welcome to worldwide exchange. i'm julia chatterley coming to you from davos. >> headlines. >> only ten minutes until the iranian president hassan rouhani takes the stage to deliver the keynote address at the forum in the hopes to woo the business community and there's still a steep hill to climb, the irish prime minister tells cnbc ireland is well on the road to recovery but warns significant challenges remain. >> the single biggest crisis facing the european union is the scale of unemployment and the potential of unemployment.

hsbc's might be contracting in january for the if, time in six months. rnlgt in the case of deja vu all over again. jack liu issues a stern warning to congress saying time is running out to raise the country's debt ceiling. a warm welcome to today's edition of "worldwide exchange." before getting out to jules the january flash composite coming in at 53.2, the consensus on reuters was 52.4. we saw stronger numbers from e theerm know,germany, 55.9, the

manufacturing and services side picking up, helped the euro/dollar up to the best levels of the session around 1. 1.3630. the slightly better performance from france and china, hsbc flash manufacturing number was weaker and contracted. more on that right now, jules? how are you doing? >> i'm great, all good this morning, shining here, ross, but the spotlight not on me today, it's very much on iran, with president hassan rouhani taking center stage in today's keynote speech at the world economic forum. he's come to davos in the hope of really wooing the business community here, the eu and the u.s. this week easing economic sanctions of course on the state in exchange for a halt to iran's nuclear program, speaking before

his arrival rouhani voiced optimism that iran and the u.s. could go from animosity to friendship, a sense of optimism from the president there but listen to what people have been telling us about the state of play and the relations in iran. >> very important to have a stable iran relations with iraq and if we have agreement between the west and iran that would encourage bp and others to invest in the region. >> we need to wait to see if there is an agreement sanctions are being lifted. if it's not lifted it's impossible for anybody to make business in iran and you just have an operation waiting for a better year to come. >> it's really interesting, isn't it, that we're focused on the opportunities in iran right now, but then if you look at the fact that they're not actually

attending geneva, too, this talk here of weather president rouhani is being undermined within his own government at home, ross, so progress is slow on this one. >> i think much between twixt and tween, jules, this will sort of swing around quite a lot. people like the direction of travel. where the final destination is we have to be extremely cautious about and tick haparticularly to started with the fact we're going to start talking. iranian crude production coming back in. there's a long way between those two things happening. >> no, you're absolutely right. we have to wait to see on this front but president rouhani will be speaking later and we will be bringing you that on the show. we have a great show coming up, too. yesterday talking to a lot of ceos getting a feel of the business community. we're switching into poli policymakers, we'll talk to the prime minister of finland, they

have close relations with iran, the prime ministers of georgia and also catching up with the prime minister of holland of the nexterlands after "worldwide exchange" and the finance minister of ireland, too. lots to come up on the show. uni >> tune in tomorrow 9:00 we'll bring you live coverage of a panel, jeff will be monitoring the future of monetary policy. al sand retonbini, haruhik haruhiko kurodo, larry summer, thomas jordan, george osborne. what they do this year will have a large impact.

head online for more coverage of this year's davos gathering and follow cnbc world on twitter and using #biggestrisks. where we are on global activities this morning, advancers outpacing decliners 6:4. the ftse yesterday was down 8 points. this morning take a look at it and we're flat, just up 4. the xetra dax down 4. easyjet flew more passengers and although the airline has warned

first half sales will be hit because of the later easter this year, right at the end of april. logitech posted better than expected third quarter numbers, raised full year outlook for 2014, stock up over o12%, total sales came in at $630 million, up around 2% from the year before. the banco de sabadell in 2013 beat forecast and lower provisions against losses on real estate assets and yesterday the portuguese government say it may not impliement an accountin change and espurito san to up 2.89%. some of the individual stocks. elsewhere talks between the ukrainian government and opposition leaders have broken down, auto speaks to thousands of protesters in kiev's

independent square, klitchko said he's willing to face the bullets of the police. the bloody streets of the capital left three people dead. let's get more with jules in davos. >> i'm joined by the georgian prime minister ga. can i talk to you about the situation in ukraine? what do you see is the end game? >> it's a dramatic storstory. ukraine is an important country and friend country to georgia. there is development, it is terrible. we do hope that the leadership of the ukraine and membership of the opposition will find a way to agree because we condemn the

violence. we saw that people died and therefore we are very concerned about the recent development in ukraine. >> you didn't mention the key word russia and the influence they had on the ukraine versus a closer connection with the eu. georgia itself actually did sign on the dotted line for closer relations with the eu. >> that's right. >> do you believe that russia's recent moves to push the borders of some of your breakaway region is actually a warning to georgia? >> i wouldn't agree because ukraine and georgia is absolutely different story because georgia is not, is less dependent on russia. while ukraine is, i mean 100%, i would nt' s wouldnt say 100% but 90%. we signed an agreement two month ago. this is the european choice and the european integration is a choice of our government and

therefore this is backed by the will of the georgian people, according to the recent political surveys, 85% of the georgian population backs this decision and european integration. that's why this is really different. >> so you don't expect any were pressure from russia because you were part of the soviet bloc. >> we've been facing problems last year, we had a war in 2008, even this year a number of provocations and therefore we expect to have more provocations but i wouldn't say there will be no pressure from them. we are less dependent on russia so therefore the risk of minimal. >> there's nothing russia would do to make you change your mind? >> i wouldn't say that, absolutely not. >> you have said that you'll see better relations perhaps with russia, the travel visas, in particular. >> um-hum. >> what happens then if you want to further your relationship

with in a i toe, again this is a real balancing act between closer negotiations with nato and russia. >> i'll tell you. look what happened when we came into power 2012 after the parliamentary elections we changed rhetoric and we did our best in order to normalize relationship with russia. this was the number one recommendation even from the you state and others and there are we did our best and our ex-prime minister appointed a representative in russian affairs who did a great job, by the way and we normalized the situation with russia and also we could improve the cultural and trade relations with them. the russians opened the market and the export for example tripled in one year and so i think apart from this everything is going well in both our relationship. >> which is crucial. >> which is crucial absolutely.

>> unfortunately we can't -- >> he doesn't come, he doesn't -- it conflicts with the policy of the georgia government. on the one hand we change rhetoric, we are making all the constructive steps but on the other hand we are facing these problems along the occupation line and the provocations. >> did europe make a mistake here? >> which we don't understand. >> i understand you don't understand. i think a rot of other countries agree with you. did the eu make a mistake and how do they reduce the influence of russia in the soviet bloc, former. the overriding message you want to move toward the eu and russia won't let you. >> the eu are active but there's something that thatabilities an cannot, maybe they can but they couldn't do it in the ukraine, and therefore we have to mac sure that, you know, we're talking about georgia, right? >> yes.

>> georgia's foreign policy is unchanged and georgia's european integration is irreversible and as i said, it's a different story. we have georgian government that supports this european integration policy and this is backed by the will of the georgian people. >> brilliant to speak to you, the prime minister of georgia is speaking to us there, very positive on the future eu relations. russell, back to you. zpr from your camera position 100 yards inside the congress center, president rouhani delivering a special address entitled "iran in the world." >> translator: this is also how i view this forum. and i am here to convey my people's message engagement, cooperation and peaceful coexistence.

distinguished participants, my view of social, economic and political issues is one of prudent moderation. this is a lesson i have learned from islam and deeply practiced in my political life. it was based on this that i decided to take part in our presidential election so as to implement at a national, regional and global level moderation and prudence, a prominent characteristic of iranians and the secret to their success throughout history. as i predicted, with the grace of god, the great people of iran opted for this approach and now they are rightfully demanding its implementation and reali realizati realization. the iranian people's choice has been welcomed in the region and

the international arena as well. the first outcomes of which have been witnessed since my government of prudence and hope came into office. ladies and gentlemen, the events and developments of the past six years in the global economy have shown that no one can live alone, no country can solve its problems on its own while disregarding others. no business can achieve sustainable growth without adhering to et cetera social responsibility and no power can regard its dominance as permanent. globalization amidst the financial crisis has shown that we are all on the same boat. if we do not choose wise ship captains, a storm will harm us

all. widespread popular protests on all continents have shown that economic policies should take social justice and the interests of everyone into consideration, evan must benefit, only those policies and systems will endure that benefit the people, and that means all people. the koran, the holy book of muslims, has taught us that only that which benefits the people will endure on earth. my views of prudence and moderation are not restricted to iran. i see the status of iran pursuing policies of moderation, prudence and hope in the future global economy as greater than

predicted, thus in policymaking, i take into consideration not only today's situation and that in the near future but a much more long-term outlook. iran's economy has the potential to be among the world's top ten in the next three decades, a goal which i pursue in wider planning of social, economic, as well as domestic and foreign policy. in order to realize this goal, i seriously intend to prepare the groundwork for this implementation during the time that i am in office, and overcome all political and economic impediments in its way. let me be clear. i view iran's economy as the most congruent, capable and closest to that of successful

emerging economies, and envisage iran's place beside them in the future. this is because my election by the people of iran took place in the framework of a democratic system, allowing me to pursue the ideals of economic development, democracy and improvement of iran's international relation. i hereby announce that one of the theoretical and practical pillars of my government is constructive engagement with the world. without international engagement, objectives such as growth, creativity and equality is unobtainable. iran enjoys one of the highest human development index rates. we will do our utmost to realize this immense national resource in line with the development of

our country. additionally, we will make use of active foreign policy to achieve economic development. my government is fully prepared and ready to engage with all neighboring countries to achieve shared practical solutions and sustainable legal regimes on a range of issues such as the environment, joint economic projects, trade expansion, realization of the palestinian people's rights, tackling the humanitarian crisis in syria, security of the persian gulf, as well as the fight against terrorism and extremism. i believe that peace and security in the middle east is dependent on the expansion of economic relations, social and cultural cooperation, tourism, value in the private sector, and cooperation of elites at the

international level. the crises at the start of the 21st century show that economic factors alone are not enough to provide a better life for people. in addition to economic well-being, people need culture, spirituality and ethics. economics without ethical boundaries will lead to the destruction of a healthy environment for humans, and instead of increasing satisfaction will lead to a race towards greedy consumerism and the destruction of intergenerational resources. common human ethics can be the basis for a common trend among human societies, bind them together, improve order, security and tranquility and make life more enjoyable. distinguished participants, as head of my country's government, i am fully aware of how

important stability of behavior and policy-making is in governance. whether in the domestic or international arena, this is critical for us. this is why regional cooperation has become a priority for us in the foreign policy arena and why we seek to deepen relations with neighboring countries. we intend to reopen trade industrial and economic relations with all of our neighbors such as turkey, iraq, russia, pakistan, afghanistan, persian gulf literal states, the caucuses region as well as central asia and begin multilateral and political cooperation. we have also had a history of deep economic and trade ties with european states with the

implementation of the geneva agreement and its subsequent step, iran's relations with europe will be normalized. engagement between iran and the united states has also entrd a new phase during the past month and for the first time, politicians from both countries have negotiated exchanged views and have made decisions to resolve differences in relation to the nuclear issue. this is a major development since eye reason's islamic revoluti revolution. the islamic revolution and the foundation of the islamic republic were the result of more than a century of freedom-seeking struggles of the iranian nation, and this young republic is growing and flourishing. therefore, it is necessary that the ruling bodies in the united states accept iran's historical realities not only in words but in actions as well.

ladies and gentlemen, i come from a region of the world which url unfortunately is burning in the flames of insecurity and violence. even though my country has experienced a new chapter of security and hope thanks to its natural solidarity as well as religious democracy and despite external pressures, we cannot be indifferent to the pain and suffering of our fell row brethren in the region. violence and terrorism is a fire in human society which doubtlessly will engulf those who ignite it. it is true that extremism and violence gets its rank and file from the army of the hungry and the unemployed, thus i believe that the fundamental approach in fighting terrorism should commence with development only through cultural improvement and job creation is it possible to replace suicidal hopelessness with hope for the future and use faith in god to serb humve huma

instead of destroying it. the main problem with the governance of despotic leaders is their distance from the people and how they manage their economies and societies by relying on foreigners. the people who don't see themselves as part of this management and revolt against the oppression while the terrorists take advantage of this situation to recruit the owe pressed to their unholy cause. i believe that the security of the world is intertwined with the security of the middle east, the security of this region cannot be achieved by disregarding its people. therefore, in order to have global security, it is necessary to hear the voices of the people of the region and create jobs and hope among the youths of these countries. i strongly believe that the path

of security passes through culture, ethics and development. however, if we want everyone to work towards creating security, everyone should feel secure themselves, since feeling insecure and deprived from one's rights is a motivation for rising up against unjust systems. thus in reshaping the international community we have to make sure that all nations feel they enjoy equal opportunity for economic and social development, and see competition as fair and based on merits. if some actors are deprived from being present in this competition for no specific reason, in the end, everyone will be deprived from utilizing their abilities to the utmost. it is necessary for a safe and developed international community that everyone benefits from economic freedom and the right to determine their political destiny.

inde indeed, any type of limitation and economic sanction will, instead of aiding understanding and common security, merely exacerbates divergence. if development is necessary for security, having access to knowledge and technology is also necessary for development, creating obstacles on the way of the development of nations will only add animosities and cynicism and ultimately fail. this is why iran in pursuing its nuclear energy program has never sought nor seeks anything other than peaceful applications of this technology and will not accept any obstacles on the way of its scientific progress. accordingly, to those who are under the influence of propaganda and still believe that iran is seeking to double up nuclear weapons, i strongly and clearly declare that nuclear weapons have no place in our

security strategy and that iran has no motivation to move in that direction. look at history also clearly shows that iran has, in the past centuries, never launched any invasion or aggression and only engaged in active defense against threat and direct and indirect invasion. any time iran witnesses a real and palpable change in animosity towards it, iran will accordingly respond positively. an example of which was seen with regards to the nuclear issue and the developments that have taken place during these past five months in which i've been in office. i stress that what was achieved during the recent negotiations was the result of a determination to reach a consensual agreement, which the parties of this conflict display.

after ten years of insisting and stressing on an illogical and incorrect position, finally our counterparts reached the conclusion that the iranian nation will under no condition give up its right to access peaceful nuclear technology and that the continuation of pessimism in the position of intensifying sanction will have no result except direct and indirect costs for all parties. this reality has created an opening for solving this crisis and with seriousness and intent the parties were able to reach an initial agreement which constitutes the basis for a comprehensive final arrangement to follow. therefore what we have achieved is not merely a temporary agreement on a specific issue but a prelude to future agreements and engagement. though differences of opinion with our counterparts are not

few and some of them have, in fact, become old and chronic and difficult to remove, there are also many common interests such as global security and stability, economic development, envi environmental protection and fighting extremism. my proposal for a world against violence and extremism wave which i presented during the recent u.n. general assembly meeting on behalf of the iranian nation and unanimously approved by the international community is founded on a common ethical base which is that all people, from whatever religion, race, language and nationality in their essence desired dignity and mercy and moderation and detest extremism and the killing of innocents and the violator of the rights of the others.

therefore, we shall all join this wave and stand up against violators of the rights of the oppressed and portray globalization through the implementation of universal ethics. mr. chairman, ladies and gentlemen, to conclude, i would also like to point out that i few friendly and sustainable relations with other states based on a belief in prudent moderation, divine faith and constructive engagement. i also believe in engagement in the economic arena on an equal and fair basis. in this field, an important lirng between security and economics is energy and security. the world attaches special importance to this lirnk. if the past, energy security has led to violence, wars and coups. however energy security can be promoting cooperation.

the republic of iran is prepared to engage in constructive cooperation in promoting global energy security by relying on its vast energy resources in a framework of mutual interests. we are prepared to engage in a serious process to establish reliable institutions for this long-term partnership. earlier today i expressed my views in a meeting with energy experts and executives, and here i would just like to stress that, from the point of view of the islamic republic of iran, the security of production and supply of energy based on the geostrategic necessities of country is the biggest factor at turning energy to a key and sustainable factor in promoting peace and stability. i would like to thank professor schwab and invite all distinguished participants to travel to iran and witness the extensive fields for investment

and joint security building cooperation for themselves and to make contact with iran's private and public sector and become familiar with our iranian culture and civilization and experience firsthand iranian hospitality so we can reach together the conclusion that only through engagement, cooperation, mutual understanding, as well as growth in industrial technology and the economy can we provide a better life for our people, make peace sustainable and create a world against violence and extremism. thank you once again for your attention. >> you've been listening to the iranian president rouhani from the world economic forum's annual meeting in davos. he says relations with europe willized at the

nuclear interim court and we have no developing nuclear weapons, has no place in their security strategy, they have no motivation in that direction. as far as relations with the u.s. are concerned they said we entered a new phase last month and they can basically conclude their differences over the nuclear issues and what happened was that interim agreement was the basis for a comprehensive agreeme agreement, what has already been agreed is not temporary. also talked about a pledge for constructive engagement with the world and is seeking to use foreign policy to achieve economic development and in the last part of that speech we heard him saying how he talked about, talking to institutions for the development of iran's energy policy and for long-term partnerships, because that part of the sector is a way to keep security in the region.

let's get some reaction back on the ground in davos, just on the back side of where that was taking place, joulules. >> thanks so much, russ. iran isn't involved in the geneva talks i'm joined which our middle east correspondent. i found fascinating the comments he seemed to be making about the foreign aid relying to fuel their economies. >> i think that was a pot shot and we're talking about saudi arabia, the united emirates, despotic regimes who rely on foreign help, foreign workers to have an economy that prospers, so it's quite interesting he's taking a pot shot at the gcc countries and another pot shot to say they're dealing with a region with the middle east that's insecure so you know, who would be insecure in that case isaa gcc countries are worried about iran, the new regional power and rival coming back onto

the scene and what that means for the future. he's taking a pot shot at gcc countries and also said we need a secure captain or the storm will take us all. he's referring to himself, this is a moderate and came up with his own nuclear type agreement, similar to what we've already agreed on today and what is interesting about that it's clear in president obama, u.s. president barack obama has found someone that he can dois with with whereas in 2003, 2005, no one was really interested. >> it's a critical point i want to take you back to the nuclear weapons discussion we were having here. sounds like he has strong views on the future or the no future use of nuclear weapons and yet not taking part in the geneva two discussions going on. seems he's going undermined at home in what he's trying to achieve. >> in this speech and through translation he was saying in terms of iran's economy he's

going to take on all kinds of positions within iran in terms of at home so in terms of politicians and politics at home he'll take on the opposition to make sure iran's economy prospers and succeeds. geneva two, rouhani said they would take up the invitation to attend the conference. backtracking on that was basically an admission that they didn't believe in geneva one which was obviously something you had to agree to geneva one to be included in geneva two. they are not contemplating a transitional government without bashar al assad. >> talk to me about what he was saying to the business community. that's what we're interested in davos. what is the opportunity forrer haves? >> forgive the pun, since we are standing out in the freezing cold but this is the opportunity for iran to come in from the cold, to rejoin the international community and that's what he's bringing to investors here at davos. >> did he do it? did he succeed? >> he's trying. we've seen european delegations

head to iran the last couple of weeks even though the u.s. is standing back shaking their heads. this is an attempt by rouhani to get the economy back on track. >> back to you, ross. just a little bit softer at the moment, around 5:5 advancers to decliners. the ftse and xetra dax down slightly. cac up 0.16% and yesterday 2.89%, a little below that now on 2.84%. stronger than expected employment day, sterling today has come back a little bit from where we were dweagainst the dollar, still moving higher,

1. 6 where we stand. monday stronger than expected pmis for both france still contracting, germany much stronger in two and a half years, boosted the entire composite eurozone pmi number as you might expect and the aussie 0.8794, on the back of weaker than expected chinese pmi numbers, seeing the canadian dollar weaker as well. it's official lenovo is buying a low end server unit. the deal will be paid out mostly in cash as part of the agreement around 7,500 ibm employee also shift their jobs to lenovo. it gives the firm a new source of revenue and could better position the chinese hardware company to compete against rivals like hp. nokia reports fourth quarter earnings later today, what is likely to be its final

disloeshedisloes diskroesheur of its handset before its sale to microsoft. we wi analysts at citi say nokia is nor like to trade as a classic than a tech stock when the deal is finalized. logitech better than expected third quarter numbers today and raised its outlook. sales up 2%, boosted by 95% increase in accessories. shares up over 50% in the last three months and up another 11% this morning. that's some of the corporate news. let's get more corporate insight at davos, jules? >> thanks very much. i'm joined by the ceo of king fisher, biggest diy firm one of the more cautious ceos we spoke to in the final quarter of last year as far as the uk recovery is concerned. where are you now? >> i think we're at a point now

julia, we're seeing the full indicators beginning to turn into some activity, that's a slight concern people expecting a recovery and the consumer reality hadn't caught up. with the latest employment we saw yesterday we're beginning to see more hours worked, more money in household incomes. >> we're not seeing wage growth in this country. do you expect to see that tick higher this year, having minimum wage discussions on the quiet here in the uk. what do you think of that? >> for a lot of households the hours is probably more important than the increase. if you can add four hours as opposed to 2% that's a more meaningful sum of money for the average family. i think we will see wages going up 2%, 3%, as opposed to 0.9% we've seen recently and that will start to leak through the consumer economy. >> you said the hour is more important than the level of ages. what is the mess annual to george osborne.

you employ over 25 tmplgt people. what would that do to your position? >> we support an increase over inflation. we need to catch up. the key problem is, a, how past it happens. if you put it up by 7% businesses have to adjust the other elements of take-home pay. secondly we pay profit share, other incentives so look at the total take. we expect more money to go into our employees' pockets as a result of a totality of expansion, not just the minimum wage. >> 50% of your profits brought in from france? >> yep. >> we've had a stronger pmi reading this morning, everybody is getting excited still below 50. did holland give you any sense of hope? >> i think it's quite an important shift that we've seen from the president and also also this morning in the ft talking about a french solution. i think there is a sense that

the government is trying to get to grips with this and it's really important business and government cooperate. the opportunity for france is there providing more clarity and direction so we welcome the latest announcements and hope it will translate into better numbers this year for france. >> that's the problem, a lot of skepticism they're going to achieve anything before the european parliamentary elections. >> the key issue is the words are great and we need to move forward and build on it to see real action. >> you talked about sentiment from the consumer. let's go more broadly. you operate in different countries, poland. what are you hearing in terms of sentiment there? >> i think again we're meeting with some of the polish government yesterday, there's a general sense in poland and some of the other major countries like for example spain which had a terrible three years there are beginning to be signs of maybe a fragile recovery but a sense that the worst is now behind us and we're gradually coming out of it so both poland and spain in the phenylquarter last year showed promising signs.

we have to carry on in 2014. >> you're still pretty cautious. you're still pretty moderate and look at how the markets are trading particularly the borrowing costs to are some of the countries that you mentioned. is there a disconnect there? >> i think markets always look forward and the reality for retail is we have to deal with weekly sales and the reality of the weekly sales is it isn't yet a full firm base recovery. i hope it becomes one and we're seeing a more optimistic outlook, we'll remain cautious until it shows up in the tills. >> are they looking forward correctly? >> how far they're looking ahead we'll see, that's their job and we do ours. >> ceo ian cheshire of kingfisher. ross, back to you. >> thank you for that. plenty mo are to come from jules. if you have any thoughts or comments e-mail us worldwide@cnbc.com is the address and follow us on twitter, special davos coverage on there and of course on the

website as well. still to come on the show we'll talk wage subsidiesubsidi unemployment, economic impact of the banks for the 2006 nobel laureate economic, edmund phelps why he believes the u.s. is in a low innovation rut.

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welcome back to "worldwide exchange." earlier i spoke to michael noonan, the irish finance muenster and asked them whether the recent upgrade and bailout exit has made investors too exuberant about the irish story. listen in >> we're very prudent and modest, we continue to grow the economy and create jobs. on the spreads our ambition is to be part of the north european my credit rating group of countries, and we're moving into that space now and we'll take every economic and fiscal action that's necessary to stay in that position. >> you kind of moved beyond that, your five-year costs are below the uk, they match with the u.s., if we keep the other

northern europeans aside your spreads are incredibly tight relative to some other countries. >> yes, we're doing okay but a fairer comparison would be to look before the crisis we were a percentage point off of germany at that stage. yesterday we were 1.50 so our spread on the bond is the most relevant statistic for us and you know, that's going well. >> but you agree that the difference between your economy right now and germany's is vastly different. >> yes. >> alarm bells stopped ringing ben you started talking about your spreads getting that much closer to germany, surely. >> i don't think so. we're growing fairly strongly. i have built the budget which i introduced in october around 2% growth and in terms of forecasts, we're one of the more prudent forecasters, the independent forecasters are higher than that, the employers agency of 2.8 and so on. so we're prudent and we're continuing to build, but we have

a lot to do. we have a lot to do all the time. >> i want to talk to you about the banks, deutsche bank one on the list saying the country will need more public money potentially in order to meet international standards on capital. when i was in ireland talking to you just a couple of months ago i had a number of people contact me and said there's rumors of a potential bail-in seen in the earish banks the remaining parts in public hands. can you deny we're not going to see they bail-in of private money in the irish banks? >> i can. we always have crazy rumors everywhere, there's talk about money, some minority always take an exaggerated view. we had an asset quality review just before christmas and that advice from that was that the banks need extra provisioning and that's been put in place but they don't require extra capital and we'll wait now for the stress tests in the autumn with the general round of european banking stress test.

>> now joining me is edmund phelps, nobel laureate in economics. good morning. >> good morning. >> we were just hearing about the irish recovery story there. there's lots of enthusiasm about the u.s. recovery story in particular yet you believe the u.s. is in a low innovation rut. why in. >> that's absolutely right, and the rut has been pretty apparent since about 1972. so it's surprising when people suddenly talking about stagnation when we've been in stagnation since 1972, and the governments have thrown all sorts of ammunition at it, including concocting the housing boom a few years ago and we're kind of out of that kind of ammunition and we have to dig deeper if we're ever going to get out of this rut. >> what are you saying a 3% growth this year, 2.5% growth next year, that's as good as it gets effectively, if we don't do

something to change this? >> that's plenty good, i this i that's a little on the optimistic side. >> right. >> i think business investment is very weak and the reason business investment is weak is that development has ran into diminishing returns. why? what's surprising about that? well, in the good old days with he had innovation always creating new investment opportunities, so we were always countering the diminishing returns. >> the tech sector would argue we are seeing innovations. >> of courser brings up the point, are you crazy, don't you know this is the age of technology. i know. i read the papers. i see it, but of course first of all, so much of that innovation is confined to one tiny sliver of the united states, namely california and more precisely silicon valley, and how much can

that small sliver of the economy do for the, for output as a whole in the entire economy, and secondly, i'm not sure that some of the innovations have really generated all that much revenue or in other words produced all that much additional output, despite all the hoopla. >> one of the other is the job market and just how we get people into permanent jobs particularly in the u.s. and more broadly for europe. we're having discussions in the uk, in germany. in the u.s. now the minimum w g wage. you're dead against that. what is a better solution in your mind? >> well i think we have to change attitudes. we have to get back with the program with the idea that life can be fun and challenging and riveting and thrilling but to do that we've got to get, got to open up the gates for innovation again and that means attacking

vested interests, stop protecting all these enclaves of special interests, giant established corporations included, and so there's a whole lot of things like that we have to do, but it is doable. >> edmund, brilliant ta touk o you. the u.p.s. needs to get with the program. the message there. ross back to you. >> thanks for that, jules. jack liu is warning congress will run out of steps, he helped the country avoid a possible default by late february unless they raise the debt ceiling. in december, liu estimated the u.s. could avoid the issue until early march. congress suggestion spended the debt ceiling until february 17th. after then lew would use various bookkeeping measures. he'll join joe, andrew and becky on "squawk box" at 6:45 a.m.

eastern. don't forget you can head online for more from our coverage of this year's davos gathering, stay in touch with the week's events by following cnbc world on twitter and using #wef14. also on what the experts think could be the world's biggest risks. join the conversation and let us know what you think on twitter using #biggestrisks. so just over two hours into the trading day in europe, just under two hours and advancers outpace decliners of the dow jones, nearly 6:4, we've rebounded off the lows we hit an hour or so ago. the ftse 100 yesterday was down some eight points, this morning pretty flat just down three. the xetra dax is flat and the cac and fse up by 0.3 and 0.5.

pmis were out this morning, french pmi came in stronger in manufacturing, 48.8 on the pmi manufacturing, 48.6 on services this morning and german composite number came in better than expected 55.9. in fact the highest since june 2011 so those pmis are helping europe. we'll look at that in a few moments' time. in corporate news easyjet saw revenue rise during the first quarter as it flew more passengers and charged them more, although the low-cost airline sales will be hit because of the late easter is the latest you could make easter. logitech better than expected third quarter figures and raised full-year outlook for 2014. total sales at $630 million, up 2% from the year before. spain's banco sabadell brought

in just short of 250 million euros boosted by lower provisions against losses on real estate assets and yesterday the portuguese government said it may not implement an accounting change hurting bank shares dramatically. the losses seem to be reversed. look at where we are with the debt markets and currency markets, it's worth pointing out gilt yields coming down a bit, ten-year treasury yields 2.8 had%, gilt yields yesterday hit 2.9 post that jobs number. the french yields haven't come down despite that, slightly better than expected pmis, they are still in negative territory. on currency markets euro/dollar bouncing off the two-month low we hit monday, and dollar/jen

104 andsterly/dollar 1.66. china's pmi manufacturing 949.6 is what we got, that traged the aussie back down near three and a half year lows, first time we've had a contraction in china since about six months ago and new orders 39.8. that's where we stand on the markets. still to come will finland's corporate tax slash help boost global competitiveness and reignite its stagnating economy? with he'll ask the finnish prime minister, he'll be with jules when we come back. the second hour of "worldwide exchange" coming up.

welcome to "worldwide exchange" here in the world economic forum in davos. i'm julia chatterley. let me give you some headlines. let's all be friends, iran's president sends a conciliatory to the west and takes the stapling at the world economic forum, also denying any nuclear ambitions. >> translator: nuclear weapons have no place in our security strategy and iran has no motivation to move in that

direction. there's still a steep hill to climb, the irish prime minister tells cnbc ireland is well on the road to recovery but warns significant challenges remain. >> the single biggest crisis is the scale of unemployment among young people. >> talks between the ukrainian government and opposition leaders break down as thousands of protesters continue to rally in kiev's main square. the prime minister of georgia tells the show he's not happy with the developments. >> we will condemn the violence. we saw that people died and therefore question are very concerned about the recent development in the ukraine. in a case of deja vu all over again jack lew issues a stern warning to congress saying time is running out to raise the country's debt ceiling.

welcome back to davos. of course just earlier we were listening to president rouhani of iran speaking to the business community here in davos. ross, it was really interesting to hear him seemingly posting pot shots at some of the other countries in the region. we don't want to see despotic regimes that just rely on foreign money to support their economies, doesn't want to see nuclear weapons being used and yet at the same time saying there's opportunity for investors in iran so interesting to see what the message was taken by the business commute here in davos. >> and it's interesting he also talks about relations with europe will be normalized and the interim accord we've got the basis for permanent are not temporary clearly laying out his stole, iran wants to rejoin the

international economic community and talking about the u.s. there, fascinating relations with the u.s. and started a new phase last month. there's an awful lot between here and where we might want to go but it did lay out the point that also talked obviously to energy companies in davos, jules, and he needs international institutions to help rebuild iran's energy sector, vital to them growing economically. >> absolutely. it's interesting to see steve talking to bp's chief bob dudley saying there's no negotiations going on but again recognizes the opportunity so a great point there. as you said, too, improving relationships with the eu and on that note, i've now got the prime minister of finland here with me, jiri ka in a then in katainen. can you tell me about the investment in railways? >> it's very good news if he's interested in our economy, our

economic model innovation economy and i could imagine for instance clean technology solutions could be one of the areas in which we would cooperate more. for instance, border cleaning, pure water solutions and more efficient energy solutions. >> a huge investment opportunity in iran but you understand some of the concerns that we've only seen the sanctions being lifted for a few days and already it seems people are fighting over the opportunities. >> i think we all are looking at opportunities and also in iran there is a constant need for clean technology solutions and icp solutions and for instance my country is full of companies who could see new opportunities also in iran. >> there's a long road here. >> of course. >> you think everybody accepts that? >> yes. >> there's an understanding there. talk to me about finland and what's going on, your economy remains one of the very few aaas

in europe, how much benefit do you think you'll see from the pickup that people are talking about here? >> well, we also suffer a lot about small economic growth and export through the economy and it will be very helpful if the road would be there in the world economy nerls we are doing quite well. clean technology solutions start and gain industry has been growing leak supercell and so we are in the middle of transformation process, traditional industrial sector is becoming more and more renewable energy business, of course they are producing paper and cardboard but the situation and development is very fascinating. >>ly it at love critics suggest you're not going to benefit that much from a pickup in the global economy because you've seen relative wages rise quite

dramatically in finland, export in labor isn't cheap, the strength of the euro also a problem. do you agree that these are causes for concern? >> we have to make sure it remains to be one of the most competitive country in the world for finland because our system is so generous we have to bring all the money for our welfare services from the other parts of the world and that's why we for instance lowered our corporate tax rate from 26 to 20 in order to strengthen our competitiveness and it seems to function quite well. >> are you going to make it lower even from the current level? >> no, i don't think so but we are spending more and more recertain and innovations because the combination of competitiveness in taxation and new ideas, universities, research, it has functioned also in the past very well and we will continue to go in this line. >> paul krugman recently said it was a mistake for finland to join the euro. he wasn't saying you should exit but saying it was a mistake as

one of the aaa countries. is that a fallacy? >> i don't share this view at all because euro has been the most step. out krntcy for finland ever when looking at our history and it has helped our business a lot so that's why we are still industrial country, that's why we are vastly moving country in terms of innovations, so i don't share his view at all. >> and the key driver of the economy going forward is its tech and innovation, you're remodeling the economy. >> exactly and start ops are one of our positive news at the moment. there are lots of capitalists coming to finland from all over the world, russian entrepreneurs coming to finland and universities have become the home base for new innovations and new companies. >> interesting to hear. thank you so much. >> thank you very much. >> jyrki katainen the prime minister of finland. ross? >> we'll bring you up to speed what is happening with european

equities, it's official that he will lenovo is buying another, worth $2.3 billion paid mostly in cash. the deal gives the firm a new source of revenue, as traditional pc sales decline and could better position the chinese hardware company to compete against rivals like hp. china's factory activity is slowing down in january, contracted for the first time in six months. the the december final reading was 50.5. the weak reading is largely due to cooling domestic demand conditions. some economists see a higher chance of monetary easing in the spring. how has that gone down with some of the asian investors? l li six an has more.

>> the shanghai composite pulled back 0.5% after the 2% rally. the borscht is higher 8%. demand is higher for ipos and eight small cap companies made debuts. investors favored the tech centric china export which jumped to a new record high. shares in hong kong were directed heavy losses and the rest of asia also traded to the downside after china's disappointing data. the nikkei 225 lost 0.8% and south korea's kospi dropped 1.2% despite the country's q4 meeting expectations. australia also ended lower by over 1%. australian gold miners took a beating today as gold prices if el for the fourth straight session. evolution gold tumbled almost 8% and kingsgate down by about 3%. so that's' look at the asian

markets. ross? >> thanks for that. we'll take a short break. still to come a slowing of enflation is apparent even as activity pecks up. we'll be joined by stephen king chief economist at hsbc, saying this inflation could provide a new set of economic challenges.

recap of the headlines, iran's president vows to engage with the world at davos, insisting nuclear weapons have no place in the country's security strategy. china's recovery in some doubt, hps contracts for the if, time in six months and jack lew wraps up pressure on congress to raise the debt ceiling before the end of february. what is on the agenda in the united states, weekly jobless claims at 8:30, manufacturing data at 9:00 and december existing home sales and leading indicators, another busy day as well for earnings, reports coming from mcdonald's, union pacific, lockheed martin, southwest airlines and united continental report before the

open, after the enclose's we'll hear from microsoft and starbucks. there's plenty of cautious optimism here in davos but it only really feels like the imf are raising the red flag over the disinflation trends, the ogre, as christine lagarde called it. my next guest believes this will be the big challenge for 2014, joined by stephen king chief economist at hsbc. why? what are your thoughts in. >> the first reason is over the last 12 months inflation is surprisingly on the downside to a considerable degree well below the targets central banks have set. of course you can see the area much lower than expected and lower than target. central banks mostly assume it will go straight back up to target over the next year or two. that's a complacent view. >> because there's a belief if activity picks up ultimately

inflation will follow. that's not always automatic. >> that's the cyclical story. japan in the 1990s, the economy recovered, moving toward a more stable story but the persistent low disinflation, rising interest rates put pressure on the situation and the recovery itself was not sustainable. that's the danger this time around. >> how do you plan monetary policy, how do you plan forward guidance is the crucial question where you're not sure where inflation is going. >> the central bankers are given the impression they have an unemployment threshold that is the one that matters. if inflation is much lower than they thought for a given up employment threshold fuller guidance becomes more complicated. the models central banks used have not predicted what we've seen over the last 12 monies. >> if disinflation remains they can keep the stimulus taps on longer there's a positive here,

too, somewhere. >> certainly the message the central bank is trying to give don't just watch the real economic data. watch the inflation data. what they haven't admitted is the deflation worries a japan style lost decade story are still the about igissue. >> what is the possibility of this taking place and obviously your message is policymakers are not conscious enough of this and not taking the right measures. >> japan in the 1990s there was a complacency, somehow you could never descend into deflation and the lesson from japan make sure you're aware of risk in policy. it's important what happens over the next 12 months central bank has to focus on the possibility inflation will be lower than expected and lower than target >> where is the biggest nudge here, europe? >> if you consider the u.s., the uk, the eurozone, the eurozone is more worrying. >> the u.s. is seeing a pickup in energy supply with the shale gas, we're seeing some instances

of productivity gains, there are benefits to the disinflation trend? >> certainly true in the u.s. case the shale revolution has helped to lower gas prices, oil prices, helped why inflation in the u.s. is so low. the problem doesn't explain why inflation is so low in the uk and eurozone and japan, not being affected by the same degree from the shale revolution but seeing low inflation and one very important issue here is wages. wage growth is non-existent and that's a big constraint. >> you're practically saying the central banks are exporting disinflationary trends with their policies right now. >> qe which is interesting is that qe has certainly contributed to big falls in currencies for the country's pursued qe, when the currency is lifted import prizes raised inflation in the country, the falling currency say the yen means rising currencies in other countries. the rising currencies tend to mean japan is exporting deflation elsewhere in the world. >> what is the possibility of a

disinflation, deflation-led currency war than in 2014? >> i think it's already happened frankly. the fact that we've seen big drops in sterling and big drop in the yen in 2012, there's no doubt that countries are trying to succeed by pushing their currencies lower. >> we haven't seen it in the euro. >> the reason for that the ecb is worried that qe doesn't work very well in a system where france is very much bank dependent rather than dependent through capital markets so they haven't been as radical in terms of policy. it raises additional risk for the eurozone they didn't do anything aggressive. the eurozone ends up being too strong and imports deflation from elsewhere in the world. they cut rates last year against people's expectations it's something but the issue no you this is a test for all central bankers if inflation continues to drop what action can you take when you exhausted qe, become tired of the side effects associated with it, increases in income and equality price

bubbles, it's tricky. >> fascinating, stephen king chief economist at hsbc. ross, back to you. >> nice to see stephen, say hi to him. tune in tomorrow for 9:00, we'll bring you live coverage of a panel jeff will be moderating on the future of monetary policy, such a big factor for investors last year and not going to be any less this year. that panel will feature george osborne, the uk chancellor, thomas jordan, chairman of the swiss national bank, larry summers, haruhiko kuroda, governor of the bank of japan and alexandre tombini. jack lew coming up at 6:45 eastern and 12:45 tada santa rosa time. u.s. futures mixed yesterday.

the dow down 41. ibm accounting for all of the losses now, another 35 points below fair value. the nasdaq since hitting the july 200 is nearly two points above fair value and the s&p 500 at the moment is around 4 points below fair value. the next part of "worldwide exchange" coming up.

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we may have heard plenty of optimism about the prospects for the global recovery here in davos, but many of the participants that we've been speaking to are raising concerns about the fragility of the jobs situation. listen to what they've been saying. >> most important thing is jobs, jobs, jobs. that part of the recovery is not yet obvious. we are still in the stage where, you know, green chutes and everything else but the part of the jobs has to be addressed and that requires specific policies. it's not going to happen simply because there's some recovery in the growth. >> is this a time to celebrate in the u.s.? well it is good news but as you indicated a very large proportion of this improvement came from people who left the

labor force. they were discouraged. labor force participation has declined significantly and therefore the effort to draw them back into the neighborhood is a structural issue. >> it will be a year where with he will add a number of employees. >> by what order of magnitude? >> relatively small, low single digits. since we operate networks you don't need proportionally additional people so the growth will be smaller than the revenue growth and that's the reason why we only will grow by low single digit numbers. >> it's very interesting, ross, and goes back to the point we were making yesterday businesses with $2.8 trillion worth of cash on their balance sheets, when are they going to invest and hire. this is one of the crucial situations. we may be optimistic about a recovery taking place here particularly in the developed market but at the same time the real crisis continues in the

jobs market. >> and some withering tax on the euro has been the record jobless figures we've seen and record youth unemployment figures as well, some of the comments the chaerm chaerman of ubs was making and we look at the jobs number we got as well from the uk, there's a lot of working oyou the what's going on with productivity, companies hiring people who aren't that productive, there's people don't quite know what's going on, oen a granular level as well and where the jobs are being created. look at the uk breakdown, a lot in services, a lot in housing, not in industries necessarily the bank of england would have wanted in manufacturing and export components. >> absolutely. you look at the u.s., the declining participation rate and actually the temporary hire s rather than the permanent hires. to go back to the point there with angel of the oecd, specific

policies and jobs that's not something that policymakers are focused on. the question are they going to do that in 2014? >> yes, and clearly the other interesting news the fed forward guidance and put in the jobs targets, right, and we've pretty much hit them an awful lot earlier than we might have expected so why were we targeting jobs with monetary policy guidance, because is job creation the right indicator necessarily of what's happening with an economy? they have to say i know we put the targets in but that's not a key threshold for us coming up with monetary policy. why put them in there in the first place? >> you're so right. you're so right. it's a good benchmark while it lasts but then we shift the goal posts either via an unemployment threshold or inflation. stephen king just said the

inflation threshold may give them as much room as they need. it's a confusing mix of policies here they have to focus on. >> they never moved away from their inflation threshold as well so they'll say look employment was one of three operate things we were looking at. >> exactly. >> we may hit that target but look where we are on inflation and the other side as well. clearly they got the pound furmfurm firmer. >> not a job i envy. another job i don't envy is trying to rule over brazil over the declining economy of course, rates and we're going to talk whether there is any way of investing in brazil to make money in 2014. stay with us, coming up after the break.

welcome to "worldwide exchange" live from the world economic forum here in davos. i'm julia chatterley. let me give you some headlines. let's all be friends. iran's president takes stage at the world economic forum denying any nuclear ambitions.

>> translator: nuclear weapons have no place in our security strategy and that iran has no motivation to move in that direction. there's still a steep hill to climb, the irish prime minister tells cnbc that ireland is well on the road to recovery, but warns that significant challenges remain. >> the single biggest crisis is the scale of unemployment among young people. and the potential of those young people. >> talks between the ukrainian government and opposition leaders break down as thousands of protesters continue to rally in kiev's main square. the prime minister of georgia tells the show he's not happy with the developments. >> we will condemn the violence. we saw that people died and therefore we are very concerned about the recent development in the ukraine. in a case of deja vu all over again, u.s. treasury secretary jack lew issues a stern warning to congress saying time is running out to raise the

country's debt ceiling. good morning to you. plenty of coverage to come from davos. right now u.s. futures have been pointing downward for the dow once again, the dow up 41 point yesterday, ibm nearly responsible for all of the dow's loss, its stock was down 3.3%. right now some 40 points below fair value. the nasdaq hit its highest level since july 2000 up 0.4% yesterday, called up around 2 points and the s&p 500 up just a point on wednesday's session currently joust above fair value as well. the ftse mib is up 0.7%, and eurozone pmi today coming in stronger than expected, germany

two and a half year high and france not quite as weak as expected. jules? >> thanks, ross. i want to quickly get straight to my next guest, get a sense of what's going on as far as the fragile five countries concerned, this is brazil, joined by jean-marc etlin. an election this year, growth slowdown, interest rates at 10%, pretty peak as far as investors think. what is the story here? is there too much pessimism? >> hi, julia. i think so. i think we are in the middle of a transition in brazil and we had an economy which was led by the consumer for the last 15 or so years since 1994 and we're now going through the pains of transition that model of investment into infrastructure to become a more efficient economy, productivity and so on and so forth. there are signs we seem to be moving to that direction, as you

said we have raised rates to tame inflation, the government has scaled back some fiscal incentives xwichb s given to t consumer, and there are signs we hopefully are moving toward the investment model as opposed to consumer model. >> you're headed in the right direction as far as you're concerned but from an outsider looking in, too much state involvement, concerns of instability over the election. why should investors come to brazil in 2014 when there's other options in emerging options out there? zmt fund mems are solid, the natural resources are still there, 250 million people market and prices have adjusted as well, if you look at the stock market prices adjusted. if anything it's an interesting entry point. >> talk to me about m&a deals in particular. we saw them fall off in the first half of last year and picked up in the second. do you expect to see more activity this year? >> what we have seen in terms of

m&a has been somehow fairly consistent in the sense that you have global companies which are interested in hauving a positio in brazil to increase the positions and we've seen private equity firms recently large global large private equity firms establishing presence in brazil and making investment. when i look at the trends of m were awere aa they seem to be intact. volumes can vary year to year. looking again three, five, ten years, the fundamentals are still there. >> some analysts say there's a reason to do m&a to invest in brazil would be about a specific m were aamp a story and not about the broader picture as far as brazil is concerned. coming through you, the bank and the i in, f downxwrgraded growt significantly. >> i disagree, growth is 2.5, 3, with i is quite painful but you have lots of sectors growing in

double digits and this is across the economy as a whole ranging from education to infrastructure to agricultural sectors, so on and so forth, health care. one needs to go down beyond the first line i would say. >> and so talk to me about the election again, is there too much concern about potential volatility about noise with regard to the election? >> i don't think so because we have had lots of volatility in the election of 2002 when there was a change and lulu was coming into power and a concern things were going to change. i don't see much change from this election in terms of radically different economic models, radically different sto stories. it's more continuity or a similar model to some extent. i don't expect a lot of volatility around election. >> why is the currency so weak if you're so optimistic, why are investors selling the currency? >> it's a process of adjustment. the currency has been expensive for some time and the government is slowly together with the

market obviously letting it, to go to levels which are probably more realistic. the real at 2.30, 2.40 is more realistic. >> jean-mark etlin, thank you for chatting with us. coming up after the break you heard from the irish finance minister what they feel. now we'll hear from portuguese economy minister, are they on track to exit the program, coming up straight after the break. mine was earned in korea in 1953.

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and because usaa's commitment to serve current and former military members and their families is without equal. begin your legacy. get an auto insurance quote. usaa. we know what it means to serve. we've seen a continuing convergence trade on eurozone debt which continued to astound a lot of people. portuguese ten-year bonds below 5% yesterday and currently still there 4.96% and a sell-off on portuguese banks because the government said it may not implement an accounting change and here we are thursday morning we're rebounding as well the losses have been reversed. as far as government debt is concerned that convergence

continues, jules. >> absolutely, and sometimes you wonder whether they belie underlying issues like the jobs. we spoke to the irish prime minister and said the eurozone faces an unemployment crisis and said the recovery in the irish economy and the recent upgrade to development grade has wider repercussions. listen in. >> move to look at the credit rating and increase that credit rating in ireland has had an impact in portugal and in spain and in greece but also it means that many of the financial investment authorities who were not able to invest are considering investing in ireland because we didn't have a credit status worthy of that. can now do so. >> i'm happen. i to say i'm underby the economy minister of portugal antonio pires de lima. the market hadn't caught on in portugal and fast forward three

months raising debt in the markets, subscribe 3.5 times over. is there too much optimism now? >> hi,ulia. it's great to be with you again, just three months after the interview in london. i think we are confident in portugal right now not only because we are meeting all the targets we commit ourselves with the troika regarding the fiscal adjustment, we are going to close the end of 2015 in a better situation than was expected and committed and this is quite important, economy starts recovering, driven by our export sector, portugal has proven to the world it is the economy regained competitiveness and it's gaining market share everywhere and i think this is really a critical factor. people believing that doing business in portugal can make a difference to gain market share not only in europe, but also in

africa and in south america. another part of my job is to communicate and you have been helping us, what we are doing, what we are achieving, because if we do not communicate, nobody cares, nobody knows. and that is my effort right now, get close to the capital here in davos, communicate what we are doing, and bring that capital to to are the gallon. >> so you're not worried if you see your ten-year yields now below 5%, you think that's because the market understands the story. the problem is these can come and leave just as quickly. are you concerned by that? >> i think we cannot get too excited. it is a dangerous state of mind to business and politics. we should remain confident because we are doing hard work in order to deliver and i think the trend right now is that stock market is going up 35% in the last three or four months in

portugal, yields are going down and those decrease on yields and gains on stock market are higher to say in 2014. our economy is going to grow in 2014 for the if, too imin three years. >> if we continue on the same track with the equity markets and the spreads tightening, could you envisage a program where portugal exits out cleanly? >> i think the options are open and it's good that we can have the freedom to choose between the two options, three or four weeks of the end of the program. as you know our program will end on may 17th, and we are going to make it. ireland decided just three or four weeks before their deadline and i think portugal will be in a situation to choose what is the best option to portugal and portuguese interests, when it gets close to that date. >> we always come back to a

question about the politics in portugal. you failed to sign a spending agreement with the socialist opposition. what does that mean and what will you do in order to make sure that you continue to meet the commitments of the bailout program? >> well, we were able also to achieve some commitments with the main opposition party as it will happen and will show to the world with our reform on the corporate tax system, which is now in portugal since the 1st of january, one of the most competitive and attractive to attract investment in europe, european terms, but it's true, when the priority with regards to control of public spending, the government and the parties of the government have been quite committed, but the help of other parties has not been much. anyhow, there is a strong

commitment of the portuguese people and the portuguese private sector, portuguese families to end up this program and to continue on the right track of fiscal consolidation in 2014 and 2015. >> brilliant. antonio pires de lima, confident but cautious, too. ross, back to you. >> thanks for that, jules. just to recap the headlines as well, iran's president takes the stage at davos insisting nuclear weapons have no place in the country's security strategy. china's recovery flash pmi contracted in january for the if, time in six months and jack lew ramps up pressure on congress to raise the dead ceiling before the february deadline. now stop us if you've heard this before. the u.s. treasury secretary is warning congress time is running out to raise the debt ceil.

krn's ha cnbc hampton pierson has nor out of washington. >> you got that right, jack lew has written another letter to congress warning lawmakers he'll run out of emergency steps in late february unless they increase the debt limit. back in december lew estimated the country could avoid the issue until early march, part of the budget deal congress struck in october to end the shutdown. they suspended the debt ceiling until february 7th. after that date, lew can start using various bookkeeping measures such as suspending investments in some government pension funds to extend the nation's borrowing authority. last year measures bought congress about five extra months to raise the debt ceiling. lew says things are different this year. the government shutdown delayed the start of a tax filing season with i will likely increase the

number of refunds the treasury pays out in february. last week john boehner said republican leaders don't want to see the u.s. default but the gop is holding firm on demands that raising the debt ceiling should be offset with an equal amount of budget cuts. president obama says he won't negotiate over the debt limit, raising the possibility of yet another standoff. jack lew will join joe, becky and andrew on "squawk box" for our first an cnbc interview from the world economic forum at davos at 6:45 a.m. eastern time. ross? >> yep, don't want to miss that. good to see you, hampton. we'll take a closer look at the shifting regulatory rate for global banks, jules joins us with the general manager of the bank for international settlements. [ male announcer ] this is the story of the little room

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a number of results looking out in the states, ebay fourth quarter estimates beat by a penny, and the bigger news may be carl icahn is nominating two representatives to the board and pushing the firm to spin off paypal shares up 8% in afterhours, currently up 4% in frankfurt. ebay's ceo john donahoe will be on today at 9:00 eastern. netflix soared more than 500%, revenue up nearly 2%, the company added nearly 4 million subscribers bringing the total to more than 44 million and expects to top 50 million customer this is quarter. shares up 17% in afterhours up

16% currently in frankfurt. all that helped since june 2000 wednesday's session the dow down 41 points most due to ibm. right now futures are suggesting a negative start around 45 poents, t points, the nasdaq under a point above fair value and s&p 5004 points below fair value. jules is in davos. >> thanks, ross. earlier today the "squawk box" team caught up with the spanish bank ceo of bbva and asked him how the spanish economy is faring. this is what he had to say. >> it has worked pretty well over the last couple of years. my view is that the war is over and recovery has started. having said that, more has to be done for us to continue. >> joining me is jaime caruan.

he said we haven't probingen this doom loop between sovereigns and the banks in europe, do you agree? ? i think a lot has been done and this should not be underestimated. i think banks increased their capital significantly and i think there have been significant he was on the part of sorvereigns to reduce or put their fiscal in order, side in order. i think it's still a lot remains to be done and i think it would be a misteak to think the job is done and that you should not be concerned about that. >> we have a banking union now where the sovereign ultimately is responsible for bank failures between now and the next ten years, so that's not breaking that link, is it at all, the sovereign still ultimately are accou accountable. >> i think the sovereignty is important and back stop that the banking system needs and at the same time the banking system has to be resilient and strong and we are moving in that direction

significantly, but again, the link is still there and banking union will be a significant progress and the asset quality review and the stress test that the ecb is preparing it will be a critical point that needs to work and be prepared properly and i think they are doing that job. >> work still needs to be done. i want to talk to you about regulation. if we look at fourth quarter results for the u.s. banks, very little mention of dodd-frank, very little concern about the volcker rule, i speak with risk takers and they say their risk limit hasn't changed at all. what have with he achieved? >> if if you look at the capitalization of the banks it is much higher and perhaps what it is not well noticed is that the quality of the capital is much petter. probably if you were to put a figure to that, the capital that barks have today in relation to

the one that had before the crisis will be seven-fold or more and i think that's quite significant and there have been many other things that have been achieved. again, i don't think that we are at the end of the road. we need more work to do and i think it's also very important to think that it is not just regulation that will prevent next crisis. it will be many other things, so putting only the emphasis on regulation will not be enough. >> regulation is always behind the kufb. >> i curve. >> regulation is something that will be needed. it has been improved dramatically, but you will need fiscal, you will need a more symmetric monetary policy, you will need macro prouudential ana lot of things that are new or change. >> china we see the term structure of interest rates rise at a time when they're trying to deleverage, it's a fine balance there. how worried are you? >> i think we should be always

be attentive to situations in which credit growth is very rapid. i think this is one of the areas where they've done a lot of research and there is some deepening in the market, rapid growth needs to receive attention on the part of the supervisors. i think the chinese authorities know that and i also know that it's not very easy to control these processes and a lot of action and not only regulation will be needed and a lot of political support to do what it takes. >> we have to keep watching it. jaime caruana, thank you so much. boss, that's it again, another day survived and another hot chocolate on tap. >> perfect. add a little bit of sugar as well on a thursday i think at davos. thanks for that, jules. that concludes championship championsh "worldwide exchange." coming up "squawk box," joe, becky and andrew. we hope you have a profitable

day. god bye for now.

"squawk box" is live in davos, becky andrew and i made the trek all the way to switzerland to interview the big power players gathered at the world economic for ul. >> interviews with the ceos of the new york stock exchange and know var tis. >> and our headliner, jpmorgan's jamie dimon. it's january 23th, 2014 and "squawk box" begins live from davos now. good morning,er.

welcome to "squawk box" here on cnbc. i'm becky quick along with joe kernen and andrew ross sorkin, and we are coming to you live from the mountains of switzerland. davos to be precise. this is the host city of the world economic forum and again we have an embarrassment of riches today for the show. topping off our line-up today, one of the contenders for cnbc's first 25 leaders, icons and rebels, jpmorgan's chairman and ceo jamie dimon. we have treasury secretary jack lew, larry summers, commerce secretary penny prizker, muhtar kent, steve schwarzman and goldie hawn. >> "laugh in" was a show decades ago, yes, there was a guy named ronan and martin and a lot of different characters be