it is thursday, the 8th of april. welcome to "worldwide exchange." the headlines today, here in asia, as the u.s. treasury secretary tim geithner heads to beijing, china warns of the pit falls of a stronger yuan. >> in europe, ba confirms the merger of the biggest airline. >> and maybe the third time is a charm. us airways and united are reportedly in merger talks. >> hello. i'm christine tan in asia together with ross westgate and nicole lapin. it is 4:00 p.m. here in singapore. let's get a quick view of where asian markets are trading or have closed the session today. a bit of a correction going on, as you can see. some fears of high interest rates in the u.s. prompted profit taking. some investors cashed in on some of those efforts. the stronger yen is really hurting the exporters. the shanghai composite down 0.9%. the hang seng is off 0.3%. elsewhere, in south korea, the picture is looking brielter. the bombay sensex down 0.8% and the aussie market down 0.5%. i want to take a quick look at the thailand market. bear in mind, we have some protests going on in this particular market. the market is behaving a little better than what's going on politically. we don't have that chart for you, but that seems to be the situation we continue to watch in thailand. let's check out the cnbc ftse global 300 index. this is how it's looking for the moment. let's pull up the chart for you. down 27 points because of the correction happening here in asia. 4,6 22. ross, good to see you. not a good day here in asia. >> yeah. we've got bigger losses this morning, most of them down over 1%. basic resources and banks right now the biggest losers. ftse 100 down 1% along with the xetra dax. the cac 40 down 1.5% and smi down 1%. nicole, good morning to you. >> good morning to you, ross. we're feeling the same type of situation here, as well. stocks were down about 1% yesterday, pulling back from the lows that the dow finished off 10,797. futures are down at this hour about 32 below fair value. energy stocks were among the worst performers yesterday losing about 1% as oil declined. ross. >> now, stocks are down. we've got eyes on what's going on with central banks today. the bank of england is due to keep them straight. so is the ecb. sylvia, i suppose much of the news ow of the euro zone is around austerity measures and what's going on in greece, as well. how much austerity is going to feedback into policy decisions? >> we're very much playing across several corners here at the moment. monetary policy, the ecb is relatively noiselessly out of liquidity measures and they can't afford to tiptoe out of it. we didn't have that much addressing quantitative easing here. the economy is relatively in no trouble zone at the moment in terms of the straightforward fundamentals. continental europe, the core europe performing if anything a little better than expected, especially the german economy looking more resilient than expected. also, if you look at the labor market in no trouble zone, it doesn't look as if you're going to get there any time in the future. and the rest is about the greece, greece, greece and more greece again. how much collateral damage on the fundamental side we're going to see. but in all honesty, there isn't a lot the ecb can do about it, except when you look at the collateral issue. we know that the ecb will review general collateral requirements and the haircut on collateral requirements and that could get interesting in the greek scenario. but again, it's a little bit of a sideline to the problem now. >> let's bring in darius, chief investment strategist at sjs market. derek, it's pretty clear, in the oecd countries in the states, in europe, in the uk, policy is going to stay low for quite some time. so how much is that liquidity that we're creating in the west going to keep pumping into the east to, in fact, create bubbles there? >> indeed, g3 markets will be on hold until at least the second half of next year. there will be more conversations for investors to sell short the yen, maybe even the dollar and to buy assets in emerging markets such as in asia. however, whether or not they will be doing so will depend on the outlook for the global economy overall. and i think that sometime in the second quarter, markets will begin a major downturn on concerns over deficit in those major economies, only in the smart ones like greece. and this, i think, will put the end to the trade and the flow of money into emerging markets. so it will not take much longer for those flows to be reversed. >> so low u.s. rates will stop having an impact in hong kong, will they? >> well, investors will be too afraid to put a lot of new capital to work elsewhere. obviously, it may not that some investors will continue in those best performing markets such as in china. but by and large, i think the upward trend that we have seen in the past year and the inflow in emerging markets will come to an end very soon because investors will focus on the risk of the greek situation spreading elsewhere with government unable to continue funding fiscal stimulus because the market may not give them the money. >> darius, just take a pause. obviously, we have a big meeting going on in braug. we're going to have some nuclear arms talks as barack obama has been talking about a zero nuclear world, a very lofty ambition. nicole. >> indeed, ross. a deal that would create the nation's second biggest carrier, talks are combined with delta and northwest have been going on for weeks but aren't in the advanced stages. in 2000, united airlines and usair struck a $4.3 billion deal only to be shot down by the justice departments and their unions, for that matter. a second deal in 2008 was opposed by a pilot's union. us airways shot up 20% in after hours trading on wednesday. united fell about 1% in late trading. darius, let's continue this conversation. our guest host, is this time actually going to go through? as i mentioned, we've tried this situation before to no avail. >> well, i think that the current market conditions with global growth recovering and the u.s. economy doing much better may provide more favorable background for m&a activity. at the same time, we have seen a big jump for fuel prices. so there is motivation to stream line and cut costs. so it may well be that this time around, the merger attempt will be successful. i don't think that regulators will provide too much opposition. although i would still be concerned about the unions. but i think there is a good chance at this time it will go through. >> hey, darius, moving on to the markets if we may, dow close to 11,000, kind of backed away from it. there's a correction going on in the asian markets right now. what is actually going on right now? are we looking at a big pullback, something more serious, or is this just a blip? >> what happened yesterday and standard a minor correction. so i wouldn't be too worried about those today. however, we have to admit that much of the rally in equities over the past year have been fueled by abandon liquidity and this increasing liquidity is coming to an end. it already has in the u.s. with the fed no longer expanding its balance sheets. the same has happened in europe so those liquidity conditions are not as stimulus as they used to be. like i mentioned before, markets will start looking forward to the time when fiscal stimulus starts to run out. this will happen in china and the u.s. this year. usual economic developments proceed by two quarters. so if the global economy does happen by tend of this year, sometime in q2, equity markets may start to fall. >> good thoughts, darius. let's continue with some headlines we're following from around the world for you today. it is day two of hearings by the financial crisis inquiry commission. chuck prince and chairman robert rubin are the ones testifying today. rubin, with his with hearings on wall street and president clinton's secretary should have taken a more active role. earlier in the week, alan greenspan insisting that the fed lacks the wording to regulate nonbank lenders that issue the subprime loans. >> and those that have been talking, ba and iberia have signed a merger agreement. the ceo has told cnbc that he's confident regulators will approve it. >> i think the concessions that have been offered in terms of the eu and demanded or requested i think are sufficient to address the issue. and i'm optimistic that we will get the formal approval, looking forward to it, as well. >> leading up to the agreement was stretched out for 20 months and stretched out by ba's pension deficit issue. which they think they've sorted out now. >> ross, u.s. treasury secretary timothy geithner is apparently in hong kong meeting with the chief executive and other officials. in a closed door session today, the u.s. consulate says geithner is headed for beijing and is due to meet with officials today. well, the chinese central bank adviser says he believes a sudden rise in the yuan will hurt the global economy. u.s. consumers will have little to benefit from a rise. china should take the yuan to a battle of trade weighted currencies within the next few years. meantime, the pboc says it has drained well over $16 billion from the money markets through its open market operations. this is part of the central bank's attempt to head off long-term inflationary pressures. nicole. >> coming up on "worldwide exchange," congress is on the hung. as the financial inquiry continues on capitol hill today, lawmakers want to know what role citi played. $$$$$$$$$$ you're watching cnbc's "worldwide exchange." these shots from prague where president medvedev is meeting with president barack obama to discuss a new nuclear treaty. meanwhile, on the fixed income markets, the 10-year bund yield is just nudging down. futures are higher today mainly because we had a record setting demand of $21 billion auction of 10-year nodes in the u.s. we are concerned about what's going on in greece and the spread has been widened out there. we hit a lifetime high of 413 basis points on the country's debt problems. the positive note is what happens to that u.s. auction. the bid to cover ratio was a record high, so that has boosted treasury prices and brought a certainly amount of relief to international investors, christine. >> right, ross. let's take a look at the currency markets. we are watching the japanese yen closely. risk aversion really abating n markets. that is pushing the yen higher, dollar down against the yen at 93.12. euro under pressure against the dollar, 1.3288. sterling continues to be under pressure, 1.5171 and euro/sterling, 0.8756. >> and christine, u.s. investors get more fed speak today. weekly jobless claims are forecast to drop to a total of 438,000. fed governor elizabeth duke speaks about financial education at 8:30 in the morning. at 2:45 p.m. minneapolis fed president kocherlakota is n going to talk about the balance sheets. at 4:00 p.m., vice chairman donald kohn is talking about the economy and at 10:30, fed chairman ben bernanke is spe speaking at an awards center in washington tonight. most retailers report same store sales today. analysts expect sales to run by 50%. people are already buying bikinis. christine, summer is a coming. >> nice tidbit to know there, nicole. the thai government called off a visit to vietnam for a southeast asian summit. >> translator: even though the government forced the law at its best, they still violated and more importantly, their actions are becoming more illegal. >> for the latest on the situation in thailand, it's talk about jason zebb, from tomp sob reuters in bangkok. jason, nice to have you with us. we know the prime minister has declared a state of emergency. what's the latest? what can you tell us? >> we have about 10,000 red shirt protesters gathering in the marketplace. they've been very defiant. they have no plans to leave. they're planning what they bill is their largest protest ever. in this protest cycle tomorrow, so they're planning what they describe as a historic protest beginning on the streets at 9:00 a.m. in bangkok. they're obviously ignoring the emergency decree. >> jason, we know the prime minister has canceled his trip to vietnam. does he compromise and call for an election or does he do something more serious, which is crack down on the protesters? >> well, first of all, there's lots of families mixed in in the main area, so there's a human cost involved. he's very reluctant to do something like that. the second reason is he has a lot of support in bangkok, but he doesn't have much support in the rural areas and that's where they protesters are from. if he goes in hard on these protesters, he knows when elections come, inevitably, either by the end of the year or earlier, that could cost him votes. so he's trying to walk a fine line here. he is trying to use the -- the military has been called in and they are takinall steps at this point to try and crack down. they've taken an opposition television channel off the air and blocked websites, so they're trying to take some steps. >> jason, thank you very much for the update. let's get a quick reaction and guest with our guest host, darius. darius, how damaging is this for the markets there? >> the country's equity markets until yesterday were one of the best performing globally, up 10% this year. the currency is up 3%. i think that the recent developments are chaenging the outlook to the point that evaluations are not justifiable any more. the process clearly are going to last. they will damage the economy. they will lower confidence that may disrupt businesses. i think you should continue to sell stocks and you should go short on the back. >> we are down about 1% across most of the markets. let's find out what's going on in london. >> ross, general weakness coming through on the ftse by more than 1% in london. basic resources are weaker. eurasian and xstrata trading lower. bur berry is trading lower. they gave a cautious outlook for that particular company. and enquest, which was spun off of petrofac earlier this week is trading down. british airways weaker on the back of -- well, it's probably to do with the broader market rather than the iberia news. but what we've heard is ba and iberia have finally merged. and on marks & spencer, q4 like-for-like sales look to be okay. there's weakness in the food area. general outlook for profits going forward and the ceo talking about consumer spending remaining flat. all that is dampening down m&s. >> anna, thank you for that. annette, banks are under pressure. why that? >> banks are set to have more than 12 billion on their balance sheets. at recent debt auctions, german banks didn't participate and they didn't buy into debt from greece. >> okay. what about we're talking about airlines, of course. what is happening with lufthansa? is there any reaction on the news from overseas? >> there was positive reaction at the start of the trading day as the strikes from the pilot side due to next week are constant. they are called off. but now with the general market tanking, lufthansa shares are now trading down by 0.8%. in general now with both parties on the table, it is more likely that lufthansa pilots are actually asking for a pay hike of roughly 6.5%. they wanted to withdraw from that demand. if lufthansa would have said, okay, that's fine, all pilots across the whole holding are different holding companies of lufthansa will have the same terms and conditions as the german pilots, but this is now off the table as lufthansa doesn't want to extend this labor protection and as well, the high pay level to all other lufthansa employees outside of germany. that's all here. back to europe. >> but will this consolidation have any impact on the planemakers? stephane has a report in paris. >> and we've got a report this morning saying that airbus received 60 orders since the beginning of the year for the first three months of this year, including 49 orders in march. airbus doesn't want to comment on the report because the company is due to report the numbers officially by tend of this week. we don't know if these growth figures are before consop addition, but that is to report 83 net orders from boeing in the first part of this year. that is big, positive news for the planemaker. but the stock is down like the rest of the market. we're off 1% right now at eads. we had a positive start in paris and now the stock is much lower, we are losing 1.8% on air france klm. >> there is new on consolidation. >> yes. the company may be close to a deal with the brazilian air force. the air force would prefer the jet fighter, which is built by -- and that's good news because we had recent news saying the president army would prefer the swedish jet fighter instead of the french one. a contract has never been signed officially. for that suggestion, that will be the first time that another country is buying this aircraft. that will be an important symbol. the stock is down, but it's clearly outperforming the french markets today. >> rafael, he's the player that got sent out and helped them to lose last night. no english teams left. that's very, very upsetting. for now, thank you very much, indeed. there's much more to come on the program as industrial production in the uk thrives or is rising unemployment taking its toll? we'll get the latest right after this. welcomes to the show. here in asia, it's all about japan's disappointing machinery orders, putting a dent in the boj's optimistic outlook. >> meanwhile, here in europe, ba and iberai have merged. and in the united states, us airways and united reportedly in merger talks. >> so you're watching cnbc's "worldwide exchange." christine tan, myself, ross westgate and nicole lapin. so we're just about to get february pmi. the manufacturing output is up 1.3% on the month. better than the consensus of 1.7%. february industrial output up 1% on the month, better than the consensus of 0.5% gain. the biggest month since september '09, as well. manufacturing output up 0.8%, three months on three months february industrial output up 0.8%. three months on the three months. they're better than expected data. sterling has been weaker today. just below 1.52 on the dollar. sterling is spiking higher off that low on the back of that news. as far as the stocks are concerned, we've been weaker today generally across the board. the ftse cnbc global 300 is down 29 points. most asian stock markets were down today, christine, and so are european stock markets. >> that's right. a bit of a correction going on. why? because we have gains in the past weeks and investors are taking the opportunity to cash in and take profits off the table. the nikkei 225 using the strong yen as an excuse. the shanghai composite off 0.9%. we did get news that the pboc is draining some liquidity from the market. the hang seng is down 0.3%. elsewhere, the kospi is one of a few markets which ended to the upside. the bombay sensex trading down 1% and the aussie market trading off 1%. overall, we're seeing a correction here in asia all because of fears of higher interest rates in the u.s. nicole. >> and that's the focus, christine, today. we are getting more fed speak out of washington today. we're getting same-store sales in the united states. market futures are lower about 42 below fair value at this hour. this is after the dow finished farther away from the 11,000 mark yesterday, 10,897, off 72 points. let's bring in peter cardillo now, the chief market economist for us at avalon partners. bright and early this fine morning, peter, thanks so much for being with us at 4:30 in the morning new york time. let's talk about that fed speak. we had alan greenspan on capitol hill. we have a little bit of sound from him where he was basically taking a percentage of responsibility for our current eco