the uk economy is certainly bumbling along. demand is not strong. but i would make just a couple of points. one is the overall level of the services pmi in the uk is well above that in europe. you know, the uk services pmi has been in the 50 to 5 2 type range for quite a while. and the european number has been around the 46 to 47. so in terms of rate of growth, actually, the uk services and domestic economy has been doing better than its continental counterpart and i think the outlook is better. inflation is falling. high inflation has been a key factor holding back consumer spending and retail spending for the last few years. it should at the margin improve a bit. >> daniel, hi. chris here. in terms of the numbers that we get the flurry of information we're getting on a regular basis, is this something that you use to frame your expect aegzs were or is this too short-term? you're talking about the longer term. are you more inclined to use some longer term views on the economic dynamics than just the .6, .7, .8 moves on a monthly basis? is that your

but nothing, again, with the slowing economy, you're getting news out of the uk. in at 2.25, 2.5%. so it's really a muddle through economy. sdmra muddle through, that's what mortimer says. ross, it's been such a pleasure. stay warm out there. see you back here on monday. >> yeah. i won't be in on monday. i'll be in on tuesday. but that's it from "worldwide exchange" coverage in davos. "squawk box" is coming up next. >> our special coverage starts now.

whereas in britain, the uk has been really the worst performing economy since 2007. if you look at nominal gdp growth and real gdp growth, the uk has really underperformed and is that going to be a question mark over the continuance of austerity on the one hand and the level of the pound? >> well, certainly they anticipate domestically about whether the coalition government will continue with its austerity measures. the government seems as though it wants. as i mentioned earlier, it's a dilemma. it's not mutually exclusive. you can't ignore the scale of the deficit and move on to some sort of fiscal stimulus package where i think the uk government should have really avoided raising taxes in the first instance. and i also think it should do a lot more to promote investment, even if that is at the expense of current consumption. but, yeah, it's easy to sort of try ask joef do all the gloom and doom in the uk. as far as the eurozone is concerned, sure, there may have been reduced tail risks. but they might have won the battle, but they haven't won the war. there's deep p

the uk to other countries, in the case of the uk equity market, for example, is the very international market and, therefore, it's more globally focused. its performance is not really tied into the uk economyhave to start looking at the second and the third tier of the uk companies. we need to also look at the credit markets. the nonfinancials are very, very safe names. they tend to overperform in a rally. as a result, when drawing comparisons between the uk and the nonuk, one needs to be aware of the fact that we're not comparing like for like. >> final point, just what are your favorite ideas? what do you think happens with trades in the next, say, four to six weeks? >> i think certainly going into the end of january, we continue to rally. i wouldn't get in the way of the risk on sentiment seems very, very potent. after that, i get really concerned, indeed. i think the talks in the u.s. about the debt ceiling combined with spanish gdp coming out, my worries about german gdp, uk numbers at the end of this week, i think it is a rather unpleasant cocktail which is brewing. the last time, the story in the u.s. did stop the rally in its tracks. combined with bad news possibly later in the mon

presumably partly of where we're going potentially with the uk economy. >> it's rarely you can get underwear >> it's the space for the uk. >> as i learn from you, simon. >> indeed all my socks, even now, i order them online. >> really? you get them shipped and the exchange rate instead of going to walmart -- >> i can't seem to -- >> yeah. >>> we can't go two long without mentioning the battle over herb herballife. >> melissa, ever sill bill ackman made his three-hour long case why he's short of herb alive, there's been some speculation he may have exited part of his position. i talk to him last night. this morning he told me we stand by everything we said, we haven't covered a share, and we look forward to the company's rebuttal. the profits of this, of course, will go to charity, about you in the wake of his coms, plenty of others have come out, including john hempton action who will be with me later on "street signs" activist robert chapman, who's made it his biggest position is actively talking about the company. he herbalife says he'll likely have a rerebuttal to that -- leaving that to

the uk companies? >> well, i don't make share price recommendations. but the uk economy at the moment subject to no euro meltdowns. >> although we have had similar stories. we've had hmv, blockbuster and jaccards. all of those businesses have gone into administration. >> the point is, they all have in common the fact that technology has changed and they were unable to respond. >> richard, thanks so much for joining us. >>> and some news on a big corporate story this morning, the ongoing troubles with boeing.now japan airlines says it has canceled all flights on its tokyo to san diego route and it will cancel eight flights between january 9th and 25th due to the dreamliner grounding. 70 flights will switch aircrafts. this is interesting as we wait for airbus results. the 787 dreamliners grounded pending safety reviews. >> they're grounded indefinitely in the u.s., right? so they're not flying until we know what's happening. still to come, how boeing's dream liners are coping around what we've already heard there. jal is going to try to switch to different planes. why futu

the indications are that the stocks have been surprisingly good despite the obvious issues with the uk economy. certainly what we see from neck is that they're seeing a continuation of the first three quarters of the year into the christmas period. perhaps not as bumpy as we saw for john lewis. but thanks to the other measures we've taken, they're pushing measures up. >> and a very strong move yesterday, which is a broad based move. the growth is underperforming. really not going with the rest of the market. what is the concern for them? >> they are losing ground to tesco. we're starting to see investors believing in the turn around story after the problems they had in the first half of last year. based on the training we saw throughout december, tesco is start to go become more favorable in investors. >> all right. and what happens now? a big move the first day of the year. first trading day of the year. and then what are your clients doing? what are they looking for now? >> initially on the back of that news yesterday, we're starting to see short money coming in. what we did notice in the ru

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the u.s. and chinese economies. in europe both the uk and french markets are up. germany down' fraction. checking in on our numbers right now i'm look hack the the futures. and it does look like a pretty mixed opening this morning for us. that is after a decent day yesterday. s & p 500 close to 1500. so we'll have a better look as we get closer to the opening bell. >>> time now 5:18. a shark attack in hawaii? people are cautiously getting back into the water. where the shark went after a surfer and what kind of shark it was. >>> a night of fun in costumes at the lady gaga concert. there was also a serious message for concert goers. >>> you can wake up with ktvu every morning. get the mornings top stories that develop while you were sleeping sent straight to your cell phone. every weekday morning 6:00 a.m.. get your ktvu morning wake up call by texting the word wakeup to 70123. [ male announcer ] are you a business traveler who can withstand the perils of air travel? can you survive change fees? blackout dates? boarding in mobs? do you actually, in a weird way, kind of enjoy rude service?

the uk? the u.s. economy in recession. they put our flag there.re so happy because they're at minus 0.3%. so misery loves company. we're not like you and we're not going down that much. it's a brief pause for us. the financers are so happy. look, they put the flag there. >> it's what they call the splash in the uk. >> it's an orange newspaper. who cares? >> yeah. when we come back, the bulls rule in january, but will the roads start getting rougher from here? our next guest wants to prepare us. find out why from here. >>> and hostess finds a new bidder. find out who will be making the twinkie brands. take a look at yesterday's winners and losers. this is america. we don't let frequent heartburn come between us and what we love. so if you're one of them people who gets heartburn and then treats day after day... block the acid with prilosec otc and don't get heartburn in the first place! [ male announcer ] one pill each morning. 24 hours. zero heartburn. and don't get heartburn in the first place! all stations come over to mithis is for real this ti

the global economy, 3%, but the average of emerging markets, close to trend, 5%, and while advance economies are going to be growing barely 1%. and with an advanced economies, the euro zone, mostly in recession, ukrderline recession, and even the united states, compared to other advanced economies growing in my rue is going to grow another year, a trend of 1.6%, 1.7%. keeps unemployment rate very high. >> reporter: and that's important. rate of growth, keeps unemployment very high in this country. key to all of that is some sort of grand bargain, grand deal in washington. not expecting that any time soon. outlook for housing improvement. but not as much as i think all of us would like to see. soledad. >> great, poppy. thanks for that. >>> ahead on "starting point." vice president biden begins his next four years, he reflects on his past term and his a-ha moment and why he decided to take on the nra. >>> she dated lance armstrong for years. sheryl crow is talking about armstrong's confession that, in fact, he did dope. and new pictures of an aftermath of a major fire in chicago. look at that building encased in ice. back in a moment. twins. i didn't see them coming. i have obligations. cute oblig

the uk with the stagnant economy, we're looking at japan using the exchange rates to depreciate.uestion. the big four companies and if you throw switzerland in the big five all face similar issues and they're all doing similar things. the dollar will weaken against currencies in emerging markets, will weaken against the smaller g10 currencies. but within the g-4s, it depends which one has the bigger problem at any point in the day. >> steve, thank you very much for joining us. >> my great pleasure. thank you. >> 47 million in 2012. he stays in california, tax bill is $29 million. so if he moved to florida, he would save $6.25 million. >> the tax bill is 29 million? >> 29 million out of 47. that's not bad. that's pretty good. but he could move to florida and keep half, basically keep half instead of keeping 18 out of 47. >> for a guy who is on the road a lot of the time. >> and then the asteroid thing, i saw what al rockier was able to -- he got a lot of mileage out of that story. >> so are you about to make a confession? >> it's not really true. today i'm feeling fine. coming up,

the uk as a model. anyway, dean baker, thank you. >>> the new year economy looks like it could be getting better maybe becausets. question is, will the fed change its stripes at its policy announcement on wednesday because the economy might be better? that's next up on kudlow. (announcer) at scottrade, our clients trade and invest exactly how they want. with scottrade's online banking, i get one view of my bank and brokerage accounts with one login... to easily move my money when i need to. plus, when i call my local scottrade office, i can talk to someone who knows how i trade. because i don't trade like everybody. i trade like me. i'm with scottrade. (announcer) scottrade. awarded five-stars from smartmoney magazine. and you see the woman you fell in love with. she's everything to you. but your erectile dysfunction - that could be a question of blood flow. cialis tadalafil for daily use helps you be ready anytime the moment's right. you can be more confident in your ability to be ready. and the same cialis is the only daily ed tablet approved to treat ed and symptoms of bph, like needing to go frequently or

the u.s. economy is doing well, then that's fine. >> i think that raises -- >> and the uk, they need to stop qebecause they just bought a third of the uk government bond markets. we are almost up to half. >> we were saying earlier, japan benefits. europe would love to see the euro be weaker. vis-a-vis u.s. currency. however pb if feds actions and they stop buying lead to weaker u.s. economy then that turns out to be bad for european economy, right? >> if they stop too early because they are worried about the aaccumulative problems down the road as opposed to stopping because we are already in a strong place, we still have number one economy, but it is still number one economy and the world is globalized. >> i think 23 members of the eurozone, gdp perspective, is the same eyes as america. >> bigger than the united states. >> it needs olive oil in greece, right? manufacturing out of germany. >> champagne france. >> exactly. they need stuff to be cheaper so we can gorge on champagne and corks. >> lucky you. what do i get to gorge on? we don't get to gorge on anything. what does the uk make any mor

the doors by central banks. investors are only looking at that. they couldn't care less about the economies on the ground which are in recession, like the euro zone, the uk, japan, china delevera deleveraging, u.s. limping along. they couldn't care less. and the other thing here is the zeile for yield. that's why junk bonds are up 20% last year. but investment grade only about 5%. this condition, i think, will continue until you get some kind of shock that returns investors to the reality of weak to recessi recessionary economies. at that point, you go to the risk off. and that's where i think you find that earnings with a global recession and stocks are vulnerable. >> sure. you are predicting a 42% drop in the -- >> no, not 42. i'm saying -- the way i get there, i've got, at some point here, some four quarters, i don't know where it will start, $80 operating earnings on the s&p and bear market bottoms have averaged about 13, multiply that, that's 104, 29% decline from here. >> but gary, first of all, if you look -- i don't know where you are getting $80 a share -- >> well, i'll tell you -- >> hold on. but when i look at the bear market bottom of march o

we haven't seen is the corresponding rise in business investment to drive the economy forward in terms of employment and change things around. we continue with a growth rate in the uk and the u.s. above 2%. it's much less in europe. so the cooperations, are they going to continue to grow profits? we've seen slowdown necessary each quarter. the last quarter werings for the s&p -- >> bob, the question is whether they reinvest. >> indeed. >> and they could support surprises by just generating more buybacks. >> we've seen buybacks, we've seen cash hoarding. what we haven't seen is investment in the real sector and replenishing those business equipment and factories that were required, but particularly for those seeing a slowdown in emerging areas like alcoa, which is more difficult. they're in a market which has been very depressed. i think we look at other sectors, we'll have a better picture. financials have done better, but it's the key manufacturing sectors and their profits and earnings and what they're doing about investments. >> just before we peck up on that, we want to bring a little bit of news. waiting on spain to tell us what it expects. now the treasury is

to be an outside not only the evidence on the u.s., but on the uk and elsewhere, that these types of policies do have an impact on the economy. >> we hope that there will be more of an impact going forward to bring the breakdown quickly. >> the pace of improvement, that's an interesting question. because the pigs of economic growth over the last few years since the beginning of the recovery has not been as strong as you normally would think would be needed to get really big improvements in the labor market. nevertheless, we are seeing declining unemployment which is fairly significant, and we hope to see an ongoing improvement there. so it's a little bit hard to judge exactly how much more improvement we will see. but certainly we want to keep things going in the right direction. in terms of additional tools, once you get the short-term interest rate down to zero, there is basically two principal coaches. either a securities purchase or communication. there are a few other things of smaller magnitude, like the interest rate that we pay on the excess reserves, for example. but i think those are the two basic approaches that w

but also on the uk and elsewhere, that these types of policies do have some impact on the economy, and at this point of course having reduced short-term interest rate close to zero we are looking for the tools we can get to get better outcomes. >> so if, so certainly hopefully there will be more of an impact going forward to continue to bring the unemployment rate down more quickly, you mentioned that you were looking at the kinds of tools that are available. are there more in the fed's toolkit that might have the kind of power to additional affect? >> first on the pace of improvement, that's an interesting question because the pace of growth, of economic growth over the last few years, since the beginning of the recovery, has not been as strong as you normally would think would be needed to get really big improvements in labor market. nevertheless, we have seen a decline in unemployment, which is very significant, and we hope to see ongoing improvement there. so it's a little bit hard to judge. exactly how much more improvement we will see, but certainly will want to keep things going

the european economy. the ftse 100 over here up by about 0.2%. take a look at the bond wall of just what kind of trade we're seeing more broadly. interestingly, spain and the uk are seeing their prices down, yields up a bit. italy, though, for the ten-year rallying a little bit to 4.17%. and the german bund is 1.6% this morning. forex is where most of the act and a lot of the market focus has been. we can take a look at a couple of key things this morning. let's start over here with the tlifty watch, as i like to call it. 1.2520. the ceiling was kept at 1.20 and for a time there was discussion about how much safe haven flows would put pressure on the banks. people were exiting that safe haven trade. adding .4% today. this has been a huge story. also a big one as the australian dollar weaker by 0.5% despite that stronger chinese figure. we'll have more discussion on that a little later in the program. the dollar/yen, 89.87. we did see this trade above 90 starting last night continuing through some parts of the morning. is it a short squeeze? perhaps. citi and is others are talking about how the yen is now undervalued after being overvalued for so long. euro/do

the economy but let's also talk about what's going on here. in particular, david cameron's comments about what's happening in the uk, and what that might ultimately how are you thinking about this right now? >> andrew, i think it's important to understand, when you make long-term industrial infrastructure, investments, that you need long-term stable macro economic environments. and the key question that i would ask myself is should i be worried about it. >> and should you, are you? >> and this is where we need to get the answer, a minimum what it will do i think it will impact investment sentiment. and the rest we will see. >> but that's real? you're not going to change anything as a result of this? >> i'm just asking the question. >> you're -- >> the uk is a very important market for us. we are one of the biggest industrial employers in the uk already. but it is key thing in terms of a new industrial investment decisions. that you need long-term stable environments. because when we look into plants or other investments we look out 10, 15 years. >> sounds like you're saying it was a mistake to make this speech. >> i'm not saying anything. you're

the economy is rebalancing. there are over a million new private-sector jobs. in the first two and a half years of this government, exports of uk goods to both india and brazil went up by over a third, and exports of goods to china went up by almost a half. last year, britain became a net exporter of cars for the first time since 1976. we've cut income tax for 25 million taxpayers, we've halved it for those working full-time on the minimum wage, and we've taken over two million of the lowest paid people out of income tax altogether. we've introduced a benefits cap. we've delivered the biggest ever cash rise in the basic state pension. and we've guaranteed real-terms increases in the nhs budget, with more of that money reaching the frontline. compared with 2010, there are over 5,000 more doctors working in our nhs, and there are 6,500 fewer managers. we've not baulked at the tough decisions necessary to secure our future. instead, we've ended the chronic short-termism that has too often let down our politics in the past and seen far too many previous governments just leave vital issues in the pending tray marked too difficult. s