you can't keep interest rates at 0.5% or wherever they are now. you've got to raise them in line with the economy. if you don't, you get massive capital misallocation. but if you raise interest rates, then the fiscal deficit of the government explodes. so they're in a very tough position.

a successful abe-nomics itself could undermine its mid size -- it's success. >> michael, great point. thank you very much. michael pettis is a profitser at peking university. coming.we'll be talking to michael abraham here from ubs's investment bank and we'll take a pulse test of the key industry in europe. >> thanks for that, carolin. just a reminder of what's on the agenda in asia tomorrow, u.s. treasury secretary jack lew continues its meeting in sick pore. we have japanese data out. india reveals its third quarter current account figures, as well. still to come, is the relative slowing still strong enough to support commodities demand? we'll have that, coming up.

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this is "worldwide exchange." i'm ross westgate. dallas president fisher has said the fed could be more clear on economic policy. as the ec launches an investigation, former central bankers speaking exclusively to cnbc disagree on the answer.

>> many countries in particular learn from that. >> my friend, axle, is brilliant bub wrong in this particular case. germany is doing the wrong thing in five different ways. china in's leadership is wrapping up in beijing. and the earnings front, vodafone results in a record on fall in core revenues. >> announcer: you're watching "worldwide exchange," bringing you business news from around the globe. if you've just joined us stateside, welcome to the start of your global trading day on cnbc. we've had 35 record closer for the dow this year, which may be some kind of record, as well. right now, futures suggest that we are some 32 points below fair

value at the moment. the dow yesterday, up another 21 points. the s&p was up about a point. the nasdaq at the moment is some 11 points below fair value and the s&p 500 at the moment is four points below fair value. the ftse cnbc global 300 is down at the session low. not off by much, just over 0. 1 fers. the ftse 100 yesterday was up 19 points this morning they're down 15, just 0.25% lower. vodafone is the weak stock there. we'll get into that. the cac 40 and the ftse mib both down 0.3%. on the bond markets, we saw them close on friday 2.75%. as we've got back into trading today, post veterans day, the yield 2.78%. the one yield that has gone down today is gilt yields, currently at 278% as inflation came in weaker than expected. the annual print for october 2.2% is running at a rate of

2.7% in september. we had expected a number of 2.5%. that's weakened sterling, as well. just before that number came out, sterling/dollar was trading at 1.5910. we're currently at 1.5874. do get down as low as 1.5850. the dollar is up against the aussie. dollar/yen is stronger, as well, getting back towards that 100 mark. we've hit a seven-week high for dollar/yen. and euro/dollar, 1 is.3 372, still above that two-month low of 1.3295. that's befowhere we're standing europe. let's recap that asian session. >> both asian markets are in the green. the dollar/yen inching closer to the 100 level. meanwhile, chinese markets gained ahead of the blueprint approved during the party plenum's charting china's reforms over the next decade. and we're watching two ipos on

the hong kong borse. a stunning debut for china's developer for online card and board games as shares jumped 14% in its $127 million ipo. yet just a 2 pefrts gain for xihuang bank. the soft listing comes as many other chinese lenders eye hong kong listings aiming to raise over $10 billion within the next year. south korea's kospi rebounded nearly 1% from its two-month low thanks to bargain hunting. meanwhile, india's sensex trading down by over 1% hurt on unalternativety over the fed tapering. that's a look at the asian markets. back to you, ross.

>> thanks for that. china's state media reporting a state security committee will be created and that the market will play a decisive roll in allocating resources. eunice is in beijing. we're waiting for more details to come out, eunice, and plenty of folks on whether they change the one child policy, as well. that's right, we are waiting for information to trickle in, like you said. what we know is that the meeting has been characteristiced. the guidelines for economic reform have been approved by the government. and a lot of people are just starting to talk about some of those comments that you had already read. one, it appears that there's going to be a push to make it just a more market oriented economy and that the market will play a more decisive roll in allocating resources. one other bit of information

that has come out is the establishment of state committee. that's create ago bit of buzz here because people are wondering if it has anything to do with the recent concerns about terrorism here in china. in terms of the one-child policy, like i was talking to you before earlier, there has been quite a bit of traction around the one-child policy because there were several local media reports that had been quoting sources, saying that the one-child policy is about to change in china. a lot of people have been speculating that there is going to be some loosening in the one child policy because of the fact that the population here is aging so quickly and also because of the potential negative impact it could have on a chinese economic future. all of this, like i said, is coming in right now. we're going to get more details throughout the hour. >> yep. and the latest snap coming out, according to xinhua unit, is china will strengthen judicial independence. so these will start floating

through. okay. thanks for that, eunice. that's the latest out of beijing. joining me in the studio, richard fu. thanks very much indeed for joining us. the market will play a decisive role in china resource allocation. what do you think that means in practice? >> morning. i think now it's almost global forecast. what they're trying to do is reform. any details, kite be from the global market, but i think one thing for sure to reform the choin he's economy, to build it on a solid foundation for the growth in the next decade. i think in that process, they need to rebalance process. they need to solve a lot of problems which accumulated through the last three decades. >> okay on.

tin ferns has been that the government has been in charge of resource and, therefore, we've misallocated it and we think the markets now might be able to do it better. we had too much investment-led spending. >> i think the focus in the last 30 years has been to pick up the economy. now they have become the second largest economy in the world. of course, in the process goes some problems like imbalance of resources, in terms of, you know, the gap between the rich and the poor and high property prices. those are a problem. but i think through this reform, they will solve this problem over time and build the economy on a solid and sustainability basis. >> that is very important.

cutting the deficit from 7% to even 6%, even. but sometimes we talk too much about growth rates. companies shouldn't forget about price. 30 years ago, china's base gdp was only about 200 or 300 billion u.s. dollars. now it's 8 trillion u.s. dollars. >> there's a number of issues, population policy, banking reforms, what do you think is the most important reform that we may get? >> i think it's all correlated. it's very complex project to reform. as you might have heard in the couple of weeks ago, instead of a committee in china, they call it a reform committee, calling it in action between ministries. so the financial sector, land, residents policy, even maybe in the one child policy now. i think it's very complicated process.

>> it's not one thing that stands out more than the other, it's the blend of them that they've got to -- >> i think so. >> and is private business, is this an exciting time for private business? are we going to see a scaling back of the influence of the government's state-owned enterprises? are we going to allow to see private enterprises compete more with state industry? >> i believe so. i believe they need to let markets play the low in the economy. more and more companies getting low in investment and trading and sectors of the industries. >> from where you stand from sort of commodities trade, wa does this mean? we've been getting less investment. are we going to get less big projects and, therefore, it's the demand for basic materials going to slowly decrease? >> i think there comes a point on the commodities cycle people

mentioned about consumer cycle is finishing. but i don't think so. i think it has a long history, a long time to play. and it's volatile in ten to 20 years market in the past. i think commodity prices might probably move in the range, but much higher than that in the past. surprise catching up, but also demand is still going. 6% or 7% growth is still in terms of copper. >> thank you so much, richard fu, from new edge. we'll take a short break. still to come, the full extent of damage from typhoon highan has become apparent. we'll get the latest from manila, right after this. [ imitating car engine ]

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the extent of damage caused by high foon haiyan is being uncovered. the uss george washington

aircraft carrier has been mobilized to help support the relief effort. cnbc's sri is with us in manila for the latest. sri, how difficult is it for the rescuers to provide the aid that people need? >> extremely difficult, ross. let me give you an example of this. the icrc as a preemptive step two days before the typhoon hit on november 6th dispatched a convoy of relief trucks. and they still have not arrived. so just under a week after the disaster struck, they still have not arrived. and that is because they are stuck because of downed bridge and they are very close. they're 15 miles away from the affected areas. this is goc to be an agonizingly

slow process. people are getting frustrated, angry, thirsty, lacking shelter and an aid official told me in manila not too long ago that this could very well translate into security issues. she did warn me that there is a possibility that it could resurface if these people are not given the aid that they need. what could change and accelerate things is the deployment of the uss washington and the support of six otherships and they carry with them, of course, much needed helicopters, supplies and aerial support and that's what is really required right now because the logistics are absolutely challenging, to see the least. >> back to you in the studio.

>> sri, thank you for that. that's the latest in manila. dallas fed president richard fisher says bond buying can't go on forever. chinese leaders have agreed on a new economic path for the country. and the eu will investigate whether germany's economic model is hurting europe. plus, still to come, move over, twitter. chinese ipos are continuing to find success in hong kong. we'll have more on the latest listing, right after this. welcome back. how is everything? there's nothing like being your own boss! and my customers are really liking your flat rate shipping. fedex one rate. really makes my life easier. maybe a promotion is in order.

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chinese internet ipos are continuing their online streak. boyaa surged as much as 26% on its hong kong debut. 832 times oversubscribed by retail investors. and a much bigger debut today had more modest gains in hong kong. huishang bank raised $1.2 billion. analysts have voiced concerns medium sized banks could have difficult controlling bad loan debt. what has this done for private equity grums?

carolin rejoins us from london at the ubs conference. >> hi, ross. i'm now joined by michael abraham. thank you so much for joining me. what exactly do you do in the financial sponsors group? >> i look after the named buyout fund, private equity funds that invest money and invest capital on behalf of their investors and then come to, you know, own those businesses until exit and then the ipo. >> how active is the pe market in europe right now. >> the pe market is very active, particularly on the sell side. private equity funds are taking benefit of the ipo market. we saw two benefits going public last week and were owned by private equities. merlin entertainment and numeric in france. and i suspect that that trend is going to continue in 2014.

>> and if he with look at the share price reaction, 10% up, 15% up, are we getting into bubbly territory here? >> it's definitely a seller's market at the moment. you're seeing it in terms of the leverage. and private equity are taking advantage of that. they're monetizing investments through ipos, through sell sides, as well as recapitalizations. taking out dividends. they're finding it slightly harder to invest capital, making new investment. >> but are some of the buyout firms, do you feel, are they losing discipline when they look at some of the companies that they want to invest in? are we bay to the heydays of 2006, 2007? >> i think definitely there's a risk on of that.

in 2006, we saw some private equity funds losing some discipline, investing in companies in the peak of the markets in terms of valuation, peak in terms of leverage, and it takes years to work out those investments. we aren't there yet, but there's risks around that. >> talk to me about where you're seeing the biggest demand. what about the rest of europe? >> so over the past few years, we've seen particular activity in northwestern europe. the uk, germany, nordic have been very active markets. what we are seeing now is that price -- as a result, prices in those markets have creeped up. and so it's becoming harder and

harder. private equity markets are shifting their attention away a bit towards geographies that have been out of favor in the past few years, southern europe as well as increasingly into eastern europe. >> so investment opportunities, are they becoming more scarce? >> good investment opportunities are definitely becoming more scarce. because private equity, historically, have acquired predominantly from other private equity funds or a significant proportion has come from other private equity funds. and those private equity funds, as we've said before, are now looking to their companies, to the ipo markets, to dividend recapitalization. and increasingly, they're seeing interest from strategic buyers. so it's becoming harder and harder to find opportunities at reasonable prices. >> thank you so much for those thoughts. michael abraham, the cohead of

vnl sponsors group at you ubs. ross, we've got another fantastic interview coming up for you. we'll be speaking to the eu competition team about many things, about google as a banging union and, of course, the forex investigation, union, that's coming up after the break. stay with us. [ male announcer ] how can power consumption in china, impact wool exports from new zealand, textile production in spain, and the use of medical technology in the u.s.? at t. rowe price, we understand the connections of a complex, global economy. it's just one reason over 70% of our mutual funds beat their 10-year lipper average. t. rowe price. invest with confidence. request a prospectus or summary prospectus with investment information, risks, fees and expenses to read and consider carefully before investing.

you're watching "worldwide exchange." i'm ross westgate. the headlines from around the globe, dallas fed president richard fisher says the central bank's bond buying program can't go on forever. he also told cnbc the fed could be more clear with its guidance on monetary policy. is germany's economic model hurting europe? as the eu launches an investigation, former central bankers speaking exclusively to cnbc disagree on the answer. >> we're studying why germany is so successful internationally in my view is many countries in europe in particular in the peripheries learn from that. >> my friend, axle, while is usually brilliant in this particular case. germany the doing the wrong thing five different ways. >> and china's leadership approved their new economic reform blueprint as the communist part's key policy meeting wraps up in beijing? plus, vodafone unveils a $7

billion pound spending plan as weak trading in europe results in a record fall in core revenues. you're watching "worldwide exchange," bringing you business news from around the globe. >> all right. okay. u.s. markets have seen a record 35 closes for the dow today. futures are pointing a little downward at the start right now. the s&p yesterday, which is up, what, just a point at the moment is around 3 points below fair value. the nasdaq is some 10 points below fair value and the dow at the moment is some 23 points below fair value. the futures have improved a little bit off their lows earlier. the european markets have been stopped during most of the session. the ftse 100 down 0.1%. we did see a bigger drop in the annual rate of inflation earlier, as well. annual rate of cpi for the month of october running at 2.2%. we thought it would fall down to

275%. xetra dax is down 0.2% along with the cac 40 and the ftse mib, as well. so on just screen losses right now just off fresh five-year highs. meanwhile, dallas fed president richard fisher says the central bank's easing money policy can't go on forever. the fed has been criticized for not being clear enough with its guidance which has confused investors as to when it might start tapering. speaking to cnbc in australia, fisher has admitted the fed hasn't communicationed as effectively as it could. >> from my point of view from the federal reserve bank of dallas's point of view, the efficacy of these asset purchases declines with each dollar of bonds we buy. the real issue that markets care about is what is the forward guidance? what would we do after we stop this program or slow it down and then stop it. and then where do we go from there looking forward? markets want to discount information as far forward as possible. >> and despite being accused of

making things up as they go along, he has been critical of the policies in the past. he says the new fed chairman will work to create consensus among fomc members. at the same time, $1.5 trillion of speculative trade debt could go one of the in the next global default wave. this is according the offer guest which estimates the u.s. will account for a staggering 1 trillion of that total. mark fritzen, author of the report which will be published by leverage data joins us now. martin, nice to see you again. how much of this wave of default or debt that we've built up is because of central bank easing money policies? >> well, i think there is lots to criticize and many have come on your show have. but this is really more a state about how big the speculative grade market has grown.

really, in the projections that i put together, assuming almost a third of the debt that's outstanding at the time that that default wave begins will default. and that's not really far out of line with the earlier cycles that began in 1989 and then in 1999. >> yeah. but is the fact -- i mean, you made the point, look, when you get recessions and cycles, you normally get default rates, right, on high yield credit and junk bonds. that's what happens. >> yeah. unless you assume that we're not going to have any more recessions, this is pretty much an inevitable. so it's just a question of how big the market gets before that wave hits. i'm figuring that this upsurge in default rates to above average levels will begin in 2016. it's possible that the fed will push it off even further by the

quantitative easing continuing and that would result in the numbers actually being larger because more debt will be created by the time it happens. >> the question, though, is how big is the market going to be? you're talking about a date in 2016. how about bigger is this market going to be and how much bugger has it become because of quantitative easing? >> that's definitely increased the size of the market because you've created easy credit, a lot of opportunities to do leverage buyouts, acquisitions, other types of financing that result in the speculative grade debt. so to that extent, the fed has fueled it. the central bank policies globally. so we've had a very high rate of growth in the last few years in the amount of debt outstanding as well as the number of issuers in the market. >> the interesting thing about this model is that's why some argue we should stop qe. not only is it no longer

effective, we could be doing some damage with it. but if we saw an immediate stop of qe and rates shot up, could that in itself start causing the sort of defaults you're talking about? >> yeah, i think that that could trigger the event, the upsurge, at least, in the default rate because we've become very dependent on those low rates. the economy has geared itself to those low rates and we don't know for sure what the disruptive effect of suddenly changing those rates will be. so there is definitely an argument that the fed policy will create greater volatility. and by the way, in the most recent cycle, default rates lasted at above-average levels for only two years in contrast to four years and five years in previous cycles. precisely because the central banks came in and reliquified the system so aggressively.

so that is not a costless activity. there are going to be repercussions somewhere, somehow elsewhere in the system. >> martin, good to talk to you today. also the reports will be published by leverage commentary and data. still to come, walmart has some big plans for the holiday shopping season. we'll get into how the retail giant is get ago jump start on black friday sales. details, straight ahead. always obvious. aren't sometimes they just drop in. cme group can help you navigate risks and capture opportunities. we enable you to reach global markets and drive forward with broader possibilities. cme group: how the world advances.

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germany's export driven economy has been criticized. earlier on this channel, we heard two dramatically opposing views. >> studying why germany is so successful in my view, there's a lot of lessons that many countries in particular can learn from that. to look the ate as a policy problems would be wholly unwarranted because there is no exchange rate policy in place that artificially exchanges rate to gain competitiveness. >> i'm afraid my friend, axle, while as usual is brilliant but wrong in this particular case. germany is doing the wrong thing in five different ways. first, it doesn't pay workers anything commensurate with the productivity they have, thereby cheating its own workforce. it investors nothing either in

the public sector or private sector. those two combined mean it's competing as a low wage economy. third, it rips off the rest of europe and the rest of the world in that it gets its subsidies weaker than the deutsch mark would be. >> right. those comments from the ubs conference. carolin joins us now. carolin, are we going to have an investigation into whether germany's trade surplus is too much and hurting the rest of the eu? >> how about we ask a man who is very close to that review process if it actually happens. welcome emunia, thank you for taking the time to speak with us. >> thank you for inviting me. >> will we see a review of tomorrow's trade surplus? >> tomorrow, we will discuss the annual growth service and also

the mechanism. the mechanism is based on a series of indicators and we follow what is going on in the different economies, if they are above or below the threat for indicators that can show imbalances in their economies. and in this occasion, their external current account surplus of germany is both. they indicate it will take stock, we need to analyze why the reason these sublosses, the threat hold, and what are the consequences can be their remedies and the consequences are negative. but tomorrow, we will take stock of the issues, will not issue judgment on this. >> you could argue germany is running this surplus for all the right reasons because its export sector is extremely competitive. why should it be punished and not praised for --

>> i am not talking about punishment. i am talking about analyzeling the situation. it means that the savings rate is much higher. >> i've seen many other imbalances? >> would that commission have? >> i will not elaborate on the concerns for the commission because we will start the discussion tomorrow. tomorrow we will take a stock of decisive imbalances, not conclusions about what to do, what not to do, what other policy recommendations. but in any case, if the coalition government in germany will agree on a minimum wage, it would be a very good news for

all the people that have earnings and salaries below the minimum wage and, of course, among other things, these can contribute to increased consumption. >> there's little germany can do about the exchange rate. it is one exchange rate for all of upper. what else does germany do to address the concerns. >> even that this is not more a national policy tool. the external adjustments that take place through internal appreciates or internal valuations in some member states in the periphery. there are ongoing processes of internal devaluations. >> finally, i want to ask you about google. because this case has been going on for the last three years. how close are we do a resolution of this? do you think that we will be

seeing a settlement or could formal charges still be brought? >> right now, we received the second round of proposals from google to alleviate our concerns. we are testing these new proposals with the stake hold erts, with more than -- once we receive the results of this at the end of this month, we will analyze this, we will make up our mind regarding the different opinions, we will ask google for comments and i hope that if everybody has opinions that will not be the same, but in general, will consider that to end this investigation with solution s than to continue this investigation with more hearing, with a statement of projections,

we will have to wait longer. so let's see what are the results of this consultation. but i will be very happy if the investigation can be concluded in the next month. >> very tedious investigations, very lengthy. >> ats function of the complexity. we cannot solve in a few months very complex investigation. >> thank you so much for taking the time. i appreciate it. >> good stuff. thanks for that, carolin. dallas fed president richard fisher says bond buying can't go on forever. state media reports that chinese leaders have agreed on policy. and the eu has been discussing whether the germany's economic model is hurting europe. now, the obama

administration has set the numbers low for health care programs. courtney reagan is joining us from cnbc headquarters. >> what a bit of a mess this has been. the u.s. government could be under added pressure following a report in the "wall street journal" that the number of people taking part in obama care is falling short of expectations. the journal says fewer than 50,000 people were able to sign up for health insurance plans last month through the federal healthcare.gov website which has been plagued by a score of tech issues. the data is from 38 states. official enrollment data won't be released until sometime later this week. on monday, health care research firm alavare put out a report saying states operating their own online exchanges have signed up about 49,000 people, which is 3% of the enrollment predictions for all of 2014.

the congressional budget office said as many as 7 million americans were expected to sign up for private health insurance via online marketplaces next year. a spokesperson for the department of health and human services says they can't confirm the number cited by the journal, but said the anticipation always anticipated the initial figures would be low and increase over time. "the washington post" says when the government did release numbers, it would count people who bought a plan along with those whose purchase is still pending. they're pushing the government to allow them to sign up people who are eligible for subsidies directly instead of through the federal system. the times says the white house is resisting that idea, partly because of concerns about giving insurers access to personal data. but they are open to the way that insurance companies can handle more enrollment. ross, this has been a very interesting lesson for many

people. i think we are far from done educating ourselves on how this will go. >> you're right. i think there's more to come. stay tuned, court. stay there. walmart is getting a head start on the holidays. it's going to open at 6:00 p.m. on thanksgiving, two hours earlier than last year. it's going to stagger door buster deals throughout the night and into plaque friday, planning to increase its stock on tvs by 60 appears and double the number of tablets on sale that weekend. walmart is bulk up the list of guaranteed items it will sell in specific sections to 21 up from three last year. it will feature several online deals on thanksgiving morning, some of which will be available in stores that evening. walmart shares pretty flat in frankfurt. now, if you think spend sg going to be big in the states over the holiday season, take a look at china. ready, set, spend. the biggest online shopping day

of the year just got a whole lot bigger. alley babb ba said sales rose to $5.7 billion. that flashed last year's record. more sales from alibab than those combined in the united states. there's less days this year between thanksgiving and christmas. so how are you going to time it? >> yeah, exactly, right? i think it gives us more time to freak out about whether or not you've gotten your holiday shopping done or you've procrastinated. but i think truly when we look at the calendar, there are certain anomalies that cause certain shopping to happen earlier than at other times. hanukkah falls very, very early this year. so that percentage of shoppers,

albeit smaller, will probably get the bulk of their shopping done very early. many of them have started those to celebrate hanukkah. and yes, there's fewer days this year, but most people have a budget and they stick to it. they're still buying for mom and dad and brother and sister and brother-in-law regardless if there's 25 days or 31 days. so there is an argument to be had over whether it impacts total spending. most believe it simply shifts it and that you will have to buy a little bit more earlier. then again, you always have those procrastinators at the end. dads particularly, that's a group that tends to hold off on their buying on christmas day. >> dad's aren't interested in giving present when he is it's their money being spent. hey, you don't need to buy me the a present. that's okay. right? you get to a certain age when you sort of -- you know, it's just for the children. you don't need to -- adults don't need to buy each other presents. am i being a grinch?

>> i know. you're not being a grinch. but there's always a reason to have a party in the holidays. >> buying on food and wine is okay. we're allowed to do that. >> thanks. >> thanks, court. have a good day. still to come, he's been pushing for radical changes at sony while building up a stake in the struggling electronicsmaker. today, hear from andrew ross sorkin as the annual conference in europe. that's coming up exclusively on "squawk box" at 10:20 eastern. and we'll countdown to the u.s. open coming up in just a few minutes. has got it goin' on ♪ ♪ stacy's mom has got it goin' on ♪ ♪ stacy's mom has got it goin' on ♪ [ male announcer ] the beautifully practical and practically beautiful cadillac srx. get the best offers of the season now. lease this 2014 srx for around $369 a month

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earn 30 cents a share. a lack of developed land is hampering its ability to develop new properties. joining us with his results, carter worth. thanks for joining us. the earnings per shares are due to go up. you think, though, we've had the best of it. why? >> well, in principal, right, we know that price moves before fact, right? there is wisdom in price. and that is the case, of course, with home builders. these securities, whether it is dr horton or toll or lenar, basically they're tripled off the lows of two years ago. it was 10, it hit a high of 28 in may. things are fine and robust earnings and good earnings to come, just as you've intimated. now we see that the securities have sold off aggressively, having hit a high of 28, it's now trading at 18 down 35%.

and it really turns out, of course, that these stocks were way ahead of themselves, which is often the case. price moves before the fundamentals turn. yet the stocks have gone the other way because they're ahead of themselves. and, of course, finally, it gets down to issues like the fact that pending home sales are now down fourth months in a row, two a nine-month low and there is a problem if and as interest rates continue to go higher for these securities. >> are you expecting market rates to inch higher? in the taper discussion? >> well, that's a big part of it. there's sort of a race to the bottom, as the expression goes. central banks around the world basically fighting with one another to lower the cost of capital. and, yet, the reality is that no one, no government controls the long-term costs of money, despite the efforts made. and so there is every indication that this 30-year cycle and interest rates is likely going

to end and that there will be a normalization in the back end of the curve so here in the u.s., anyway. and if and as that happens, it really gets to an affordability issue. you see this with first time buyers and their inability in many ways to come into the market. it's all much more sensitive, i would say, than maybe the bull would hope for. these stocks stop on a dime when interest rates perked up, basically, two or three months ago. >> talking about the bulls, looking at the overall levels, the dow having its 31st close of the year. how many more closes high can we have? how much more can this market inch up? >> one does wonder. it's quite something, which is to say we know several things. that it is a fairly mature bull market on average and averages are what they are. but bull markets are about 36, 38 months. this one is in its 54, 55th

month. we are seeing all-time highs basically here in the u.s. and as important as the dax in germany. the ftse is trying, of course. but our premise is that it's a moment of asymmetry. can we eek out a foor more points? a few more new highs? sure. but that's not the objective. for instance, you or me or all of us, i'm not trying the eek out a living. i want to make a big living. the problem with the markets is could it eek out a little bit more? yes. but you trade off, we believe, great down side risks. the risk/reward is asymmetrical. >> thank you. and that's just about it for today's edition of "worldwide exchange." don't forget andrew ross sorkin is at the deal book conference in new york today. so plenty of conversation coming from that. he'll be speaking to dan bloeb as part of that. coming up, it's "squawk box" and the countdown for the opening of markets stateside.

from all of us here on "worldwide exchange," have a great day and let's hope it's a profitable one. good-bye.

good morning. today's top stories, the dow eeks out another record close. who do we thank? maybe dr. bernanke. china's ruling party pledges to let markets play a decisive roll as it unveils a reform agenda. and our newsmaker of the morning, outspoken iac chairman barry diller. it is tuesday, november 12th been 2013. 11-12-13. and "squawk box" begins right now.

>> good morning. i'm becky quick along with joe kernen. andrew ross sorkin will be joining us in the next hour. coming up around 8:00 eastern time today, andrew will kick off the headliner with barely diller. catch it right here on "squawk box." our guest host this morning on 11-12-13, dennis gartman pointed out that it's 2:15 today in military time it will be 11-12-1314:15.16. first, let's get you up to speed on the morning's headlines. an experimental glaxosmithkline hard drug has missed its main goal in a major clinical late stage study. it was designed to prevent heart attacks and strokes in a completely different way from cholesterol lowering drugs by