Hello. Youre watching todays worldwide exchange. Im ross westgate. And im kelly evans. Japan is facing a 255 million euro loss for philips. Cutting a key Interest Rate by 25 basis point is the bank of india. And the boj is keeping tune rate until theres a significant drop in unloimt. And ahead of todays parliamentary hearing, italys economic mip sister takes grilli takes center stage. All right. Reunited. Back together. So nice. You know that song . I sang that to you the last time. Weve had a couple of reunions and a series of time spent apart. How are things sthp. They are great here. How was davos . So far, gone, in the distant memory. Dont worry about it for another year. Plenty to worry about today, though. Korea. On todays show, plenty of good stuff coming up. Were going to be in madrid as the Prime Minister is reportedly releasing a plan to relief some of the pain of austerity. Then its south korean steel giant posco reporting Quarterly Earnings today. Well have the latest live from seoul at 10 15. And its day one of the fomc meeting. Economists are awaiting more clues from the stimulus program. Well be live in new york about 11 00 Central European time. Before that, were going to head out to mumbai as the rbi cuts Interest Rates for the first time in nine months. We can gauge the market fall out now from that move. All right. So lets just show you where we are in global trade right now. One hour into the session here in europe, it was a soft close for u. S. Markets. Were struggling for direction and thats where we are right now for u. S. Markets. Pretty equal. The Dow Jones Stoxx 600. And as far as the ftse 100 was concerned. First thing this morning, it was up 13 points. The ibex is up three and cac 40 down 1. Like the u. S. Market, struggling for direction. Moving on for you, lets show you where we stand with yields, as well, on the bund market. 1. 687, steadily creeping higher. Spanish yields, 5. 27 . Italian yields, 4. 22 . Once theyve grossed over the 2 mark, they havent been able to get over. Around 1. 57 is sterling dollar. Aussie dollar, 1. 0458. Dollar yen, 90. 53. Euro dollar, 11. 3452. Thats where we stand right now in european trade. No big directional movement. Lets bring you up to speed with the Asian Session today. Sixuan is with us out of singapore. Hi, ross. A mixed day ahead of u. S. And china data and more corporate earnings. The shanghai composite gained 0. 5 . Brokerages fought for the second day as beijing may allow them to provide fund cuts to these services. But the hang seng finished just a touch below the line. Look at Hong Kong Listed stocks. It slipped 2 today after the 1 billion share fell down by Goldman Sachs which was placed at a 3 discount to yesterdays closing price. In japan, the nikkei gained 0. 4 . Nissan saw its shares move to the highest level in more than four years, 4 1 2 years, in fact. This after the automaker reached an agreement with daimler and ford to develop Hydrogen Powered cars. Elsewhere, kospi snapped a fourday losing streak ending higher by 0. 8 . Samsung and hyundai rebounded strongly on bargain hunting. After the bell, posco reported a slump in its q4 profit so well watch its shares reaction tomorrow. Elsewhere, Indias Sensex is currently down by 0. 3 after the rbi cut the Interest Rates for the first time in nine months. Back to you. Okay, sixuan, thank you. Catch you a little later. Now joining us on the set is allan miller, Founding Partner at stm private. The top thing on everyones mind, allen, welcome first of all. Whats happening with markets . Equities around the world and a lot of other markets are at multi year highs. Theyre on these winning streaks. Yesterday we saw that start to break down. Is there a significance to that . We never look on a oneday view. If you look further out, theres substantial value in equities compared to bonds. But when you actually look at the sharp rise as weve had in the last few months, its not unusual for some of that to be basically given back. And if you look at the volatility of markets, the vix, its down to the lowest level its been for years and years, which is normally a negative sign in the very shortterm for markets. Because you guys like to take a contrarian view when it comes to investing. How do you read this . Do you look at the last couple of weeks and say we need to blow some of the froth out of the market. Would you almost say you would like to see a healthy correction . I dont think there will be a healthy correction. I think there would be a sideways move or a slight pullback. If you take what we did last year, for example, were moving money into emerging markets, into europe when its completely out of favor, in japan which now seems to be everybodys consensus is bullish on when it felt extremely worrying, putting money into japan at the time last summer and now were actually taking some money out of small cap, midcap in the uk which is over 20 . What about toous . In the u. S. , again, we took money out of u. S. Equities Third Quarter last year. I think the real terms of value is emerging mblth. If you look at the companies, and thats what you own when you buy indexes is underlying companies, you get higher growth and lower valuation. Youd rather take money out and put it somewhere else than buy Downside Protection . With the vix so low, you could go and buy yourself some cheap down side insurance. If you talk about indexes following the blitz, normally a recipe for losing 50 to 90 of your money over a fiveyear period. You can tie the market over a oneweek or twoweek view. Fine. But i dont like betting against the odds. Those indexes are based on volatility and disaster. No, im just saying it suggests insurance at the moment. But you could buy option insurance at the down side is pretty cheap. Well, what we tend to do is basically increase the cash when were short the negative, reduce the cash when were more positive and thats what we have done consistently since 2009. Were starting to get into earnings season here in europe following earnings season which is off to a reasonably good start in the u. S. Are earnings relevant in this context . As we look, for example, at the u. S. And what weve seen there, its come in relatively okay. Apart from apple. Exactly. Yeah. The u. S. Has been more positive in terms of earnings against other markets the last 12 or 18 months. I mean, this year, that gap is likely to narrow. And i think actually people probably underestimate it in europe the impact of the strength of the euro against everybodys expectations. And for a lot of markets, a lot of exports in europe, that could actually reduce earnings quite considerably. Talking about earnings, lets tell you whats happening with phillip. Fourth quarter loss in line with expectations. The Dutch Electronics giant agreed to sell the unit to japans ny electronics for 2 million. Earlier he was asked about the companys strategy for growth. Im confident that the accelerate program is making philips a more agile and Entrepreneurial Company where we are able to reposition us to Growth Markets. To Growth Markets like china, Southeast Asia grew by more than 10 in the Fourth Quarter. Compensating for the the negative growth in europe which still is in a recessionary state. Yes. So what do you think of what do you make of what theyre doing . Well, i havent looked at philips for 10 or 20 years. And the reason for that . The reason for that is when i look at individual stocks, i tend to focus on the uk. Youre not worried about what the big condmrom rats are doing. Well, i look at stocks from the big index and the investment index. Samsung being 25 to 30 of career stock market has a big impact or, you know, the four or five stocks in russia. But obviously, philips is tiny on the european market. So what do you think of samsung . The worrying fine is whether the korean won will strengthen. The impact that has on samsung, relative to apple. I think the power in a way is moving from apple to samsung. And if you look at the year on year growth, its 20 to 25 growth from samsung, zero growth from apple. Tomorrow rim is does rim report tomorrow . No, its the blackberry ten launch. Oh, the blackberry 10 launch with the positive reviews rolling in from davos. Every review rolling in for davos. It was a smart strategy for them to come and get the gadget in front of everybody and getting everybody excited and talking about it. It was funny to get everybody with Lloyd Blankfein and jamie dimon. Did you just drop the name Lloyd Blankfein . Okay. Mario draghi met victoria grilli last night to discuss. Officials had been questioning how much italys central bank and mario montana tys governmet knew about applying for state aid. They have rebounded. They are atop the euro stoxx 600 today. By the way, a lot of people say thats not a good thing having drinks with those two guys. Be careful who you hang out with. Yeah. Be careful. Spain could be given more time to meet its equity targets. Stephane is in madrid probably running away from the french employment minister bearing in mind his remarks. Is that why you got out of france, because its bankrupt, stephane . No. I went out of france for tax reasons. You know that. Spain might be even more trying to reduce its public deficit over the next couple of years. European officials will not make a decision until next month when they will assess the spanish Austerity Program on the 22nd of january. It was explained that europe information would have to take into account the Growth Prospect of the fiscal space for each country in europe and could, indeed, soften the spanish deficit target if the economy continues to contract. Thats precisely what we are expecting because for the Fourth Quarter, we are expecting the spanish gdp to shrink by 0. 4 . For the time being, spain has a deficit target of 4. 5 for 2013. That seems to be really ambitious if not out of reach. Because to meet this new target, the government would need to find 20 billion of additional euro cut. That wont help the spanish economy to go out of recession. For that reason, oli rehn thinks spain will need some incentive from stimulus measure toes improve its economy and boost its labor market. It has to be complemented with policies to help the unemployed find new work or training opportunities. Its important for our Financial Sector to give credit so they can invest and create jobs. And it will be important to maintain the fiscal consolidation. And the stimulus measures are indeed on the agenda. The Prime Minister will make an announcement on the 20th of february with a package to boost the economy and help small and medium tax breaks. We know after austerity comes the time for stimulus. Over to you. Stephane, thanks for that. Also to come, were going to hear about ten coming bank of england governor about what else . Reform. And mark carney will join us. Well be right back. Welcome back to the program. The fed begins a twoday meeting today and will deliver a report tomorrow. The fed said as long as inflation stays subdued, rates could remain at historic lows until unemployment dips below 6. 5 , which they predict could take until the end of 2015. In india, the central bank has lowered its key policy rates for the first time in 15 months. Ecta, the first rate cut in several months here. Are we expecting more to follow . Well, that is the rabbit in the hat, actually. The policy in terms of commentary was extremely deliberated and balanced in terms of what the forward looking guidance would have been from the rbi. They have said that inflation will be pretty much range bound going into 2000, 2013, 2014. So that would give them space to maneuver in terms of the monetary policy. But, again, there will be two conditions that they will be looking out for. One will be inflation and the wpi inflation tragedy and whether there would be any sort of upside to it into the next year and second would be any discernible down take in terms of the current account did i have deficit and the current deficit problem which india is facing at this point in time. In fact, they did make quite a statement in terms of current account deficit. They put a lot of emphasis in terms of the macro accounts reviewed yesterday. Otherwise, there was definitely some amount of relief for the markets. The rate was cut around 25 basis points. The first time after nine months, the last one was a few basis points in april. Trying to include liquidity into the system and a discerning amount of credit. Otherwise, the markets were pretty much sanguin about it at this point in time. But now they have opted to pay higher at this point, just about trading with the negative highs. The broad markets showing much more pressure at this point. Back to you. Okay. Thanks for that. Thats the latest and well talk more about this rbi decision, as well. Meanwhile, Incoming Bank of England Governor Mark carney has given his assessment of the Global Banking system in his capacity as xarm of the banking stability board. Car carolin, its not so far to go, frankly, from davos to zurich. Absolutely. Thats what mark carney, the chairman no. But thats exactly what he did. He probably took the trade, maybe took the helicopter, we dont know that. But its a twohour ride on the train, i can tell you that. Anyway, hes the chairman of the Financial Stability board and the Financial Stability board met in zurich yesterday to talk about the banking sector, to talk about ogc derivative rules. But i wanted to know from mr. Carney whether he during his time in davos felt any sense of complacency on part of european policymakers given that markets are trading at multi year highs and risk premiums have come down. I wouldnt say that there is a sense of complacency amongst policymakers. And that id say on the basis of both private discussions in davos and the public points that were made by christine legarde, for example, ignacio fisco. Im not sure i heard a public policymaker exhibit those signs which is a good things. Because while tail risks have been reduced, extreme negative outcomes have been reduced, they certainly have not been eliminated. And its going to require a sustained implementation of policy that extends well beyond actions of Central Banks to true structural policies and National Fiscal and structural measures and in the case of Europe Institution building is ultimately going to fully address some of the risks that have been manifest over the course of the last couple of years. So here is the good news. Mark carney, the chairman of the fsc and the incoming boe governor, he sees no signs of complacency just yet. But as he pointed out during the press conference yesterday, there is still a big Downside Risk for the economy. Im quoting him now. Given the weak Growth Prospects and high levels of public and private sector debt. Kelly. Carolin, thanks so much for that. I think well have more of that interview, too, in the next hour of the program. In the meantime, its the 20th birthday for the etf. We know to know whether youve invested in these products and have etf changed your trading habits for better or worse . Worldwide cnbc. Com. Tweet us, cnbcwex or individually. Allan miller, you guys have three main funds, all of which invest etfs. Yes, they did. Why . Well, because one of the reasons why etfs are so unpopular for a manager is you have more diversification, less you cost, more liquidity and its easier and cheaper to deal with. Thats why more and more private investors like it and more and more Fund Managers dont like it because they offer wealth. But do they offer longterm value, though . What i worry about is that the popularity of so many of these products, whether theyre leveraged etfs or derivative etfs, when youre talking about buying the s p 500, great. But if youre talking about some of the other newer products, theres much more potential for individuals to get burned. People sa a, but obviously if you give investors a choice, i think its good for investors to have the choice. I might want a plain vanilla s p 500 or ftse 1 hup. But isnt it nice to have the wide choice you can invest in, commodities, equities, bonds, emerging markets, developed markets. But the point, are you getting options about investments, but are you being not tricked, but are you overlooking the costs of getting exposure to making these best because of the way they hold products and if they roll, they destroy your value over time. In terms of roll, youre talking about commodities, and whether you hold commodities physical there is a cost. Theres always a cost. But the beauty of etfs or etc is you can see the cost. So you can make a judgment. What do you think is going to be the return . What do you think is going to be the cost . And compare one with the other. And thats the great pit fall of many funds. If youre investing in a bond fund at the moment, investing in government bonds and those government bonds are yielding 2 and the costs from top to bottom of that fund is 3 , its a pretty stupid decision. Right. Yeah. I mean, over time, and maybe if youre a retail investor, youre retailing in pensions and mutual funds, how much do costs higher costs damage funds . If youre doing over 10 or 15 years this is one of the great wonders of the world, its compounding. So people think theres only an extra 1 , 1. 5 if youre investing at 20 or 30 years, thats 30 of your capital gone in fees and costs. And its like going up an escalator. More for the fees and charges, the higher that speed of the escalator and the harder it is to actually end up ahead. Now, it doesnt mean that people cant achieve that. It just means its harder if theres a