Trend in what could be its biggest free market experiment in years. Announcer youre watching Worldwide Exchange bringing you Business News from around the globe. Well, the u. S. Government is on the brink of its first shutdown in 17 years if congress does not pass a stopgap spending bill by midnight. Early sunday the house approved a measure linking funding to a one year delay of president obamas Health Care Law. It would also repeal the medical device tax which helps pay for the law. The senate convenes at 2 00 p. M. Eastern and will likely vote to strip those provisions sending the bill back to the house. It is then up to House Speaker john boehner who could have members vote on a clean bill or one with new provisions. On sunday republicans and democrats continued to trade blame. Here, unlock those doors, i say to harry reid, and come out and do your job. The senate must act. They must, must act. We do not want to shut this government down. Its wrong, and we want to work and negotiate and get the job done. Want to debate obama care, thats fine. People have strongly held views on both sides. But to hold hostage democrats and mainstream republicans until you get your way and hurt millions of innocent people across america is wrong. So thats the latest out of washington. The latest out of europe er equity markets are down. Were now into the session where were at the low as well. Last week the ftse 100 was down 1. 3 . The xetra dax is down 1 . Cac ka rant is down. We could see the collapse of the Coalition Government led by he nrika letter. The italian banks are down 3. 6 . Its ousted its chief executive after a hasty range Board Meeting yesterday. In a statement the biggest lender said the biggest investor carl messina would replace him. There were resignations of five ministers from the countrys governing commission. Now that has pushed up italian bond yields. We got to spreads of 300 bases points. Italy is yielding 4. 6 . We have been to 4. 3. 10 year bond yields, the spread back below the 300 bases points. Italian treasury yields are a safe haven flow. Ten year yields down 2. 6 . Last week down to 2. 63 and spanish yields a little bit higher at 4 point poip 38 . Rather mixed day for currency traders in the euro weaker against both the yen and the swiss frank against the dollar. Flat 135. The dollar is also being pressured. The dollar yen is down a two week drop. The aussie dollar saw a twoweek drop. Sterling has been a beneficiary this morning. Currently 1. 6134. Weve been up to 1. 6180 this morning. Thats where we stand right now in europe. Lets bring you up to speed with the rest of the action in asia. Lisa is with us. Asian markets are worried about disappointing data out of japan. China has a seven day holiday starting tomorrow. The nikkei ended lower but over 2 with the b. O. J. s survey. A abes tax decision is due tomorrow. The yen was trading 98 below the green back. Chinas pmi grew only slightly but it was revised down one point. Meanwhile, hong kong, australia, and india see losses for more than 1 . Now on to some big movers in japan. Mizuho financial dropped 4 . But teppco continued to outperform. Its application to restart some undamaged facility helped convince regional banks. According to reuters creditors are providing 5. 9 billion life line. The shares gained more than 2 . China markets bucked the down trend. Some shanghai based companies continued to gain ground after launch of the program yesterday. Wai gaoqiao. Xinhua surged up 10 . Thank you for that. Joining us is a strategist at monument securities, mark. Put the u. Is ts. Political newo perspective. Markets hate politics. Unlike Central Banks decision, you never know quite what youre going to get. They always assume, given history, that some say it will resolve itself. Theyre now being faced with this prospect that positions are extraordinarily entrenched in the states. The difference between this and the 95, 96 situation is 95 bill clinton was in quite a good position to face down all the beginning gri gingrich demands. In this situation mr. Obama i dont think has any friends on capitol hill, either in his own party we dont care about budgets. It doesnt stop the number of shoes that are selling or the bottles of coke people drink, does it . Are we worried about it for what it means for the debt ceiling . We are worried about it for the debt ceiling even though the treasury says it will try to carry on paying things for quite a long time. I think were worried about it is there doesnt seem to be any movement. We went through all of this two years ago and they had an opportunity in the meantime to talk to each other. Me we are at one minute to 12 yet again and yet again the u. S. , capitol hill is unable to make a decision. Thats the worrying signal. What everyones used to in terms of the perception of the u. S. A. Ell while europe is seen to be muddling through and coming out with compromises, in america its the perception of everyone else, while we may not like the decisions, its decisive. We have the body position that doesnt like to make decisions. There will be some sort of agreement even if its a compromise one. It will probably put the issue on ice for a short while. Unfortunately the time frames where we get these compromises are getting shorter and shorter and shorter and the positions arent moving. So whats the damage then that it can do . If we are going to get another 11th hour agreement and so far the market doesnt seem to be selling off. I think thats exactly where the interesting part of the markets perceptions going to be. Does it go, well, if the American Government shut down for three to four weeks, it might deduct, say, 2 from gdp in q 4, but excluding Government Shutdowns Everything Else was all right. And thats a very positive spin. Or does it go actually, this is bad news and we seem to be in a situation where the Positive Side will be we get taper forever. Could we be in for a nasty surprise then . I think the risks are increasingly for a nasty surprise that not much does get done. Theres a lot of data out this week or does that matter. If it gets published. Even the eurozone pmi and so on . The pmis do matter this week. They have different points. Will it look more like the chinese one we saw this morning which was disappointing or the japanese one. Will exports start picking up. In the eurozone will green chutes fade into autumn leaves. In the u. K. Is the strength of the Services Data that were seeing and the manufacturing data going to actually translate into decent hard data and in the u. S. Is there any impact on the other hand of people anticipating this shutdown and saying that sends a very bad signal for america . Well, well talk it out certainly throughout the show. Staying with us, mark oswald, strategist at monument securities. Give us your opinion. There should be lots of them this week. Take part in our online poll this week. Were asking you how to trade the s p 500 as a u. S. Shutdown looms. Head to trader poll. Cnbc. Com and cast your vote. Straightaway you will begin to see the trend. You can have your say in twitter, use traderpoll and you can tweet ross or i. You can. Dont miss out on that. Got some data out of italy. Producer points up 2 month on month. The year end rate falling. 2 . The biggest decline in almost four years. The annual decline the biggest since 2009. Plenty more to come on todays show. Were just full of good news today, arent we . On todays show, cleaning graffiti, picking up rubbish. This is what im going to do in london for the rest of the week. Cleaning graffiti, picking up rubbish and going to the job center for the rest of the week. Those are the tasks for the unemployed under government proposals. We have the latest at 10 30 c. E. T. Plus, german finance minister is talking about the green party. Well have the latest from frankfurt in 30 minutes. President obama says the new insurance exchanges created by his Health Care Law will launch tomorrow. At 11 20 c. E. T. We ask if obama care can avoid falling foul . Can the u. S. Government avoid the first shutdown in nearly 20 years. Well have the latest from washington. And you know i love this story. As the long awaited free trade zone launches in shanghai, find out whether it poses a competitive threat to hong kong. Un eunice yun will be joining us live from shanghai after the break. Announcer youre watching Worldwide Exchange. Welcome back. Italian Prime Minister will hold a confidence vote in parliament on wednesday as he and the countrys president scramble to save the government from collapse. It follows silvia berlusconis withdrawing his party. Yesterday the italian president said he would do anything to avoid going to the polls seven months after the election. Translator the president of the republic dissolves the republic only if theres no chance of finding a majority. Joining us from rome, claudia penzotti. How is this going to play out from now . Reporter ross, today is going to be an important day. Berlusconi is going to try to persuade his party to stay out with him. It is the idea that there are dissidents to this party. Some of the ministers, some of the five that were asked to step down, the five in the cabinet as well as others have made comments about their doubts Going Forward with this idea that bur lerlusconi has had on government. They want to postpone it so they can work to try to get more support. He needs 24 particle la mliamen his side. He may get a majority. He probably will get a majority. The question is how strong will it be . How much longer can he hold out before this government needs to go to an election . Clearly its important to pass a new electoral law before that happens. Its important to pass a stability law by october 15th and another big step is, of course, not part of the government but part of time. On the 4th of october, the committee thats evaluating whether to send to parliament a vote on his senate seat if that goes forward as well. This could mean a future without the possibility of actively participating in politics for senior berlusconi. This is a crucial week for the Italian Government in general and for politics in italy. Joining us is mark oswald and hes saying hue we hate politics in the market. This has blown up much quicker than people thought. The question is can we get some kind of not a new government, can we get something that passes a stability law as claudia was saying and the electoral law on a casebycase basis. Can we muddle through here . Right. I would say that was definitely possible. Theres been a growing number of defect shuns. Some of these have been very high profile including the deputy Prime Minister. If these defect shuns gain momentum, we can see a majority to support the current government or force berlusconi to backtrack. Its unclear if this new majority will be to support a limited time is that conceivable, berlusconi backtracking . Personally, i think thats not likely. I think theres a deal on fiscal policies on the table. The center left has been resisting. Theres an ongoing debate on that. However, any deal i think would likely include ways to freeze the ongoing impeachment of berlusconi. Theres a final vote. Is that going to go . Is that going to go . Right. Thats just not going to happen, i dont think. Mark, you said we hate politics. Weve seen italian yields rise today. Banks being sold off. An election is not new for us. Theyre not new but this does look like a return to old form. 2011. In the current scenario where youre talking about defect shuns within the pdl, you are looking at this breakup of the right which berlusconi, give him credit, he managed to unite the whole of the right. The question, its biz zan thyme, is whether a more sustainable government can be formed. Perhaps the most important thing is this electoral change. Frankly under the Current System theyll likely have the same outcome. Fred der reek a. Thats possible. Theyre talking about passing a budget. Go to elections in early 2014. Thats the question. Can they lead the government in case the majority is too slim . Are the stakes up too quickly by calling a confidence vote . Could he have muddled through this with berlusconi . He may not have all of the support of the party. Would have been able to muddle through but not for too long. This had to happen . Yes. The looming senate on berlusconis impeachment would have been bad for the government in any case. Incompetent stead of giving into the latest rounds of the pdl, latta decided to force them to show their cards. Zooming out a little bit, what are all the implications of this political turmoil. What are the implications for the eurozone, fragile recovery . Theres been some minor slippage that was recently shown by the september budget. The slippage is marginally limited to 2014. The real risk is the market pressure, perhaps to the levels that we saw in 2011, 2012 that could cause trouble in the eurozone. At that point the ecu can resort to its buying program. Lets go back to claudia whos Still Standing by. Claudia, were also looking at corporate movers out of milan today. Specifically with antessa san palo. What can you tell us . Reporter it was planned as far as the exit timing. They decided to announce the resignation of the ceo of intesa. The markets were going to come out certainly in a very cautious state to say the least. So they got that information out. The stock is down not too, too much. This was a rumor that was circulating last month and the stock had suffered by 6. 8 already on the news of that. He was seen as sort of more of an international manager, somebody who was going to move the bank forward sort of away from old italian ways of managing banks and according to shareholders, this is not what they preferred. The longtime manager of the bank is sort of giving the ba bank going back to the old ways for the time being. Other sectors, were watching telecoms where the chairman of telecomutaile may step down. He wanted a capital hike. He didnt get it. Telefonica has snepd and taken t operator. Its a very, very busy week for investors as they are looking for italy trying to grasp whether there is stability or not and look at the individual stories. The banks are a big issue as we were saying. They are holding on to a lot of government italian debt. Its increased from 397 billion total that they are holding now of Italian Government debt. We have to watch the spreads and yields. Its an incredible time. This gets put in the past and they move forward. Thank you so much. Just more on that. San paulo is saying its going to speed up the effect of the groups potential. Basically what claudia was saying. Meanwhile, politics also in focus in the u. K. Prime minister David Cameron is defending his governments mortgage security scheme. Cameron talks about why he thought it was important to bring forward the help to buy despite the fact that its going to create a problem. Im not going to stand in the way as peoples dreams are trashed. Thats why its good news that were bringing forward the help to buy scheme. I can tell you today that matt west, halifax are all going to be putting forward these products. This morning we have data out that said house prices are up 1 2 percent. At the same time, british chancellor George Osbourne is due to address the conference this morning and will announce new plans for longterm unemployed to do Community Work or training to get their benefits. Our correspondent is in manchester. The chancellor will use his speech to say after three long years the british economy is finally turning the corner. He will say the battle is a long way from being done. While the labor Party Last Week lurched to the left politically, the tourists will be fighting to try to persuade brittain that they are the business Friendly Party and able to plot this really steady course for the economy to come back. We are still below historical debates. The help to buy scheme has raised huge questions about whether the government is going to create an asset bubble that is dangerous and an unbalanced u. S. Recovery. We have warnings from the imf and the business secretary, vince kamber. Theyve raised concerns because after all we still dont know until next week what these new powers that the bank of england has that is going to put a check on the help to buy scheme and make sure it doesnt fall foul of asset prices. The Business Community in the u. K. Are also going to be asking, is enough being done on skills and immigration, on Infrastructure Spending and on business rates. This is going to be a Conference Full of politics. Weve got the headlines today this morning talking about the work to door scheme. This is the unemployed being forced to do community service. Remember, this is a conference dedicated to hard working people and were going to hear a lot about those rights, but the question is going to be the cost of living. Will people have recognized the recovery in the u. K. How is that going to affect their pockets and the chancellors going to have a lot of hard work to persuade people that the recovery is really benefitting them quite yet. Now, mark, i saw you nodding your head a little bit and sort of chuckling at some of those things. What catches your eye about that . I think theres three things. All the issues to do with structural problems in the u. K. Are never being addressed. This isnt just this government, its serial governments for the last 50 years and they are a major issue and its getting worse the more people dont do something. Its a classic balloon effect. It goes expo tension nal. With the hope to buy is very good for them to talk about. We saw when we had the collapse in the whole borrowing in the u. K. , it wasnt about aspirational, its about actually affordability. And guaranteeing all of these things if basically someone is having to get a 95 mortgage and that represents if its guaranteed by the government and that represents eight times earning, its not affordable. Yes, it may be playing into their aspirations, but in realistic terms youve still got this massive divide and really what needs to be done much more is something that focuses on the supply side. What weve got i