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tv   Worldwide Exchange  CNBC  April 8, 2014 4:00am-6:01am EDT

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welcome to "worldwide exchange," i'm julia chasly and these are your headlines from around the world. the yen gains as the bank of japan stands pat on policy. but the governor sees there is room for additional stimulus if it's needed. markets in japan slip on the lack of action but stocks in europe remain fairly flat. this after a volatile day of trade state side sees the major indices clock multiyear lows. oil prices climb on tension in the ukraine. the foreign minister warns the country could be facing a civil war. nokia shares open higher
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after chinese regulators give the firm the go-ahead to close its deal with microsoft. it now has all the relevant approvals. you're watching "worldwide exchange," bringing you business news from around the globe. welcome again to "worldwide exchange." now russia is calling on kiev authorities to put an immediate halt to military preparations in the southeast of ukraine. saying the troop buildup could lead to an outbreak of civil war. the russian foreign ministry statement follows an announcement by ukraine's interior minister that -- anti-terrorist operations are now under way in the eastern city of kharkiv. under a bit of pressure today as
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well. meanwhile, u.s. secretary of state john kerry will meet with top diplomats from russia, the ukraine and the e.u. over a new push to calm tensions in the eastern region. now, vice president at intelligence joins me. with me is also another guest. good morning to both. are we looking at a crimea take two situation here? >> well, some of the evens that we saw in kharkiv yesterday and on sunday suddenly were reminiscent of the situation in which the crimea even started. that was the take overof the regional administration buildings and declarations of separate independence of willingness to join russia and calling on russian help. however, the situation in eastern regions is quite different to what we had seen in
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crimea. in times of the ethnic make-up of the population, the control of the central government as well as eastern regions don't have the military presence of russia that crimea had. >> we got comments from russia this morning in the potential about the potential for civil war. the kiev government are walking a fine line. we're still in that situation, aren't we? >> exactly. it is a thin line but we're maintaining public order and restoring the control of governmental buildings in the regions and not being seen as too heavy-handed on what seems to be the russian ethnic minority representatives in the eastern regions. any sort of powerful move on protester protesters -- and perhaps casualties on their side would give a good excuse to intervene
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in these regions. if not directly militarily, perhaps sending some of the force regulations through the ground as we've seen in crimea. >> you're talking about a smaller proportions of ethnic russians in these region s. we don't want to get distracted by the pictures or headlines we see. what's your probability that this situation escalates do you think? >> you see every time there is a separatist declaration, what we need to have a look at is do these people declaring independence have an actual control of the ground. if they did, that would be a dangerous situation. if it is 50 people sitting in the room proclaiming independence, that is still not -- >> that's very different. >> yes, that's right. >> what do you think? the markets are keeping an eye on this but not really impacted right now. have the sanctions we've seen give enough to give russia pause for thought here? >> irrespective of what we're hering from russia, yes.
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this is not a majority in this area. it is probably a minority and, well, we had a revolution in the ukraine. you have instability afterwards. that's quite normal and to be expected. at the moment we're watching the situation but not getting too excited about it. >> they do continue to threaten the ukraine as far as energy prices are concerned, the civil war comments this morning. what about what happens for the presidential elections on may 25th? there was always a belief that russia would do their best to try to influence them and get somebody in sympathetic to their line of reasoning and approach at those presidential elections. is this going to be a key element there, too? >> indeed. russia said the military exercise is on their side of the border will continue for 45 to 60 days, a time line for the presidential elections and we expect the russia pressure in terms of gas prices, in terms of
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statements in regards of potential civil war situation in ukraine, pressure on federalization to continue at least until the first round of presidential elections. when we might see russia willing to engage with whoever becomes the new president of ukraine. but it is still up in the air. we don't know who that person will be. >> it's a continual buildup. we have talks with the west and hopefully ukraine and russia going on now. otilia, great to get your updates. great to get your impressions. relatively little change for the stoxx, down by 0.1%. we did lose 1.2% yesterday which bucked a trend of nine sessions of gain for the stocks europe 600. it is the tech stocks, the momentum names that continued to see losses, taking their cue
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from what we saw as far as the u.s. sessions are concerned. the key underperformer, we're only talking around 0.2%. the ftse 100 in the uk markets this morning. let's move on and have a look at what else is driving this market. we have some of the top stocks, the key movers in this morning's session so far. shares in sugar produce r suedzucker, it expects profit to go down. another one we're watching, sportsdirect. they are saying investors reacting to news that the founder of the uk retailer has sold 25 million shares in the company taking that stock down just shy of 6.5%. we've also got nokia, bucking the trend trading higher this morning after the company says it's received approval from
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chinese regulators to sell its handset business to microsoft. the long awaited deal now expected to close this month in a signoff now on all the approvals the company needed for that. quick check on the foreign exchange markets this morning. interesting to see what's going on in u.s. equity markets this morning. not translating in terms of risk off environment. dollar under a bit of pressure, we're seeing that again. euro dollar trading higher. they are saying that's the most oversold, perhaps looking for a boun bounce. the bank of japan meeting lower by around 0.4%. we'll be talking about what this means for the bank of japan and policy going forward, too. quick check on sterling, too, we have uk data out this morning. asian markets while choppy continuing the trend we saw from overnight in the u.s. session.
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we'll focus on the nikkei, down 1.5%. yen strength feeding into that in particular, the tech stocks, too. two-week low. 14,606. the nasdaq posting the biggest three-day losses of a drop since november of 2011. a bit of a bounce here that we're seeing across these indices. we're around 33.5 for the dow, the s&p 500 by around 3 points and 7. we have a few hours until the open of those markets. in a reversal on its more bullish takes on u.s. stocks, dennis gartman told cnbc he's getting out of equities and sticking with cash and gold. he said unusual market trading last week scared him into action. >> something happened between 11:00 and 11:15 turned on a dime. i haven't seen anything quite
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like that in that short a period of time. in a bull market there are three positions you can have, really long, pleasantly long and neutral. it's still a bull market. it's time to be neutral. you don't need to be short but you don't need to be long. i think cash is the right place to be. >> dennis gartman there, saying cash is the place to be. you, however, say when we analyze short-term trends using tech analysising with the s&p 500 looks increasingly buttish. >> it does. what we're seeing at the moment is very much the markets, very much focusing on company earnings. with the company earnings season just kicking off this week, the nervousness is what's reflected in the markets, the market participants thinking have we gone too far? earnings perhaps going to dispoint us and that's why we're seeing a son solizaticonsolidat >> it's not only about the large cap names, it's also about the
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small cap. the russell lost almost 6% in the last two weeks, too. does that fit into this picture. >> it does. this market is driven by sentiment, the hope that things will be better in the future. if that is undermined, yes, markets fall. >> if i look at what the expectations are, the bar has been set pretty low. 111 negative eps announcements versus 17 for the s&p 500. is this an opportunity for investors to get back in, is that what you're saying? >> for those who are more courageous, yes, it is. you have to have the longer term in view. this will bring volatility because sentiment is quite brittle. it goes up and down. investors seem to change their direction with every piece of news. >> do you sit on your hands and perhaps wait for better levels? germany's cabinet reportedly approved a reform of the country's renewable energy law, this according to sources speaking to reuters news agency. the reforms are aimed at slowing
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down the expansion of green power which is contributing to a rising cost of energy in germany. we go to frankfurt to give us the latest. it feels to me like it's reform on the margin and the bottom line is consumers will pay for green energy reforms in germany. is that the case? >> that's very much the case. we're still looking into a renewable search of roughly 6.3 cents per kilowatt hour. that's still a lot. the estimates are about a household of four people as approximately paying 200 euros per year just for the renewable surcharge. but that is actually going down for the german public. the majority of germans want to have that renewable energy shift. i think carolyn has introduced the term already in english as well during "squawk box."
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what is going to happen now is we have less exemptions here for german corporates. the big ones, they still are benefitting from the exemptions and those exemptions to that surcharge are worth more than 5 billion euro per year. this have been challenged by the european commission and that also today is allegedly after the table. there were flashes from reuters saying that german government officials are saying that the european commission has said -- has agreed to that renewable energy law, our economy minister is today presenting and the cabinet has approved. really good news from that front. and the other side, who is benefiting as well, will be windmakers -- or wind mill producers, for example. the only renewable energy area which is still benefiting from
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more surcharges or more capacity is the wind energy. the german government is saying it's the cheapest power and we should support that power, because above all, there was a long standing problem getting them connected to the grid on the mainland. those shares have been rallying on the news also when it leaked last week but we see a little bit of a rally as well today. with that, back to you. >> thanks so much. annetta outlining those points there. samsung suspects its profits will continue to slip. who's winning and losing the battle in the smartphone war? it's coming up right after the break.
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you're watching "worldwide exchange." welcome back to the show. samsung electronics estimates operating profit fell by 4.3% in the first quarter. slightly below analysts' forecast. this marks the tech giant's second straight quarter of profit declines. now june is in seoul to take us
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through the numbers. >> that's right. the slightly lower than market expectations, first quarter preliminary numbers are showing that operating profit is expected to come in at 8.4 trillion, down 2% from a year earlier. this is coming mostly from weakness in its smartphone business. this part of samsung was about 70% of the company's operating profit last year. what's interesting is that samsung saw a record number of its smartphones sold in the first quarter, more than 90 billion phones were sold. more importantly, falling average prices for its smartphones was the key point in this decline in profits. this is coming as a result of increased competition from lower cost phones from china. also, funds set aside for legal costs for the samsung, apple peyton trail negatively affected the numbers. analyst reports in korea are showing a mixed picture.
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some are saying this isn't the end, samsung faces a more challenging second quarter as the two top telecom companies started a new subscriber ban on all samsung phones. they may also see a bottom out in the first quarter. in terms of what samsung is doing to avoid a further profit decline is they're focusing on managing costs. that's how the samsung earnings guidance look today. julia, back to you. >> thanks so much, june. we're joined by richard win sore, founder of radio fee mobile. they've had a weak start in south korea but they have competition at the top end, they have competition at the lower price end from china, too. i look at it and see a number of analysts saying this is the start of a further operating margin decline for samsung. do you agree?
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>> yes, i'm afraid i do. the real problem is if you look at the overall smartphone market, it's very large and unit shipments will still grow double digits this year. because all the phones pretty much look the same these days you're in a situation where prices will come down quite aggressively. that actually makes it very difficult to see revenue growth this year. because of the price declines you'll have margin pressure. while consensus is looking for about a 3% increase in operating profit for the full year for the sampson group, within i look at the numbers i'm looking around about an 8% decline. i'm in that second camp. >> to go on from what you were saying, about generating revenues and margin, how crucial is it that they reign in those costs? these are also the things they need to address beyond the products, isn't it, surely? >> well, this is the whole question mark, isn't it? the problem is, the hardware is
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becoming commoditized. in order to create value in the to do more and more services. if you look at the amount of revenue google generates from these devices is significant. it's moving out of hardware and into software and services. samsung and position here is very weak. >> it looks like the 2007 samsung had massive market share. let's move on ho htc, reliance on the htc for them, much weaker earnings we saw in q1 and 2. the life cycle just one quarter. how are they going to sort this business out? you have a death spiral. >> yes, i'm afraid it is. typically when you get a company in this kind of situation, you have to cut resources in order to stem the losses.
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when you cut resources, you then lose market share. your losses deepen. you have to cut again. this is why you get that a death spiral. the way out of that is either you invest very, very heavily and incur massive losses in order to get a return slightly further down the line or basically you just carry on in this way. when you look at in terms of what htc is doing, they have a great product. but the marketing resources that htc has to go behind it is much, much more limited. this is where i worry. plus the fact the htc 1m8 isn't cheaper than competitors. >> smartphones have been around for quite a while. the question is who will be the next innovator?
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quite frankly these phones pretty much look the same, have the same operating system as well. they're completely interchangeable. who is going to be the one who brings the next innovation? >> well, i totally agree with you. this is why the view i hold is that the value is moving into the ecosystem. you know, in terms of how an investor should position themselves in the smartphone world this year, it's not really the guys who are making the phones on android. it's going to be the companies that have services that are able to generate revenue from the growth and the user base. the user base is growing quite strongly. then you start to look more into the likes of google, yahoo! microsoft, these companies. these are the ones you want to look at for the growth in the next generation. >> richard win sodsor, founder radio free mobile. thank you. it's interesting to look at
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apple and samsung. these charts suggesting that where the growth is is larger screens, and better price point. everything that apple isn't doing. >> i think apple will come out with a larger screen product during the course of this year. i think actually now that the game has been leveled between samsung and apple to a certain extent because samsung is now struggling to grow as well, i actually have my stakes more on apple. because i see apple as the more emotional product than samsung. samsung is much easier to replace with htc or other products. apple most of their customers, i think, are a little bit more attached to the brand. >> emotional. it's the emotions. interesting. it's complicated to move as far as apple is concerned. everything is so connected. emotional. i like it. >> several brokerage firms have upgraded with lafarge.
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pbs has a buy rigating on the stock at 2. the bane highlighting potential savings. let's talk about what we're seeing as far as m & a. these businesses looking at deciding whether or not to invest in capex or go the m & a route, go for the cheaper, low-cost option in m & a. that's what we're seeing surely. >> it's the lower risk option. it tends to deliver more quickly. it gives you the pr boost. really what we would like to see companies doing with their accumulated cash piles is not necessarily m & a, it's invest into future capacity. that's going to give the economic recovery really the boost we need. let's face it, at the moment it's mostly carried by consumer demand. we need to get more of that industrial demand going as well. while we're encouraged by what the m & a tells us about
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increasing confidence levels amongst decisionmakers in industry, we would like to see that confidence also translating into capex. >> we talked about last year being the year of the buy backs. if i look at the s&p 500, these companies are still spending about the same amount of money investing in capex that they are in buy backs. it's still the year of the buy backs surely. >> that's why i'm not overly totally bullish on equities as i would otherwise be at this part of the cycle. 2014 will potentially be a slightly more borg year for equities than what we saw in 2013. >> brilliant. today is annual international payday, a symbolic day when women's earnings catch up to men's earnings from the previous year. it takes a few extra months because of the 23% gender wage gap that women typically face. what looks to be a timely announcement, president obama is set to unveil a pair of moves
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that his administration says will strengthen enforcement of equal pay laws for women. now, does the government still need to take action on equal pay or is it up to the individual to fight harder for pay? do women need to lean? ? if you want to join the conversation on "worldwide exchange," get in touch with us, contact us by e-mail, twitter or direct to me. still to come on the show as the uk economy builds higher can the construction sector keep up? stay tuned as we get the latest data, right after the break.
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you're watching "worldwide exchange," bringing you business news from around the globe. welcome back to "worldwide exchange." here are your headlines. no easing for now. the yen gains as bank of japan governor kuroda stands pat on policy. he thinks there is room for additional stimulus if needed. markets in japan slip on the lack of action. stocks in europe remain fairly flat, this after a volatile trade state side sees the major indices clock multiyear losses. oil prices climb on renewed
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tensions in ukraine. russia's foreign ministry warns that the country could be facing a civil war. nokia shares open higher after chinese regulators give the firm the go-ahead to close its handset deal with microsoft. it now has all relevant approvals. we have some uk data out this morning, manufacturing data. we have an annual rise of the fastest rate since february 2011. the february manufacturing output rising 1% on the month, 3.8% on the year. much stronger than the 0.3% that we were actually anticipating. industrial output at 0.9% on the month, the strongest since june 2013. the forecast on that one, too, 0.3%. we've got the uk january figures for manufacturing revised to
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0.3%, too. that's up 3.2% on the year. strong industrial manufacturing data is coming out from the uk this morning. more of the same it seems. we're joined by robert wood, economist at bahrenburg uk. he's in studio. more positive signs for uk manufacturing sector, it seems. >> yes. it's hard to find any negative signs for the uk economy right now. when you look across the manufacturing data, which is clearly much stronger than expected, 1% monday on month is a strong number. if you look across that or the british chamber of commerce or deloitte, a big firm showing investment intentions. >> i want to talk to you about that. british service firms reporting the fastest growth in exports on record in the first quarter. this is one of the signs that perhaps we wanted to see more strength feeding through as far as the uk recovery is concerned.
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>> what we've had so far is consumers dipping into their pockets. that's normal for a uk cyclical upturn. businesses are investing more. in this survey this morning, they were at a record high for manufacturing films. also signs on the services side that exports were picking up, which is really important given that enormous payment deficit they are running. this is strong for the uk, which is why i expect growth to be way above consensus in 2015. >> upside risks even to your 3% forecast for this year, are you saying? >> if investment intentions are record highs, the key risk here is political. european elections, scottish referendum, whether that derails some of the sentiment. if it doesn't, yes, upside risk. >> there's a comment on the uk here. >> we need to accept we're still quite dependent on what happens in the eurozone. the uk is the sweet spot.
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that could come back on us. very good. very positive. >> what about the markets for the ftse 100. it's very much a story. >> we are overweight on equities. our overweight on europe has worked better. we're expecting the uk to catch up quite a bit compared to the international markets. >> the uk could see it's gdp for 2013 and 2012 ramped up after a major shake-up in the national accounts this autumn. they will implement reforms, the first in 15 years, which will boost the size of the economy, increase the amount of public debt, unfortunately, as well as raising the savings ratio. >> it would be good news, wouldn't it? the two key changes that are being made, r & d spending is
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going to be count as an actual output than expenses. the second is the defined benefit, pension plans will count as income when the benefit is given rather than when companies pay into it. it makes that benefit less lumpy. the result is you'll see savings go up for households but down for corporates. that's where the savings is coming from. overall gdp up. investment should be higher. international comparisons, the whole of the eurozone, putting through the same revisions this year. the uk is towards the top end but a lot of other countries are very similar amounts to the revisions for gdp and investment. it might not increase in the international standings. >> that's a good point to make.
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>> we have to push it aside. it's something that's going to be across the board. >> if it influences sentiment positively -- >> and does it? do you expect it to? >> well, maybe, i'm not sure. >> where does scotland feature in this very quickly? one of the key things you've put into this is not what we see in the short term. you have the general election. >> it's an uncertainty we don't need. i still very much believe and hope scotland will stay with us. until they decide, that's not going to be good for decisionmakers. >> now, we were just talking earlier about equal pay. i'm going to keep you both pay rather than thank you. i want to get your views on this. today is equal payday, a symbolic day when women's earnings theoretically catch up to men's earnings from the
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previous year. what looks to be a timely announcement, president obama is set to unveil a pair of moves that his administration says will strengthen enforcement of equal pay laws for women. now, does the government still need to take action on equal pay? or is it up to the individual to fight for harder pay? do women need to get in there and fight for their rights? it's solely up to the individual to fight harder, says this tweet. you were laughing about this. what do you think? >> i was laughing because i'm agreeing with a lot of what's been said. not so much that the government perhaps needs to do more but it's just in society that women often times underrate what they have to bring to the table, whereas men overrate. the old saying, if you don't ask, you don't get. actually is something i've experienced quite a lot over the course of my own career. >> my boss at morgan stanley used to tell me, women when they were filling in the quarterly
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reviews of their performance, rating between 0% and 10% of their performance, men would do it by 1 to 2 notches above what their colleagues were basically saying to them. robert weighed in here. it's a tough one, isn't it? you're not going to get away with anything but agreeing with lhota here. >> i would have to agree. >> of course you are. >> this is due to lack of enforcement. >> women take career breaks. they have time off. i have to defend men a little bit in this. >> that natural decision advantage. what i also -- beyond what i just said, you have lots of women who are underestimating what they're doing. there are a few who are completely overestimating. i'm finding it a bit extreme. >> guys, thank you so much.
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i was being coy there in case anybody is watching is incensed by what i just said there. quick check on the european markets. a bit of a lackluster. losing a bit of ground to add to the losses of yesterday. the key underperformer, quick check on the bond markets this morning in particular. lost a bit of ground as far as the u.s. markets, 270 the level for the ten-year treasury. we have ten-year bund trading. one of the ecb members suggesting qe is further away than perhaps we might like. the dollar under pressure this morning. dollar yen continue to trend slightly lower after the bank of japan stayed pat on policy overnight, 102.60, the figure there.
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137.70. citi saying that of all the currencies in the g10, the euro most undervalued, most likely -- sorry, oversold. not undervalued. most likely to face a bounce back. stephan is in paris. there's talk of potentially the left in his party in particular not signing off on this confidence vote today. what's the risk there? and even if he does get the confidence vote, the nod here today, how much of a struggle is it going to be passing through reforms in parliament given the skepticism we're seeing, particularly on the left of his party? >> yes, it's so secret. the new prime minister is not very popular with the left wing of the socialist party. and over the weekend 88th, clearly, that might not support the prime minister this
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afternoon when he will presented his policy before the national assembly. even if the last minute, i believe, most socialists will decide to vote like the rest of the party. the head of the socialist group say he was rather confident about the outcome of the votes which will take place later in afternoon, around 4:00 p.m. central european time. the new prime minister will outline a policy. we're expecting two main announcements related to the economic policy. the first one is the fact of responsibili responsibility, pro business measures. we're now expecting the details on how it will be implemented and precisely what will be the benefits for french companies. remember it's a 30 billion euro tax skirt on labor. the second announcement that we are expecting today, julia, is the detail of the 50 billion euro spending cuts that the government is planning to implement over the next three years. he will outline the details. he's likely to announce 20
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billion euros in savings from the central government which probably a reduction in the number of public workers. that would be a big u-turn compared to what francois hollande is likely to announce $20 billion in savings on the social security, the welfare state in general. that for french people would be a significant effort. last but not least, 10 billion euros in spending cuts from local authorities. this is basically what we are expecting this afternoon. >> thanks so much, stephan. eagerly awaiting the 50 billion ye euros worth of savings. great to chat to you this morning. now moving on, stories making news in the banking sector, citigroup warning investors it may miss a key profit target after the fed rejected its capital plan late last month. "the wall street journal" reports that move makes it
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unlikely to hit its 2015 goal. it is often used to compare banks against one another. the figure is also important for the ceo who promised investors he would ramp up profitability when he took over in 2012. citi agreed monday to pay $1.1 billion. citigroup shares trading higher by around 0.4% in the german trading session. the fed will give banks two more years to share their holders are in compliance with the volcker rules. banks will have until july 2017 to divest certain collateralized obligations, or clos. they will shift investors to other exposures. loans and clos are high-yielding, often used in buyouts.
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some clos fall under this rule. u.s. regulators will vote today to finalize rules for bank leverage ratios that are expected to be districter than those in the basal 3 accord. they would force banks to fund part of their business through less risky avenues such as shareholder equity instead of borrowing money. they called big banks to meet a leverage ratio of 6%. banks see tougher capital rules as costly but regulators said they shouldn't have a problem meeting the higher requirements. it's the end of an era but also a security threat for the business of banking. from today, microsoft will stop providing security updates for windows xp. with 95% of bank atms using the operating system, could it make lenders more vulnerable to
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security lapses? kayla tausche has this report. >> reporter: they run using a 13-year-old piece of software called windows xp. about four years ago, microsoft ended support. the traditional software used in the atms will no longer be updated by microsoft. it costs about 3,500 bucks for each atm to be updated. they have to be programmed individually, meaning this is a tedious process that doesn't come cheap. in the meantime, banks like jpmorgan chase, wells fargo, citigroup and pnc have asked microsoft for extensions to get them past this point. that's not to say they just learned of the transition. microsoft did end that support several years ago and federal regulators in october urged them
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to make this transition sooner, saying it was up to them to take on this operational risk so that consumers would stay safe. in the meantime, some banks have not given estimates about how long the transition will take, only ensuring that customer accounts will stay safe. a sticky situation for banks and atm operators alike and one that won't be solved overnight. for now we sent it back to you. >> still to come, the bank of japan says it doesn't see any immediate need to roll out more stimulus, sending the yen higher. we're cross to tokyo after the break.
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go out to the car. ok, i'll just be outside... ok, yeah. his dad is my boss. yeah. vin scanning to add a car. just a tap away on the geico app.
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you're watching "worldwide exchange." the bank of japan decided to keep its monetary policy unchanged as widely expected. it also maintains its view that the economy is likely to continue recovering moderately. we have the story live from tokyo. >> hi, julia. the central bank voted unanimously to maintain its point of easing even as company sentiment turns sour as the sales tax hikes started this month. the boj says business sentiment continued to improve. some companies are cautious about the outlook.
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at the press conference, kuroda showed that japan's making steady recovery towards meeting the central bank's 2% inflation target. he showed no signs of additional easing steps but market players believe the bank will be forced to act if consumption falls post the sales tax hike. many economists expect the boj to act on further easing by the summer. in other news, japan's current account returned to surplus in february from a record deficit in the previous month. surplus stood at $5.9 billion while higher energy import costs add to the deficit in february. income from overseas investments helped push the economy into surplus. back to you, julia. >> thanks so much for the update. alvin lew sr., an economist, joins me now. you were expecting the bank to add stimulus before the hike. you called the situation dire.
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tell me what your thoughts are right now. >> that was a bit of a disappointment. we thought they would do some monetary easing, a hit of the process itself. we are still a bit hopeful, although right now it seems i think the rest of the market seems to be correct, they might have to do it later in the summer when the second quarter number comes up and to show there will be a significant slowdown in the consumption within the gdp itself. >> we have analysts on the show this morning. they were saying that the bank of japan could look to add 20 trillion yen more stimulus in the second quarter. that's almost double really what expectations are right now. can you see that happening? >> we are thinking of a lesser amount. we are looking at around 10 trillion. certainly if they were to delay it further and when the data does show up in a very
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disappointing manner, then there will be more to be expected from the boj, which is why we think boj should have done something earlier. anecdotal evidence seemed to suggest that consumption seemed to hit quite high in the second quarter and may not recover that well in the quarter itself. >> the risk is here itself. if we don't see further stimulus by the end of the second quarter, by july, we're not going to get a kicker to the third quarter. that means perhaps it is incapable to add to the consumption tax hikes next year. this is a real problem for him, isn't it? >> yes, definitely. even if the inflation numbers are like what they say, going along quite nicely to hit the 2% target. it's masked by the gst increase itself, come next year, inflation numbers could look quite bad. and by then, they might be too late for them to actually
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reverse course or improve the situation. so i think they should be looking at a hit rather than doing it much later. if you look at the way the data will be -- first quarter data is only coming out in may. the second quarter wouldn't be out many months until after that. so i think it is pretty much unfortunate that we didn't see more coming out from boj today. >> you make the point as well, that this painfully slow progress as far as the third arrow is concerned. if you do see some kind of minor wage rises for the larger companies, if we look at the small and medium size companies in japan, they just don't have the confidence to raise wages. what do they need to see in order to give them the confidence to do that? >> i really think there's very little in terms of a third arrow coming out. there's quite the disappointment. corporate tax reform still in the pipeline. australia, japan trade agreement that was talked about today,
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probably gives a bit of hope that there might be some areas of -- in terms of the trade, some could actually be pushed through. but, again, i think it's not just a matter of confidence. i think for them it's that the companies are a bit too stretched to really be able to dish out this wage increase. bigger companies may do the normal increases but i think a lot more needs to come up from the arrow which we are not seeing right now. >> as you were just pointing out as well, we're not going to see the impact of the consumption tax hike in the data until we get into the beginning of may. do you see further downside for the nikkei here, as perhaps confidence continues to be hit? >> i think certainly, look at the reaction today on the nikkei itself, possibly, also due to the fact that overnight markets, u.s. markets have been fairly weak. this inaction from the central bank itself. and very much in the view that
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this market, the economy, domestic economy, is still on track for improvements seems to be a bit -- maybe a bit too optimistic in our view. that's reflected in the selldown in the nikkei. and possibly there will be more downside pressure. >>al vin, great to chat to you, alvin leiw. takeda pharmaceutical, they've been ordered to pay $6 billion in damages over claims it hid the cancer rids relating to its diabetes drug. takeda and eli lilly were ordered to pay additional damages. japan and australia have finally agreed a free trade deal. the pact will see each country lower tariffs on imports of key products, including australian beef and japanese electronics.
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take a listen to what the japanese prime minister and his australian counterpart had to say at a news conference in tokyo. >> translator: first of all, in the economy sector, i'm extremely delighted that negotiations on the japan/australia economic partnership agreement which began in 2007 when i was the prime minister. has reached an overall agreement today. >> this is the first time that japan has negotiated a comprehensive economic partnership agreement or free trade agreement with a major economy, particularly a major economy with a strong agricultural sector. >> key question is whether or not this gives them leverage in the trade talks of the u.s. we'll have to see on that front. insurers in china will be allowed to buy stakes in more than one pair it competes with for the first time. that's according to new rules issued by the chinese insurance regulators they allow stronger
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firms to invest in weaker players. this, coupled with investment in risky local infrastructure projects have weakened the position of smaller insurers. let's give you a look at what's on the agenda in asia tomorrow. monday, the world's largest democracy started heading to the polls on wednesday. it's the turn of the world's third largest. indonesia holds its parliamentary elections and will also determine which parties can run candidates in july's presidential contest. taiwan's umc posting sales tomorrow. the company is the world's biggest chipmaker and has ten plants around the world. still to come, are you ready to go long the dollar? stay tuned. we'll explain why our next guest thinks you should. stay with us.
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welcome to "worldwide exchange," i'm julia chatterley and these are your headlines. no easing for now. the yen gains as bank of japan's governor kuroda stands pat on policy. he says there is room for additional stimulus if needed. markets in japan slip on the lack of action but stocks in europe remain flat, this after a volatile day of trade state side sees the major indices clock multiyear losses. and citigroup is warning investors they could miss a key profit target this year.
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while they give banks more time to comply with volcker rules. and ukraine, the prime minister warns that the country could be facing a civil war. you're watching "worldwide exchange," bringing you business new from around the globe. if you're just tuning in, thanks for joining us here on "worldwide exchange." quick look as always at how the markets are faring ahead of the u.s. open. we are seeing a bit of a bounce as far as the futures, the dow indicating higher by 23 points, the s&p 500, a minor 1.5 points and for the nasdaq, around 5 points higher. the losses that we saw in yesterday's trading session around 1% for each of these market. but for the nasdaq posting its biggest three-day drop since november of 2011, the worst three-day losses we've seen for the s&p and the dow since january 27th.
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a lot of focus. it was of course the momentum names, the biotech stocks we're seeing some of the biggest losses in the session, following a theme we've been watching in recent days. amazon and google in particular, obviously a bit of focus. the tech stock losses. some of the more minor losses in yesterday's trading session. the real pain felt -- gained by some of the biotech stocks. similar story for the russell 2000. it lost just shy of 5%, too. a number of analysts saying people are looking at valuations as we head into q1 earnings season. alcoa is coming up later. let's move on and give you a look at what else is going on as far as europe is concerned. the 600 continues to see losses. ftse 100 off 0.4%, germans, off a tenth. similar story for the french and italian markets. a quick check on the foreign exchange markets today.
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we'll focus as far as -- i'm showing you the asian markets first. real focus on what's going on in the japanese markets for the nikkei 225. the bank of japan, as i just mentioned, holding pat as far as policy is concerned. they did say more stimulus will be there if it's needed. yen strength feeding into this, around 1.4%. yen gains here, we have 102.60, the love for dollar yen. similar story as far as euro dollar is concerned. euro gains here, we have seen the dollar under a bit of pressure, citi analysts saying this is the most oversold currency of the g10, looking for a bounce to 147.70. talking about the europe and the dollar in particular, our next guest says it may be time to get back into the long dollar positions as the u.s. data picture improves. now yen's norvick global head of
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research at nomura. a tough few trading sessions, particularly what we're seeing going on in the equity markets right now. is this the time really? >> i think 2014 will be a year of dollar strength. obviously we have dollar strength in january but then we had a giveback in february and march and obviously the last couple days. i think the strategic theme very much remains intact. what we're say thing for is the normalization. once that happen, the dollar will regain its footing. we think entry point is decent. >> i guess the argument for this, too, positioning is much cleaner. i look at the ftc data. positioning back to october 23 levels. that's surely an argument for
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it, too, surely. >> that's an important argument. obviously people have been excited about the long dollar trade in various waves. and now the excitement has faded in the background. i think those are typically times where it is a good entry point and we want to get into those trades. >> stay with us. first i'll give you a look at what's on today's agenda in the united states. no major economic data today. just a pair of fed officials, the fed president, narayana kocherlakota talking today. "the wall street journal" reports that move is unlikely, citi can hit its 2015 goal for return on common tangible
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equity. equity owned by shareholders is often used to compare banks against one another. the figure is also important for ceo mike corbett who promised investors he would ramp up profitability back in 2012. city also agreed monday to pay $1.1 billion to settle claims stemming from mortgage securities it sold before the financial crisis. citigroup shares slightly higher in the european session this morning in the german markets higher by 0.4%. now the fed will give banks two more years to ensure their holdings are compliance the with volcker rules. banks will have until july 2017 to divest certain collaterized local obligations or clos. they shift exposure to other investors which can be other banks. loans in clos are high yielding and often are used in leverage
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buyouts. the volcker rule cap bank's ability to invest in risky funds such as private equity and hedge funds at 3%. some clos fall under this rule, too. u.s. regulators will finally rules for bank leverage ratios. the fed, fdic and occ would force banks to fund part of their business through less risky avenues such as shareholder equity instead of borrowing money. a proposal last year called for bank s such as jpmorgan and others to reach a level of 6%. regulators have said they shouldn't have a problem meeting the higher requirements. coming up next, the yen rises as the bank of japan fails to fire more stimulus. find out why our guest says don't expect any easing for the next few months. stay with us.
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♪ ♪ [ male announcer ] you're watching one of the biggest financial services companies in the country at work. hey. thanks for coming over. hey. [ male announcer ] how did it come to be? yours? ah. not anymore. it's a very short story. come on in. [ male announcer ] by meeting you more than halfway. it's how edward jones makes sense of investing.
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you're watching "worldwide exchange." welcome back to "worldwide exchange." these are your headlines. u.s. regulators vote today on tougher banking rules. which could prove costly. but the fed gives them two more years to comply with the volcker rule. the bank of japan says it
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will not roll out any more qe for now but it is ready for action. and following heavy losses in the u.s., asian markets trade lower while europe tries to get into the green. we've had a couple of ecb wires hitting the headlines just now, ecbs bonicci says the negative price changes are mainly in stressed countries, no signs showing inflation. the ecb still has standard policy tools it can change. yens is still with us. what is the impact as far as the euro is concerned. >> we've had talk, obviously in the last couple weeks about
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quantitative easing at the ecb. they didn't want to do it at this meeting. these comments you're referring to now suggest they want to use standard policy rules before they go down that rule. the euro regains its footing. the qe issue is really pushed further into the future and that's giving some relief to the euro. i think they're reluctant to go down that route. they would need to see further bad news on the inflation front before they were to consider pulling the trigger. >> i spoke to the vice president of the european central bank on friday. he said there wasn't detailed discussion about the prospect of qe and that belied what mario draghi said at the press conference. i would agree with you on that point. what do you think of the euro then? it parodies your strong dollar call. >> yes, we've definitely tried to avoid being too focused in euro dollar trading, because
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even if the overall direction monetary policy suggests that the euro dollar rate should go lower, there are other flows that pulls in the other direction. the flow we've been focused on for a while is the inflow into eurozone stock markets. last year around 240 billion euros came in from foreign investors. that trend remains pretty strong this year. so until that turns, we would not be very aggressive on euro dollar trading despite our dollar view. >> very quickly, how best to play that long dollar view. i know you're talking about a basket that includes emerging market currencies. they're an expensive commodity to be shorting right now. you have to be precise on the timing. >> yes, well, so in emerging market space, the ones we picked have low carry. not the most expensive ones. chile would be one expression.
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>> now that the meeting is out of the way, we will consider trading dollar yen from the long side again. obviously the level is a better entry point right now. >> you're talking about the prospect of the bank of japan as you just mentioned there. they kept their monetary policy unchanged and said that the business sentiment is improving but it doesn't acknowledge this caution going forward. we had the bank's governor saying japan would likely see consumer inflation reach its 2% target around the end of this fiscal year and that the sales tax hike is likely to erupt the positive cycle emerging yen's economy. many analysts would beg to differ as far as disrupting the growth of the economy right now. they could increase bond purchases between 10% and 20% really without disrupting the markets in any way. we had jpmorgan earlier saying we could see up to 20 trillion
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yen trend worth of purchases. could you see that happening? >> yes, i think there's an issue of what is feasible and they're almost running out of bonds to buy. they're buying such huge amounts now, there's technical difficulties for them to increase the program from here. they had some room left but they might consider other, more exotic equities to increase the size of the program from here. there's an issue of timing as well. i think they feel really that they're broadly on track in terms of generating 2% inflation rate within two years time. for that reason they're not in any rush to move. they would certainly want to see more data for q2 to see what effect the consumption tax hike has before making a premature decision to stimulate further. >> it gives them a very narrow window, doesn't it, waiting for the data to feed through in q2 before they perhaps push for
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stimulus to help the gdp stats in q3. i have to say good-bye to you. key point there, time to buy your dollar yen according to yens. head of fixed income research at nomura. now, some expect profits continue to slip. we look at who's winning and losing the battle in the smartphone war, coming up right after the break. [ hypnotist ] you are feeling satisfied without standard leather. you are feeling exhilarated with front-wheel drive. you are feeling powerful with a 4-cylinder engine. [ male announcer ] open your eyes... to the 6-cylinder, 8-speed lexus gs. with more standard horsepower than any of its german competitors. this is a wake-up call. ♪
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welcome back to "worldwide exchange." quick check on what the u.s. markets are indicating ahead of the u.s. open. as you can see, the s&p 500 enindicating higher by just shy of two points. for the dow jones, 22 points and for the nasdaq, 6 points. remember 1% losses across the board yesterday. nasdaq posting its biggest three-day drop since november 2011. the momentum, the tech stocks, bioteches in particular weighing on the market. that doing a similar thing across global markets into the trading session today. they're relatively little change as far as the european markets are concerned this morning. samsung electronics estimates operating profits fell by 4.3% in the first quarter, slightly below analysts forecast. this marks the tech giant's
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second straight quarter of profit decline. june yoon is in seoul to take us through the numbers. june? >> that's right, julia, the second straight quarterly decline in operating profits. what is samsung doing to avoid further declines. they are looking to the sales of the galaxy s5 to help their second quarter numbers and at the same time, more importantly, they're saying they will be focusing on managing costs going forward. samsung has previously mentioned that one of these costs is coming from marketing having spent 12.2 trillion in marketing expenses last year. it's said that it would lower the ratio of marketing expenses to revenue this year. a final q1 numbers are due out later this month and samsung electronics stock closed it down slightly, down 0.2% in trading today on the kospi. julia, back to you. >> thanks, june, great to have
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you on the show and for the update. nokia shares are trading higher after chinese regulators gave the green light for the firm's agreement to tie up with microsoft. they agreed to sell their mobile business to microsoft. they've now won backing from all relevant jurisdictions. nokia expects the deal to close by the end of the month. the first subscriber figures from the wwe network's online offering are out. they've reportedly signed 667,000 people after just six weeks in what is seen as the first big attempt by a contact provider. the wwe strategy is an interesting test case for the likes of yahoo! who yesterday signaled their intent to green light four online comedy series to augment their video strategy. joining us from new york is
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principle at a.t. carnie. it feels like a gamble for yahoo! here. i understand why their heads have been turned by perhaps netflix and the house of cards but the likes of netflix have data that gives them an idea of what consumers want to watch. >> yahoo! they're looking at the landscape where they are currently number five in terms of the most highly trafficked online video sites, well behind google and facebook. marissa mayer has set out a vision to close that gap if they can. this is one plank along with other targeted acquisitions and strategic partnerships they're doing. it is a risk for them. for them to monetize this, they're relying mostly on advertising revenue as a way to close that gap. netflix and amazon have healthy subscriber up ins and a base.
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as we mentioned a lot of data and information about their subscribers. that will be a skill set yahoo! has to build up. it's clear they're trying to narrow that gap behind google and facebook. >> what about the perception here with advertisers? that's another crucial point, if they actually do make a success out of this, that could be a crucial element for them surely. >> yes. what video does and one of the reasons why it's the fastest growing sphere on the web is because it really does open the web up to premium advertising which is something that's been out of reach for web properties. this would enable them to really add some sizzle to their pitch to advertisers because they could -- if they succeed, they would be able to show more consumer interest and deeper engagement with their consumers with this video content. that's the play marissa mayer is going for here. >> let's move on to wwe. you say this is a game changer
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for them. the stock price was down almost 15%. tech stocks got a pounding yesterday, too. why is this a game changer? >> it has. i believe it is because this type of what we call over the top content that's direct to consumer really lends itself fundamentally very well to content that's highly targetable. this absolutely is. they have a fan base that's extremely passionate and loyal. it's easy for them to target these subscribers. they're already two months in and reached almost 700,000 subscribers. i think the economics for them are if they cross the 1 million mark, which they're well on their way to doing, they break even in year one. it's definitely a low-cost proposition, they break even early and it sets them up to have direct-to-consumer access, direct-to-consumer insight and build up a new asset to the class that they'll be able to monetize going forward. >> it's incredible. they break even within a year.
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it seems like investors were hoping for more. do you expect them to see a lift even in the subscriber volumes that we've already seen? >> definitely. they timed it in a way that it was next to their marquise event, which was last sunday, wrestle mania. this was a huge lift they got, deliberately timing it in that way. they have two or three other marquise events spread out throughout the year. it offers a differentiated experience where you can search content through the archives and look up old clips of old fights and matches that the fan base is very much into. we definitely see that lifting further. at a price point of $10 a month, it's a pretty attractive proposition for the consumer. >> thank you. fans of gains of thrones were ravenous for the return of their show.
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sunday's premiere drew 6.6 million viewers, the largest audience for the cable channel since the "sopranos" finale. hbo go crashed shortly after 9:00 p.m. eastern due to overwhelming traffic. "the new york times" reports google will announce a glass for work program today. providing more business tools for the web connected eyewear such as tech support. glasses being adopted by more professionals such as emergency room doctors and police departments. consumers want protective lenses and long battery life. uber captured a niche in the
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car services business. they want to branch out to other markets. they're launching a courier service in manhattan called uber rush. you can order a package to be delivered on bike or foot anywhere in the city from $15 to $30. the service will be available 24 hours a day and the new uber rush app will let the sender track the progress of the courier in realtime. i like the idea of that. for more on the world's most iconic tech companies, tune in to cnbc at 1:30 p.m. eastern for pixar's co-founder, ed catmull.
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welcome to "worldwide exchange," i'm julia chatterley and these are your headlines from around the world. the yen gains as the bank of japan governor kuroda stands pat on policy but he says there is room for additional stimulus if needed. stocks in europe remain fairly flat, this after a volatile day of trade state side seize multiyear losses. and citi warns it could miss a key profit target. meanwhile, u.s. regulators give
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banks more time to make sure they comply with volcker rule. oil prices climb on renewed tensions in ukraine. >> you're watching "worldwide exchange," bringing you business news around the globe. >> thanks for joining us here on "worldwide exchange," as always, a quick look at how the u.s. futures are faring ahead of the market. a bit of a bounce as far as futures are indicating p. 16 points higher for the dow, for the s&p 500, just a point higher and for the nasdaq, around 4 points. we are losing steam as far as these futures are indicating. this comes on the back of around 1% losses for the markets. yesterday, the nasdaq in particular dragged down in yesterday's session by a continuing sell-off in the momentum stocks. you can see some of the big
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moves to the downside here from some of the big biotech names, even big tech stocks like amazon and google continue to be under pressure as you can see, minor losses compared to some of the bumper gains we saw, losses for the likes of applied genetics and aquinox, too. it posted its worse three-day loss since november 2011. worse three hef day loss for the s&p and the dow since january 27th. 4,079, the left f-- level for te nasdaq. gartner says he's getting out of equities and sticking with cash and gold. >> not sure what happened. something happened between 11:00
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and 11:15 that everything turned on a dime. i've only been in the market for 40 some years but i haven't seen anything quite like that in that short a period of time. in a bull market there are three positions you can have, really long, pleasantly long and neutral. it's time to be neutral. it's still a bull market. you don't need to be short but you don't need to be long at this point. i think cash is the right place to be. >> interesting. this is not just about the big markets i was talking about there .russell 2000 losing just shy of 5%, too. we are seeing some of the pressure in the smaller cap names, too. back in europe, there are rumors about their greek economy and whether or not they'll be issuing longer term debt over the next few weeks. they sold 1.5 billion euros, a yield the 1.3%. also selling 26-week treasury
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bills this morning. continuing to watch to see if they'll push out to longer debt, too. banks will have until july 2017 to deverse clos. these securities are a way for banks to remove loans from balance sheet by shifting exposure to other investors which can be other banks. loans are high yielding and are often used in leverage buyouts. the volcker rule caps banks' abilities to invest in risky funds. some clos fall under this rule. now, it's the end of an era but is it also a security threat for the business of banking? from today, microsoft will stop providing security updates for windows xp, with 95% of bank atms using the operating system, it could make lenders more
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vulnerable to security laps. kayla tausche has this report. >> reporter: some 95% of all of the atms in the united states run using a 13-year-old piece of software, called windows xp. april 8th is the deadline for extended support. meaning the traditional software used in the atms will no longer be updated by microsoft. that has caused banks to rush to transition their systems. it costs about 3,500 bucks for each atm to be updated. they have to be programmed individual individually, meaning this say tedious process that doesn't come cheap, jpmorgan chase, bank of america, wells fargo and pnc have asked microsoft for extensions to get them to this point. microsoft did end that support several years ago and federal regulators in october urged them to make this transition sooner
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saying it was up to therapy to take on this operational risk so that consumers would stay safe. in the meantime, some banks have not given estimates about how long the transition will take, only ensuring that customer accounts will stay safe. a sticky situation for banks and atm operators alike, once that won't be solved overnight. for now we'll send it back to you. >> from the bottom line to brand reputation, cybersecurity can pose a huge threat to businesses. 2013 was a year that more data records were lost than ever before. the report released later today show security breaches grew 62% over the course of last we're and can have a devastating impact on large organizations. joining us from new york to discuss the report is vp of the information security group symatech.
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you describe an explosion in data breaches, including mega data breaches where 10 million data records are exposed. why are we seeing such an explosion and who specifically is being targeted? >> i think it's best summed up by willie sutton's quote, why do people rob banks because that's where the money is. as more and more digital assets move to the internet fabric, at tackers are moving there. the attack landscape is booming with these types of things. in fact, we saw over 91% of targets attacks over the last year in terms of increase. what that really demonstrates is a shift in behavior of these attackers. they're moving from target of chance to target of choice. big game hunting. >> i saw a report from hewlett-packard saying we're spending $46 billion a year on cybersecurity. this is not necessarily about
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we're not spending enough, it's how we're looking at protecting ourselves and addressing some of these issues? >> yes, that's spot on. i think the key for many organizations is looking at this as a unified security fabric. it starts with understanding where your information is, it then moves to leveraging your most powerful asset, your people, to be part of the solution. it also includes rethinking, reimagining and in certain cases rearchitecting your security posture. the sheer velocity, volume and variety of tax is quickly outpacing a lot of the security postures of organizations. >> i also saw an article that suggested we have a problem identified when a data breach happens. an average breach goes undetected for 243 days. how do we drive those numbers down? >> i think it starts with awareness. many organizations out there have a good understanding of the information that they're aware of. but that information starts to grow legs and cascade throughout
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their environment. and looking at that surface area is the key. i mean, at symantec we're looking at some of the emerging threat landscapes. if you look at the explosion of cloud or big data or things that's stepping out of imagination and into reality, all of these new systems are providing new potential areas of attack and new data. >> there's an article "new york times" in the says that hackers infected the malware of a chinese restaurant that was popular with employees. how do you deal with that risk? it's limitless. >> i don't imagine your refrigerator will attack your washing machine anytime soon but what i can say, we've seen real-life attacks against baby monitors and security cameras. in certain security conferences, we've actually seen smart televisions and next generation
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cars get hacked. i think the key here is as the kinetic and physical world start coupling with the digital and cyberworld, there's an opportunity for greater damage. it's important to design security within those systems as opposed to trying to bolt them on later. that's part of where we're focused on, partnering with an ec ecosystem of the next world of appliances so they're considering the security risks up front. >> brilliant to chat with you. vp of the information security group symantec. the center for auto safety says the company code in older models determines when the air
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bags deploy in a crash may improperly turn off the air bag if a driver or passenger is bounced in their seat. separately, the detroit news reports gm will invest $450 million into michigan plants to boost electric car research and production capacity. gm shares lower in the german trading session by around 0.7%. now, the u.s. senate has passed a bill to renew jobless benefits to 2.4 million americans who have been out of work for at least six months. these benefits expired in january. president obama is calling on the house to follow suit but house speaker john boehner and other republicans oppose the measure, saying it doesn't meet their demand to include provision for job creation. now, today is annual international equal payday, a symbolic day when women's earnings theoretically, emphasize that point, catch up to men's earnings from the previous year.
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it takes a few extra months because of the 23% jennifer wage gap that women typically face. and in what looks to be a timely announcement, president obama is set to unveil a pair of moves that his administration says will strengthen enforcement of equal pay laws for women. the key question is, does the government still need to take action on equal pay or is it down to the individual to fight harder for what they earn? do women need to lean in? that's the question. josh tweets in to say, it's up to the individual. if you're good enough, you'll get paid what you're worth or you'll leave. #freemarket. i'm not sure i agree with that. you get what you ask for. e-mail us @worldwidecnbc.com. and why capital plans is
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causing new headaches for michael corbett, coming up right after the break.
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mfs. because there is no expertise without collaboration. you're watching "worldwide exchange." welcome back to "worldwide exchange," these are your headlines. u.s. regulators vote today on tougher banking rules which could prove costly for the lot. the fed gives them two more
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years to comply with the volcker rule. the bank of japan says it will not roll out any more qe for now. it is ready still for action. and following heavy losses in the u.s., asian markets trade lower while europe tries to get into the green. another story we're keeping a close eye on, russia is call on kiev authorities to put an immediate halt to military preparations in the southeast of ukraine, saying the buildup could lead to an outbreak of civil war. it follows an announcement by ukraine's interior minister that, quote, antitrust operations are now under way in the eastern city of kharkiv. oil prices moving higher on the renewed tensions. we have brent sitting above $106 a barrel. meanwhile, u.s. secretary of
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state john kerry will meet with top diplomats from russia, ukraine and the european union over the next ten days in a new push to calm the tensions in the eastern region. citigroup may be trying to lower people's expectations for its profit targets. in the wake of the fed rejecting the bank's capital plans last month, mary thompson is at cnbc hq with all the details. mary, good morning. >> good morning to you, julia. citigroup is reportedly warning investors it may miss a key profitability target now that it's not able to boost its dividend or ramp up a buy back. the federal reserve shot down the bank's capital plan saying it failed to make improvements in risk management as well as manage potential risk to its business during a severe economic your honor turn. that makes it unlike ly -- this measure, a ratio of profit to
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equity shareholders, it is often used by investors to measure banks against each other when comparing to profitability. the figure is also important for ceo michael corbett who promised investors he would ramp up profitability when he took over for vikram pandit in 2012. last year, the target rose to 8.2%. analysts say -- or actually came in at 8.2%. the analysts say the company was counting on the ability to boost its stock buy back program to help meet that 10% goal. citigroup agreed to pay just over $1.1 billion to settle lawsuits. citigroup shares have dropped 7% since the plan was rejected on march 26th.
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next, google wants more people to wear glasses. reports say the company will announce a glass for work program today. we'll tell you what that is, coming right up. mine was earned in korea in 1953. afghanistan, in 2009. orbiting the moon in 1971. [ male announcer ] once it's earned, usaa auto insurance is often handed down from generation to generation. because it offers a superior level of protection. and because usaa's commitment to serve 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.
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[ male announcer ] open your eyes... to the 6-cylinder, 8-speed lexus gs. with more standard horsepower than any of its german competitors. this is a wake-up call. ♪ google wants more people to wear glasses. "the new york times" reports that the company will announce a glass for work program today. providing more business tools for the web connected eyewear such as tech support. glasses being adopted by more professionals such as emergency room doctors and police departments. uber captured a niche in the
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car services business. uber is launching a courier service in manhattan called uber rush. you can order a pack delivered on bike or foot anywhere in the city for $15 to $30, depending on the distance. how exciting. quick check on the u.s. futures here alead of the u.s. market open, losing steam as far as the futures are indicating here. s&p 500 higher by just shy of 1%. for the dow, 14 points higher. 1% losses across the board in yesterday's trading session. now, the unofficial start to the earnings season begins with alcoa set to report quarterly results today after the light weight metals was company was dropped from the dow. the official start to the season begins with u.s. banks on friday. being kicked out of the blue chip group hasn't been all that bad for alcoa as it's outperformed new comers to the
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dow, including visa and nike. james globalfield joins us now. the bar has been set pretty low as far as we've seen from negative eps reports going into this earnings season. what are your thoughts. >> people expect it to fall around 2.9%. we think that's probably overly bearish. it's due to a large number of companies releasing negative guidance. but that is about 22% of the market. we've seen quite strong pmis recently. that's encouraging and crucial to earnings is margins. that hardly suggests that margins are under threat, particularly now that unemployment still remains stubbornly high and by our
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estimates, margins don't get significantly squeezed until unemployment falls to 6%. >> you're seeing some of the value play, the biotech stocks losing ground, particularly in the last few days. do you expect this to continue or is this a temporary blip? >> there's going to be increased nervousness. certainly in the tech business there seems to be very nervousness. the downgrades have been around 7%. there's some real concern there. >> this divergence between some of the old tech names. >> this is really important. what we've seen in companies that reported in the interim, companies like micron and oracle highlight this new versus old tech. oracle is much more exposed to the desktop pc market. micron had strong earnings
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results. i think that highlights this important divergence within tech. it's about being selective in tech. >> the semiconductors have done it great. the philadelphia semiconductor index, up 7%. >> europe is a good example of that. it's a semiconductor lithographer. they've really benefited from that trended. >> very quickly, overall for earnings season? we talked a little bit about it there. what are you expecting? do you think the u.s. markets continue to push higher? >> yes. we see growth. perhaps a bit more mix than usual. will certainly beat expectations. >> for europe, very quickly? >> europe is crunch point for europe. if we don't see earnings come through this time, all the indicators suggest they will, strong pmis, et cetera, improving economic indicator suggests earnings will pick up.
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if we see no real growth in earnings, revenues have been decent in this fourth quarter. if we see earnings missed -- >> benchmark low for the u.s., crunch time for europe. i like it. james, great to catch up with you, james butterfill. a quick look at what's on the agenda. fed officials to watch for, fed president narayana kocherlakota and chicago fed president charles evans. stay tuned. alcoa ceo klaus kleinfeld. that's it for today's show. i'm julia chatterley. thanks for watching "worldwide exchange." "squawk box" coming right up.
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♪ [ male announcer ] this man has an accomplished research and analytical group at his disposal. ♪ but even more impressive is how he puts it to work for his clients. ♪ morning. morning. thanks for meeting so early. oh, it's not a big deal at all. come on in. [ male announcer ] it's how edward jones makes sense of investing. ♪
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good morning. u.s. stocks, looking to make a stand after another sharp sell-off led by tech and b biotech. moscow warns ukraine that any use of force against pro-russian protesters could lead to civil war. and the huskies of uconn are national champions, defeating the kentucky wildcats, 60-54 for their second tight until four years. i think they're fourth overall, not too many teams can say that. it's tuesday, april 8th, 2014. "squawk box" begins right now. ♪ in one shining moment it's all on the line ♪ ♪ one shining moment
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good morning, everybody. welcome to "squawk box" here on cnbc. i'm becky quick along with joe kernen and andrew ross sorkin. u.s. markets will try to rebound after two straight sessions of sharp declines. at this hour, though, the futures if you take a look, the u.s. futures indicated slightly higher. nasdaq futures up by just over 1.75 point. the s&p futures are slightly negative. this all comes after the dow fell another 166 points to 16,245. as for the s&p 500, that index capped off its biggest three-day drop in two months with a decline of 20 points it closed at 1845. you are looking at the nasdaq. it got the worst of this. that index had its worst three-day decline. negative for the year are the markets. we will talk about the momentum shift in just a few minutes. first, andrew has more of the top corporate stories.

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