Hello. Welcome to todays Worldwide Exchange. Im ross westgate. Here are your headlines from around the world. Sterling hits a 2 1 2 year low after moodys strits strips britain of its aaa Credit Rating. George osborne, still defiandef. Brittant cannot let up dealing with its debt, dealing with its problems, cannot let up in making sure it brings the to the world. Chinese factory activity in february heads to a new twoyear high. And voting is under way in italy in one of the most unpredictable elections in the nations history. Welcome to todays program. Kelly is not here because she is somewhere else. To be fair, shes in barcelona. Thats where the wireless provider with big hopes for 4g technology in the uk. Well find out why the industry is looking forward to the next big things. Kelly will be talking to everyone from everywhere at 10 40 cet. Yumm brand sess trying to prepare its reputation after a chicken scandal. And delivering a sharp warning will be in seoul for the latest at 10 30 cet. Plus, bps highly anticipated trial kicks off in new orleans as the blame game continues over the deepwater horizon disaster continues. Thats at 11 20 cet. But first, b the British Government insists it will not budge in its austerity drive despite pressure following moodys stripping the country of its aaa Credit Rating on friday. The Agency Warnings the british economy faces sluggish debt for years. The finance minister george as born Standing Firm despite questions over whether hell announce new growth measures when he presents his budget on march 20th. I dont think the budget should be about a change of economic strategy. It should be about making sure we deliver that strategy with these, the jobs being created, protects those low Interest Rates which are so important to people with a mortgage or businesses with a Small Business loan. It goes on making sure britain says to the rest of the world, were not going to run away from our problems. Were going to take those problems head on. As far as sterling is concerned, you can see were currently trading at 151. 44. We did get down to 1. 5073. We had a 16month low of 87 of 75 against the euro, as well. Darren maher joins us. Theres been quite a big move already in sterling before this announcement, one wonders actually whether the ratings downgrade, now its on a stable outlook, is perhaps the end of the weakness in sterling. I suspect not, to be honest. We can talk about it being a move and certainly over the last couple of years, there has been a big shift in cable. Frankly, this has been a relatively small move. We cant say as of yet its overshoot. I dont think the market will take great solace that were now in a stable outlook from moodys because i think everybody recognizes the uk is still fragile and the growth position is more fragile, so i think more down side is possible. But what is in the price, darren . I think from this point forward is how much slippage do we get. I would say its more whats in the price and whats in the price for sterling is the market has given the uk a lot of good will that it will be able to mix this wonderful growth of austerity. I think what the market is now doing is reappraising that. That now is coming out, but its not by any means all the way out of the price. Is there the chance now, if the focus is on growth, is there a chance now on the bank of england stepping up to the plate once again . Well, you got that from the minutes. You know, the vote was a lot closer than the market was spething, talk about more qe. You still get a sense that the majority of the bank of england, if there is going to be more stimulus, it wont necessarily be this gilt buying that will be the tactic. But yeah, i think there is an appetite and obviously the market is waiting for carney and thinking that hell show even greater appetite. So both on the monetary cycle, maybe from the fiscal side, Growth Initiative in the budget, it does feel as though, you know, things are changing, but not necessarily the better for sterling. Whats the target for cable and euro sterling . Weve got 1. 48 on cable. Weve got 91 on euro sterling. Stay there. We have a report suggesting japans government is set to appoint kuroda as the bank of japans next chief. Hes more likely to take radical steps to fight deflation, but japans chief kap cabinet secretary has not a formally approached the candidate for the bank of japan governor and Deputy Governor positions. Nevertheless, we have seen the nikkei at 53month highs, dara. How much further is that a go on this rate . Well, on friday we recommended actually, last week we recommended going long euro yen and our target was around 1. 2850. We think that has more legs. Youre right, these announcements if theyre confirmed, if theyre approved by the upper house, they would mean a much more dovish election for the uk and the market will be anticipating something more radical. Will they deliver . We dont know. Shortterm, the yen will remain on the defensive. Yen on defensive, the pound on the defensive. The euro, look, you know, were looking at weaker growth and bigger budgets in spain and france with the eye 258an elections still waiting to hear the results of. The dollar by default, the index is up at a fivemonth high. Can you put your money on the dollar when were waiting for bernanke to see what the fed does and the sequestration . I dont like the dollar, either. The difficulty in g10 is finding anything to like. I think bernanke is going to be dovish. Got this march 1st deadline which would be a Downside Risk to growth if the sequestration comes in so we have more qe3. I think in this one its the euro thats going to go into the battle again particularly from the kind of levels that are out now. Thats why i say euro yen rather than dollar yen. It is a relative story. It is a relative ugly game still. And the euro is for the moment is going to win the beauty ugly parade. Daragh mayer, thanks for that. Yesterday, millions turned out in the snow in italy to cast their votes in whats been called the most unpredictable election in italys history. Mario monti, sylvia beryl skonny and bersani cast their votes. Well have coverage on that as soon as the polls close, 1500 c. E. T. London time. Nicholas anastasia swept to an election victory on sunday. He pledged to work with the countrys eu partner toes secure a swift rescue package, insisting that the new government would prepare such an image around the world. And a slowdown in chinese exports has been pulling back on the economy. It posted a fourth consecutive month of expansion. Chinas hsbc flash pmi index for february slipped to 50. 4, the lowest reading in four months and down from a twoyear high in january of 52. 3. No one is hitting the panic button just yet. While the flash pmi slipped from a twoyear high in yarn, it tells us chinas economic recovery is intact. 6. 4 is considered that the week long Lunar New Year holiday fell in february of this year. Look back at Lunar New Year last year and you can see some of the distortion effect it fell in january 2012. What may be worry background this months flash pmi is the new export orders subindex. It inched down to contraction territory, add to go existing worries about this sector. Taken as a whole, the flash pmi number is the earliest indicator of Chinas Health and the hsbc and the official data have been steadily improving. The hsbc category track tess official firms. The official is represented by green line here. Now, all eyes are on friday when we will get the final pmi readings. Back to you guys. All right. That was diedra. Joining us for more, darius. Its weak but its still expansion territory. Of course, we saw export growth at a 21month high in january. What do you take away from todays number . I think that the main take away is do not draw firm conclusions yet. Its just one month of data, it is distorted by the lunar year effect and it turns out manufacturing output in china is not that well core racorrelated. They do not give us a clear picture of economic activity. I think in broad terms now, out of the latest data suggests in the Current Quarter the Economic Cycle is peaking. The government is trying to slow the economy a little bit down, especially in terms of the real estate sector. And from the Second Quarter on wards, we are going to see gradual deceleration of china. And not in a dramatic fashion, but growth has definitely peaked. And i mentioned the january export numberses. The export order subindex is just down into contraction territory slightly. Exports have been something of an achilles heel. Is that anything to worry about . Because of the data effect, i would not judge that, we need to wait for the march readings. We were comparing it to last year when activity was slower because last year the Lunar New Year fell in january. So the picture is not as fantastic as the exports for january show that. Overall, china is growing at a steady pace. But the pace is about 8 right now. So people who are used to double digit gains and, you know, compare the manufacturing pmi now to what it was before the crisis should accept that china will grow around 8 the next year. The growth industry is too slow, but still, 8 growth is decent. Well get the forecast for growth, as well. Where do you think they are trying to peg that . 7. 5 . Leave them some wiggle room . Exactly. I think china will not change the growth target. Precisely because their Growth Potential is lower right now and theyre focusing on restructuring growth away from export and towards consumption. They cannot expect too much. And i think that that target will be easily beaten this year. Our forecast is 8. 5 . China will be doing pretty well. But other important decisions made during the congress will be inflation target. We think it will be lower to 3. 5 which will require higher Interest Rate to meet the more ambitious target. We think china will be increasing their Interest Rates and in the first half will be pushing up money market rates to slow the housing market. A little bit of tightening and that should help the renminbi resume its appreciation against the u. S. Dollar, especially one that the depreciatation of the yen stalls, we expect renewed gains and our target at the end of the year is 6. 10. All right. Darius, good to see you. Thanks for that. Thanks for having me. No problem. Were just over an hour and 30 minutes into trade in europe. Around about 7 to 3, 7 to 2, advancers outpacing decliners at the moment. As far as the uk ftse 1 00 has been something of a laggard early today. Its up 0. 7 . Ibex and cac 40 up 0. 5 respectively. Now, as far as debt markets are concerned, really, the focus will be on italian yields. They are a little bit higher today. Or lower, i should say. 4. 43 in italy. Spanish yields, 5. 1 is 3 . We have some zero coupons coming out in auction in around about an hour from now. Well get the results. Uk gilt yields, they are higher. 2. 12 is where we stand at the moment. But its worth pointing out, of course, that we have been up to 2. 2 . In fact, if anything, the reaction fairly measured. Lets show you where we are with sterling. We saw that just a short while ago. 1. 5147 sterling. We did get down to 1. 5743 which is a 41month low. Pmi, aussie slorl, 1. 0292. Dollar yen, 93. 88. Again, back from that 33month low of 94. 77 or high for the dollar. And euro dollar steady at 1. 323137 friday we hit a sixweek low of 1. 34135. Thats where we stand right now in europe. Lets bring you up to speed with more reaction to that chinese pmi number and the rest of the asian markets, as well. Sixuan joins frus sing boar. Thank you, ross. Its a good start to the week with the nikkei soaring to a 4 1 2 year high. The market jumped 2. 4 as the yen weakened to a 31week low. Japans shipping stocks climbed after Morgan Stanley raised the outlook for the transport sector. The sharp shares itemeled over on 5 after reuters say discussions of a tie up are expected to end without an agreement. In china, the Manufacturing Sector showed signs of a restreet, as you just mentioned, after hsbc flash pmi for february slipped to a twoyear high. But the shanghai composite slipped. Brokerages made a comeback after it was reported chinal soon relax rules for qualified Foreign Investors to invest their offshore holdings into mainland stock markets. Hong kong fkd marginally in the green. Real estate was under pressure after the City Government imposed higher loans. The kospi ended weaker by 0. 5 . Australias asx 200 moved back towards its 4 1 2 year high gaining 0. 8 . As we had the strong gains in retail and financial stocks. Indias sensex are trading higher by about 0. 25 . Back to you. All right. Thanks for that, sixuan. Catch you later. Still to come on the program will be adam barcelona. Taking a look at the hottest trends in the space, find out what the ceo of deutsche has to say about the challenges of taking on the american market. Kelly is there. Shell join us in just a few moments. The mobile World Congress is under way in barcelona. Theres a new hand set based on its firefox web browser for mozilla. The reason im on my own is because kelly is there getting all mobile and wired and super fast. Hi, kel. Ross, it is great to see you guys out here in barcelona. I wish i could say the weather is a little warmer. Its surprisingly chilly here. And the chilly economic environment across europe also having an impact. Some of the bigger european and american names have skilled down their presence a little bit. The focus is shifting to emerging markets. Deutsche telekom, you mentioned, ross, when they talked about this partnership announced last night, it has as much to do with opening the web the way mozilla had months ago. Poland is the next frontier, ross, its aimed at that next generation of mobile users. We know the market has matured in developed markets and the economy isnt that great, either. Here is what Renee Obermann had to say about the demand that he sees in the years ahead and, by the way, whats going to happen to his own career once he leaves the company at yearend. Take a listen. I think theres nothing new to say. I have said what i intend to do next year. But i have still, you happen, a number of things to accomplish this year. And what do you hope the legacy of your time at d. T. Is . I think the company is much more competitive. The brand is well recognized now and the Service Quality for our customers has improved. And overall, somebody said at a recent management conference we had, whether people had noticed that the company had developed a heart. I thought that was very good. And what about taking on competitors like sprint, at t and the u. S. . Look, the company in europe has become very competitive and also we are defending our market shares very nicely. In the u. S. , we have a challenge still and we have found some answers to this challenge over the last 12 months after the at t deal collapsed. But we have taken a number of steps to improve our situation and we have a great strategy and that will materialize. Im very optimistic for u. S. Market now. What about the European Crisis inspect how has that affected your company . The euro crisis has eventually hit us. But look, for me, one recipe out of the euro crisis is to simulate private investments. Our industry is ready to make private investments, big time, as long as there is an investment friendly Regulatory Environment so we can actually, you know, make money in an appropriate way. I think this is part of the solution because a lot of growth and productively growth comes from the existence of ict infrastructure and were part of that. And who are you going to vote for in september . Are you kidding me . Thats an interesting question. I am entirely unpolitical. Now, ross, he also said to stay tuned for more news about a tie up potentially with fone, a Spanish Company that used wifi user generated networking hot points that put so much demand on Companies Like do you have ya telecom. Deals may be a real theme coming out of this conference. When we spoke with some of the other mobile executives here, they all see more consolidation here as companies have to avoid, that is, several different kinds of networks. They all have to get up to speed and in order to do so, we could see a lot more deals. Yeah. Well, well have to see how that pans out, kelly. What else are you focused on . What are you going to be focused on, as well, over the next couple of days . Well, ross, just for you, we are going to take a look at a couple of cars. This isnt just a show about smartphones. Ford is here. I dont know if you can see them. They have a set up behind me. Gm, as well, will have some news with at t they will be able to bring viewers later in the day. When it comes to what happens with the next generation in the mobile world, it haas to do with finding these devices in your car, this in your fridge, in a number of city elements that are on display behind me. Shortly, well be speaking, well get some better sense of what it means to have machines talking to one another. Thats with ericsson, hans vesberg. We just spoke to him. But again, you might think the smartphone world has matured. Not exactly. You get those devices talking to one another and youre talking about millions more in the next generation. Machines talking to one another . Thats just like another day on cnbc. Exactly. Weve got the machines talking here all the time. You get disruptive, they like people and things being disruptive. Ill do my best. Maybe ill run around here a little later and try to cause some disruption of my own. You are our own disrunive technology, kelly evans. I hope youre having fun and using the spanish. Kelly will be joining us a little bit later by ola swansea, as well. And if you cant recollect enough of this show, head to on website for the latest mobile trends including waterproofing, new operating systems and wearable gadgets. Its all there on cnbc. You never know in the tech world, waterproofing could mean anything. Plus, we want to know b