Hello and welcome to Worldwide Exchange. Im ross westgate. And im kelly evans. These are your headlines from around the world. Washington and wall street brace as the deadline to pass the sequester passes. President obama holds budget talks at the white house today, but the odds are pretty low on a deal. Chinese factories fall to an alltime low. And european equities begin the month trying to inch their way into the green after all three major u. S. Indices end at a february high. The dow coming in within 16 points. Youre watching Worldwide Exchange, bringing you Business News from around the globe. All right. Welcome to the last show of the week. Plenty to do today, as well. The first show of march and we know what happens on the first day of the month. Its our favorite day or at least mine. Open, thats why. Its the pmi figures around the world, frankly. Europe, by the way, came in after the flash at 47 i think point 9 versus 47. 8 flash. Thats just in line with what we saw in january. Some interesting things happening with the components. Greece is a little better, as well, although still contracting. But yes, were looking at not too much of a reaction in the euro dollar to those figures. Slight pick up. Weve also got italian january adjusted jobless rate jumping to 11. 7 , higher than the forecast 11. 3 . And the highest since the series began back in 1992. The youth Unemployment Rate in italy, 38. 7 versus decembers 7. 1 . So the Unemployment Rate jumping up 11. 7 on wider numbers. Joining us for more is brendan brown, head of research at mitsubishi usj securities international. Brendan, thanks for joining us. For all the port of the omt, clearly, the economics havent turned around and we saw this the last time last week the yields coming out and talking about france and spain werent going to hit their targets in the way we thought. When you look at that italian number, how does that play into the politics . Clearly, the italian political situation is very concerning. I think the consensus for you is if we are in a deep recession, Political Uncertainty is going to deepen that recession. Is in in general, i would say this mornings data continues and there is a slightdown turn it had at the end of the last year. Thats the main good news in europe. The super economy in europe is somewhat positive and i think thats actually underpinning some think Global Markets. If Global Markets had the combination of seeing raised italian Political Uncertainty and germany going into recession, that would have been much more serious. Fortunately were not seeing that. I think what were seeing in Global Markets is one school of thought says for weakness and commodities is telling you that the Global Economy is slowing down. My own view is that what were actually seeing is some rotation of asset Price Inflation away from commodities, commodity extraction companies, high yield debt to u. S. Equity markets and japanese equity markets. So im more positive in general. And Central Bank Action is boosting equities more than it is other assets. When you think about this fantastically bad monetary movement in the United States, the process of inflation goes through different markets at different times. There has to be a speculative story and we have that speculative story back a year ago or two, three years ago with china in emerging markets. That story is fading a bit. And the new story is the u. S. Is the super Energy Economy of the World Manufacturing coming back from china on sourcing everything out. And thats the new story. So that is a feature of this asset Price Inflation. You get rotation from the asset market inflation attacks one market after another. And you dont have previous market which was attacked seeing a speculative temperature fall. At a time, the speculative temperature is falling. Every day that we talk about whats happening across Eastern Europe, but today well be talking to bartos paul alolowski. Polish gdp this morning slowing to 1. 1 growth on the year in the Fourth Quarter. That was better than expected. And the same going on with the pmi figures point to go a less severe contraction in manufacturing. So a lot of concern about the vulnerability of Eastern Europe to deliver and poland is the mexico of europe. Right. Does that make sense . Nd iis thats exactly what were going to discuss. President obama is due to meet for the final sets of budget talks with lawmakers. Is it too little too late . Well be stateside with analysis. And well head to istanbul where u. S. Leaders are weighing in on the sequester deadline. Also, the Iran Nuclear Talks have reportedly reached a milestone feeling halts for a break throughout of tehran. An adviser to the u. S. State department will join us about 11 20 cet. Chinas factory growth hit a twoyear high in january, but february is a different story. Activity is cooling. Li sixuan has more. I understand if you seasonally adjust and make a few other fixes to the figures, they dont look quite so bad. It is seasonally adjusted. The final reading of hsbcs pmi came in with earlier estimates. Note both pmi numbers are now very close to the boom and bust level of 50. If you drill down the data, both new orders and new export orders fell in february from the previous month and that signals more head winds for chinese factories which are already suffering from sluggish poor sales. Some economists say the pullback in the pmi could be due to distortions in the seasonal holiday despite the adjustments. Were get a clearer picture for the pmi data in march. The data does signal a path to the economic picture. Thanks very much for that. Brendan brown is still with us. Jing joins us, as well. What do you make of the data this morning . Ning . Well, the data clearly are slightly below expectations indicating the economy is perhaps losing a bit of the momentum. In the last several months on the back of the governments stimulus program, were seeing a very strong economic rebound. Clearly in february, Manufacturing Activity is slowing a little bit. However, we should also look forward to march and april because i think theres indeed some distortion in the data. Is it your view that a cyclical recovery is taking hold in china . It has indeed taken hold. Going forward, were beginning to talk to investors and Multi National companies about the chinese risk in the economy. Given the strong rebound weve seen in november, december and is january of this year, people are beginning to worry about potential overheating concerns. As you can see, housing prices are very high. The Central Government put on new measures to restrict the speculative activity in the housing market. Were seeing potentially higher inflation down the road, maybe three or four months from now. On the one hand, we do have an ongoing economic recovery. On the other hand, we have to be potentially concerned about o r overheating risks. Across the brick some tightening here taking place. How does that fit in with what we were just talking about and the asset performance that were seeing . Very much so on because the whole story about two years ago was chinacentric. What youre now seeing is a growing concern that maybe the china bubble didnt burst and that there is possibly big slowdown and puncturing the bubble still to come. Are you saying the hard landing question is still with us . Its still in investors minds. A lot of investors are waking up saying there wasnt a bubble bursting and man its still to come in the future. Gene, whats your view . I dont hear a lot of people talking about hard landing risks today. However, a lot of people are really looking forward to next weeks Major NationalPeoples Congress taking place in beijing. Some 3,000 people will gather and the new chinese leadership will be formally inaugurated. Well have the new president , the new premier and a pretty big lineup coming up. A lot of investors are focusing on what new policies will be announced. I think one thing we are focusing on is social rel fair provisions. Health care, education, Retirement Services which will help support consumption going forward. The other area were focusing on is basically the property market, which is 10 of chinas cdp. Will there be further measures announced by the Central Government . Lastly, the more focused portion of the Chinese Government is putting people first. Theyre trying to promote social well fare. Theyre building a lot more lowcost housing. So i think at the present time if you look at hard landing risks, i would say those risks are pretty remote. However, going furd, we need to focus more on investing more towards private consumption. Okay. Thanks very much. Well keep an eye out for cnbc next week in beijing. It will be one of the main events for investors to watch next week. It will certainly be on our radar. Worldwide cnbc. Com. President obama will meet with congressional leaders at the white house at 10 00 a. M. Eastern for lastminute budget talks as the sequester looms. Hopes are low for the deal to avoid the budget cuts. The deadline has passed but 85 billion in spending cuts wont go into effect right away. The president must order a sequestration for fiscal 2013 but he can issue that order at any point today and the white house says it will probably be as close to midnight as possible. Thursday, competing bills replace the sequester failed in the senate while house members left early for the weekend. Apparently, yes, finding no reason to stick around. Well, i think what were seeing here is political theater. The Economic Impact of the 40 billion of cutbacks in spending is going to be fairly insignifica insignificant. In fact, much more significant is going to be the implementation of obama care in terms of what it may do to the labor market. Explain that for a second. Were seeing more. More reports of employers cutting back labor forces to be under the 50 which obama care tax cuts start coming in or reducing hours, under 30 hours for parttimers so they dont pay obama care. This may have a Significant Impact on employment and i think thats much more important than the 40 billion coming from the sequester. It would be rare for Something Like that to seep through on the left level. Its bound the influence the labor market. What we dont know is how it will all balance out in terms of unemployment numbers. We dont know. But i think the general point i would come back to with this sequester is that theres going to be a huge amount of political theater over this and where the cuts come. Its in the obama administrations time so make sure the republicans get the right message. But the Economic Impact is not so great. These tax adjustments are going to be positive from the effect coming from the stock market. Ross, do you want to walk us through that . Yeah. Its the first trading day of the month. Looking back at what happened in february, as well, march the 1st. Weighted to the upside. Less than six to four advancers outpace decliners at the moment, kelly. Ftse 100 up nine months in a row, the longest winning streak since 1997. Up around 1. 3 on the month. Upper 16 points today. The xetra dax is up nine points. Ibex up 0. 25 at the moment. It was down over 8 during the last month. The ftse mib down today, also. Been a big loser during the month of february. Some individual stocks were looking at, areeva says its sticking with its target to sell and build ten Nuclear Reactors by 2016. After the bell last night, the group revealed a doubling risk for just over 2 billion euros. The stock downmildly. Thales is doing okay, up 13 this morning. The French DefenseElectronics Group posting a 24 margin in its full year effort. It beat estimates, 2012 sales up by 9 . The company also saying the headwinds in europe should be easily offset by growth in emerging markets. And over in italy, luxottica up 2. 5 . It had a 19 jump in adjusted full year net profit. This is the worlds big ft eye wear company. It says its going to focus on Southeast Asia this year and expect double digit growth in those premium and luxury segments. As far as bond markets are concerned, were up to 4. 9 before that auction a couple of days ago. Fairly contains 4. 7 , tenyear yields back down to 5. 07 in spain. So weve seen a sharp narrowing of the space between italy and spain. On the currency markets, declined quite a lot on the month. Aussie dollar, 1. 02. Dollar yen at 92. 65. Euro dollar, 1. 3066. 1. 3017 was the 17week low which we hit a couple of days ago. Thats where we stand. By the way, we have uk pmis coming out in around about if i can work it out, 14 memberships. No, 12 minutes. Well get to that in a second. Li sixuan is with us. Thank you. China pmi data in worries over the auto u. S. Budget cuts put a lid on asian markets ending the week on a mixed note. They bared down early losses. Insurers tumbled after china life issued a profit warning and that stock lost nearly 3 today. But environmental stocks yet again surged on hopes of more supportive policies. In beijing, the hang seng finished lower by 0. 6 with citic leigh leading the losses. In japan, january cpi figures marked a Third Straight decline and we had a mixed showing for exporters. The but the property counter and other inflation betts left their support. The nikkei gained 0. 4 and its up for the Third Straight week. Elsewhere, its a solid day for south koreas kospi up over 1 helped by bank and automakers, this despite the sharp fall. And down under australias asx 200 eased 0. 4 . Indias sensex, less than an hour ahead of its market close currently trading higher by 0. 4 after yesterdays selloff. Back to you. The london mayor has fashioned brussels policymakeres and described this deals eu deal as the, quote, most adil e adiluted measure since bowman times. And investors have done pretty well buying stocks this year, but this could have done even better with nigerian equities. Find out which other countries are leading Global Equity markets also on the website at cnbc. Com. Plus, what will buffett do next . This is always the question, the oracle of omaha is set to release its annual letter to shareholders today. Read more of them, history and previews of the buffett letter over at the website, as well. You know the address, cnbc. Com. Also still to come, fed policymaker warnings investors could become too dependent on monetary easing members. And before that, we want to leave you with the latest rendition of what is known as the harlem shake. Yes, u. S. Aviation regulators are set to look at whether rules were broken when they got up on the airline. The seat belt sign was off and Safety Measures were followed. Welcome back to the program. Growth concerns remain front and center in india. Were seeing some positive signs out of factories there. Remo tendokhar has more information. Thanks so much for that. The february manufacturing pmi as released by hsbc has come in at 54. 2. Its on a month to month basis, there has been an improvement that weve seen. The february manufacturing pmi came in at a bit more of a low of 4. 5 . The Manufacturing Activity has picked up on the back of growth and domestic order. There were a few brokerages who indicated that the rise has lifted the output and exports have moderated. Going forward, if you look at the indications, it does seem to provide that there could be growth going forward. But the data has come in higher than expectations and it should alleviate, at least to some extent, the numbers that rose. Reema tendulkar, thanks, reema. Speaking on cnbc, he compared it to monetary ritalin, warning that theres a risk that the market economy has become too addicted. Its time to really perhaps taper this off. This doesnt mean to stop it. Were not going to go from wild turkey to cold turkey, but i do think we probably have run up to the limits of the efficacy of what were doing. Its time for people to begin the discount basis on a normal basis. And i think its a good time to do it. Brendan, your book is called global curse of the Federal Reserve so, therefore, mr. Fisher is one of the good guys at the Federal Reserve, isnt he . Yeah, of course, but hes not in the ruling party. We saw ben bernanke this week denying there were any bubbles anywhere. What is your beef with their policy . What is the curse as you see it that theyve inflicted on all of us . The curse of the Federal Reserve is their policy of manipulating Interest Rates and rolling the economy causes two forms of economic destruction. One, it causes a lot of malinvestment over time and thats what were suffering now in a lot of economies. Secondly, in the long run, it causes anorexia of Risk Appetite. People looking at this monetary uncertainty and the huge rise withdrawal from benefits. Isnt Monetary Policy more certain than ever . Here is exactly wa were going to do, but Interest Rates have going nowhere. Every man, woman and their dog know at had some point this policy is going to be reversed or its going to roll into higher inflation. So theres an existential uncertainty block there and investors realize it. So if we mov