Transcripts For CNBC Worldwide Exchange 20131008

Capital hike. And investors try out the latest cost cutting measures. The telecommaker is shedding an additional 10,000 jobs by around 14 . A very good morning to you. If youve just joined us in europe, good afternoon. If youre watching in asia, and well get on to you in todays show on, as well. Sideline. Instead americas trading partners in asia have been left frustrated. Well have the latest from the apex summit in bali. Plus at 10 35, a new hsbc report shows infrastructure trade will triple by 2030. Well ask whether the surge is likely to come from developed or emerging nation peps. Investors appear to be stamping their seal of approval on the royal mail ipo. But does a last minute rush before the deadline suggest the governments share price evaluation was wrong . Well get the latest at 0 20. And it was bought for 200 million in 2001 and now its worth 250 million. Well be joined by the coowner of the ultimate fighting championship. To find out how he helped make the franchise a knockout business. And from knockout to shutdown, as the crisis run was on stateside, attention turns to october 17th when the u. S. Faces default. Or indeed, does it . The Treasury Department could juggle the books, he thinks, for a couple of extra weeks. Any thoughts or comments on any of what were going to talk about today, please, email us, worldwide cnbc. Com. Its day eight of the u. S. Shutdown. The president says he will be willing to accept a shortterm deal. A former u. S. Budget director is floeth an idea to reopen the government and raise the debt ceiling. It would give the president government funding and the gop at that cross the board spending cuts currently in place under the sequester. The performance proposal may not gain any traction. Joining us for the first part of the program today, Charlie Diebel from lloyds wholesale banking and marketing. Charlie, good morning to you. Good morning. Weve seen u. S. Treasury tenyear yield spiked up. Sixmonth yields have spiked up. Are we going to see any more adverse pry reaction or not . To be honest, its in the hands of events now. If the political situation is resolved, then we revert to a very minimal Economic Impact, treasuries linked to selloff by 2025 basis points in the tenyear. And were back to a u. S. Economy thats doing okay. The alternative, and thats why the markets are kind of, you know, stuck, theyre in pause mode waiting for news. At some point, you know, i mean, i tend to agree that the 17th of october deadline is poorest and that they will still have some funding thereafter. But, you know, according to cbo estimates, certainly by the 30th of october, the u. S. Effectively will have run out of money. So it is coming even if there is no specific date. Every day that goes tapast, i expect the market will start to panic because no one knows what would panic look like . Well, thats exactly the problem. No one knows what its like for a technical default from the worlds global reserve currency. Its never happened before. So we dont really know what it looks like. Im just wondering what that would be like, to maybe think about pricing that in, what action i mean, its got to favor safe havens, but does it favor treasuries . Thats the real question. Should it help gilt . Yes. Jgbs . Yes. All those countries theoretically should see government efforts improve and yields fall. But what does it do to treasuries . Given the fact that theres cross default lines n states, you could find those issues that have a november coupon will go into technical default where those with a may coupon wont. And thereby, you get this big dislocation in terms of actual market value because those issues will be in default, but those ones wont. Not anybody thinks thats going to happen, though . No. And thats but is that everybody thinks well run up to this deadline, theyll do something. So everybody is supposed to be thinking about are you thinking there will be a buy yacht or a sellingoff . Well, i mean, this is it. And it is that complacency that worries me. We are sort of sailing towards the edge of the precipice and everyone is going, no, the thats all right. Theyll turn the boat around any second now. Well be fine. Because of that assumption perhaps the pressure to get a deal is less pressing. You mean market pressure . Yes. And that means youre in a situation where, you know, we have a series of u. S. Bond auctions this week. Theyre probably relatively well subdescribed. If i told you that the u. S. Is about to default but there bond actions will be well subscribed, it makes no sense whatsoever. But thats the kind of paradox were faced with right now. And i think that continues at least until we get some clarity as to how long this is going to go on for. It does seem too awful to contemplate that it will actually happy and the u. S. Will go into default. But its a nonzero probability and thats why the market refuses to really take it seriously. Charlie, stick around. Well get more from you. On italian banks, dipaschii rallies again today. It includes around 3,400 additional job cuts. Cnbc has been speaking exclusively to the ceo about the details. The logic behind having raised our profitability objectives for 2017, while continuing to reduce the risk profile of the bank is to ensure that the bank will become a viable one by the end of this period sflp. You also spoke about the longterm effects of the plan, particularly in terms of job looses. In light of the more challenging objectives that are a part of this new plan, we must work to complement those actions to make us more productive. In particular, strength in our commercial distribution. Lets not forget that was 8,000 less employees, we will be dif in the nigz raise our productivity. Very nice. Very honored to have you here. A pressure. What do you make of what theyve announced . Have they gone further than what we mif thought . Theyve gone further than what they initially thought to do. This is what he agreed with back in september saying they needed a Bigger Capital hike. So for one building thats expected, theyre going to go for 2. 5. The question is, will they be able to close this or not . They had time to do it. In the meantime, the markets are reacting well because of the fact that this is an aggressive, ambitious plan. Administrative cost cutting as theyre Going Forward with the closing of branches. They they should become more they should improve by that standpoint, but its an ambitious revenue. For new, the market seems to like it. Will they be able to raise that capital . So Going Forward, most likely, theyre going to have to go with some sort of a merger and then they have to sell even. It also depends, i suppose, on the Market Sentiment generally, as well. But, you know, a lot will depend on sentiment over the next year. Absolutely. And, you know, theres a much bigger european question instead of, you know, how much support, you know, the sovereigns are able to give while they continue to be somewhat under pressure and their own funding costs are so high. I think thats still a major structural problem. Also, the question has come up about, you know, the ecb lacks support. Theyre now talking about may punishing banks who cant wean themselves off ecb money. Yeah, which which is like lets make the weaker bank pay more. Some sort of abusive relationship they want to establish with the banking center, it makes no sense. The whole point of this provision of liquidity was to encourage lending and support the economic recovery. So then sit there and say, well, youre not weaning yourself off, particularly at a time when most participants are thinking they will do it, ltros to pump liquidity back into the system once the existing you stuff gets less than a year. And if they cant, who was saying they who would be in the fame for them to to get together with . Well, there have been talks about a merger and those have been denied, but of course the previous krr eo has absolutely been against that. But he is no longer in place there, so a merger with another italian bank, selling off to somebody else, as youre saying, its difficult to manage the situation when you have poor asset quality, when you have increasing nonperforming loans in a difficult recession in a country like italy. So how can this bank, you know, theyre doing as much as they can. They say we need to make this bank more viable, but he said were becoming more viable by the fact that we have less people doing more work. Its quite a challenge. Claudia, thank you. Looking forward to that. Right now, though, its time to bring you up to speed about whats happening onned tos Global Market report. Well take a shot of the Dow Johns Stoxx 600. Even stevens between advancers versus decliners. Were about five to four at the moment is where we stand. Lets bring you up to speed with the ftse 100. We were down 16 points yesterday for the ftse. Right now, this morning with retailers in focus, well come on to that, as well. There we go. Thank you very much. Down 0. 25 . The xetra dax is fairly flat. The cac 40 down 0. 2 and the ftse mib up about 0. 1 at the moment. A number of these retailers are down today. September figures released by the British Retail Consortium showing sales at 2. 4 higher than the same month a year ago. That number did mark the second worst this year. It acts as a reality check for the sector. Home Retailer Marks Spencer dune 3 . Home retail down 2. 35 . Debenhams and neck, down 1. 8 and 1. 3 respectively, as well. Meanwhile, alcatel lucent, the stock up marginally at the moment. Planning to cut 10,000 jobs. Its all part of the plan to 15,000 post worldwide. The layoffs are said to be part of a cost cutting drive to save a billion euros by 2015. Stephane has more for us out of paris. Stephane, what do you think of it . Hey, ross. Its part of the shift plan to reshape the group into a smaller company. Youll remember in june, the new ceo say that alcatel had to reduce its cost base by 1 billion euros annually and would sell some assets worth 1 billion euros. The target is to return to a positive cash flow from a 2015. This morning, the Company Announced to the labor unions the details of the cost savings plan. 10 on,000 job will be cut by tend of 2015. 4,100 jobs will go in europe and the east of africa including 900 in france where some factories will be closed. According to people with a plan, the job cuts will impact mostly the all technologies such as 2 and 3g, why the company will hire more people, 5,000 in its new technology department, like the 4g and reuters. With this plan, mission com hopes to put the company back on try. Theyre expecting this will be only the first step for alcatel before selling some assets or even the entire business to one of its competitors. And you know since nokia sold its hand set business to microsoft, there are speculations that nokia, which is now a telecom equipmentmaker could be interested in buying perhaps alcatel. Thats only speculation. But this is what the market will look at pb ross. Stephane, thanks for that. Thats the latest from paris. Yield today on sovereign debt, just a little higher. Treasury ares down 2. 6 . On the currency markets, dollar just nudged back a little bit higher today. Euro dollar, 1. 35 6 6. Away from that 1. 3645 high we hit last week. 1. 37 is the high for the year. Dollar yen, bouncing back from 96. 55. Which is the lowest from the dollar yen since august 12th. And is pound sterling, just down slightly. So a little bit of a reprieve from the u. S. Greenback today. Confidence in chinas domestic driven Service Sector may be slipping. Hsbcs service secretarying is expanding. It dropped slightly in the month of september since the month before. Business expectations hit their lowest in three years. Analysts saying its following recent down tick necessary chinas manufacturing pmi. So thats the background. Lets give up on the Asian Session. Hi, sixuan. Hi, thank you, ross. A largely positive session in asia today at the nikkei 225 dipped to some fiveweek low after the down beat current account data. But managing higher by 0. 3 . A slightly firmer dollar against the yen offset concerns over the u. S. Political standoff. And with hsbcs services, pmi standing above auto 50. Mainly in china markets gained traction coming back from that sevendaybreak. The shanghai composite gained 1 . And over in hong kong, the hang seng got a lift higher by almost 1 . And on to something the stocks in japan, sharp shares eased a modest 0. 3 today on reports its upcoming shares offering will fall short by 30 billion yuan. And shares have tumbled over 20 since september the 18th on dilution fears. And on the hand, heavy industry gained ground rallying over 2 , this on reports developing a hybrid suv with toyota. And over in hong kong, the Gaming Sector also in the green, helped by a holiday week spending boost, the stakes are high as mccau Officials Say the arrivals in the first five days for the golden week were up 5 on the year despite bans on gaming trips. Back to you. Still to come, china and japan are urging the u. S. To get its ole house in order. Well get latest from the apex summit in bali in just a few moments. Uk retailers frofd be the biggest drag on the s p this morning. Its the second worst growth rate this year. It says the figures served as a reality check on the sector. Another u. S. House price survey, another multi year record. It shows house prices increase in their fastest pace in 11 years in september. The northeast of england was the only region which didnt see some growth. Charlie. Yeah. Your assessment of the british economy. Sterling has been pretty strong over the last several months. The data have been good. Our Study Suggests q3 gdp will be good, as well. Year on year, were probably heading for a 1. 4 , 1. 5 rate. Which is pretty good for the ooubs uk and better than what people were expecting. That would be better than france, u. S. , japan. And thats the remarkable thing. It is testament to the fact of the positive confident effect that the Housing Market have got. As house prices go up, so goes the consumer in the uk. And is were not doing anything different from than what weve done before. The only warning note is a lot of on that is coming from saving. So its not rising real incomes. Its coming from people running down. Its squeezed on real wages. Exactly right. So we have the crisis created this big surge in savings. Its been run down more aggressively than you would have anticipated. Were now, to be honest, back to a level where you would expect us to be from a cyclical point of view in terms of savings. But that starts to limit the potential for further consumption gains. Certainly because weve spent a lot of the precautionary savings that we already had. The key now is whether this spending or savings actually leads through to businesses investing and, therefore, we can now get Sustainable Growth which feeds back into the absolutely. And the survey suggests ceos and cfos are feeling more confident and have stronger investment plans Going Forward. What we dont really need now is an external shock to make people cautious once again. That brings us back. Yeah. Exactly. If that doesnt happen, the setup is pretty good. Is the pound at about its range now . No, i dont think so. Even though the data will soften up into next year, we have a couple more months of decent ratings releases. And, you know, we tend to think sterling still has another couple of months in it. We could get cable towards 165 pb maybe slightly north of there, but that then probably will be the peak. Ive always thought 1. 5155 on cable is a natural range. Where purchasing power, whatever, is that sort of where it should trade . And, you know, 1. 50 is a very, very longterm average for that currency. So the further you get from it, the greater the graph stational pull. But we still think it has some legs. But youre right, it is getting towards the end of its cycle. And do you post on many letters in your family . No. Its all email these days, email, text, twitter, the lot. Still, it hasnt stopped a bit of a rush for the people wanting to buy shares. Companies being sold off too cheaply. Heaven forbid. Businesses brohimia has been tracking this. This is a difficult one. You have to make the float a success, but you have to get some money. Its a tricky one for politicians and for the banks because they want to price to go up, but they dont want it to go up too much. Remember, this is the biggest privatization in the uk in 20 years. And this week is the turning point. Tonight the order books close. Then at the end of the week, its going to price next week trading is going to kick off. And its all about where that stock is going the price at. And weve already seen the government revise up its price range to the top end, 3 pounds to 3 pounds 30 because that demand is so strong. But people like ig index are chicago theres are going to be above 4 pounds, even. So even at that range, 3 pounds to 330 pounds, a multiple of 5. 5 times 2014 earnings. That is the low. Deutsche post, rival, tnt, shows there is a lot there. The government is selling down with 30 going to retail investors. Thats one of the biggest selloffs to the retail space that were seeing. Back to you, ross. Okay. Thanks very much indeed for that. Come back and join us. Charles, which is sort of we had no ipos for a long time. For a very long time. Then we get a government ipo and bank, suddenly were back. Its like the hat was off. And thats what confidence is. You know, the biggest problem you faced post financial crisis was the lack of confidence. You know, households would not actually that negatively impacted perhaps. But they saw the headlines and it made everybody cautious. Now, that is both a negative and a virtuous circle, depending on which stage in the cycle youre on. We have to generate a confidence circle over the past six to nine months. And long may it continue. We lost a lot of output in the last five years and weve got a lot of ground to make up. When we floated british goes, everybody had the famous sid campaign. This seems to have come back with a vengeance. Why . Dont forget, this is the fifth attempt at privatizing royal mail. Why is that well, if you read the political information, youd say they have done it right this time. Theyre doing it the transparent way, in the market. And theres time to get exactly. The post men and women are getting 10 . And even though the unions have kicked up a fuss stwb people within government say, actually, the demand from postees for this share have been in the high 90s. So theyre going to make a lot of money. Yeah, theyre going to make a lot of money. So they could sell tomorrow. They could sell off tomorrow. And youve got labor saying the property is undervalued, the shares are under valued and the government has to do more. So theyve got a balancing act in a market and probably two weeks that are a difficult conditions given whats happened in the u. S. I would just turn around and say look at all the money weve made for the employees. The post men are all participating, then surely thats a very nice Wealth Sharing scheme. Wealth sharing and kind of the retail is huge. Its like 30 to retail investors. A lot of institutions are not going to get what they want. I have been with Fund Management companies telling me to take up. Now that im allowed, you see, im not allowed. But i noted there had been Big Marketing efforts. Thats it for now. Thank you very much. Still to come on the show, with the dismantling of barriers set, global trade on a path without pace . Gdp growth trade report is coming up next. These are the headlines from around if globe. Its day eight from the u. S. Shutdown. One lawmaker is circulating a plan to raise the debt ceiling. China and japan show their unease with the closure, warning the u. S. To avoid risking a default that could upset the global economy. Shares in monte depas is chi unveils a bigger than expected capital hike to get owe u approval for its bailout. Now, some of the americas asian trading partners have been growing rather impatient with the u. S. Shutdown stalemate. But china and japan are urging them to avoid any risk of defau default. America says its highly committed to the region despite its no show in bali. Our very own martin soon is in bali with more. Martin, here we go. Theres a picture were showing at the moment w of lots of colored shirts. You are wearing your own. Im very impressed with that. Whats going on . Its very nice. Oh, well, thank you. Thank you. Its well, thank you. Thank you. Were just trying to get as they say, sympitico with the story here. Its wheat leaders and i are wearing. It is a traditional balinese textile made into the short sleeves and long scheaf shirts. This is the socalled National Costume that all 21 is leaders including secretary of state john kerry with wearing. Its a woven textile, sort of like ecot if youre familiar with that. And this group photo with the National Costumes or clothes, thats been sort of a feature of apex summits every year when theyre held. So just to give you a look and let you see visually what this is all about. But i want to get to the news, ross. Just a couple minutes ago, the twoday summit wrapped up the final declaration that came out which is the same as the final communique out of other summits. Theyre acknowledging that, a, growth is slowing, trade is weakening, but theyre promising all 21 members economy toes pursue prudent macroeconomic policies to make sure the Financial System is stable. That doesnt honestly tell you much. When you dig down, though, get more granular into the details, what sprang up to me was theyre promising to continue supporting the maul tie lateral trading system, thats one, which basically means wto. Its been 12 years for the doha rounds. It has gone nowhere if you want to be charitable. If not, its near death. Indonesia for one, and obviously apex are still intend on trying to pull a rabbit out of the hat. They are meeting for a ninth round of doha talks here in bali in december trying to do a deal on whats bog called doha light. The idea being if you cant get a huge comprehensive deal, then lets focus on small deals, Food Security would be one and Cutting Bureau on the okaysy at the border, in other words, red tape. Theyre saying if they could do a deal on that, it could add 1 trillion of fresh growth to the global economy. But, again, the wto ons recent track record in terms of achieving deals has not been good. You mentioned at the top, ross, that both china and the u. S. Are saying that, look, you need to resolve big issues like the crisis in washington. Plus, theres a lot of attention on chinas slowing growth. That got the attention of, obviously, australia, which is a huge supplier in terms of commodities to china. But xi jinping addressed those concerns and said slowing growth in china, even at about 7 , twice, this is what we intended and that is what we planned. Take a listen. We have recognized to fundamentally address economic development, china has to press ahead with structure reform. Even if it requires some sacrifices. They must have an undertaking, one has to look far and plan widely and to take both the longterm and the shortterm needs. Killing the hand to get the ax, draining a pond to catch fish is no formula for sustainable development. And chinese president xi jingpin there speaking at the time summit earlier on. You might be surprised, maybe you might not be because you follow these things minute to minute like i do. But for a lot of the country necessary chinas model for freeing trade further, our step, which is the regional comprehensive economic partnership, this is whats fighting against tpp, you know, 16 countries in there already including japan, south korea, india, all the cubs, guess who is their main number one trading partner right now . With the exception of india, its china. And i think that says a lot about the current state of affairs. It does, martin. Thanks for that. Also, just get me probably a medium large one of those shirts would be great. I said medium large. Its in the mail. Done. Thank you. Thanks, martin. The director is being cheeky. Now, in south korea, the government may give workers a break by shortening maximum weekly work hours. Hi, cherry. Youve got to stop doing those six day a week 12hour shifts. Exactly. And you wanted me here on Worldwide Exchange, ross, for my long hours of today. But you know what . Lets talk about why the change. We do work long hours here in south korea, ross. Last years figure was not available yet for korea, but South Koreans worked 2090 hours be worker in 2011 bht oecd average was 1765 hours. So more than 300 more hours of work for South Koreans. So the government and the ruling party are pushing for a bill that could cut the that would cut the maximum work hours per week from the current 68 to 52 hours starting in 2016. Now, thats good news for people like me, but for businesses, of course, it can squeeze them even more. Were already getting negative feedback from a business lobbies here. Now, to reduce the negative impact of this bill, ross, the government and the ruling party are considering at least gradual implementation of this new system so that the country can sort of ease into the shorter work hours starting in 2016. Now back to you in london. All right, chery, good stuff. Thanks. Try and shave off some time at the other end of the day so you can still make this. That would be okay. Got it. Thank you. We appreciate it. The ftse mib is up 0. 1 . The cac 40 down 0. 3 . Bond market deals nudged slightly higher this morning, not by huge amounts. On the currency markets, the dollar has a slightly i dont want to say its a firmer tone is what i want to say this morning. Dollar yen, just up to 97. We were down this morning. Euro dollar, below 1. 36. Cable just above 1. 60, 1. 6050. Still to come on the program, could global trade be set . Hsbc thinks so. Well find out why, just after this. Hsbc says interrelated trading will double by 2013. It will boost their share in global trade. James, good to see you. Thanks for joining us. Its quite a bullish forecast for this on trade. How is that going to develop . What is it going to look like . Well, ross, i think what youre seeing here is we had a deep dive into infrastructure and have a look at whats taking place. Why . Because we see infrastructure increasing as a proportion of manufactured trade taking and going up to about 54 of trade by 2013 f from about 45 at the moment. And thats quite a significant change because it reflects two things. One, investment infrastructure. So that is investment in machinery, investment in goods, increasing productivity and factories and so on. And infrastructure for roads, railroads and so on. And who is going to where is this coming from . We think of the emerging markets in india, brazil and china. Is that whats going to drive it . I think thats absolutely right. The emerging markets are a story here. China is a very important play. And what you see on the investment equipment piece is china becoming in fact, overtaking the United States by 2013 as the biggest importer of investment equipment. This equipment, factories, the higher value added production and so on. And india, on the infrastructure side again overtaking the United States as an importer of infrastructure by 2013. But also, malaysia, vietnam, mexico, are all key players, but its important not to forget that developed markets in their own right have to advance. So this is a global story. Its not just the story of emerging markets. As china scales up its manufacturing abilities, it scales up the chain by what it manufactures. Is the equipment going to come from the developed world . Well, i think youll see it coming from a number of markets. But in germany, france is currently the biggest export partner for germany. China will overtake france as the biggest export market for germany by 2030. But what youre going to see, and theres another side to it, if you go next to germany to pola poland, china becomes much more important as a key provider for equipment for poland in its own right. What that means for developed markets is that they themselves have to continue to innovate, continue to move up the value chain in their own right. But the china story is absolutely a key part to this. James, its charlie. I was just wondering how i mean, clearly in emerging markets terms, there is plenty of scope for expenditure at a national level, almost. Whereas you have strong corporate sheets in the balanced world. I assume what youre looking for here is that it has largely private sector driven rather than government or Public Sector driven. We havent gone down and broken down the two. But absolutely, theres the components of both the private sector is by default going to be the biggest user of the investment equipment. This is the sort of equipment. If you picture it as manufacturing kit, robotic arms and so on. And one way to look at it in southern china, im here in hong kong at the moment, actually, and just north of here, youve got a lot of factories who are moving themselves into higher value add equipment. And they need that to effectively take that next step effectively producing labor in that region. So is its a symbiotic story, but its driven by demographics, urbanization, and indeed the supporting investment for that. Thanks for that. Now, japans august current account surplus missed estimates by a country mile. We have the story from the nikkei. Toshiko. Hi, ross. Japans minister of finance says its current account surplus slipped 64 on the year to 1. 6 billion, driving this was a larger trade deficit outweighing returns from overseas investments. Competitiveness overseas, its pushing up import costs. Japans investing more overseas, but Foreign Companies in japan are sending more profits back home, pulling the income down. But some economists are optim t optimistic saying the current account sur is plus will likely expand gradually and are recovering exports. Ross, back to you. All right, toshiko, thanks for that. Charlie, what do you think of japan right now . Its been a strong story. And the aggressive plans from the bank of japan have, again, if the story of confidence, that theyve management to start a process of starting to pull out of this deflationary trap. But theres big hurdles. The last time they did it, it didnt end well. It threw the economy back into a deep recession. So theyre really going to have to theyre really going to have to gum, system, particularly from the jank of jap japan. While theyre great, thats great. But you have been a strong shift from the japanese Banking Sector decreasing their jgb holdings, pushing them back to the bank of japan. Thats all well and good, but what we need to see is a selfsustaining consumption its all well if you file for corporate taxes. You need the stopping consumer to get them to invest. Its not a defact your lower tax rate that makes you want to go and invest. Absolutely. Corporate Balance Sheets are in pretty good shape in japan. The problem is largely dem dprafices. Japan is aging quite rapidly. Are you surprised that they still have that scare . Theyve gone quite a bit lower. If you were to look at the market pricing, thats given you a warning sign. Because the fact that the yen hasnt continued to weaken, its broadly speaking or been in a range after its prior surge. And the fact that the yields are have started to go down again. Equally, you can sit there and say the market is expressing some caution as to whether abes plan is going to work. Meanwhile, as expected, indonesias central bank is taking a pause to tightening. Bank indonesia hiked rates aggressively. But the rupiah and inflation has stabilized since the fed delayed its own tapering. The key discussion here is actually minutes today out with the fed when we get through whatever happens with the government, when do we go back to wondering whether the fed will start tapering and, therefore, putting pressure back on indonesia . If there wasnt grounds to taper at the last fomc meeting, there are less reasons to taper now. Now, if this continues for a number of weeks, the macro impact is going to be notable and, therefore, q4 is going to be soft. And it wasnt really have the right data. It wont have good data to judge into q1 is. You could be seeing a realistic fed tapering, not until q2 of next year. Does that resurge . Possibly if they leave the taps open too long. The u. S. Economy is doing okay. Its not doing fantastically. Whether they actually knew that they were going to be in this twitter impasse. Maybe they have incredible foresight. But they obviously maybe they walk into a few politicians. It does suggest a fairly good degree of foresight that they didnt taper under the circumstances. Yeah, okay. Meanwhile, alibaba has ditch today hong kong stock exchange, but going public on wall street may not all be smooth sailing. Theyre not just seeking the shares, but also the right to control board appointments. Lloyds say that may leave u. S. Equity shareholders with too few rights. Were skd asking if you would buy twitter. Head to traderpoll. Cnbc. Com to cast your vote and trade away youll begin to see the trend. Naturally using trader poll. Steve jobs impact on the business is still being feld. But not because of the performance of the stock. I came to the conclusion that it was unlikely that a man has really awful as i think steve jobs was could possibly create a create company for the longterm. He described him as mean. We want to know, does character matter . Would a ceos personality orr leadership style stop you from investing in their business . Join the conversation, email us, tweet us cnbcwex or direct to me rosswestgate. I think the implication was everybodyively while he was alive, he was great at running it, but didnt feel the corporation was no bigger than the man. I think thats what hes alluding to. It was triven by one individual. And to institutionalize that and make it a corporation is difficult. Before we let you go, final word then, why do you think well be the end of this week . With the u. S. . Yes. I dont think well be any closer to a resolution. Bond yields are probably weaker. Before that, minutes today, are they going to show us actually the fed has for every member theres a different opinion . Yes. The thats exactly right. You only have to look at the member tear to know that. And thats part of the reason the market is struggling. Its not singular. Its multiple. I think youre going to get quite a mixed message. But if anything, maybe its a buying opportunity for treasuries. Charlie, good to see you today. Thank you very much. Charlie diebel. Whats on the agenda in asia tomorrow . With the apex summit wrapping up in bali, the leaders move on. In japan, the bank of japan releases its minutes and plenty of september sales reports due from taiwan hes firms including umc, tsmc and au opt. Still to come, will the dollar hold the continued weakness . Second hour of Worldwide Exchange right after this. This is Worldwide Exchange. Im ross westgate. China and japan show their unhes with the closure stalemate, warning the u. S. Too void risking a default that would upset the global economy. Corporate news shares of monte de paschi unveil ago birth than expected 2. 5 billion euro hike to get eu approval for its bailout. And the latest cost duting measures, the telecom cost cutting measure reducing head count by around 14 . Very good morning to you. The dow is off around 6 points. The s p down 14 right now. The dow is some 11 points below fair value. The nasdaq is about a point below fair valuable. So all to play for, really, for the u. S. Equities this morning. The dow jones 600 is justify off 0. 1 . European equities is somewhat mixed. The ftse and the cac down around about 0. 3 this morning. The ftse is down by retailers. So thats can ftse down 0. 5 . The zex ra dax is off 0. 2 . The cac 40 down 0. 4 and the ftse mib is fairly flat this morning. Yielding just under 2. 6 this morning. On the currently market, the dollar has just got a tone on it. So not quite on the eightmonth lows for the dollar index. Euro dollar, down to 1. 3566. Moving away from the high that weve seen recently. And japanesent, we did hit the low since august 12th. Currently just below on 97. Sterling is a little weaker, 1. 6059. Aussie dollar slightly firmer, but not a huge amount. That is where we are right now in european trade. To wrap up that Asian Session for us, sixuan joins us out of singapore. Thank you, ross. Asian markets mostly finished in the green. The nikkei dipped to some fiveweek low after the down beat current account data, but management to end higher by 0. 3 . A slightly firmer dollar against the japanese yen over the u. S. Political stand still. With hsbc services pmi, sentiment lifted china markets gaining traction coming back from a sevendaybreak. Shares have tumbled over 20 to september the 18th on dilution fears. And on the other hand, fugi heavy industrial gained 2. 25 over reports its developing the hybrid car with toyota. Gains today helped by a spending boost. Tourist arrivals in the first five day of the golden week were up 5 on the year. Despite the new ban on gaming trips, total gambling revenue is expected to be 14 to 17 higher than a year ago. Back to you. All right, sixuan, thank you for that. Have a good evening in singapore. Now its day eight of the u. S. Government shutdown. And there are a few glimmers of hope. The white house has president obama would be willing to accept a shortterm deal to raise the debt ceiling to get past the october 17th deadline. But its unclear whether it has the votes to pass. Republican aides say ohio senator rob portman, a former u. S. Budget director is floating the idea to reopen the debt ceiling giving the gop the across the board spending cuts currently in place under the sequester and raise the debt ceiling. But portmans proposal may not gabe any traction. At the same time, new polls show the republicans are drawing more fire from the Government Shutdown than the democrats or president obama. A survey by the Pugh Research center find 38 blame the gop while 30 blame the administration. Thats more sharply divided than two weeks ago. But 58 of democrats and 54 of republicans say it would be unacceptable for their side to back down. Thats not a great stat. Overall, a majority of the public is concerned about the Economic Impact of the closure. At the same time, top wall street executives warning that any efforts to prioritize payment of the u. S. Debt ceiling is breached could pose risks. According to the journal, meetings with the White House Bank ceo ons say putting some ahead of others would create uncertainty, driving up Interest Rates and disrupting markets. The general said the Social Security administration has begun warning that it cant guarantee it will be able to make full benefit payments if the debt ceiling isnt raised. Now, as you saw earlier, the dollar is just sort of off its recent lows this morning. Are we likely to see if we get to the end of the week with no clear resolution, are we likely to see more pressure on the dollar . If so, how much more . Sure. First of all, ross, i dont see any resolution happening by the end of this week. To look at the market as a whole, i think the market has taken the whole u. S. Dollar scenario complacently, casually. This is the mothership. The mothership saying, houston, we have a problem. Weve got no money left, we dont know what were doing right now. And the politicians between them having a feud. Equally unsettling is the proposition on the table. On one side, you have the potential of a default. Which i guess we dont want to talk about this in terms of what would happen if that was to follow through. On the other hand, what the republicans are saying is we want a 600 building spending cut. What will end up happening is this could carry on for another week, two weeks, four weeks, definitely past market expectations. Eventually, it will have to give up something to do with entitlement spending and we could get some kind of compromise. Under that scenario, how will asset prices react . The u. S. Dollar will definitely weaken, going up and to that point to the point where we get past 17 for december, which is moving targets. Theyre saying theres suggestions that theres some surfaces in september they might have more money, yeah. So up until that point, the dollar will keep weakening. I wouldnt be surprised if we get a dollar weakening. I wont be surprised by the same token, whether we see equities also falling. Theyre not going to default. They are going to increase the debt ceiling as they did the last time. But im sure we will have some panic. They sort of maybe need a kick from equities. I think the politicians are fully aware of what the scenario is and what the circumstances are and what actually is the result. They know if they get close everybody sort of expects some sort of scenario like that. We push, we push, we push and then we get some sort of resolution. If anybody seeks the same way, you may not sell off the dollar because what everybody is doing if we do get sold off, were looking for an opportunity to trade and get back in. So when the herd is speaking the same, its difficult to get the moves you expect sometimes. Youre right quite. It is obviously in terms of if that would happen. This is obviously the thing that would happen. The market has gone the opposite way for quite a long the period of time. Equities themselves, we had a dip after the tapering. The tapering didnt stop. It should go down and doesnt want to go down, its only going to go up. The fact that you Vice President got this tapering on qe, it has that deal. That has to filter into equities. Even though you might argue, equities may not have that blitz, it just means youre carrying those lines. And no one has any reason to buy. Thanks so much. Now, the u. S. Fed has launched a new high tech 100 billion. It has new features, including a blue 3d security ribbon and a copper bell that turns green at an angle, features that Authorities Say are difficult to replicate. The 100 bills are reportedly the most counterfeited, but the bank note hasnt been completely redesi redesi redesigned. The Benjamin Franklin is still on the front. Saturday marked the second anniversary of the death of apple founder steve jobs. But on monday, billionaire hedge founder Julian Robertson revealed to cnbc that he had dumped all of his shares in the tech company in january, but not because of the performance of the stock. I came to the conclusion that it was unlikely that a man as really awful as i think steve jobs was could possibly create a Great Company for the longterm. So were asking does character matter . Would a ceos leadership style or character matter . Join us here on the conversation. Email worldwide krnlz. Com, tweet direct to me rosswestgate or cnbcwex. Still to come, a second day of rises for monte de paschi. Cnbc has been speaking exclusively to the ceo. Find out what he had to say when we come back. And the sex and third biggest economies in the world, china and japan, put pressure on america to resolve its stalemate. And jobs in the u. S. , europe and asia all set to go as frenchs Telecom Company reveals its global cost cutting plan. Also in corporate news, monte de paschi approves a plan to return to profit. Overall included around 3,400 additional job cuts and ames to cut costs by 440 million euros. Bank agreed to a bigger than expected 2. 5 billion euros share sale. Cnbc spoke exclusively to the ceo about the plan. Translator the logic behind having raised or profitable objective for 2017 while continue to go reduce the risk profile of the bank is to ensure that the bank will become a viable one by the end of this period. Joining us now in the studio, claudia. Now, this is all part of a they had to get eu approval for the bailout of monte dei paschi. Will this mean the banks future is secured . This is a plan that is expected to make the bank a viable bank. Clearly, its a very aggressive plan that they have put into place for the next three years in order to turn to profitability by 20 is 15. There is a bank that has lost 8 billion euros in the past two years and its a bank thats been weighed down by many issues, the crisis that the we have seen in the Financial Sector and as well a costly acquisition they made in 2007. So lets take that the old way of doing banking has weighed on the health of monte dei paschi. The question is will they be able to . So, of course, the 2. 5 billion capital hike they need to carry out by tend of next year is a big question mark. If they werent going to survive on their own, would there be someone that is natural partner for them . That clearly could be the case. Lets say that if this capital hike doesnt go through, the state aide, which is 4. 1 billion euros would become equity and the government would buy it would be nationalized by all practical purposes. But before get to go that point, if the capital hike cant go through, talks could start on a possible merger. There has been talks with italys largest bank, but that has been sort of denied, lets say. I think the ceo would have looked very well on to a merger of that kind because it means taking on once again keeping something that was not functioning in that trying to make it live longer than it probably should. Just move into the sector as a whole in italy. Were trying to work our way towards fresh bank tests and, you know, penal were talking about now maybe penalizing banks that stay too long with ecb liquidity loans. How thould they fare through these processes . They were healthier than other ones. Monte dei paschi is the one unhealthy one. But overall, the eye tall i cant known banks are seen as fairly healthy. The crisis isnt helping. And that depends on what we get from the company. How do you turn an ailing sports franchise into a 250 billion powerhou powerhouse . Well speak with the coowner of the ultimate fighting championship. Just by talking to a helmet. It grabbed the patients record before we even picked him up. It found out the doctor we needed was at st. Annes. Wiggle your toes. [ driver ] and it got his okay on treatment from miles away. It even pulled strings with the stoplights. My ambulance talks with smoke alarms and pilots and stadiums. But, of course, its a good listener too. [ female announcer ] today cisco is connecting the internet of everything. So everything works like never before. Into paul tucker says we need regimes that can deal with bank failures. Those comments coming out of testimony to the parliament. Hes one of few central bankers speaking around the global at the moment. Well discuss that with our Business Editor who will join on us on set for a little bit more. Meanwhile, u. S. Futures this morning, they were fairly flat about half an hour or so ago. Got a little bit more negative in the last 30 minutes. S p currently was 1. 6 implied down. Dow jones down compared to fair value. And the nasdaq is nearly 2 below fair value. Not huge calls. The world sport has seen a new contender vying for the prime time spotlight. The ultimate fighting championship has groan from an attraction to one of the top five most watched sports in the u. S. When our next guest purchased ufc in 2001, it was nearly extincti extinction. Today its valuable at around 250 million. Thanks for join onning us. Its extraordinary one bought it for, what, 2 million . We bought it for 2 million in 2001. What did you decide about ultimate fighting was the thing that was going to turn it into such a successful sport . What was it about what is it about on the fighting that gets people interested and prepared to pay money . I grew up in las vegas. I was born and raised there. Las vegas is the home of all the great fights historically meaning boxing. And i studied boxing. And i looked at the fact that boxing had been around for a hundred years, generated billions of dollars and there was no brand, there is no value associated with the sport like there is soccer and the premier league. So i felt like with ufc, the brand, ultimate fighting had transcended the sport, which is called mixed martial arts. But we had a brand, something we could build off of. So first we put in rules and regulations, addressed all the health and safety issues for the fighters and started to promote these events for what they are. Athletic events. And how did you persuade authorities to let you start putting these fights on . Working with the authorities, working with the regulators to put in rules and regulations to address all the safety and health issues. Essentially we have a sport thats a combination of olympic style martial arts. So you have judo, die want doe, box, and youre essentially mixing thoup techniques to mixed martial arts. Were the largest pay per view provider in the world. Well do well over 6 million pay per view buy these year in north america alone. And we have other distribution deals around the world. Were now distributed in at 148 countries and territories, broadcast in 28 languages in nearly a billion homes around the world. So weve taken a sport that has translated all over the world. So the next major event, and this is on october the 9th is in brazil. What would your expectations be for the number of people that would pay to watch that event around the globe . Well, its interesting. That event will, for the motor past, be on free to air television. It will be on fox in the usa. It will be on dt here in england. And in brazil, it will be on a net world called the combat channel which is a subscription based dhanl that we provide. How do you when youre doing that, how do you broadcast it . Typically what ill call fights that are with the contenders, guys trying toic ma it to the championship. We like to put those on free to air to help build the marketplace. And the championship fights typically reside on a pay platform of some kind, whether its pay per view or subscription. Where do you see the growth . Are you going to sell it . Bring some partners in . We dont have a need for partners or capital. The business is profitable. Right now, the focus is we have the majority of our content being aired in prime time in north america and south america. Which puts it at an odd time in places like europe and asia and french times, 2 00 and 3 00 in the morning here. So for 2014 been, what were going to do is expand the live events into major capitals around europe in prime time, provided great content for the networks throughout europe to help build the bit here and do the same thing for asia. In 20 on 14, well have six to eight additional events in europe and asia, places like macau, singapore, hong kong. Will be diminish the market in the state by taking it overseas or not . We dont think so. We think we have a tremendous amount of growth here and theres a lot of athletes that are still training in these areas that need to opportunity and need to exposure. Briefly, what do they earn, those guys . The top end guys are earning anywhere from 3 million to 5 million a fight. Guys just breaking in earn anywhere from 10,000 to 20,000 a fight. Then you have contenders that earn in this in between. It depends on their drawing power. Fascinating stuff. Well see how you go. Thanks for joining thus morning. Now well take a short break. Well leave you with a look at whats on todays agenda in the United States. The august trade deficit was scheduled to be out at 8 30 eastern. Its scheduled to be postponed because of the Government Shutdown. The imf releases its Global Outlook and cleveland fed president and philly fed president will be both speak background the monetary policies this afternoon. Former dow component of alcoa and yumm brands will be reporting earnings after the close. Orbiting the moon in 1971. Afghanistan in 2009. On the u. S. S. Saratoga in 1982. [ male announcer ] once its earned, usaa Auto Insurance is often handed down from generation to generation because it offers a superior level of protection and because usaas 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. With my united mileageplus explorer card. Ive saved 75 in checked bag fees. [ delavane ] priority boarding is really important to us. You can just get on the plane and relax. [ julian ] having a card that doesnt charge you foreign transaction fees saves me a ton of money. [ delavane ] we can go to any country and spend money the way we would in the u. S. When i spend money on this card, i can see brazil in my future. [ anthony ] i use the explorer card to earn miles in order to go visit my family, which means a lot to me. Youre watching Worldwide Exchange. Im ross westgate. Today is day eight of the Government Shutdown. There is one lawmaker circulating a plan to try and raise the debt ceiling. China and japan are showing their unease. Theyre warning the u. S. To avoid risking a default that could upset the global economy. In corporate news, the shares of monte dei paschi unveiled a bigger than expected capital hike to get approval for its state bailout. And investors pleased with alcatel lucents latest cost out canning herb mas. Its reducing its head count by around 14 worldwide. Youre watching Worldwide Exchange, bringing us Business News from around the globe. Very good morning. Youve just tuned in stateside, we start with the dow down at onemonth lows. The s p down 14. This morning, were pretty flat right now. The dow is 12 points above fair value. The nasdaq is about a point and a half below fair value. 2 points below fair value on the s p, as well. European equities have been flat to fairly down this morning. The cac 40, down 0. 5 . Ftse 100 off 0. 7 3ers this morning. Weve had some downgrades and a brc survey which wasnt one of the most positive of the career. Thats where we stand right now. So what are investors to do as we keep our eyes on politics in washington . Here is a recap. Its suffered from corporate sentiment of late. We believe that will resolve itself. Italy is one of the next opportunities, along with as manager, we have to possibly add to some lower volatility equity necessary germany from valuation perspective. Theyre seeing this transition to uber luxury. Names that have more legacy or more value than some of the other brands. A brand that is more sent rick than any other brand as opposed to things like rich montana, things like prada, which have pretty much been inspired. Five, six weeks ago, it was very large crude in the dollar. Most of that has gone. And the yen has not been a big representant. If youre going to see anything, its a conservative trade. You could see a big drop in dollar yen. Now, we havent got any u. S. Data, really, to hang our hats on. But maybe well be helped out by the fact that were about to get earnings. Its the first time in years the Aluminum Group has officially launched earnings season because it was removed from the dow last month. Still, results come as the u. S. Reporting season gets in gear. Weve got this costco and Family Dollar reporting tomorrow w along with chevron and the big focus on friday when jpmorgan and wells fargo are now officially kicking off bank earnings. Joining us with his thoughts, Greg Harrison at thompson reuters. Good to see you this morning. Thanks for joining us. Great to be with you, ross. Its still the unofficial start of earnings season with alcoa today. How closely are we going to wamp what they have to say . I think people will be watching them very closely. The thing is alcoa is that the less people are looking at their earnings than wa they had to say about their customers. They have important customers in a lot of Different Industries from aerospace to canned beverages. I think thats the key to look at is what theyve been saying about the demand that theyre seeing. And that can give us clues into some other areas. That will still be key. What is your impression at the moment of what the q3 earnings season will tell us . You know, i think its going to be more of the same of what we say in the last several quarters. Were looking at pretty slow earnings growth. 4. 3 is the current estimate. 3 revenue growth. So expectations are not real high and there arent a lot of catalysts, really, to drive earnings into that more double dij range. When you look at the negative announcement, how does it compare with previous Earnings Seasons . Its very negative right now. Weve had 96 negative preannouncements. Only 19 positive ones. So thats really helped drive this lowered expectation environment. The estimate at the beginning of the quarter was 8. 5 . When these companies came out with negative guidance, that caused analysts to revise downward. Clearly, jpmorgan and wells fargo on friday, financials will be in focus not only this week, but generally, as well. Will we particularly be interested on what the impact of mortgage and Mortgage Rates . We will. Financials are expected to have the highest growth of any sector at 9. 2 . And this has been the case for a couple quarters now, driven in by large part by mortgages. Well be looking to see how the higher Mortgage Rates took place throughout the quarter affected earnings. Demand is down a little bit. Housing prices are still rising. Well st are still buying new homes and refinancing. But revenues from mortgages are expected to be down, by still driving earnings. In the sector, were expecting to see the big banks drive earnings the most. Theyre having good revenues from their trading fees. And also some of them have easy comparisons to a year ago. And finally, when we look across discretionary consumer spending, who is going to win out and who is going to be the loser . Consumer discretionary is expected to be a strong performer. Theres a die vergence there between companies that make the more big ticket items versus others. Weve seen consumers postpone purchases of big ticket items like homes and cars and appliances. Theyre getting to the point where they have to replace them. Thats benefiting some of these, the home builder sector, the retailers of appliances and home furnishings, things like that. And thats coming at the expense of had some other items like fashion retail, restaurants, because consumers just dont have the extra money after theyre buying these more expensive items. Good to see you this morning. Thanks for joining thus morning. The fhfa has filed paperwork for firm to replace fannie mae and freddie mac. It will consolidate some of fannie and freddies overlapping functions. A group of mortgage Bond Investors have reportedly sent a letter to u. S. Attorney general eric holder concerned over the governments potential legal settle manies with banks. The deal could stick investors with some of the tabs. The letter was prompted by reports its nearing a 11 billion with the justice department. Jpmorgan is denying charges by the cftc that it milt manipulated certain credit markets. The move suggests the banks is prepared to fight the regulator in court. Jpmorgan stock is pretty flat in frankfurt. And jury selection begins today in the fraud trial of five of Bernie Madoffs former employ employees. The group to have defendants includes mad i cant haves former secretary. Theyre accused of helping to hide madoffs ponzi scheme by making false statements and falsifying records for years. The government is counting on madoffs former finance chief as its key witness. The chile is expected to last five months. And huj fund b. E. Shores is reportedly closing its doors to new clients. The Flagship Fund generated a 20 return last year. The performance has been more modest since. The funds were closed earlier this year and the xos yif fund was closed this summer. Many extra additional funded strategies have become less profitable. Coming up, call the i. T. Guy. A week after its launched the Online Health exchanges, the u. S. Is still experiencing difficulties. Can obama care overcome its latest rollout . Well have more after this. Stick with innovation. Stick with power. Stick with technology. Get the flexcare platinum. New from philips sonicare. At bny mellon, our business is investments. Managing them, moving them, making them work. We oversee 20 of the worlds financial assets. And that gives us scale and insight no one else has. Investment management combined with investment servicing. Bringing the power of investments to peoples lives. Invested in the world. Bny mellon. Mrns may pride themselves as being pretty tech savvy. But the u. S. Governments latest for ray into commerce is leaving everyone bewildered. Bertha has more in the states with plenty more. Whats going on . Ross, you know, this is a very, very ambitious project. And it was done a have very short time frame. One week since president obamas Signature Health care law launched the key parts of Health Care Online insurance exchanges and the technical issues that marched the first day still persist. People in the three dozen states that are using the federal exchange continued to experience delayed on monday as well as problems setting up their account. Among one of the biggest problems is the security question setup is still not working properly. The online enrollment system was off john life again for the night as the system was dine down to try to fix glitches. Several i. T. Experts say it suts from from a constell lagz of problems, including unspecdly high demand is causing big problems and that seems to be exposing software and other design flaws because of that volume. The Obama Administration has blamed the high volume as being the main problem. They are adding servers but they say say they are trying to address some of the software flaws, as well. This is the first time theres been the glurchb associated with the launch of a federal program. The Medicare Prescription Drug program in 2006 was marched with problems. Officials who oversaw that program say theres still enough time to fix the Health Exchanges before uninsured people and those seeking insurance need to get coverage starting on january 1st. They have to be have their applications filled out by december 15th. As for how many people are managing the sign up, the white house says the administration is not going to be releasing enrollment figures on an hourly or daily or weekly basis. Officials say they will report the number of visitors up to this point. Its up to 8. 5 million visitors in the last few days. I did talk to an official from cigna and he says they are starting to see some of those applications come through and people enrolled. He didnt tell me how many, but given whats in the pipeline, its just a trickle. Sounds like they have problems and theyre going to sort it out. Bertha, stay there. Theres a couple stories id like to get your views on. The first one, buy two, get a steak lunch. Brooks brothers is planning to open a steakhouse just around the corner from its Flagship Store on madison avenue. The firm says its looking for next summer for a possible opening, but its still way out. It could serve as a like of branded restaurants. Brooks brothers has been around since 1818. It comes with a button down, i think. Wheen meanwhile, you were planning to go somewhere to watch the next giants game this week, youll have to check one place off the list after the Football Team lost on sunday. They now havent won a game this season. Sorry to remind you, folks. Manhattan club ricks cabaret has decided it wont show giants games for the rest of the year. Customers turned and began booing the tv, create ago hostile Work Environment for the dancers who then had to work extra hard. I mean, what has it come to, further ya . Not only are the giants not winning, but they are damaging revenue take at well respected establishments. Not winning is putting it mildly. They are 05. Thats a horrendous start to the season. And it certainly doesnt make me sad because im a new England Patriots fan having grown up in boston. They did lose one, but 0 of 5, that really stinks. I can see why they wouldnt want to show the games. Its not a big loss, i dont think. As a patriots fan, no, you wouldnt think it was. Anyway, i feel sorry for the distraction that its clearly caused these people who are working very hard. And it probably means lower tips, as well. A lot of times when your Football Team doesnt do very well, this is true of colleges and universities. When the Football Team does well, alumni give more money. When the Football Team doesnt do so well, they arent yug as sort of rahrah. I would imagine its the same if he club. A brokes brother steak, would that come with a button down . Its an interesting thing. My theory is theyre going to load up with the sour creamed on the baked potato so that then you have to go back and buy a new pair of pants when your waistband expands. There are certainly plenty of places. Youve got brooks brother down there in the 40s. So i guess not only are they making you walk less to get to the stake house, youre right next to the store. So you eat a little more, you need bigger pants, its a way to sort of feed their clientele and their business. I see how that works. I knew there was a reason we kept you on for those stories, bertha. Good to see you. Have a good day. Thank you. Lets recap the headlines today. The shutdown continues, a divided congress dig in while agreeing on a confidence while the debt ceiling looms. China and japan are putting pressure on the u. S. To resolve its stalemate. [ male announcer ] this store knows how to handle a saturday crowd. [ male announcer ] the parking lot helps by letting us know whos coming. The carts keep everyone on the right track. The power tools introduce themselves. All the bits and bulbs keep themselves stocked. And the doors even handle the checkout so we can work on that thing thats stuck in the thing. [ female announcer ] today, cisco is connecting the internet of everything. So everyone goes home happy. Weve been asking you, dp does character matter . Some ceo gs are aband yop for revealing the truth. Meanwhile, day eight of the Government Shutdown, and there are maybe a few tiny glimers of hope. The white house says president obama would be willing to accept a shortterm deal to raise the debt ceiling to get past the october 17th deadline. Senate democrats meanwhile may introduce a bill to raise the debt limit this week, but its unclear whether it has the votes to pass. Republican aids said ohio senator rob portman, a former u. S. Budget director is floating an idea to reopen the government and raise the dealt ceiling. It would give the president a full year of government funding and the gop the across the board spending cuts currently if place under the sequester. This is the new polls show the republicans are drawing more fire from the Government Shutdown than democrats or president obama. A survey by the Pugh Research center finds 38 blame the gop while 30 blame the administration. And thats more sharply divided than two week ago. But 58 of democrats and 54 of republicans say it would be unacceptable for their side to back down. Joining us is the chief political strategist. Greg, thanks for joining us. Just how twitchy should we be getting, greg . Not quite twitchy yet. I think this this week were going to have pore you thing and finger pointing and no real progress. I still think that a default is no greater than a 10 chance. Its not zero, but i think weve got maybe a 10 chance of a default. Yeah, okay. 10 chance. What would take us there . Under what scenario might that happen . Well, if we do get to the 17th and treasury cant make all of its payments, we could technically be in default. But i think before that were to happen, there would be some kind of emergency extension. The greater risk, in my opinion, rots, is that this goes on for week after week after week. And the impact on the overall economy is corrosive. And you see gdp and employment, all of the key indicators, if we get any more indicators, will start to really look very soft as we go into christmas. Yeah. I mean, is october the 17th a final deadline . You seem to be hinting, actually, that theres probably a bit more wiggle room than that. Yeah. Who knows. I mean, you have to take treasury at their word that the 17th is the day where they have to roll over a lot of debt. There are other studies that show maybe we could get into late october, to halloween. I like the imagery. Maybe to november 1. But were arguing over a couple of weeks. There is no question that treasury faces a major crisis if we dont raise the debt ceiling. Have we got any back channels, greg . The thing is, what struck me yesterday is there seemed to be no discussions with those things so at least there are back channel discussions going. We seem to have none of that at the moment. Is any of that about to start . Theres a glimmer of hope. Theres talk that paul ryan in the house and rob portman in the senate are coming up with proposed deals. But, you know, right now, with the main problem is the white house will not negotiate and the republicans will not negotiate anything that doesnt have at least some alteration of obama care. So were dug in pretty deal. And i think this very strident position on both sides is going to persist for at least a few more days. Theyre going to make uts squirm. Greg, good to see you this morning. And thats just about it for todays edition of Worldwide Exchange. U. S. Futures are a little negative this morning, but not much. Coming up next, squawk box the countdown to the opening markets stateside. Whatever happens, we hope you have a profitable day. Opportunities arent always obvious. Sometimes they just drop in. Cme group can help you navigate risks and capture opportunities. We enable you to reach Global Markets and drive forward with broader possibilities. 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And right now, get this limited edition hoveround America Travel mug free with your hoveround delivery. Call or log onto hoveround. Com right now good morning. Day eight of the Government Shutdown. Meantime, dallas fed president Richard Fisher is blasting washington politicians for even flirting with default. And ceos are sounding the call to rise above. Starbucks founder howard shaurlts urging to push for a shutdown. Squawk box begins right now. Good morning, everybody. Welcome to squawk box here on cnbc. Im becky quick along with joe kernen and andrew ross sorkin. Stocks are slumping amid no development in the shutdown fight in washington. Futures this morning are just slightly weaker. You did see a selloff yesterday. This morning, dow futures down by just about four points below fair value. Joe mentioned china and japan. Uncle sams biggest critters are increasingly worried about the standoff and the shutdown in the debt ceiling. Beijing and tokyo have both publicly called on the white house and congress to resolve this dispute. Japanese officials reportedly held several emergency telephone comps from u. S. Treasury officials yesterday. Their concern is if the dollar weakens, it will mean a big surge in the yen and that has been part of what theyve been trying to do with their recovery. Chinas finance minister s