hello you're watching "worldwide exchange." i'm ross west gate. >> i'm julia chatterley. these are your headlines from around the world. south african president jacob zuma says the sell-off of the rand is not due to domestic issues. >> many currencies are having problems. it's difficult to say, we cannot move this direction or that one. you know for a fact that to defend that, you have the economic measures down because of the dollar. >> rbs shares drop, the lender posts a $13.5 billion loss. the chief executive expected to

lay out his turnaround plan for the business. and wpp weak margins. the ceo says he should have done more in emerging markets. >> they are our most profitable markets now. i think over the coming years we'll be more aggressive and if there's one thing i regret about the last ten years, it's that we didn't go faster. >> and a split picture for two of the world's biggest asset managers, pimco owner allianz suffers. okay, welcome to the thursday edition of "worldwide exchange," plenty to get through today. i'm looking at the russian military exercises down at the

ukrainian border, 100,000 troops. >> posturing, 150,000. >> exactly. we'll talk about that. also on today's show qantas lays out plans to cut jobs and grounds some of its fleet after a disappointing set of numbers. we'll get the latest from sydney. as we've been saying the russian flag is raised over the crimea regional parliament building. we'll be in moscow for the latest. and some positive news from retailers stateside, jcpenney swings to a profit in the fourth quarter sending shares higher. how the firm shrugged off the winter weather headwinds. fed chair janet ylen is set to testify before the senate banking committee starting at 10:00 a.m. eastern. yellen's appearance was originally scheduled for february 1th but postponed because of the snowstorm as well as her outlook for the u.s.

economy and the effect the weather has had, the markets will be looking for clues on how the feds' tapering plan could progress and what impact that may have had in emerging markets. >> the biggest impact so far has been on the fragile five a term coined by morgan stanley, that club includes wra zillion, indonesia, turkey, south africa and india, the countries most as risk during the tapering cycle. the response of a number other nations has been to hike rates and brazil continued its fight against against inflation. the 25-basis point increase marks a slow-down in the policy of monetary timing. now the story is fairly similar for asia's third biggest economy, where growth remains stuck below 5%, a near decade

the country has suffered from a weak currency. forthcoming elections could pose a risk. the latest pew research center poll suggests 6 % of the population could vote for the opposition bjp if the election was held today. the governor has blamed the economic turmoil on the u.s. and the nation's selfish fiscal policies. we'll know more when we get the latest gdp figure tomorrow. in south africa ripples being felt this side of the atlantic from ongoing mining strikes that have halted production and escalated into violent protests. the rand is being pushed close to record lows despite the central bank raising rates and elections in may seem to be contentious with new parties adding to the new anc's challenges.

broadwin, i think it's incredible what he said about the u.s. monetary impact of the dollar, not actually the domestic issues requesting goin country. tell us what he had to say. >> reporter: absolutely, thanks very much, julia. taking you a step back in the context of the interview we spoke to president jacob zuma tonight. it's important he starts engaininging with stake holders ahead of the election on the 7th of may. the anc is starting to lose votes. opinion polls are indicating that there could be getting less than 0% of the total vote. if that happens it will be the first time that the anc finds themselves in that position since they took power in 1994, against that political backdrop we have the economic back drop where the international monetary fund is forecasting a growth

rate for 2.4% for 2014. the african continent has an average growth rate of 6% so south africa is proving a drag to that overall african story. of course we've got unemployment in the countries sitting over 24% that is the formal been static at that level for the better part of a decade. youth unemployment is higher than that and it's against that background i asked president jacob zuma whether south africa was in for its own arab spring. >> we're running a very democratic country. i don't think the reasons for people to go to that extreme that they have enough space to protest and voice their views, as it should be in any real democracy, because i think some of the actions come in a sense

to express the situation, whether people have enough room to be able to raise their views. of course, in the state of the nation address we stressed this point but again, it's not a south african problem. it's a global problem, the unemployment, particularly the youth so we are dealing with a problem that is afflicting everyone. >> you've also expressed concern about the rand weakness, fueling inflation, ultimately the rand looks as though it's set to remain weaker for longer. your thoughts on where the currency's going? >> it's difficult to predict that, because it's not because of our currency it is the dollar, the key controlling currency in the world. once the dollar is in problems, many currencies are in problems. so it's difficult to say we cannot move this direction or that one. you know for a fact that the

fact you have the economic measure down is because of the dollar. once the dollar is in trouble, that impacts all of us. we are trying our best to ensure that we handled the currency, but as i say, it's not totally in our control because it has to be part of the xwloebl volatile situation. >> would you agree some of the rand weakness is related to heightened risk in the mining sector, do you not think that is heightened risk from foreign perspective? >> because of the economic meltdown and the markets were no longer able to buy platinum and gold and once that happened it affected mining, so it was not it affected what they were doing but it was the economic meltdown. once that happened then the mines reacted in a particular way because one particular mine

thought that they should deal with workers, others would not strike so whatever way we look at it, it was not viewed in isolation. >> we supply 80% of the world's platinum, a huge industry for us. do you think we'll see our way clear? >> absolutely. as the economies of the world that we trade with are beginning to come back, i think that means then our commodities are going to be bought and that will make us come back to where we were before. >> there president jacob zuma is net confident about the outlook for the mining sector in south africa. now finance minister gordon tabled the budget in article amount yesterday, a debate is raging. is a weak rand good or bad for the south african economy?

lindsey williams asked the prime minister whether local manufacturers exporting out of south africa are benefiting from that weaker rand. >> life is about balances, so the currency has to be at a level where exporters can export, exporters can be competitive and exporters can produce goods that are wanted outside at a price that is acceptable to the customers outside. on the other side we have lots of consumers and investment projects which require capital goods for example to come in. we import all of our oil or much of it, so we've got to maintain a position which says watch the import side and the export side and each one must make the best proposition out of it. >> reporter: in south africa prime minister gordon had a tough balancing act to conduct in parliament yesterday when he tabled the south african budget.

back to you, ross and julia. >> thank you for that great stuff from south africa. here we are in europe, and hour and ten minutes into the trading day and decliners have it over advancers more than 5:4 at the moment, the dow jones stocks 00 pretty flat close for u.s. equities today. ftse down 100, individual corporates to focus in on, rbs posted a full-year pre-tax loss of more than 8 billion pounds that has unveiled a 570 million pound bonus pool, stock off 6.4%. man group up 10.5% after impressive full year figures. funds under management left the companies aa slower pace than expected in 2013 as the firm attracted more new investment. rsa down 3.4% is where we stand,

the firm's planning to plug a capital hole with asset sales the former rbs ceo steven hester now taking over at rsa and wpp, 5.25, saw sales rise in 2013 but investors left unimpressed by a warping on margins. the ceo told cnbc he should have been more aggressive in emerging markets. >> they are our most profitable markets now. over the coming years we'll be more aggressive. if there's one thing i regret about the last ten years is that we didn't go fst aer. >> posting a 2013 net profit of nearly $4 billion and allianz down 2.3%, raised its 2013 dividend after roughly meeting market expectations.

the company saw a strong performance from its property division but life and health insurance missed analyst forecasts and ahold, the dutch retailer up nearly 4% today, spending by u.s. consumers still fairly cautious but the fourth quarter numbers did come in a notch above market expectations. that's where we stand with the corpora corporates. pretty much on that mark a fairly healthy five auction well bid despite new home sales coming in at a 5 1/2 year high. yields have gone a little bit low so that so big beat on new home sales. on the currency markets the dollar basket is up a two-week high, 1.3646, and we haven't changed an awful lot oef tver t

last 24-hour period. thank you, ross. the shanghai composite managed to gain 0.3%, despite that the pblc drained liquid from the markets. the china export lost more ground with chine jxt down. 3.5. the nikkei lost ahead of the yellen testimony while the dollar/yen pair has been largely flat at 102.36 during asia trading. kospi gained marginally. australia suffered the biggest loss in three weeks hurt by a steep drop in business sentiment and poor earnings from qantas. panasonic shares gained 2.6% today, hitting a four-week high thanks so its better than expected dividend plan it comes a day after the report about its

investment plan in the u.s. car battery plant but japan's realistic counters saw increased selling. in china, some electricity stocks are higher on expectations that the country may build new power transmission lines in the eastern region to reduce coal consumption and tackle the smog problems. so that's a look at asian markets. back to you. still to come rbs posted its sixth annual loss but that won't stop it dishing out over half a billion pounds in stock bonus. >> we'll have more on that as soon as we come back. we needed 30 new hires for our call center. i'm spending too much time hiring and not enough time in my kitchen. [ female announcer ] need to hire fast? go to ziprecruiter.com and post your job

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the ukrainian foreign ministry summoned the russian envoy in kiev, requested immediate consultation with moscow, since russia put 150,000 troops on an exercise. jaime maceda joins us from the russian capital with more. hi, jim. what's the intention here do you think from the russian government? >> reporter: well, the russian

government wants two things, to exert its influence in the region but at the same time it doesn't want yet i think nor do other analysts we've spoken here to rock the boat too much. there's no question, ross, texts have spiked in the past 24 hours just as russia's foreign ministry came out condemning large scale human rights violations against its ethnic russians in the ukraine, the russian defense ministry confirmed that fighter jets were now on high alert along the border with ukraine that's of course part of the surprise, war games we've been reporting on since yesterday including long range aircraft, warships as well as some 150 troops and some 900 tanks. the main flash point is ukraine's crimea peninsula, strategic for russia, the home of the black sea fleet, scuffles broke out yesterday between

proand anti-russian protesters outside crimea's parliament. overnight the building was seized by armed men speaking russian with rpgs, sniper rifles, in effect vigilantes who raised the russian flag over the building. today police surround that building hoping to contain the situation while ukraine's acting president warned russia that any troop movements outside of the black sea fleet base would be seen as an aggression against ukraine, and all of this going on, ross, based on as a result of many things but now we're seeing photos even of ukrainian armored personnel carriers and troops on the road to seba sebastopol, it looks like an intense stand yourseoff and onl

to get worse. the head of markets at bcs financial group, to find an analyst that thinks there's any possibly of military action as far as russia is concerned. have investors got it right here, the bond markets and the equity markets if we look at what's going on the investors are positive on the ultimate outcome here. >> ukraine is an extreme version of a frontier market, has very little access points to gauge what happens in the capital market there. it's true if you look at the equity market in the ukraine and the bond t seems like it stabilized. you look at the credit default swap it's an elevated level above 1,000 which is distressed but below the 1300 level. >> and liquid as you just pointed out. >> very much so. the reality is the kremlin has been quite a responsible actor, the putin administration in terms of how it's been dealing throughout its long tenure and the situation is much more complex than what you can gauge

from looking on the surface. there is no imaginary line between the west and the east that you can split off to russia. the crimea which is russian in terms of the way we conceptualize it. >> it was russia until the 1950s. >> when it was passed over to ukraine and the naval fleet of the black sea is there and indeed is an autonomous region within the ukraine. even there, there's a sizeable minority not only of ethnic ukrainians but the tartars are on the front of it. the putin administration is well aware of that. the notion they can sweep into crimea and be greeted by the large minority is not realistic and there's no interest from the russians or europeans to escalate this further. >> let's move on to yaush. you came on cnbc at the beginning of this month and said that the rube was due for a

pullback. investors who believed in you, talk me through. >> it's a good point. even we have a huge debate on the direction of the ruble. we came into 2014 expecting the trubl depreciate. the pace of the deterioration was surprising. even today it's quite surprising to see where the ruble is. we came into 2014 with a sell-off in emerging market currencies due to external vulnerabilities. we have discussing south africa, india and turkey and russia is not in that camp. it seemed like the ukrainian situation is not helping. the fact that i miscalculated to be fair when we discussed is the central bank of russia, the central bank of russia is seizing on this opportunity to orchestrate a bit of a devaluation in the ruble. this is positive as long as it's in an orderly fashion for the russian economy for investment in russia, for profitability of corporate russia and the current account in russia which has been

deteriorating. net net you'd expect the ruble to be further downside in the lubl to be limited but again we do see monetary situation in the u.s. tightening, more fears, it's hard to call that. >> tends to overshoot. joseph, great to chat with you. now rbs ceo ross mcewen said to set out his plan for the bank, this announcement is taking place after rbs posted a loss of more than $13.5 billion for the last year. the head of global banking at pimco joins us now and also joined by helia even hibrahimi. >> we heard it's a buying opportunity but for most in the

market you've seen shares side this morning. it's a real massacre. you've got a high loss number, 8.2 billion pounds, a massive bonus number higher than we expected but importantly you've got a whole load of costs associated with it and you haven't seen the cost reduction so if you look at the markets business, you can see that actually income has come down about 26%, profits down 58%. that's with the costs only coming down 11% and if you come back and have a look at the wider group you can see that in the last year, even though income has fallen 2.3 billion pounds the actual cost reduction they've managed to do is just half a billion so you've got this massive cost income ratio of 67% which is a long way off from where the bank was hoping to be. >> felipe, come in here. three to four years through this

process of restructuring for rbs. seems like they have an upward struggle to improve this business. >> i think that's right. the numbers this morning are very weak, expectations were not high. i think the most concerning number here is the top line the income line where basically you see the french eating into the franchise to generate earnings going forward. that's the bigger concern to me and in addition to that what effect you have now is a bank signing up under government pressure primarily for two or three years of massive restructuring and that creates a lot of uncertainty and the government's vision to transform rbs from this massive global universal bank into an 80% uk institution is certainly an appealing message politically but in the reality and

practicality of it, are difficult to implement and you have to question the value of that company going forward. >> they've got to sell by the end of 2016 the u.s. bank as well. 8.6% at the end of 013, higher than 2012 when moody's were talking about possible credit downgrade. has that threat gone away? >> i think the capital position looks weak today because the bank has been consistently loss making for the past five years so it's been left mind compared to peers that have been profitable and retain earnings and build up capital organically. they are certainly left behind. the good news from a capital perspective is that there's big chunks of assets to sell that should boost the capital ratios going forward, citizens, the u.s. bank is going to be part ipo this year so there's a lot of capital benefit from that so they have a target of 12% and i

think that is achievable. >> there say problem if you want to boost capital that's one thing but at the same time you're stripping out assets like the u.s. retail business, restructuring from seven business units down to three, stripping out employees, also impacting and gaining their top line of where they generate revenue here. are they getting the balance right? >> no, so i think the government has made a mistake when it did that strategic review. my view and my recommendation has been to keep the hester management team. i think that we're getting close to a point where the bank was ready to initiate the privatization process. i think for mostly primarily political reasons the government has decided to follow a different path which is to transform rbs into some sort of lloyd's but with the focus on uk smes. i think that's primarily

intellectual appeal rather than economic appeal and you will see that strategy is creating a lot of value destruction for shareholder answer therefore taxpayers. >> maybe they'll get the bank to a smaller safer size that scott rand could support it on its own. maybe that's where we'll end up. >> it's better supported going forward. >> good to see you. helen will stick around for the ramifications of it, back to that. still to come is the chinese yuan going to be the next world reserve currency? it could topple the u.s. dollar to snatch the top spot. we'll bring you that story right after the break. we needed 30 new hires for our call center.

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the headlines from around the globe, blame it on the dollar, south african president jacob zuma tells cnbc that sell-off in the rand is not down due to domestic issues. >> once the dollar is in problem, many currencies are in problem. so it's difficult to say we can

mott move this direction or that one. rbs shares drop after the lender posts a $13.5 billion loss. chief executive ross mcewan expected to lay his turnaround plan for the business. wpp disappoints investors with its weak margin guidance despite driving profits higher, the ceo says he should have done more in emerging markets. >> they are our most profitable markets now. over the coming years we'll be more aggressive and if there's one thing i regret about the last ten years, it's that we didn't go faster. >> and split picture for two of the world's biggest asset managers, pimco owner allianz suffers a high outflow of client cash but man group boosts its dividend after attracting more investment in q4.

so rbs ceo ross mcewan laying out his turnaround plan for the bank. few key headlines restructuring means making difficult choices on jobs in the years ahead, no real detail as far as how many job losses we're likely to see. technology investment in the next 12 months will be to improve system resilience and make it more agile, flexible for the company, a change in annual bonuses is needed. they dropped 15% from the prior year, rbs will continue to be a back marker in investment banking and they're going to have fewer branches over time. there's been a 30% decline in branch usage since 2010, incredible figures. they're also saying not strong yet enough to be privatized at a profit for the taxpayer, not going to be privatized at a profit for the taxpayer in the immediate future, funny enough our last guest was saying not

likely until 2016, 2017 at the earliest. >> this bank produced 40 i think 44.6 billion of losses ever since 2009 and we were told this was a five-year restructuring plan when hester came in and it would all be tied up. >> but it was tied up just about and then the government changed their mind. >> depends whether you wanted rbs the bank that was rbs in a smaller size or you wanted as mark, too. politicians wanted rbs to become a mirror image of lloyd's which is a much more complex task to achieve. >> is it a new ceo though. how much of this is about kitchen sinking in this day? >> the banker is so self-critical i think in a wish to avoid being criticized by others and one of the investor presentations they put crosses next to all the things they do badly which is questions remain about technology, our reputation

has been damaged, our market share trend is flat or declining, there's nothing in here that they're not doing badly. >> i asked you this morning what was good. what was good in the report? we got a bit confused, didn't we? >> i think what ross mcewan would say, rbs is still the uk's biggest corporate bank and in line with this cyclical recovery in the uk, it should be able to benefit from that upswing, but actually when you look at the numbers for q4, they haven't done particularly well in that franchise either and you have the at strosk numbers from the markets division, profits down 58% and this is when costs are not coming down. remember, today they paid out over 570 million pounds in bonuses, that was slightly higher than people expected. when the loss was slightly more than people expected so it's a really difficult conundrum.

on the analysts call one was asking the finance director nathan bostock soon to leave to santander was asking why are you issuing equity again to pay your coupon, again why do we as shareholders have to bear the cost of you going into the capital market, the debt markets and raising money and he was saying well, unless we produce a profit we can't pay in cash to our debt holders. so on scotland he was very interesting. he said he wanted to remain neutral and let the people of scotland, this is ross mcewan, decide, but he said we need to consider what the risks are. we don't know what the rules of engagement are, which i think is how a lot of the scottish voters feel. >> interesting, also heard from standard life this morning, it's going to leave parts of its or look to leave parts of its business away from scotland if

the country votes for independence. the firm says the move would protect interests of its shareholders and interesting about that 90% of its policy holders are in england and wales, not in scotland and i think maybe what they're trying to do here is probably get some clarity in the debate as it goes. we're going to have to know before. what's going to happen. >> last month they talked about the fact that voters in scotland aren't sure, we've got a currency issue, a regulatory issues around banks whether the bachkz of england are the lender of last resort for scottish banks if they're regulated up. there's lots of questions. >> standard life of the big employer in scotland as well. thank you for that. european equities we're about an hour and 40 minutes, we'll twibl about the 1:30 short of that, down half a percent for the uk xetra dax off nearly a

percent. ftse down about a percent. spreads certainly tight in the pond market, the u.s. ten-year trading around 2.65, more than three-week lows in terms of yields. number thinking the geopolitical concerns will benefit even the periphery and not just core bonds here taken seems to be the case. >> u.s. dollar index up at a two-week high. this time yesterday dollar/yen slipped down to 1.02. just the 1.66 handle after being up nearly 1.67 early in the week. angela merkel will address parliament today and joins the queen for a pot of tea no doubt. uk prime minister david cameron will be hoping to use the visit to get the chancellor's support on renegotiating the uk's relationship with the eu. so what are his chances of making some leeway with germany's version of the iron

lady? chief economist at lundberg street research joins us now. charles, in between the discussions between merkel and cameron whoo he asks for. we're not clear on what he wants back precisely from brussels. how can he ask for what he doesn't know? >> he'll ask for stuff which sounds good in a speech and ask for everything and he won't get everything but the key question i think is going to be over time first of all how voters react to what's currently happening inside the eurozone and secondly, how the economies develop and whether or not the eurozone can actually stabilize itself satisfactorily. >> when you say react to the way things are going in the eurozone, what are you hitting or alluding to? >> i don't know to what extent people in spain froeror example going to be content with 26%

unemployment and 55% youth unemployment. it's fine for us here in britain, we get all their talent who come oef here but not so hot for them and the willingness of voters to do something about this in terms of voting for people who if you like have a sort of cameron-esque or slightly -- >> that's more reform of the way the eu is in competitive practice really, isn't there? angela merkel is modification rather than general renegotiation? >> well i'm not sure where the line is drawn between modification and renegotiation. any modification is a change which is, could be presented by mr. cameron as a renegotiation. >> i think as far as germany is concerned -- >> it will be presented. >> you don't have to go back, countries have to go back and have referendums. >> that's what they want because they never have referendums themselves and if they had, of course, we wouldn't have the euro. >> do you think the

parliamentary elections changes anything here, because we're talking about a possibility of having 30% of the europe parliament skeptics. do you think that makes, angela merkel will change her mind at all on this? >> the pressure on merkel is currently mostly i would imagine at least on the day-to-day basis from her social democratic partners inside the coalition who are very kind of integrationists if i can use a word which probably doesn't even exist. if something like if you're deutsche, you're a skeptic by which i mean euro the currency skeptic group makes a substantial breakthrough in the elections that creates alternative pressure because they're mostly appealing to her own christian democratic voters. so that's one of the things that's there to play for and then of course a question of what happens in the other countries. >> i think it's really

interesting the meeting between cameron and the dutch prime minister because i sfoek him a few weeks ago and he's still adam ant that the time for more surp over and we do need to repatriate. as crucial as getting the germans on side is building a consensus amongst some of the other countries and he does have that. he has a growing consensus among some of the big countries, the core countries. >> yes, confronting the fact that the head man of the so-called freedom party is eu skeptic rather than just euro skeptic and wants out and is currently the leading party and that's exactly the kind of pressure which could build in germany and those are the guys who are playing up this thing and the other people who are suffering from it because the germans effectively through their sort of competitive devaluation have exported their deflation down south, those guys are suffering, too. so it's how those people react in the voting booths which i

think is crucial. >> the last time german chancellor addressed parliament was in 1970s. >> the irony. >> i voted to go in 1975 or to stay in rather by then and now i still think we're better off inside the eu and outside the euro. >> i thought you were going to say something revelatory charles. >> i haven't changed. the world has moved from left to right around me. >> charles, fantastic to chat to you, lundberg street research. logon to cnbc.com to get a preview of the big meeting today and of course we'll have live coverage of the joint press conference at 10 downing street from 3:30 cet. change of pace now, cnbc confirmed with government sources that egypt's finance minister will not be in the

country's new cabinet. decision on the post is expected within the next 48 hours. this as broadcaster al jazeera called for protests outside egyptian embassies across the world. yousef al din talks to us now. i remember talking to the former prime minister a month ago and he was looking forward to the parliamentary elections, the presidential elections. what changed? >> well it's been a real roller coaster, julia, but i landed just a few hours ago and effectively walked into a series of labor strikes, likely to have been a key contributing factor in that surprise resignation by the last cabinet. there are also power cuts again as a result of gas shortages despite aid coming in from the oil rich gulf states, those are going to be central in the priority list of the new prime minister ibrahim. as he puts his team together

cnbc learned from sources that gelel will not continue as finance minister and dimyon former chief negotiator from egypt with the imf will take up that position most likely. now in either case, the transition is going to be short lived. the mandate is will be short lived because presidential elections are slated to take place in a few months again before parliamentary elections so just putting together the framework, the legislative framework for that and also keep in mind that the political ambiguity has been that ratings agencies like moody's, like fitch have maintained their negative outlook over the last two weeks, a central bank decision on rates is also expected later on today, analysts have told me don't expect any change on that front because of what's happening politically. perhaps ironically the stock exchange, the equity markets have reacted positively to the political uncertainty in this country. now, on a slightly different note, julia, and you brought

this up as well, al jazeera calling for a global day of action. we spent more time telling the story rather than sharing with you the risks and the challenges we take on to bring you that information. al jazeera calling for the release of four journalists that have been detaped since december 29th and it's really part of a growing debate or a wider debate about freedom of expression in this country, egypt was the third deadliest destination for journalists in 2013 and the hope many have is that the government will take a closer look at these issues and resolve them to make it easier for journalists to do their job. julia? >> thanks, yousef. we'll wait and see if we get some progress on that. blackstone is buying 20% of versace, going to inject $150 million of fresh capital, acquiring $60 million in stock

and have one seat on versace's board. there's a slight different investment, fashion, darling, versace, are they out, are they in? where are you on the versace scale? >> i couldn't really give you a -- >> no? >> positive that tells you everything. reading between the lines. >> it's so far out it's time for it to be in. >> she's quite a flamboyant character, isn't she? i don't know. >> our director says it's out. >> she's braver than me. >> you're wrong it's coming back. >> it's all cyclical. she'll be back. also still to come, qantas is forced to cut jobs and its fleet as the competition takes off. >> we'll jet across to sydney next for analysis of the australian airline's turbulent first half coming up after this break.

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welcome back to the show. few more headlines coming out here on that versace deal with blackstone, agreeing to a 20% stake. versace is saying the family will remain at the heart of the company, the transaction implies total enterprise value of around 1 billion rue euros for the

company now. also versace or blackstone taking one seat on the board so that's the latest on that deal. now the yuan will take the dollar, a survey of 200 investors, 100 headquarters in mainland china and 100 outside it published pi state street and the economist intelligence unit, they expect beijing to complete its final liberalization within ten years. for more and the renminbi's recent slide head to cnbc.com for all the details, this comes as china's central bank sets another week a midpoint band for the chinese yuan. the currency opened below the fixing but it did recover midday trading around flat. the yuan depreciated about 1% over the past few weeks and expected to continue to slide ahead of china's national people's congress next week.

tommy shea, economist research and strategy at ocbc bank joins us now. tommy to what extent is this a warmup our prelude for the widening trade of the yuan? >> right now we have a lot of speculation in the market. right now we have seen the gap between the yuan fixing in the onshore market has been closed so next question is when china's going to widen the trading bands. so we think it's likely for us to, i mean for the next few months likely for us to see china to widen the trading band. we know next week we are going to have the national people's congress which reform will be one of the key focus in the congress so i think i won't be a

surprise for china to widen the trading ban during the congress meeting next week. >> are the pbc trying to change the view that the renminbi will appreciate against the dollar and that encourages -- do they assume because there's that assumption in the market it encourages speculative inflows? are they now saying we don't want the speculative inflows so we'll change the view for the currencies automatically rising maybe it's at fair value? >> okay, i don't think they want to change the view that the renminbi is going to appreciate. i think what they do actually they probably try to clamp down on certain speculation flows because right now it's kind of the consensus trading in the market is going to bet on the renminbi appreciation. i think the inflow is too strong. i think that's why opbc is not comfortable with that. the move for the past week

they've tried to clean up some position but i think pboc has to allow the renminbi to appreciate. >> speculative inflows are down to the fact there's an expectation currency is going to appreciate? >> well, i think there's no official statistics on how much the speculative inflow is in china but if we look at the capital population and china's forex just by the chinese banks it's quite huge hundreds of billions which cannot be explained by the fdi so that's a huge number we are looking at. so again we are going to see pboc is trying to balance the flow. >> great to chat with you tommy xie at ocbc bank.

ross i'm with you. >> i'm right here. >> i'm with you i believe one of the biggest short trades out the carry trades out the short dollar trends. the funny thing is actually they've been speculating on increasing volatility so the hedge funds they're benefiting from this not losing out >> there'll always be somebody who benefits. >> playing for greater volatility. >> shares of baidu up. fourth quarter sales doubled to 1.5 billion, beat analyst expectations. invested herself nil mobile content which makes up a fifth of its top line and says more acquisitions will likely keep net proflt flat in the year ahead. >> let's give you a look at what's on the agenda in asia tomorrow, spending figures, cpi, industrial output and retail sales, and full year results after hong kong's glom rate and

india will report q3 gdp figures, retail poll suggests lackluster growth 4.9% for the december quarter. still to come on the show jcpenney ceo says the challenging part of the turnaround is over. >> we'll have more on how the company managed to eke out its first profit in more than two years, after the break and a pretty decent performance from target after its earnings after all we talked about that. plenty more coming up on the u.s. market. the second hour of "worldwide exchange" is coming right up. [ male announcer ] meet jill. she thought she'd feel better after seeing her doctor. and she might have if not for kari, the identity thief who stole jill's social security number to open credit cards, destroying jill's credit and her dream of retirement. every year, millions of americans just like you

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welcome to "worldwide exchange," i'm chullia chatterly. >> i'm ross west gate. the headlines today from around the globe. >> blame it on the dollar. south african president jacob zuma tells cnbc exclusively the sell-off in the rand is not down to domestic issues. >> once the dollar is in problem many currencies are in problem so it'sive to say we cannot move this direction or that one. we know for a fact that the fact you have economy down because of the dollar. >> fed chair janet yellen will say about the impact on emerging markets from u.s. monetary policy and if u.s. storms have

chilled the economy. rbs shares drop after the lender posts a $13.5 billion loss. chief executive ross mcewan says he'll have to make difficult choices on jobs in the years ahead. w.p. pierce disappointed investors with weak margin guidance despite driving profits higher. the ceo says he should have done more in emerging markets over the years. >> they are our most profitable markets now. i think over the coming years we'll be more aggressive and if there's one thing i regret about the last ten years it's that we didn't go faster. if you're just joining in, thanks for joining us here on "worldwide exchange." i'll give you a look as always as how the markets are faring ahead of the u.s. open today and as you can see futures

indicating lower despite minor gains in yesterday's trading session a sell-off into the close again we saw in intrading in wednesday's session, lower here on the dow futures by around 54 points so far for the nasdaq, trading around the 14-year highs but indicating by around four points and s&p 500 similar story, too, indicating around four points lower. quick look what is going on as far as the global top stocks are concerned, it's a weaker session here for europe despite a mixed picture in asia overnight. i'll give you a quick look at the individual stock performances for the european markets mere the ftse 100 down by around 1%, rbs are weighing on the index, german markets down 1.3%, french markets by 0.8% and for the italian markets lower by.2%. >> nudging a little lower. >> a host of earnings to digest

as well. i'll have to wear green tomorrow, all mint. >> you're calling the market higher tomorrow? >> you heard it here first. >> rbs today very much in focus the state-owned bank still majority owned by the british government stock down 7.6%, posted a full year of more than 8 billion pounds and unveiled a 570 million pound bonus pool. the ceo says he has to make difficult choices on jobs but plans to sell its citizens u.s. business as well, there will be a part yol flow to that too. man group up 11% on the other hand impressive with its full year numbers the asset manager said it left at a slower pace than last year the firm attracting more inward investment. rsa the insurance group in the uk ex-rbsceo steven hester is taken over at irc, parachuted in to help it out and he's unveiled a $1.3 billion rights issue and

the firm planning to plug a capitol hole with asset sales as well and doug pp down 5%. may have seen a rise in sales in the last quarter of 2013 but investors unimpressed by warning on margins, martin searle telling cnbc he should have been much more aggressive. >> they are our most profitable. if there's one thing i regret about the last ten years we didn't go faster. >> how fast do you want to go, break the speed limit? i don't know. moller maersk is the it's the shipping company. allianz trading lower after a

weak performance. and dutch retail group ahold has a big presence up 3.39%. fourth quarter figures were not above market expectations. that's the individual. yields are lower as cross the board today. accelerated during the session. we're at 2 pn 66% yield on the ten year when we finished the u.s. market. it was a big -- we had a well received auction yesterday. of the currency markets, dollar index is at a two-week high today. dollar yen has gone down to e e below 1 pn 0 -- 1.02. we have an update on what's happening in asia. >> managed to gain .3 despite

the drain of the markets this week. but within china down 3.5%. over in japan, lost .3 ahead of the testimony. while the dollar yen has been largely flat at 102.36. but australia suffered the biggest loss in three weeks. also poor earnings from quan it is a. panasonic shares gained 2.62% today. tha thanks to its better than expected dividend plan. this comes a day after the report about investment plan in the u.s. car battery plant. but saw increasing selling extending a down trend since the start of this year.

some electricity is higher on expectations on the country they build new transmission lines to reduce coal consumption and tackle the problems. so that's the asian markets. back to you. >> we just had a few on the ukraine to keep you abreast of developme developments will. former president said he's still the president of ukraine and this according to russian news agencies. so that's an interesting question about whether he's in russia. we still don't know that. he's also saying he's asking russia to guarantee his personal safety from actions of extremists. e he also says southeast ukraine doesn't accept leadership. the parliament yesterday said they did want to remain as part of the ukraine. that's just his personal opinion

here. but he's saying he's still the president of ukraine. >> janet yel season back on capitol hill today. she was to appear in february, but it was delayed because of freezing weather conditions. she's also likely to face continued requests. joining us is the managing director andrew good to see you this morning. is the weather different from what she said to the house today to the senate? >> a little unusual that we have a pause between the two speeches. the weather has been a factor in a lot of the economic data. i think that will be one of the

primary focuses. but i think three keys essentially to the statement today, the q&a i don't hi the statement will fluctuate much from what she said a few weeks a ago. i think they will continue to press her on this idea of is it really just whether distortions or is there something more fundamentfund mment l going on that would cause them to alter the pace? >> that's not interrupting sales or home prices. >> also data out on new lending for home construction, which saw a good pickup in the fourth quarter, which has been an inhibitor in terms of the housing market. the housing market started to pick up.

builders were having a hard time obtaining financing for new construction. that was really slowing the pace in terms of new home sales and new construction. so i would say that was a bright spot we got yesterday as well. >> andrew, what would you -- if you were asking the questions, what would you drill down specifically and is there anything -- what would it take for the fed to change the course that it's on right now? there's an kppation we wrap up by october. >> i think if you step back and say if you look over the last six months when taper really kind of came on to the forefront. it looked like it was getting going. essentially what was happening is the economic momentum was strong in the u.s. data in the third quarter, beginning of the fourth quarter just as taper talk started to develop. a the lot of that was an inventory build. so what i would ask and press on

that is how much of the strength did we see as they were make in the decision to start to taper was really the jurnd lying fundamental versus an inventory build. since we have had the weather distortions, that's impacted things significantly. that would be one issue i would be interested in is what are the drivers of growth that the fed is looking at and are they inclined to actually alter their forecasts at this point. . now that we are quite a bit through the first quarter, it definitely looks like the fed's assumption is probably too high. what would it tyake for them to downgrade their assessment and say maybe we're too optimistic coming into the year. >> okay. stick around. get a cup of coffee. have one of those excellent bagels they have there. whatever your thing is at this time of the morning.

south africa has been one of the emerging markets hit by the fed's tapering cycle. mining strikes and allegations of corruption have all weighed on the rand. but speaking to cnbc, the south african president has blamed the fall in the currency on the dollar. >> life is about balances. so the currencies have to be at a level where exporters can export, exporters can be competitive and produce goods that are wanted outside that is acceptable price. we have lots of consumers. and investment projects, which acquire capital to come in. an oil dependent company, we import much of our oil. so we have to maintain a position which says watch the import side and watch the export

side and each one must make the best proposition out of it. >> you may have spotted mistake there. that was the country's finance minister. he was speaking ab the benefits of the country. e we will bring you the president later on in the show. that's in 15 minutes to talk us through those details. some of the other stories meanwhile, buying 1.3 more shares. berk shire's stake is worth $2.5 billion. the company, has been trading around 52-week highs. another development in general motors recall of faulty ignition switches. the government is opening a probe into the timeliness of the recall. it wants to know if gm properly followed the legal process in requirements for reporting them. it affected 1.6 million of its

small cars. open a probe, it sounds like the thing the aliens do. when you get sucked up into a spaceship. >> i'm not sure where you were going with that one. >> no one ever remembers when it's happened. still to come, blackstone getting into high fashion. the firm is taking a 20% stake. you think versace that they are not in fashion? >> not the top focus for fashion brand. this could be the turning point. all the details coming up after the break.

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the headlines blame it on the dollar. their president tells c nbc exclusively the rand is not down due to domestic issues. a bumper loss. the bank is not strong enough yet to be privatized. and is yellen going to stay the course? investors looking for clues twh n what the fed chair could say during her testimony later today.

developments on the ukrainen story this morning. we heard ten minutes ago that the their president was asking russia for protection. we have reports from the russian use agency kwaeting a source saying that russia has agreed to ensure the personal safety of the ukrainen president. i was wondering why we haven't seen more of an impact on markets given what's going on in the ukraine. the likes of venezuela and th thailand. >> they are not yet systemic. >> i think the ukrainen situation has the capacity. in russia it was already under pressure this year. >> they are not the at moment. >> seeing some kind of market reaction risk sell off today

makes sense. >> yep. meanwhile, u.s. stocks did manage to recount kind of a mixed performance wednesday. about 14 at one stage. should investors be prepared for further volatility? ann. drew has been enjoying his coffee in that short sbrerm sbrerm or tea. >> i have been watching out for the alien probes too. >> that's very important. but we never remember them. they are clever like that. andrew, are we in for a more volatility? is that what happens with prices? >> yeah, i think that was our outlook for this year is high single digits for the overall markets. but more volatility through the ebbs and flows. it's challenging when you're dealing with this weather-related data. our sense is that as we get into the springtime and things start

to heat up, the economy will also spring back and start to heat up as well. that's the balancing act that the fed and chairman yellen will be dealing with in the near term is not to alter their policies based on a couple months of volatile data but look for the trend that we think is going to continue to improve. >> strong five-year action. yields on the ten-year tracking between 2.65 and 2.78 yield a the moment. do those boundaries stay in place? >> i think so. that's important for the equity market as well. they are the round numbers we have been looking at that's where the 10-year yield has been in that bound. every time we have gotten up to 3 or higher, we have seen the market get into trouble as the relative evaluations look more attractive on the bond side. the best thing is this continued

kind of 2, 2.5% economic growth that keeps the fed on the modest trajectory but doesn't require them to alter their policy one way or the other. now we're a little below that. when all settles out, we'll still remain in the 2, 2.5% trajectory which should keep the yield in that range. >> good to see you. thanks for that. have a good day. stay away from the flying saucers. >> flying bagels. >> versace says they have signed a deal in the fashion house. >> the agreement values sler is a chi at $1 billion. the luxury group says the family will remain at the heart of the company. is that a good thing? that was my point earlier. i question that. >> she does have a unique look.

>> flamboyant is the word you're looking for. >> it is a look. >> let's give them a look at the market. >> we have continued to slide as we head towards u.s. session. we're down on the lows in europe. 8 to 1 decline. we'll have more right after this. in the new new york, we don't back down. we only know one direction: up so we're up early. up late. thinking up game-changing ideas, like this: dozens of tax free zones across new york state. move here. expand here. or start a new business here... and pay no taxes for 10 years. with new jobs, new opportunities and a new tax free plan. there's only one way for your business to go. up. find out if your business can qualify at start-upny.com

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ahead of the u.s. open, futures are dipping downwards. the s&p is down around 5 points. the dow down about 43. further developments on the ukrainian front. the disposed former president asked for russia for protection. we then heard on russian news agency saying they have granted him protection in russia and will continue to give you further developments on that front. for now, we're joined by charles robertson joining us here onset. light at the end of the tunnel, that's your final point on the ukrainian situation. what do you think of the developments we have seen in the last 24 hours? >> that's the good point. we did a report six months ago

saying ukraine was the worst country for a whole host of reasons. what we saw yesterday, floating the currency, allowing it to reach a level -- 9% of gdp, constant drain on the reserves. floating the currency means they can address the issue and help get themselves out of a problem. you have a new government. >> just over two months, the point on the reserves. they can't defend this currency. >> i have been doing it long enough to remember countries days of cover. two months is not so bad. >> yet we're surrounded by noise in the likes of them offering the president protection. is that all noise we should just cut out at this stage? do you believe a deal is going to be signed quickly? >> they will be doing a deal. you can catch coming through after the may elections. so you'll get preliminary agreement. >> does it matter? they can remain viable over the

next two months? >> what they have done in the past was just freeze the deposits in the banking system. you couldn't take your money out. they devalued that as well, but they stabilized the currency and stopped a meltdown at that time. so it's a different issue. i went to e see the ministry in moscow just after the georgiaen conflict. now it was an issue back then. and there are a lot of legal issues which the russians could draw up. if they decided to get more serious. it was until 1954. . they argue it was never given so there was legal status. >> the polls are interesting on this. 75% of the russian population wanted to remain there. they wanted the russians to be military to be involved. this time around, 75% don't want action. >> the ethnic russian people might have a different view

about which country they would like to be aligned with. >> how does putin play this? >> i don't think he will act rationally. he was ready for georgia. here i think we have had three or four days of incredibly rapid moves and i would be surprised if he moved rashly today. >> no one probably wants something that ends up as a civil war. there's always a risk of that. >> it's the worst case scenario. i was worried last week talking about going in that direction. i was worried about what would happen on the west of ukraine instead. >> you see vigilantes taking over government posts. taking over government posts and that's the thing that makes it worried, isn't it? >> image is more inflammatory than perhaps the situation.

>> every time i've been in a crisis country, you're in this square mile of terror and beyond that it's common. >> we'll bring you back for a lot more over the next few months. thank you very much. we'll take a short break. still to come in her appearance, may have been delayed but will janet yellen still be blaming the weather when she talks about the u.s. economy.

welcome to worldwide exchange. >> the headlines from around the globe. >> the south african president tells cnbc the rand is not down because of that specifically. >> it's difficult to say we cannot move this way or that way. you know it's down because of the dollar. >> what the fed chair might say about the impact of monetary policy on emerging markets. . and just how much u.s. storms have chilled the economy. >> struggling u.s. retailer jcpenney surprises wall street with their latest earnings

profit showing a profit in the fourth quarter. shares jump in afterhours trade. and weak margins despite profits coming in higher. wpp should have done more in emerging markets. >> they are our most profitable markets now. over the coming years, we'll be more aggressive. if there's one thing i regret about the last ten years it's that we didn't go faster. you're watching "worldwide exchange", bringing you business news from around the globe. >> if you're just tuning in, thank you for joining us here on the show. i'll give you a look at how the markets are fairing ahead of the u.s. open. in a weaker session in the u.s. so far this morning, you can see by the futures we have the dow around 45 points so far. the nasdaq trading around those 14-year highs. the nasdaq down about 5 points.

the s&p not managing above the 1850 level. weaker session, some of the political concerns really weighing on sentiment here. i'll give you a look at the individual performances of these markets. the first gaining back off the lows. german markets are still performing lower. and the italian markets gaining a little bit back here around 1%. >> just off the session low. but what are you supposed to do today if you're an investor? here are some of the recaps of some of the guests we have had on the channel today. >> i'm very, very ghoulish on eurozone financials. >> so that's ex-u.k.? >> ex-switzerland as well.

you look at them trailing u.s. financials by about 30%. that's justified, of course. there are still in the lower core of the performance. >> if you start getting upside numbers and the weather factor wears off, that's going to change things. but to be honest, they are not too keen on the fed right now. they are wondering whether to get back into emerging markets. i think there's a reason it's cheap. >> rbs today looks like 18 to 24 months ago. i see a clear runway to rbs becoming highly investable, low risk bank. >> fed chair janet yellen set to testify before the senate banking committee starting at 10:00 a.m. eastern.

it was originally scheduled for february 13th but was postponed because of a snowstorm as well as her outlook for the u.s. economy. markets will be looking for cues on how the fed's plan could progress and what kind of impact that could still have on emerging markets. >> the biggest impact so far has been on the fragile five. the group includes brazil, turkey and south africa. there are the countries judged to be the most risk during the tapering cycle. >> now in south africa, ripples have been felt on this side. the rand has been pushed close to record lows despite the central bank raising rates. upcoming elections added into the mix look to be contentious with new parties adding to the ruling challenges. >> and joining us for more,

speaking exclusively to the south african president, what kind of mood did you find him in? sdplr he was in a very buoyant move after his recent state of the nation address. but i want to go back to the fact that you point out that south africa is part of thatgro. all of those countries are experiencing pressure on their currency. south africa has one of the most volatile. having fallen 17% against the u.s. dollar over 2013. many economists believe that corruption allegations against the ruling party and unraced in the mining sector are further fueling that rand weakness. i asked the president what he thought was behind that rand fall. >> it was difficult to predict that because it's not because of our currency. it's because of the dollar.

the dollar that is the key controlling currency in the world. once the dollar is in problems, many currencies have problems. it's difficult to say we cannot move this direction or that one. you know for a fact that to have the economic meltdown is because of the dollar. once the dollar is in trouble, that impacted all of us. we are trying our best to ensure that we handled the currency, but as i say, it's not totally in our control because it has to be part of the global kind of volatile situation. >> that was south african president speaking exclusively to cnbc africa about the rand's weakness. back to you on the desk. top of the agenda, state side today is from the federal reserve chairman janet yellen. she returns in her second

testimony before congress this month. the managing director and head of rate strategy joins us from new york. george, recent speeches by the fed presidents have basically put the weakness in the data down to what we have seen in terms of bad weather. how much more information janet yellen can add here? >> thanks for having me. the key question is her testimony was postponed and now she has another opportunity to qualify the recent data run. it's true that most forecasters including the fed have been attributing this weakness to weather. but i think we're getting to a point they'll have to access that there's something more than that happening and potential for entering into a soft patch. largely a lagged response to the higher rates we saw throughout 2013. i think she's going to start to

change the narrative as we get closer to her first official meeting, which will be later on in march. so i think today what we're watching for is to prepare comments because that's stale. it's about how she responds to q&a. he's going to change the discussion to saying perhaps there's something going on here we have to be conscious of and really saw a little more today. >> it's kind of the moment of truth for her. we're getting to the moment of truth as far as the data is concerned. the data improves or expectations need to be ratcheted down to meet them. how do you play this market wise? >> i think we have been seeing a tug of war between the equity markets and the fixed income markets have been, in my opinion, operating more towards the fundamentals. meanwhile the hope trade has been more about how risk assets will see through this and we'll see growth rebound as we head into the spring and summer. the risk, again, is that people are expecting kind of a hockey

stick type of transition. once we get past march and april, the data is going to improve. it takes time for things to clean out. and if there's something more systemic going on, it's going to carry on through q2. we're more constructive fixed income. if you look at the flows into bond market funds, there's decent flow there is as well. investors are starting to think about maybe there's some sort of an allocation switch that's happening. we're not really seeing it clearly. it's hard to keep track of those flows. we're seeing some interest more in fixed income. >> we'll be back with you shortly. some of the other stories we're looking at, arizona governor's jan brewer has vetoed a religious freedom bill. she made the decision o block the bill because it could have unintended negative consequences. >> after weighing all of the

arguments, i have vetoed senate bill 1062 moments ago. to the supporters of this lgs, i want you to know that i understand that long held norms about marriage and family are being challenged as never before. our society is undergoing many dramatic changes. however, i sincerely believe that senate bill 1062 has the potential to create more problems than it purports to solve. >> opponents of the legislation called it state sanctioned discrimination because it would have provided legal protection to businesses who refused service to gays. >> that's huge. big companies have come out against this. american airlines, which is merging with u.s. airways, is no longer giving special fares to passengers who must book flights last minute due to a relative's death. it brings american airlines in

line with the policy, which also doesn't offer bereavement fares. still to come on the show, jcpenney's ceo says the important part of the turn around is over. >> more on how the company managed to eke out its first profit in more than two years. in my world, wall isn't a street... ...return on investment isn't the only return i'm looking forward to... for some, every dollar is earned with sweat, sacrifice, courage. which is why usaa is honored to help our members with everything from investing for retirement to saving for college. our commitment to current and former military members and their families is without equal.

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welcome back to "worldwide exchange." these are your headlines. the south african president tells cnbc exclusively the selloff in the rand is not down to domestic issues. struggling u.s. retailer jcpenney surprises wall street with their latest earnings in the fourth quarter. will yellen stay the course, investors look for clues for what she could say to lawmakers later today. struggling u.s. retailer jcpenney surprised wall street with their latest earnings report. courtney reagan breaks down the numbers. >> reporter: jcpenney seems to garner an outsize amount of attention for the past few years and with good reason. the 112-year-old department

store is now just a shadow of its former self. they have shed more than $16 billion in market cap since its 2007 peak sitting under $2 billion today. the retailer was already struggling when it brought in ron johnson, though his bold turn around plan cost jcpenney a 50% stock price decline in his 17 months at the helm. former ceo mike ulman returned in april of last year, but the stock has fallen a further 65% in just 10 months. cash is another concern. jcpenney closed with $2 billion in liquidity, but some think the department store won't register enough in sales to offset the cash burn and might need to raise capital at end of this year or the beginning of 2015. investors are losing faith in a

jcpenney turn around and analysts are growing pessimistic about their future. while the company had positive sales for the first time in nine quarters, wall street expected more. >> i don't think this is necessarily an em nnt bankruptcy, as i think a lot of people out there believe, but i think you have to come to grips with what is going to be the timeline and the magnitude of recovery here. >> reporter: he doesn't think jcpenney is a lost cause but doesn't think it will ever be a $17 billion retailer again. they aren't recommending to clients echoing the advice of the majority of analysts covering the retailer on wall street. versace signed with black street. the agreement values $1 billion. blackstone will have one seat on the board. the italian group says the

family as seen here on the screen, will remain the heart of the company. it's a look. i said this earlier. that is a look. >> it's certainly a brand that you can recognize. >> yes, you can. i think versace is doing a comeback. brands kbo through these stages. when they are so out and no one thinks, that's the time they come back and that's the time to buy them. >> there's only one way to go. maybe blackstone is seeing something that others aren't right now. >> it's a rebranding exercise. still cocome, her appearance may have been delayed because of freezing conditions state side. >> will janet yellen still be blaming the weather when she talks about the u.s. economy in the senate later? >> we'll head to washington in a few moments. [ male announcer ] whether it takes 200,000 parts,

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european markets down about a percent across the board this morning. we're looking at inflation numbers. regional cpi looks have been weaker. we know why that's important. it will pose more risks and what they might say. >> holding the rest of the economy up. let's look at today's agenda in the united states. this morning we'll get weekly jobless claims numbers and durable goods numbers from january. also big earnings in the retail space. best buy, kohl's and gap. let's give you a look at the u.s. futures. weaker picture and getting weaker as we head towards the

u.s. open indicating around 70 points for the dow. nasdaq lower by 12 points. the s&p down by 8 points. unchanged session yesterday, but all the focus today on fed chair janet yellen set to testify before the senate banking committee at 10:00 a.m. eastern. hampton pearson is in washington, d.c. with more. very british tendency to talk about the weather here, but what can we expect from janet yellen today? >> weather is going to be a big theme in her second appearance on capitol hill as fed chair. this time before the senate banking committee in about four hours. and i say that because weather is an overriding theme in what everybody believes is going to skew the data that the fed will be looking at between now and its next meeting. weather was a factor in what she was asked repeatedly about ten days or so ago when she

testified before the house. specifically as regards to the unemployment numbers, which have been weak over the past couple months and when we get the jobless figures next week, there's likelihood we'll see more weather impacts than we have seen in previous jobs reports because the survey week that the labor department was in the feel have been top one of the times we had some of the worst weather of an outrageous winter here especially on the east coast any way. but remember the fed chairman told the house members and we'll expect he'll tell the senators the same, the two months of jobs data does not make for a significant change in fed policy especially when it fight be weather impacted going forward. we're expecting frankly tougher questions from the senators on the banking committee whether it's about the tapering prospects, which you covered in an earlier segment, wanting more guidance as to where the fed

might be going, but also about the movable target on the unemployment rate of 6.5% as the touchstone for raising interest rates. all that coming up in about four hours from now. >> thank you. have a great day. the managing director is still with us. george, how much expectation is baked into the cake here today from what janet yellen can say and what's the risk of disappointment? >> can you guys hear me? >> george, can you hear us? actually we don't appear to have george. we have lost him there. >> we'll try to reestablish contact. >> i wonder how much expectation. we have heard they put weakness down to the weather. the question is what more value can she add. >> they probably don't know either. they will have their agents out.

>> what do the markets need here to rally? everybody is saying they are bullish. we have taken the heat out of the markets. >> the s&p had fresh highs today. we just got to get through this period. we had a big run last year. >> that's not how we make money. >> there are many, many ways for people to make money. you don't need everything to go up. >> it will be interesting if she says anything about guidance on that. they were suggesting they might start changing how they are guiding everybody. >> tying down forward guidance. that's just about it for this edition of "worldwide exchange." coming up next, ahead of the janet yellen testimony. we hope you have a profitable

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good morning. janet yellen, part two. ready to deliver testimony on capitol hill. jcpenney shares move higher. and arizona's governor vetoes the highly controversial anti-gay bill. it's thursday, february 27th, 2014. "squawk box" begins right now. >> good morning, everybody. welcome to "squawk box" here on cnbc. several potential market moving events today including testimony

from fed chair janet yellen. she will be testifying at 10:00 a.m. eastern time. this is the appearance that was postponed because of weather earlier this month. i think that was two weeks ago we were supposed to be hearing that. that was two weeks ago, we were supposed to be hearing that, two weeks ago today. the markets are going to be waiting to see how much yellin mentions the weather as an excuse for slower economic growth and some of these disappointing numbers we've been seeing. during her last appearance, she made it clear the fed would continue its tapering course. "squawk on the street" will be carrying all of that live. but before she starts talking, the markets will get two key economic reports. we've got jobless claims and durable goods hitting today. economists are expecting 335,000 new employment claims for last week. that's pretty much flat from the week before. durable goods orders for january also out at that time. they're expected to fall 2%. both of these reports are hitting at 8:30 a.m. eastern time. on you are earnings calendar, we'll be hearing from retailer best buy, ko