Transcripts For CNBC Worldwide Exchange 20131017 : vimarsana

Sab miller does see solid growth in africa. Youre watching Worldwide Exchange, bringing you Business News from around the globe. All right. A warm welcome to todays edition of Worldwide Exchange. Well the markets had it right all along. Crisis has been averted on capitol hill. And now the senate and house voting to pass the deal nearly at the 11th hour to raise the debt ceiling and reopen the government for now. President obama signed the bill shortly after midnight. Steve handelsman wraps it all up from washington. Good evening, everybody. I want to thank the leadership for coming together and getting this done. Hopefully next time it wont be in the 11th hour. Hopefully next time it wont be be and raised the debt ceiling through february 7th but america came close to default. This was pain infliktd on a nation for no good reason. Reporter the plan easily passed the senate. The motion is adopted. Reporter and the house, where most republicans voted no and the tea party vowed to keep targeting obama care. We indeed will continue to fight. Were fought going nowhere. Moderate republicans vowed to prevent another crisis. Early on targeting the one guy who caused it all, ted cruz. But the texas senator loves the obama care light and the spotlight. I am encouraged by the millions of americans who want to get back to the constitution and stop this train wreck of a law that is the biggest job killer in this country. After 16 days all of government will be open. Debts will get paid. But the partisan fight will go on. Im Steve Handelsman nbc news capitol hill. But the reaction has been investors believed at the 1 is 1st hour there would be something signed so they havent fallen off all that much. But this morning, this is where we stand. The ftse off 0. 5 . The xetra dax off 0. 75 . The ftse mib off 0. 8 as well. Take a look at the asian reaction. Slightly more mixed. Nikkei closing up 0. 8 . The s p asx up 0. 3 and the s p index in india down about 0. 3 . On the bond markets, the reaction was in u. S. Treasury. The debt kreeld 2. 6158 . That is pretty much where we were preshutdown. So a big rally in the ten year. As far as currency markets are concerned, the dollar yen got up to 99 earlier. Asian session right now, dollar yen back down to 97. 90. Euro dollar, back over the 136 mark. Later in trade, we were down to 1. 3472. The pound back over 1. 60 is where we were yesterday. What happens now . Were joined by john hardy head of fx strategy at saxo bank and with me on set Mark Castillo chairman of the bankers group. John, lets kick off with you first of all. There had been some thought about whether we would see a slowdown in demand longterm impact for u. S. Aspects. Do you actually see that happening . Well i think what we see here is a case where because weve nearly seen a temporary delay of a few months the market is very uncertain on whether wire going to see this fight crop up again in a few months time. And, of course it keeps the fed on hold. Were seeing the dollar weaker across the board, although it didnt seem the market was fearing the market all along. Risk assets were up sharply. Its simply a question now i think of the dollar being weak as the fed is anticipating being very much on hold as we get clarity around january and february. In a way, the debt ceiling expires, what, february the 7th but with extraordinary measures we might actually see a resolution if we go to the wire again. It might be april or something. There is no fed tapering until at least the back end of the First Quarter. Yeah. You would certainly think is unless we see pronounced progress in the political hard. Hard to believe that with several years of not being able to create a budget and merely doing these continuing resolutions time after time. Again, the market really saying here that the fed is very much on hold. Mark, have you asian comments had any impact or not . I am sure that there are very active discussions between the holdings. Theres an enormous amount of concern about the unknown, if the United States did default, if the virtual free haven disappears. People didnt have a frame of reference going forward. Everyone is relieved. People expected this outcome. The market really only reacts to real event it is status quote for a while. Theyre saying china and japan now own about 67 more treasuries than it did during the previous round of sparring over the debt limit. At the end of the day, is there any substitute for the dollar . Particularly bearing in mind they used these as collateral for trades. What else are they going to use . In terms of major currency blocks in terms of the euro the u. S. Economy has a way of coming out of problems faster than europe. So i think some people are looking at baskets of currencies stronger smaller countries currencies and people using commodities as Virtual Currencies for longterm savings and value preservation. But the dollar is still the dollar and theres no major currency threatening that on the horizon that we can see so far. John do you see that . There is for all the talk at the end of the dollar the dollar will stay the world currency for quite some time. Yes. You have seen a lot of steps lately from china move forward with eventual liberalization imploding with its currency. The big swap with europe. In a world where the reserve is so much larger than another, its going to be there for at leave the a decade to come i would guess. And as far as trading until the yearend does dollar yen stay in the 95 to 100 level . Euro dollar between 1. 30 and 1. 38, for example . I think we could see the dollar weakness peter out rather quickly. We may see Something Like 1. 38 or slightly newer highs for euro dollar. But well see an anticipation of a november ecb meeting where draghi needs to come out and reach into the toolbox and stop the de facto monetary policy. I see that coming. Dollar yen could see a pretty deep correction. Thats been a latent stale trade. And as well can Risk Appetite continue higher from here . The dollar yen comes back in either as a safe haven currency if we get risk off or data proves more supportive we get the fed taper back into the cards. What do you think dollar yen could go down to . So for dollar yen in terms of volatility, its high to the down side because i think a lot of stops, a lot of old long positions. 95 could certainly possibly be even lower. But i see these as longterm attractive levels to accumulate dollar yen. I think there is shortterm risk of some down side. What do you think martin . If the yen isnt going to weaken any more what happens to institutional flows into japan . I think what well see is pretty much the economies in asia muddling through where they are, europe and the United States muddling through and trying to get through these obstacles. We saw a big drop off in vix today, too. There is some activity around that. But its basically within the expected events, i would think and no major corrections unless theres a Political Risk event which could happen in asia which is getting spaceyer. Mag, you stick around. John, thank you very much. The s. E. C. Says it has no plan to change u. S. Treasury holdings. There you go it confirm what we were just talking about. For more on the debt ceiling, head to cnbc. Com. Also on the website, has treasuries still in favor . Follow us on twitter cnbcworld. With the prospect of being in the same situation again in just 11 weeks, were asking do you think it might be any different next time . The president says it would be but is he going to be right . Email us, worldwide cnbc. Com, tweet cnbcwex or direct to me rosswestgate. American mobile is rethinking its expansion plan. The company has announced its not going ahead with its takeover of kpm. American movil owns 30 and says it has not made a decision on what to do with its remaining stake. Plenty more to come on the program, as well. The holidays are coming. Well get reaction from paul caber, chairman of billick. John harwood will be wuls with us at 11 00 cet as investors prepare for a slew of Economic Data to hit the wires. And is gold just so last year . The precious safe haven stad status may be dented by debt diagram in. Fiscal policies in gold have skyrocketed. Could they preview the numbers. If thats not enough, as reports suggest chocolatemaker nestle could prepare to by nutella. Well have a view of the swiss Multi National stock, as well. Plenty more to come from Worldwide Exchange. I love having a free checked bag with my united mileageplus explorer card. Ive saved 75 in checked bag fees. [ delavane ] priority boarding is really important to us. You can just get on the plane and relax. [ julian ] having a card that doesnt charge you foreign transaction fees saves me a ton of money. [ delavane ] we can go to any country and spend money the way we would in the u. S. When i spend money on this card, i can see brazil in my future. [ anthony ] i use the explorer card to earn miles in order to go visit my family which means a lot to me. We are plenty of news out of europe today. Syngenta up 1. 5 . Expecting 22. 30 which is below analyst expectations. Share price doing oak. Roche, fairly flat right now. Sales in china are up 23 for the first nine months of the year. The worlds biggestmaker of cancer drugs said the u. S. Health care reform will help extend its market penetration. Nestle today is up 2. 25 . It recorded a 4. 4 rise in ninemonth sales. It did confirm its annual growth target of 5 in line with a previous forecast of 5 and 6 . Some relieved that they kept that. Investors might be eyeing a report into the italian newspaper. Well keep our eyes on that. Catch the interview on european closing bell on 1700 cet. Theres more stocks here that are in focus, as well. Bskyb reporting a right in fits quarter revenue, helped by growing customers. Profit fell slightly. The companys warning the rest of the year is going to be fairly challenging with uk Consumer Spending squeeze. Well find out more. Retail sales stock up nearly 5 . Diageo down marginally this morning. Its, again, warning over a slowdown in asia. First quarter total sales up 3. 1 impaired to 5 in the same period last year. With American Growth still fairly solid, head winds as you might expect in europe. Sab miller on the other hand stocks up today 4 as well. Solid growth in latin america for the global brewer. Pretty much in line with forecasts. But the markets still like it. And carrefour in france is up just under 2 . Talking about a turn around in its Domestic Stores reverseing a multi year sales slump. Stephane is in paris with more details. Ste far. That was important because carrefour makes 48 of its revenue out of france and the company confirmed this morning revenue in its main domestic market. Revenue was up 2 organically in the Third Quarter. Thats a contraction for its main rival. The new ceo of carrefour has xwlekted a new strategy with less products and lower price and it gives local managers more availability to adjust their prices. In that part of the globe, the company has been affected by a negative currency fx with the depreciation of the rio in brazil against the euro. In asia, sales are up nearly 4 due to the recovery of its business in china and in the rest of europe excludeing france. Organic sales are down nearly 2 . Thats because of the weak economic environment, especially in italy where the sales dropped nearly 5 . In terms of what you say three months ago is confidence with the growth of everything profit of 2. 2 billion euros this year at carrefour. So its a strong set of numbers and thats the reason why the stock is performing well this morning. Its top gainer ross on the cac 40. Stephane thanks for that. Now, our next guest meanwhile is under way consumer staples. He thinks the sector is one of the worst places to invest. Kevin, good to see you. Good morning. Thanks indeed for joining us. Were talking about the likes of unileaver, weve heard this morning. These guys generate a lot of cash. They had exposure to asia which is what investors previously wanted. The price in the current environment. These companies have done exceptionally well over the last few years, which has been a climate of fear. Weve come through, the lehmans crisis the eurozone crisis fears about the u. S. Tapering and, you know various budget implications etcetera. What that means is those companies do very well in a fear based environment. Were now in a situation where some of those elements are behind us. The environment in europe is improving. Economic growth in europe is improving. Arguably in the u. S. People are being desensitized over there because theyre coming so frequent. If we were return to go a better growth environment and were at the early stages of Economic Growth globally these arent the kind of companies that are going to outperform going forward. They will probably do okay. But relative to the market i think theyll underperform. So my portfolio is very underweight this area and very overweight the more cyclical and financial so theyve had their day. Exactly. Theyve done exceptionally well for numerous years now. These companies were on the nestles, the diaggios are on pes. As opposed to a credit suisse. I think that discretion will close over time as the european economy starts to pick up. Does that make sense to you, mark . I am a bit more bullish coming from the emergeing markets. I have no position on the thoughts that have been described here. But with the growth in africa or the growth in asia the growth in latin america and the growth World Population from 7 billion to 9 billion which continues to pay, i think the growth in gdp per capita and the growth in populations will meet the fmcg businesses can be very attractive. But theyll be differentiated by strategy. Someone in alcoholic beverages and they do better in recession can be very different from someone in organic foods which would be less attractive. So i would look at the company, the sector the strategy and the usual factors. The interesting thing is they have spent the last couple of quarters. Asian growth hasnt been quite what we expected right . And actually theyve been damaged by that because you had some growth and its not quite delivery. Unilever has been the same as well. India is one of the worlds maybe the Worlds Largest brown spirits market. And when these businesses were put together in the 1980s with a combination of deals on the guinness platform a lot of Growth Opportunities were dramatically underexploited. Some of them had been exploited. Theres still some to go in the sector if people say focused. What youre saying, kevin, is im more interested in leveraging return to growth in europe than you are interested in leveraging growth. I think as European Companies come out of session into recovery investors will focus more on the domestic markets rather than the emerging markets because thats been the game thats been played for the last four or five years. The growth is still there, dont get me wrong. Its priced in at the moment. Its essentially where the pricing is. You mentioned back eurozone. Uran banks, yes . European banks. The capital ratios are now strong. They can start to return to normal banging. If we get some tests that tell us the underlying picture. On a limited basis. I think the major banks in europe know theyve done it. You get a few peripheral banks that have to raise some capital. I think thats more than in the price again because youre looking at companies peripherally that are priced at values of 0. 6. So its a very slowly values. For a reason. For a reason yeah. Kevin lilley fund manager at old mutual global investors. Good to talk to you. Lets turn our toengz back to china. The u. S. Debt crisis is pushed off until next year. The trade minutester industries are warning its trade may be challenged in the Third Quarter. Still, capital is still going into the country unabated. Fund direct investment into china up nearly 5 . September. What do you expect from the growth number . How important is it going to be whatever it is . I think you always have to take the official numbers with a small grain of salt. Not a medium size out of china. I think the real Growth Numbers may be around 7, not 7. 6. That may be high if you look at the rates of development. Its stale strong story, its very attractive compared to the developed world. It is slowing, they have environmental issues, some productivity issues, they have some issues to deal with going forward. But i think it will be strong, it will be at the 7. 5 , 6. 5 . Its really good going in a world thats mired in problems these days. Some people are talk about how the vix is now if you want to hedge one use the vix much more than you would goal. Do you go along with that . I dont think id substitute playing the vix on a portfolio for gold. Gold hay has played a role in peoples portfolios for a long period of time. Its something you buy with deep understanding of the market and whether its physical or even coins, which is a 5 or 10 premium if you want to keep the coins at home. Its played a significant role in the savings of indian families where women wear their savings as gold. Theres a lot of factors that drive the gold market that are unique that you need to understand. I wouldnt substitute vix for gold and i would think about having some small portion of gold in a portfolio. Theres a big dip in the volatility index poster. Mark, good to see you. Thanks so much for joining us. Still to come on the show bskyb has warned that british Consumer Spending remains weak and analysts are calling for a pick up in british retail sales today after augusts big dip. Well break that data right after this. Buy the rumor, sell the news as investors turn their attention away from washington to corporate stories. Kpm plunges nearly 10 after American Mobile hangs up on its bid to buy the dutch telecom. But the ceo says they could reconnect. And its a mixed emerging markets consumers staple ss sab miller sees solid growth in africa. We have retail sales out for the uk for the month of september. Up 0. 6 for the month, up 2. 2 on the year. Thats stronger than the forecast to rise 0. 3 on the month, up 1. 9 on the year. Thats the fastest growth since Worldwide Exchange<\/a>, bringing you Business News<\/a> from around the globe. All right. A warm welcome to todays edition of Worldwide Exchange<\/a>. Well the markets had it right all along. Crisis has been averted on capitol hill. And now the senate and house voting to pass the deal nearly at the 11th hour to raise the debt ceiling and reopen the government for now. President obama signed the bill shortly after midnight. Steve handelsman wraps it all up from washington. Good evening, everybody. I want to thank the leadership for coming together and getting this done. Hopefully next time it wont be in the 11th hour. Hopefully next time it wont be be and raised the debt ceiling through february 7th but america came close to default. This was pain infliktd on a nation for no good reason. Reporter the plan easily passed the senate. The motion is adopted. Reporter and the house, where most republicans voted no and the tea party vowed to keep targeting obama care. We indeed will continue to fight. Were fought going nowhere. Moderate republicans vowed to prevent another crisis. Early on targeting the one guy who caused it all, ted cruz. But the texas senator loves the obama care light and the spotlight. I am encouraged by the millions of americans who want to get back to the constitution and stop this train wreck of a law that is the biggest job killer in this country. After 16 days all of government will be open. Debts will get paid. But the partisan fight will go on. Im Steve Handelsman<\/a> nbc news capitol hill. But the reaction has been investors believed at the 1 is 1st hour there would be something signed so they havent fallen off all that much. But this morning, this is where we stand. The ftse off 0. 5 . The xetra dax off 0. 75 . The ftse mib off 0. 8 as well. Take a look at the asian reaction. Slightly more mixed. Nikkei closing up 0. 8 . The s p asx up 0. 3 and the s p index in india down about 0. 3 . On the bond markets, the reaction was in u. S. Treasury. The debt kreeld 2. 6158 . That is pretty much where we were preshutdown. So a big rally in the ten year. As far as currency markets are concerned, the dollar yen got up to 99 earlier. Asian session right now, dollar yen back down to 97. 90. Euro dollar, back over the 136 mark. Later in trade, we were down to 1. 3472. The pound back over 1. 60 is where we were yesterday. What happens now . Were joined by john hardy head of fx strategy at saxo bank and with me on set Mark Castillo<\/a> chairman of the bankers group. John, lets kick off with you first of all. There had been some thought about whether we would see a slowdown in demand longterm impact for u. S. Aspects. Do you actually see that happening . Well i think what we see here is a case where because weve nearly seen a temporary delay of a few months the market is very uncertain on whether wire going to see this fight crop up again in a few months time. And, of course it keeps the fed on hold. Were seeing the dollar weaker across the board, although it didnt seem the market was fearing the market all along. Risk assets were up sharply. Its simply a question now i think of the dollar being weak as the fed is anticipating being very much on hold as we get clarity around january and february. In a way, the debt ceiling expires, what, february the 7th but with extraordinary measures we might actually see a resolution if we go to the wire again. It might be april or something. There is no fed tapering until at least the back end of the First Quarter<\/a>. Yeah. You would certainly think is unless we see pronounced progress in the political hard. Hard to believe that with several years of not being able to create a budget and merely doing these continuing resolutions time after time. Again, the market really saying here that the fed is very much on hold. Mark, have you asian comments had any impact or not . I am sure that there are very active discussions between the holdings. Theres an enormous amount of concern about the unknown, if the United States<\/a> did default, if the virtual free haven disappears. People didnt have a frame of reference going forward. Everyone is relieved. People expected this outcome. The market really only reacts to real event it is status quote for a while. Theyre saying china and japan now own about 67 more treasuries than it did during the previous round of sparring over the debt limit. At the end of the day, is there any substitute for the dollar . Particularly bearing in mind they used these as collateral for trades. What else are they going to use . In terms of major currency blocks in terms of the euro the u. S. Economy has a way of coming out of problems faster than europe. So i think some people are looking at baskets of currencies stronger smaller countries currencies and people using commodities as Virtual Currencies<\/a> for longterm savings and value preservation. But the dollar is still the dollar and theres no major currency threatening that on the horizon that we can see so far. John do you see that . There is for all the talk at the end of the dollar the dollar will stay the world currency for quite some time. Yes. You have seen a lot of steps lately from china move forward with eventual liberalization imploding with its currency. The big swap with europe. In a world where the reserve is so much larger than another, its going to be there for at leave the a decade to come i would guess. And as far as trading until the yearend does dollar yen stay in the 95 to 100 level . Euro dollar between 1. 30 and 1. 38, for example . I think we could see the dollar weakness peter out rather quickly. We may see Something Like<\/a> 1. 38 or slightly newer highs for euro dollar. But well see an anticipation of a november ecb meeting where draghi needs to come out and reach into the toolbox and stop the de facto monetary policy. I see that coming. Dollar yen could see a pretty deep correction. Thats been a latent stale trade. And as well can Risk Appetite<\/a> continue higher from here . The dollar yen comes back in either as a safe haven currency if we get risk off or data proves more supportive we get the fed taper back into the cards. What do you think dollar yen could go down to . So for dollar yen in terms of volatility, its high to the down side because i think a lot of stops, a lot of old long positions. 95 could certainly possibly be even lower. But i see these as longterm attractive levels to accumulate dollar yen. I think there is shortterm risk of some down side. What do you think martin . If the yen isnt going to weaken any more what happens to institutional flows into japan . I think what well see is pretty much the economies in asia muddling through where they are, europe and the United States<\/a> muddling through and trying to get through these obstacles. We saw a big drop off in vix today, too. There is some activity around that. But its basically within the expected events, i would think and no major corrections unless theres a Political Risk<\/a> event which could happen in asia which is getting spaceyer. Mag, you stick around. John, thank you very much. The s. E. C. Says it has no plan to change u. S. Treasury holdings. There you go it confirm what we were just talking about. For more on the debt ceiling, head to cnbc. Com. Also on the website, has treasuries still in favor . Follow us on twitter cnbcworld. With the prospect of being in the same situation again in just 11 weeks, were asking do you think it might be any different next time . The president says it would be but is he going to be right . Email us, worldwide cnbc. Com, tweet cnbcwex or direct to me rosswestgate. American mobile is rethinking its expansion plan. The company has announced its not going ahead with its takeover of kpm. American movil owns 30 and says it has not made a decision on what to do with its remaining stake. Plenty more to come on the program, as well. The holidays are coming. Well get reaction from paul caber, chairman of billick. John harwood will be wuls with us at 11 00 cet as investors prepare for a slew of Economic Data<\/a> to hit the wires. And is gold just so last year . The precious safe haven stad status may be dented by debt diagram in. Fiscal policies in gold have skyrocketed. Could they preview the numbers. If thats not enough, as reports suggest chocolatemaker nestle could prepare to by nutella. Well have a view of the swiss Multi National<\/a> stock, as well. Plenty more to come from Worldwide Exchange<\/a>. I love having a free checked bag with my united mileageplus explorer card. Ive saved 75 in checked bag fees. [ delavane ] priority boarding is really important to us. You can just get on the plane and relax. [ julian ] having a card that doesnt charge you foreign transaction fees saves me a ton of money. [ delavane ] we can go to any country and spend money the way we would in the u. S. When i spend money on this card, i can see brazil in my future. [ anthony ] i use the explorer card to earn miles in order to go visit my family which means a lot to me. We are plenty of news out of europe today. Syngenta up 1. 5 . Expecting 22. 30 which is below analyst expectations. Share price doing oak. Roche, fairly flat right now. Sales in china are up 23 for the first nine months of the year. The worlds biggestmaker of cancer drugs said the u. S. Health care reform will help extend its market penetration. Nestle today is up 2. 25 . It recorded a 4. 4 rise in ninemonth sales. It did confirm its annual growth target of 5 in line with a previous forecast of 5 and 6 . Some relieved that they kept that. Investors might be eyeing a report into the italian newspaper. Well keep our eyes on that. Catch the interview on european closing bell on 1700 cet. Theres more stocks here that are in focus, as well. Bskyb reporting a right in fits quarter revenue, helped by growing customers. Profit fell slightly. The companys warning the rest of the year is going to be fairly challenging with uk Consumer Spending<\/a> squeeze. Well find out more. Retail sales stock up nearly 5 . Diageo down marginally this morning. Its, again, warning over a slowdown in asia. First quarter total sales up 3. 1 impaired to 5 in the same period last year. With American Growth<\/a> still fairly solid, head winds as you might expect in europe. Sab miller on the other hand stocks up today 4 as well. Solid growth in latin america for the global brewer. Pretty much in line with forecasts. But the markets still like it. And carrefour in france is up just under 2 . Talking about a turn around in its Domestic Stores<\/a> reverseing a multi year sales slump. Stephane is in paris with more details. Ste far. That was important because carrefour makes 48 of its revenue out of france and the company confirmed this morning revenue in its main domestic market. Revenue was up 2 organically in the Third Quarter<\/a>. Thats a contraction for its main rival. The new ceo of carrefour has xwlekted a new strategy with less products and lower price and it gives local managers more availability to adjust their prices. In that part of the globe, the company has been affected by a negative currency fx with the depreciation of the rio in brazil against the euro. In asia, sales are up nearly 4 due to the recovery of its business in china and in the rest of europe excludeing france. Organic sales are down nearly 2 . Thats because of the weak economic environment, especially in italy where the sales dropped nearly 5 . In terms of what you say three months ago is confidence with the growth of everything profit of 2. 2 billion euros this year at carrefour. So its a strong set of numbers and thats the reason why the stock is performing well this morning. Its top gainer ross on the cac 40. Stephane thanks for that. Now, our next guest meanwhile is under way consumer staples. He thinks the sector is one of the worst places to invest. Kevin, good to see you. Good morning. Thanks indeed for joining us. Were talking about the likes of unileaver, weve heard this morning. These guys generate a lot of cash. They had exposure to asia which is what investors previously wanted. The price in the current environment. These companies have done exceptionally well over the last few years, which has been a climate of fear. Weve come through, the lehmans crisis the eurozone crisis fears about the u. S. Tapering and, you know various budget implications etcetera. What that means is those companies do very well in a fear based environment. Were now in a situation where some of those elements are behind us. The environment in europe is improving. Economic growth in europe is improving. Arguably in the u. S. People are being desensitized over there because theyre coming so frequent. If we were return to go a better growth environment and were at the early stages of Economic Growth<\/a> globally these arent the kind of companies that are going to outperform going forward. They will probably do okay. But relative to the market i think theyll underperform. So my portfolio is very underweight this area and very overweight the more cyclical and financial so theyve had their day. Exactly. Theyve done exceptionally well for numerous years now. These companies were on the nestles, the diaggios are on pes. As opposed to a credit suisse. I think that discretion will close over time as the european economy starts to pick up. Does that make sense to you, mark . I am a bit more bullish coming from the emergeing markets. I have no position on the thoughts that have been described here. But with the growth in africa or the growth in asia the growth in latin america and the growth World Population<\/a> from 7 billion to 9 billion which continues to pay, i think the growth in gdp per capita and the growth in populations will meet the fmcg businesses can be very attractive. But theyll be differentiated by strategy. Someone in alcoholic beverages and they do better in recession can be very different from someone in organic foods which would be less attractive. So i would look at the company, the sector the strategy and the usual factors. The interesting thing is they have spent the last couple of quarters. Asian growth hasnt been quite what we expected right . And actually theyve been damaged by that because you had some growth and its not quite delivery. Unilever has been the same as well. India is one of the worlds maybe the Worlds Largest<\/a> brown spirits market. And when these businesses were put together in the 1980s with a combination of deals on the guinness platform a lot of Growth Opportunities<\/a> were dramatically underexploited. Some of them had been exploited. Theres still some to go in the sector if people say focused. What youre saying, kevin, is im more interested in leveraging return to growth in europe than you are interested in leveraging growth. I think as European Companies<\/a> come out of session into recovery investors will focus more on the domestic markets rather than the emerging markets because thats been the game thats been played for the last four or five years. The growth is still there, dont get me wrong. Its priced in at the moment. Its essentially where the pricing is. You mentioned back eurozone. Uran banks, yes . European banks. The capital ratios are now strong. They can start to return to normal banging. If we get some tests that tell us the underlying picture. On a limited basis. I think the major banks in europe know theyve done it. You get a few peripheral banks that have to raise some capital. I think thats more than in the price again because youre looking at companies peripherally that are priced at values of 0. 6. So its a very slowly values. For a reason. For a reason yeah. Kevin lilley fund manager at old mutual global investors. Good to talk to you. Lets turn our toengz back to china. The u. S. Debt crisis is pushed off until next year. The trade minutester industries are warning its trade may be challenged in the Third Quarter<\/a>. Still, capital is still going into the country unabated. Fund direct investment into china up nearly 5 . September. What do you expect from the growth number . How important is it going to be whatever it is . I think you always have to take the official numbers with a small grain of salt. Not a medium size out of china. I think the real Growth Numbers<\/a> may be around 7, not 7. 6. That may be high if you look at the rates of development. Its stale strong story, its very attractive compared to the developed world. It is slowing, they have environmental issues, some productivity issues, they have some issues to deal with going forward. But i think it will be strong, it will be at the 7. 5 , 6. 5 . Its really good going in a world thats mired in problems these days. Some people are talk about how the vix is now if you want to hedge one use the vix much more than you would goal. Do you go along with that . I dont think id substitute playing the vix on a portfolio for gold. Gold hay has played a role in peoples portfolios for a long period of time. Its something you buy with deep understanding of the market and whether its physical or even coins, which is a 5 or 10 premium if you want to keep the coins at home. Its played a significant role in the savings of indian families where women wear their savings as gold. Theres a lot of factors that drive the gold market that are unique that you need to understand. I wouldnt substitute vix for gold and i would think about having some small portion of gold in a portfolio. Theres a big dip in the volatility index poster. Mark, good to see you. Thanks so much for joining us. Still to come on the show bskyb has warned that british Consumer Spending<\/a> remains weak and analysts are calling for a pick up in british retail sales today after augusts big dip. Well break that data right after this. Buy the rumor, sell the news as investors turn their attention away from washington to corporate stories. Kpm plunges nearly 10 after American Mobile<\/a> hangs up on its bid to buy the dutch telecom. But the ceo says they could reconnect. And its a mixed emerging markets consumers staple ss sab miller sees solid growth in africa. We have retail sales out for the uk for the month of september. Up 0. 6 for the month, up 2. 2 on the year. Thats stronger than the forecast to rise 0. 3 on the month, up 1. 9 on the year. Thats the fastest growth since First Quarter<\/a> 2008. The september figures come off a bit of a dip in august. Joining us with his thoughts paul cavener. Thanks for joining us. A bit of a rebound in the economy. People have been wondering, bear in mind they have no average earnings increase. What is Consumer Spending<\/a> based on . First of all, that is a good number. There was the potential for september to be a rather good month. If you pick up on some of the stocks likes next and marks spencer, they have a wobble towards the end of the month in their share prices. And that was on the basis, particularly in the uk its a critical time for these retailers as theyre start to go stop new goods. And its a very warm september. And as a result of that there was a fear that many of these stocks were seeing the numbers. At the moment the savings ratio in the uk is certainly on a down trend. I think during the recession and during the financial crisis it was notable how consumers started increasing the savings ratio of money and putting money aside, repaying debt. But over the course over the summer months of 2013 its been notable that the savings ratio has started to dip back down again. So its a sign that consumers i dont think are necessarily spending this money out of wage increases. Yeah. Which is going to be interesting for how you know what happens in the future. Uk sales down 6. 9 over the first half to 7. 5 . This used to be roadway occurring theme where the National Markets<\/a> are doing well but the uk market is tough. It is tough. When you analyze the number were not necessarily talking about volume growth in terms of selling more. Its the fact that there is inflation in the system inflation data earlier this week was indicating that area on year were up around 2. 7 at the moment and, therefore, its 0. 6 month on more is indicative more of the price increase. So from an investment point of view, what do you do with the exposed consumer in the uk at the moment . Do you avoid . And if you are leveraging that is there somewhere to go or not . Yes. Well, the consumer at the moment is still a stable area of the economy. As a result of that if you can go with a well managed brand operating competitively in this market at the moment we know on high street there are certain Business Models<\/a> becoming unstopped. Theyre finding life quite difficult at the moment and it is Good Management<\/a> that is sort of able to navigate the down term. Who are now a Distribution Center<\/a> for ebay. Right . Absolutely. So the way you manage the business model, the back drop is stable. You have got some strong brands. Youve got some weak brands in there at the moment. So there are ways of playing this market. I think when you look more internationally, where the opportunity lies at the moment particularly when were going to be talking about diaggio and unilever, is that the emerging markets has been a story and theres a view there as to whether emerging markets are slowing down permanently or whether there is a blitz and if its a blitz, its up side. Well look at that. Lets bring you up to speed with nestle. There were reports that nestle was looking at buying the nutellamaker. Dallas release that came out that says nestle is not planning any big acquisitions at the moment. He says he sees 5 to 6 growth next year. Seems fairly doable and acceleration should continue in the Fourth Quarter<\/a>. As for the earnings paul mentioned diaggio. First quarter total sales up 3. . North American Growth<\/a> is solid. Head winds, though still in europe. Its different emerging markets story for sab miller, the brewer. Its reported solid growth in america. Overall net sales up 4 in the first half of the your largely in line with forecasts. He says europe continues to drag where sales are flat. Interesting. Kevin was on earlier saying Companies Like<\/a> diaggio are very rich on price. Are investors now looking at a cyclical growth story . Essentially. Essentially. I think the area i would disagree with kevin on his analysis is why are they on 16 . From an equities standpoint they have become quite rich. But what is in the back drop is the fact that plantive money has been pushed out of bonds. Its found its way into the equity markets at the moment. Youve got long bond yields now down at 2 . Whats happened is theres been a crunch in the earnings shield on very stable consumer stocks. They may have a bit of weakness in asia. The north america base is bubbling up at the moment. I think the aurm whether its back is more akin to whether it starts to suck the money back out of the markets and back into safe haven assets. I think it will continue to expand in these core consumers. Whether investors you know, what is it theyre going to want . Are they going to want growth or are they going to want cash generation . I dont know what the answer is to that. With unilever were not talking about a business going into reverse. Where corporate res so much better positioned, we have a handle on that slowdown is theyve got the ability to cut costs. And theyve been able to do that very successfully. And its that cash flow that earn eggs shield which has been attracting investors, the stability of it and compared to pay high prices for it. Lets look at bskyb, as well. It had a rise in its First Quarter<\/a> revenue. Profits down slidely. The company said the rest of the year will be challenging because of that squeeze in uk Consumer Spending<\/a>. What do you make of bskyb . Its been forecast for about ten years. It should never have been this successful right . Its a platform telling. And you think in this day and age of streaming, video have been tv how successful can that plant form prove to be . But what these numbers prove today, and really the recent story is entering the sports markets, trying to undermine the key pillars support for bskyb, wa damage will that do . And the numbers that we saw today, particularly new subscriber numbers were way ahead of expectations. What that does mean is that the profitability for the First Quarter<\/a> means full year expectations are now very much i think, looking firmed up and room for upgrades i suspect as you go through q2 and q3. Inverse that. Put it on an earnings shield. Look at the stability of the income. Thats why i think its an attractive investment in the near term. Longer term it does continue to face challenges the way that people access consumers. Okay. All right. Stick around, paul. Meanwhile congress voted at the 11th hour to pass a bill ending the 16day u. S. Government shutdown and lift the debt ceiling, the there by averting the threat of default. The senate voted 8118 on the measure crafted by marry read and mitch mcconnell. The house followed. It passed the bill by 285144 margin. Every democrat in congress voted yes. A majority of House Republicans<\/a> voted no. The deal will fund the u. S. Government through to january the 15th. It will raise the debt ceiling until february 7th. Thats not that far away. Lawmakers are required to try and hammer out a longterm deal through a Bipartisan Committee<\/a>. Democrats have weighed in following their vote. Averting this crisis is historic. Lets be honest. This is pain inflicted on a nation for no good reason and cannot make cannot make the same mistake again. This is not a happy day. Its a somber day. Because at the end of the day, we never should have gone through wa we went through. Joining us from washington is tracie potts. They say we shouldnt have gone through what weve gone twlu what are the chances of it repeating again . Fairly good chance that well see some back and forth, but in terms of a shutdown that lasts this long, likely not. There was serious damage done here on damage to the economy, 24 billion loss in the course of this shutdown and very much damage politically to both parties. But especially the Republican Party<\/a>. Poll after poll has shown that the American Public<\/a> more so than the Democratic Party<\/a> blames the Republican Party<\/a> for this shutdown and for coming so close to the debt ceiling. So will we see this repeated again in december when that more permanent plan is due . Unlikely that well see a shutdown, but certainly a lot of back and forth, especially about health care which is the one thing that this deal did not really address. How quickly are things going to get up and running . How quickly will we get Economic Data<\/a> . There may be a backlog of things to deal with when these workers comes back. But theyre coming back to work this morning. The office of management and budget put out a statement late last night literally for people to watch the news and if this passed, they were due at work this morning. President obama said it yesterday, that when this passed government would reopen immediately. So youll see people back on the job today. But depending on you know which services halted during the shutdown, it may take a while to work through that bag lock of work that piled up the last few weeks. And the president will be speaking this morning. What do we expect him to say . Well hes likely going to be looking forward and talking about what happens between now and december 13th. And in just a few weeks, theyre going to try to do frankly what congress hasnt been able to do in the last forefour years, which is to come up with a budget. If they dont, then were in the very same place in a few weeks, in the middle of december that we were just a couple of weeks ago. What is going to be the path forward . That is likely what were going to hear the president talk about today. These negotiations over health care. Now, the white house, president obama, democrats have gotten what they wanted. Government reopened first. He promised to talk about health care after government reopened. People are going back to work today. Now they have to have very difficult discussions over where republicans want to scale back and severely scale back a health plan that they dont think is working at all. Tracie good to speak to you. Thanks very much. Youre pulling long hours in washington. Tracie potts from americas capital. Tokyo stocks were higher on the news that the u. S. Congress passed a deal and didnt default. Yukako has more for us. Hi. The nikkei 225 closed up 119 points on a relief rally is and is now in a sevenday winning streak for the first time in seven months. The yen was around 98. 8 yen against the dollar. This pushed up exports in shares. Now that the u. S. Debt issue has settled, the market interest is moving towards corporate earnings later to start in about two weeks time. Backed by the weakening yen, we could be seeing much companies revising forecasts up towards for the full year through march potentially sending the nikkei to its way to its highs. The news is likely to provide comfort to the abe government. Earlier this week, japans finance minister warned u. S. Legislaturemakers that a potential default has great global implicationes and could harm japans economy. That threat is removed, at least for now. Thats all from the nikkei business report. Back to you, ross. Thanks for that. Paul is still with us as well. All the way through this process, bearing in mind how closely we got, incesters are quite sanguin, i think. Yes. I dont think the market dshg it never had a deal not priced into it. Hence todays slippage back. But what it tells me at the back drop of the moment is that were going to continue to go through a spin cycle. Were going through this area of increased optimism around the economy at the moment. But i think the most telling comment from ben bernanke at the september meeting was how the move in long yields had started to impact on Economic Growth<\/a> on some of their forecasts. And it just goes to highlight how sensitive the whole issue is around interest rates. We mustnt lose sight of the fact that theres still lots of debt out there at the moment and, really the economy has been sort of its a confidence issue at the moment. And i feel confident its going to come in waves and can be knocked. The net result of that, of course is what happened to yields and what happens to the equity market. My suspicion as a result of the process that weve been through over the last few weeks is were going to move now to a period of jumping what impact that had on the shortterm economy, what impact that has on the risk premium associated to the u. S. Securities, and then priced out accordingly. Our suspicion is it didnt have too much damage and, hence the data will start to pick up the economy next year. But for my money, i dont think were off to the races yet. And its interesting what the page book talked about, employment remains modest. It is. With janet yellen coming on board, she does not see the inflation risk that others potentially do. We just had a spanish auction out. 2. 081 , lower yields from 2. 24 on september the 19th. The 2018 maximum yields dipped from 3. 16 , as well. Appreciatory yields also down with the preshutdown. And european equities, as paul was alluding to are soft they are morning, get ago do happen deal done was always the base assumption, of course. Well take a short break. Still to come well talk about ibm in a few moments. 0 [ male announcer ] eligible for medicare . Thats a good thing, but it doesnt cover everything. Only about 80 of your part b medical expenses. The rest is up to you. So consider an aarp Medicare Supplement<\/a> insurance plan, insured by unitedhealthcare insurance company. Like all standardized Medicare Supplement<\/a> insurance plans they could save you in outofpocket medical costs. Call today to request a free decision guide. With these types of plans, youll be able to visit any doctor or hospital that accepts medicare patients. Plus, there are no networks, and virtually no referrals needed. Join the millions who have already enrolled in the only Medicare Supplement<\/a> insurance plans endorsed by aarp. And provided by unitedhealthcare insurance company, which has over 30 years of experience behind it. With all the good years ahead, look for the experience and commitment to go the distance with you. Call now to request your free decision guide. O0 c1 ibn fell despite a rise in earnings. Rough quarter for ibm. Earnings per share came in slightly above the target 3. 99 versus 3. 96 expected. Revenue, though came in light. 23. 7 billion versus 24. 8 expected. A big part of the problem here was in wa ibm called Growth Markets<\/a>. Particularly in china. There was a big part of purchase of hardware in china ahead of the government developing a new Economic Development<\/a> plan. They expect to see that in mid november and then theyll have to adjust to it. But apparently the sales team saying theres a big slowdown until china figures out how theyre going to reconfigure the way they buy and do things. Ibcs ceo saying it will take a couple of quarters before they get back on track. Saying that the five point decline in Growth Markets<\/a> will to that china decline, which was down more than 20 . Now, as far as ibm specific units, Global Technology<\/a> services was definitely amiss under the close to 10 billion that the street was looking for. Global Businesses Services<\/a> higher end services did a little better, but still a little bit under what wall street was looking for. Software came in shine of the 5. 98 billion that the street wanted. Hardware, though in part because of that china problem well off the target that china was looking for. But ibm saying they still expect to meet their full year epfs targets trying to reassure the street on that. But after several quarter of Revenue Misses<\/a> disappointments now in china. Analysts were giving ibm a difficult time on the call wondering whether to readjust their models for cnbc im jon fortt. Mean wile the worlds top chipmaker sees a decrease in sales. Tsms says Fourth Quarter<\/a> revenue will likely fall in the Fourth Quarter<\/a>. The Taiwanese Firm<\/a> holding a record 1. 8el billion in its First Quarter<\/a>, rising 2 on the year. A pick up in i. T. Spending in developed markets is paying dividends. Indias major outsources hcl beat earnings estimates taking in more profit in the September Quarter<\/a> than last year. But hcl shares slipped today after recent gains. It Beat Estimates<\/a> earlier this week and its considering a big boost to hiring. The ceo says stronger demand to the u. S. And europe makes a difference. The u. S. Will continue to grow into our longest market. The euro is picking up momentum for us. And i think what markets will do well. And shipments are up and debt is down at the worlds number four iron ore producer. It ships 61 more iron ore in the September Quarter<\/a> compared to last year. With prices up australian firms start to go pay down debt as it finishes off a 9 billion expansion. The shares slipped nearly 3 in trade after recently hitting a 17month high. Fresh off the report the chairman and founder spoke to cnbc in a first on cnbc interview. What you have is a 50 to 100 year demographic change where the peoples of the emerging markets will drag themselves kicking and screaming. There will be no way to ever start into standards of living which you enjoy, which i enjoy. And that will bring a longterm demand on resources. Youll see prices go down and prices go up. Youll need to be at the bottom end of your cost curve to survive when they go down because they will. But you are in a 50 to 100year growth cycle. Thats the latest from fortescue. Basic resources have been a big underperformer over the last couple of years. Is that going to change or not . Were starting to see chinese demand for iron ore up at a record last set of numbers and production for the majors looks to be okay. It does. Theres certainly potential for a rating on these stocks. Two main things happening here at the moment. Foifrt all, crisis and demand is not collapsing quite the way i think the fears were earlier this year. Secondly, most of the major mining groups responded with Cost Cutting Initiative<\/a>s, so theyre not increasing investments at the moment. Rio tinto this year set out to take the 750 million out in terms of costs. And by q3 had already achieved at least 729 million. So the scope for the Cost Cutting Initiative<\/a> of rio tinto. Glencore when they bought xstrata did exactly the same. Theres been a real down on investments at the moment and, of course, at the same time, prices holding up and Production Holding<\/a> up better than expected means that the profitability is coming through for the businesses. The rating has collapsed and that is part of the reason why the sector has been an underperformer of late. But i think it is a sector that potentially is the play the swing factor over the course of the next six months. Yeah. It will be interesting where we go. Lets with that lets see what happens. A couple of other things were looking at as well. Were going to be talking about gold the second half. Do you think gold has lost its luster . Yes. I think for the near term i think gold is still unwinding as a trade. It always was an asset class that played to fears. And as a result of that its very hard to base it with substance as an asset class and, therefore, it becomes the ultimate motive trade. And if you feel the reason why its tracked higher you can see that begin to go undermine. I dont think that necessarily unwinds at the moment but i think it has further to fall back before one would be tempted back in with further exposure. Paul good to see you today. Thanks very much, indeed. Well get retail sales and output data. Three of chinas major banks coming out with data. Well get a quarterly activity update from the aut Australian Energy<\/a> major santos. And the latest deal by congress to avoid a u. S. Default was not enough to avoid a debt downgrade from chinas degong cut its u. S. Sovereign dut rating to a minus from a previous rating of a. It said the latest deal failed to change americas rising debt issues and it kept its negative outlook, as well saying it didnt see any solution to the problems in sight. Coming up were asking how the government can avoid a repetition of the dead lock. The second hour of Worldwide Exchange<\/a> is up right after this. This is Worldwide Exchange<\/a>. Im ross westgate. Your headlines today. Up against the clock, congress has vote onned to end the Government Shutdown<\/a> and avoid a default. And in the Political Drama<\/a> that put the u. S. Economy at risk. Buy the rumor, sell the facts. Stocks in europe come off their high as investors turn their attention away from washington to the corporate agenda. And talking of which, kpm is down nearly 10 after they hang up on their bid to buy the dutch telecom. The ceo says they could still reconnect. And its a mixed emerging markets picture. Nestle and diaggio warping over asias slowdown. Sab miller the brewer seeing solid growth in africa. Youre watching Worldwide Exchange<\/a>, bringing us Business News<\/a> from around the globe. The senate acted first to pass a motion. The house followed passing the bill by 285144 margin. Every democrat in congress voted yes while the majority of House Republicans<\/a>, including budget chairman paul ryan voted no. The deal funds the u. S. Government through january the 15th and raises the debt ceiling until february the 7th. Lawmakers are required to try to hammer out a longterm budget deal by december the 13th through a Bipartisan Committee<\/a>. Senate democrats have weighed in following their votes. Averting this crisis is historic. This was pain inflicted on a nation for no good reason and we cannot make the same mistake again. This is not a happy day. Its a somber day. Because at the end of the day, we never should have gone through what we went through. Now, the president quickly signed the legislation shortly after midnight. He spoke at the white House Wednesday<\/a> saying the u. S. Can now begin to lift the cloud of uncertainty for businesses and the American People<\/a>. Once again, i want to thank the leadership for coming together and getting this done the hopefully next time it wont be in the 111th hour. One of the things i said throughout this process is weve got to get out of the habit of governing by crisis. Isnt this going to happen all over again in a few months . No. All right. Joining us now is our very own john harwood. John, the approximated said no were not going to do it all in a few months. But bearing in mind 144 republicans voted against this bill, what are the chances we will be back here . Yeah thats a big unknown, ross. The president s goal in taking a hard line not having a negotiation about the weigh out their goals some republicans have pushed defunding obama care repealing obama care delaying obama care he took that hard line because he was making the point that just to keep the government over and just to pay our bills, which is what raising the debt limit would do is not going to cause me to have to give a whole lot of ground. He thinks hes established that principal and can repeat it when we hit the debt ceiling in february. We dont know the answer to that question. It is possible that he succeeded but its possible youll see the same fashion come back and attempt to do this again. If we see one this round, and he is hoping that he set a precedent for more which does not mean hes going to win on over legislative fights immigration or on the kind of budget deal that he wants. And they could have put together this Bipartisan Committee<\/a> now. What are our hopes for that. I think the best that is likely to come out of that bypartson committee, ross a small budget deal that replaces some parts of the budget sequester. Theres across the board cuts that members dont like. Replace some of those with longer term savings and entitlement programs. Now, the question is if you have a large deal that goes after the largest of those entitlement programs medicare and social security, democrats are going to insist on some tax increases to go with that. If republicans say no and every indication we have is that they will say no the speaker said so at his News Conference<\/a> yesterday, that means were like willing to get a smaller deal out of that not the far raining changes to medicare and social security. But thats the issues facing that committee. You always characterize that as john boehner facing down the right wing of the party. Where has this skirmish left him . Well john boehner got a lot of support yesterday from members of his caucus. I was told in the final caucus meeting before they took their stance on the vote and came out and decided that a significant number of republicans would be for it there was a rally around the speaker. But its plain that john boehner doesnt really have control over his caucus. He has governed by letting them have their voice. What that means is the most intense voice, the most extreme voices tend to push the rest of the caucus around. The other members, the other 180 so members of the republican majority decide theyre not going to put up with the shenanigans of that extreme group and they if they make that decision, could help boehner achieve some things or take a different stance a more reasonable stance, that has a greater likely hoof of success. The problem is when you have a republican majority and you try to get your priorities passed with only republican votes, youve got to have everybody with you and that group, by withdrawing their support, can push the speaker in directions he doesnt want to go. Thats what happens in this case. He hopes it wont happen the next time, but we dont know. John good to see you. Good stuff. Thanks, john. I do. Yeah, good. I think youre going to need it. Lets see where the futures are right now. Remember the u. S. Dow is up five points. Closing down right now. We are some 2 points below fair value. The nasdaq at the moment is what, ten points below fair value and the s p 500 is about 5 points below fair value and about 100 points below fair value for the dow. Tracking whats happening in european markets the ftse mib down 0. 6 cac 40 down 0. 6 as well. Its very much a case that market beliefs believed a deal would always be done. They effectively priced that in by and large. Asian markets slightly more mixed. The sensex in india off 0. 3 as well. So the australia up a third, i should say. On the bond markets, a big move in treasury yields. 2. 7 . We saw the yield on the tenyear right now, were trading at 2. 62 years on the treasury. Preshutdown, we were up around 2. 611 is . So nearly back down to the preshutdown levels. Currency markets, euro dollar is up modestly. Yesterday, euro dollar is trading at 1. 34. The dollar has weakened during the session today. At the same time the u. S. Government is up 6 off. The s p which cut the u. S. Credit rating during the last debt ceiling crisis in 201 1 says the short turn around for congress to negotiate a longer term budget deal will likely weigh on Consumer Confidence<\/a> going into the holiday season. Joining us with his thoughts, brian gardener Senior Vice President<\/a> Washington Research<\/a> analyst. Brian, thanks for joining us. What damage do you think this episode has done . Good morning. I think its temporary. A lot of this is timing. I think a lot of americans, they sit back are going to wonder you know, how much value was added by government . A lot of people just went on unaffected. They didnt like the stories and the pictures of National Monument<\/a> life being shut down. Now, a lot of that Economic Activity<\/a> that wasnt going on because of the shutdown will get pushed off for a few months. I think the damage is minimal. We dont know was going to happen next. We might be back here. So is the maybe the key take away here is that the fed isnt going to do anything for quite some time. I think that is the key take away ross. I think skeptic yag that the fed was going to act until next year, anyway. And if you take the logic that ben bernanke laid out in his september press conference which is the fiscal situation and the impact on Congress Going<\/a> to put the fed on hold for a few months well if were on hold back in the fall i would expect them to stay on hold in the winter. So assuming that janet yellen comes in and is confirmed, i dont expect any action on tapering at the january meeting, which could be her first meeting depending on when shes confirmed. That gets us into march. As weve talked about this morning with your other guests the new timeline suggests that were looking at the march meeting being affected by a debt ceiling debate and the government funding debate throughout the winter. So the fed may be on hold longer than people have factored in so far. And the one deal we did get out of facebook is that you know, is a key things for the fed. If thats the case brian, what happens to how are asset prices going to reaction . You know i think the equity markets have become you know addicted to tapering. Weve seen the swings going on and you over the last couple of months. Anytime a fed official has opined on the outcome of tapering and the timing of tapering, you can go back over the last three or four years. And you see anytime the fed acts on qe mentions qe in a positive light, you see the s p react positively. I would expect that to keep happening, although i think as qe has kind of it had diminishing returns in its iterations as weve gone from qe1 to qe3 the. I think it will have less impact on the market. One thing i would look for, too, when they go to qe to tapering is how they taper. The composition of the tapering. I think some people are focused in on the overall number. I think the fed will keep the pace of purchases on a Mortgage Backed<\/a> security side. Even despite what has been going on in washington for the last couple of months before that ever started, i think there was growing concern about where the ten year was going, where Mortgage Rates<\/a> are going. Yeah. Wool see what happens. Brian, stick around. You can get a coffee like john is doing in washington, as well. Thanks for now, brian gartner. Will do. And for more on the debt ceiling debacle, head to cnbc. Com. Read up on whether emerging markets are going to rally in the wake of the deal too void a u. S. Default. Also on the website, were investigating the american credibility. How much american credible has been damaged to the point that perhaps big holders of treasury might look to rude their demand. You can follow us on twitter, cnbcworld. So with the prospect as well as being in the same situation again in 11 weeks, were asking do you think it might be different than next time . Get in touch with us. Worldwide cnbc. Com cnbcwex or direct to me are rosswestgate. Still to come could in the nestle be circling a tasty takeover . Well get into that when we come back. [ male announcer ] more room in economy plus. More comfort, more of what you need. Thats. Built around you friendly. [ woman ] if you have the audacity to believe your Financial Advisor<\/a> should focus on your longterm goals, not their shortterm agenda. [ woman ] if you have the nerve to believe that cookie cutters should be for cookies, not your investment strategy. If you believe in the sheer brilliance of a simple explanation. [ male announcer ] join the nearly 7 million investors who think like you do face time and think time make a difference. Join us. [ male announcer ] at edward jones, its how we make sense of investing. A recap of the headlines today, washington gets back into business after washington seals a debt deal in the final hour. And necessarily is circling nutella, according to reports. Quite a few stocks today in focus here in europe. Lets kick off with those in switzerland, first of all. Full year earnings will disappoint after they revealed its taking a writedown on stocks. The stock is up 1. 5 . Roche posted an 8 rise in its Third Quarter<\/a> sales. That topped analyst sales forecast. Sales in cheeven na are up 30 . It says the u. S. Health reform would help extend its market penetration. A slowdown in emerging markets and price pressure owes europe weighing on results. The key thing is the company confirmed its annual growth target of 5 in line with previous forecasts as some relieved about that as well. Investors have been eyeing a report in the italian newspaper republica. In a post selling conference call, the ceo said that he had no plans for a major acquisition at this time. And carolin roth will be speaking to the ceo today. Catch that grew on european closing bell from 1700 cet. Now, away from switzerland, other earnings in focus particularly in the uk bskyb having a rise in q1 revenue helped by growing customers and additional deposits sold to existing subscribers. The stock up 5 despite profits down slightly and the company says the rest of the year will remain fairly challenging. Diaggio today, that stock up 0. 5 . Its again, warned over a slow yun in asia. North American Growth<\/a> is still pretty solid, although there are still headwind necessary europe. Sab miller the brewer its stock up 4 at the moment. Solid growth in latin america and africa. Overall net sales up around 4 in the first half of the year. Thats largely in line with forecasts. And the french super market with carrefour, up 2 at the moment. It posted a turn around in its comparable stores. At the same time, weve got our eyes on cpm. He says he cant comment on whether american movil will remain a shareholder. The phone company has announced it will not its takeover of kpm. America movil says it has not decided what to do with its current stake. Thats Corporate News<\/a> right now out of here in the european trade. Still to come gold may have shrugged off the recent u. S. Debt drama, but our next guest is telling us fiscal trade volumes have skyrocketed in recent week. As we do so a recap of where stocks are right now here in europe. The ocean gets warmer. The peruvian anchovy harvest suffers. It raises the price of fishmeal, cattle feed and beef. Bny mellon turns insights like these into powerful investment strategies. For a university endowment. It funds a marine biologist. Who studies the peruvian anchovy. Invested in the world. Bny mellon. Mine was earned orbiting the moon in 1971. Afghanistan in 2009. On the u. S. S. Saratoga in 1982. [ male announcer ] once its earned, usaa Auto Insurance<\/a> is often handed down from generation to generation because it offers a superior level of protection and because usaas commitment to serve current and former military members and their families is without equal. Begin your legacy. Get an Auto Insurance<\/a> quote. Usaa. We know what it means to serve. [ male announcer ] this store knows how to handle a saturday crowd. [ male announcer ] the parking lot helps by letting us know whos coming. The carts keep everyone on the right track. The power tools introduce themselves. All the bi ts and bulbs keep themselves stocked. And the doors even handle the checkout so we can work on that thing thats stuck in the thing. [ female announcer ] today, cisco is connecting the internet of everything. So everyone goes home happy. Now, the crisis has ended in washington for now after week of political uncertainty. But gold isnt really do very much during it. While previous instances have sparked a rally in the pressure metal. This month, prices fell as investors steered clear of the traditional safe haven. Right now, orders are slightly firmer at 1307. The next guest says fiscal trading volumes have skyrocketed. Joining us is Michael Hanes<\/a> of the ceo pressure metals exchange. Michael, good to see you. Look investors have lost faith in gold as a store of value. Well if you look at their recent history, our physical trading volumes have been up somewhere between 200 to 4 had 00 over the last ten days. And remember that the physical buyers have a longer term interest rather than the shortterm buyers who are often looking for day trading. But the physical buyers have a longer term view and theyre certainly been buying on the down tick or the uptick recently. Yeah. Why doesnt that translate into into if thats true we have more physical buyers why doesnt that translate into the shortterm investors has a bigger impact on price . I think this is Just Economics<\/a> 101. Theres more trading in the shortterm than there is for the longterm. So those shortterm buyers tend to dictate current prices a lot more. But the physical buyers have been taking product off the market here. Quite heavily. Really, since the first of the year. Youve got demand for, say, the u. S. American eagle or the u. S. Consumer eagle both up about 40 year over year. So the physical side like these coins over here the u. S. One ounce Gold American<\/a> eagle, the demand for these types of physical coins has been skyrocketing. Who is buying that . Where is that nand coming from . Well again, beside tess fact that these buyers have a longterm view we have a lot of High Net Worth<\/a> individuals are looking to diversify away from etfs where they cant get their hands on the physical necessarily if they happened to. So theyre taking a portion of either their gold etf or their silver etf, maintaining their exposure to the metals markets, but converting that position into physical, like i have here with the one ounce gold of american eagle. Theyre converting part of that position into fg. We also have people on the other end of the spectrum the millennials and only 30s who are buying a lot of silver because they dont trust the direction of whats happening in the u. S. Currency, that those governments dont have control of their own currencies. What are you holding in your hahn, about 26,000 in gold there in that hand . Yeah. This is about these are one owns Gold American<\/a> eagles up about 30 bucks or so in the last hour. This is a 00 ounce silver bar. I knew you would like this one because its flashy. This is your kind of thing, ross. A lot of people like those. Its a nooid night handful of silver. Thanks for that michael. Always good to see you, Michael Hanes<\/a> from american pressure metals exchange. Nice to just carry around the physical stuff with you, isnt it . Well take a short break. Well talk more about the implications of the political agreement in washington. Is it going to be different next time or not . Weve been asking that. They will never slow down the spending until its too late and they dont care, anyway. What do you think . Email us. As we go to break, futures are down. [ horn honks ] [ passenger ] airport, please. What airline . United. [ indian accent ] which airline, sir . [ passenger ] united. Whoa taxi [ british accent ] what airline, then . [ passenger ] united. All right. [ spanish ] what airline . [ passenger ] united. [ mandarin ] which airline . [ passenger ] united. [ arabic ] which airline . [ passenger ] united. [ italian ] where are we going . [ passenger ] united. [ male announcer ] more destinations than any other airline. [ thai ] which airline do you fly . [ passenger ] united. [ male announcer ] thats great, big world friendly. This is Worldwide Exchange<\/a>. Im ross westgate. The headlines today, up against the clock, Congress Votes<\/a> to end the Government Shutdown<\/a> and avoid a default threat. Ending for now, the drama that put the u. S. Economy at risk. Buy the rumor, sell the facts. Attention now away from washington with a corporate agenda. And on that front, kpn is down nearly 10 after american movil hangs up on its advice with the dutch telecoms group. They could reconnect. And its been mixed emerging markets picture for sab miller. They are talking about pretty good growth in africa and latin america. All right. If youve just joined us today stateside, welcome to the start of your Global Trading<\/a> day. Its been all about the reaction to what happens in washington. Congress voting at the 11th hour to pass a bill ending the 16day u. S. Government shutdown and lift the debt ceiling. Futures, you can see, are pointing down right now. The dow is about 1111 points above fair value. The s p is 7. 5 points below fair value. The senate acted in the drama yesterday. And minority leader mitch mccoppel and harry reid drafted a agreement. Every democrat in congress voted yes. A majority of House Republicans<\/a>, including the budget chairman paul ryan voted no. The deal will fund the u. S. Government through to january the 15th. It will raise the debt ceiling until february 7th. Lawmakers also are required to try to hammer out a longterm budget deal by december the 17th with a Bipartisan Committee<\/a>. Averting this crisis is historic. Lets be honest this is pain inflicted on a nation for no good reason and we cannot make the same mistake again. This is not a happy day. Its a somber day. Because at the end of the day, we never should have gone through what we went through. Cnbcs john harwood rejoins us from washington. John, what happens now . What happens now is that we have a negotiation between the house and Senate Republics<\/a> and democrats, to try to come up with a budget for the rest of the year. Remember this spending plan which reopened the government runs through january 15th. And that budget plan both side hope, will involve rearranging some of the sequesting cuts the across the board cutsry placing them with more sensible longterm entitlement cuts. And if they can do that that will be a step forward out of this committee. Theres no certainty that they will reach a deal. Theres no certainty of the size of the deal. The larger the deal that is possible, the more democrats are going to insist on tax increases and thats sort to have trading range were looking at. The follow on question is going to be when we get to mid february and we run up against the debt limit again, are we going to have the same sort of bring usmanship that puts uncertainty in Global Markets<\/a> and threatens harm to the economy . The president is betting no but were going to have to wait and see. And this all started because the gop wants to repeal obama care. Presumably they still want to do that. And the president said im not going to talk about anything like that until the government is reopened. So where does that debate now go . Well it really goes deeper than obama care ross. I think its increasingly daunting on people on the right that thats going to be an impossible goal as long as the president control tess white house and democrats control the senate. But it really runs deeper to the idea that this republican majority in the house was elected in 2010 with the belief that they had a mandate to cut back government to stop what they consider excessive government spending. The problem is they havent adjusted to the fact that the president two years after that was reelected and that hes got a say in this as well. So the balance between their view of what their legitimate role is and the reality that they only control one half of onethird of the u. S. Government is the recognition that is at the heart of whether or not were going to make problem from here on out. And, john maybe the polls might help them realize, you know, the reality a little bit. I mine how big of a factor is that going to play over the next few months . Well the problem is that members of congress in their individual districts, many of which are very lopsided in favor of one party or the other, insulates members from National Public<\/a> opinion. The people would care about National Public<\/a> opinion and those numbers are terrible for republicans and would cause the Republican Party<\/a> as a whole to want to change course are those who are going to run for president. Because thats the only National Election<\/a> we have. To some degree people running for the senate and republicans are trying to recapture the senate in 2014. But the so the poll ves an impact, but they have a limited impact. Ross, i have to ask you as somebody watching from across the pond are you impressed with the efficiency of our political system . Just like the manufacturers, congress believes in just in time delivery and thats what we got last night. The thing is thats what everybody thought we would get. So in some ways they have fulfilled the expectations. I wish we had better expectations. Exactly. Thats their strategy set expectations at rock bottom. Meet those rock bottom expectations. Just like some of the best corporates do. John, good stuff. Thanks for joining us this morning. Plenty more to come from you as well. You bet. Later on cnbc and on squawk box. Brian gardener is also joining us from new york. George concalvis at nomura. George, lets kick off with you, first of all. We saw u. S. Treasuries up around 2. 7 . This morning, theyve been down to yield on the tenyear 2. 62. What happens now . Weve got this deal but hey, we could be back here in 1 1 weeks. Thats right. If you were to give this news ahead of what actually happened and we asked what would happen to the bond market you would think the opposite. You would think it would be a relief selloff and that equities would do better. But the follow on we saw the knee jerk reaction in equities but this morning were not seeing any follow through there. But the bond market kept rallying. It tells you that the bond market has seen this and theyre realize theres been a lot of damage to the economy. 2013 was a year of writeoff. It started with fiscal crisis it looks like its going to end with the fiscal crisis. And we were talking about it earlier with brian and well get his few in a moment as well. How far back are you now pushing any expectation of u. S. Tapering . So we actually you know before the news actually broke, we moved it back to sometime in the First Quarter<\/a> of next year. If the stars line up if the economy starts to improve, if we get a fiscal deal thats longer than every three months. I think the fed will be in a position to slowly start to reduce some of its easing. But the proof is in the pudding. Weve been at this all year long. Until we get something thats more substantial, i think the markets will remain skeptical. You have the change in fed leadership that potentially is going to be coming. I think all those things suggest to us that slow and steady and its one of the reasons why the fed will do the right thing by not tapering in september. So all this is kind of lining up for a bond market that should stay within a very stable range. Brian, lets bring you back in. Whats the best do you think we can hope for politically as far as investors are concerned . You know i think a modest deal on the budget which funds the government through the rest of the year as john was allude to go earlier, maybe you trade some of the sequestration cuts for some modest entitlement cuts. I think a larger deal is un unrealistic. Weve tried to get these large budget deals since 2011 since the original kind of debt ceiling crisis that weve been through. And we go through these efforts every few months and they dont do anything. Then on the debt ceiling, i think thats a tougher one. Look conservative republicans who ran in 2011 can never raise the debt ceiling without concessions. Kind of you know bit the bullet on this one. I think theyre going to come back and look for deeper concessions as part of the debt ceiling list in february and probably march. So were really not talking about february, were talking about march again. They can they get out of this . I think their strategy has been wrong the last few months because they got in the way of the unveiling of obama care which from all instances seems to be unsuccessful and i think its going to be quite unpopular. Once they get out of the way, and that becomes one of the lead stories in the press, i want to see how Public Opinion<\/a> towards obama care changes and whether they may actually have an opening to make changes to obama care as part of the debt ceiling. But i still think thats a stretch. So i think the best outcomes are just modest changes in the budget, funded for the rest of the year and getting longer term debt ceiling that gets us through the midterm elections in 2014. Thats a pretty good outcome and, really the best that the market can home for. Bribe, good to see you this morning. Thanks for joining us in washington. George, you stick around. Well come back to you. Also still to come Goldman Sachs<\/a> rebuilds Third Quarter<\/a> earnings before the bell. Our next guest has downgraded his rating on the bank. Well find out why right after this. Stick with innovation. Stick with power. Stick with technology. Get the flexcare platinum. New from philips sonicare. A recap of the headlines this morning, washington said to get back to business after Congress Seals<\/a> a debt deal in the time hour. The news fail toes deliver equities as a slew of earnings takes center stage. And Goldman Sachs<\/a> is up with Quarterly Results<\/a> expecting the lowest revenue in more than a year. Ibms Third Quarter<\/a> earnings beat forecasts, but revenued missed. Big blues cfo says the Third Quarter<\/a> is historically difficult, but he added that the company faced particular challenges this time around blaming china for the slowdown in the hardware business. He also expects the division to return to Profit Growth<\/a> in the second half of 2014. Ibm stock was down 6 in after hours. In frankfurt, its matching that fall. American expresss Third Quarter<\/a> profits is up 9 beating forecasts and higher spending by card members. A am ex has a more affluent customer base. It says it hasnt suffered any direct impact from the u. S. Government shutdown and its seen a pick up in spending after more than a year of sluggish growth. Am ex in frankfurt is down around 0. 8 . As far as the ifo is concerned, its Third Quarter<\/a> earnings beat forecasts. The online reaction site gave a disappointing outlook for the holiday season. Its citing un outlook in america. Ebay is sticking with its full year forecast. Its stock is off after hours and down 5 in frankfurt trade. Goldman sachs continues a busy week of earnings. Analysts are paying close attention to the investment trading arm, which produced more revenue than expected in the last quarter. Mark moosby joins us from memphis. Always good to speak to you. We have disappointment so far from the big banks. Is goldman going to be any different . Well, what weve seen is a lot of what we expected though. Revenues from the brokers dealerside size. But then what weve got is a favorable appositive coming out of the asset quality. Charge offsets continue to improve. At the banks, weve seen a 50 cut over the large of last year. Goldman will be very particular in the sense its different than what weve seen. Its the first pure broker dealer that will releel. They dont have the benefit of asset quality. Well see the pressure on the revenues from the broker dealer side without some of the off set thats we saw from jpmorgan and wells fargo early on in the season. It gives us a cleaner look as you say. What do you think is the impact that weve gone through, a bit of volatility and gone through the discussions in washington . And then you thought that the fete would taper and not taper . Well, a lot of what weve seen in the Capital Markets<\/a> broker dealer revenues fixed income, equity the customer activities kind of went to the sidelines as you went through the seasonally low july and august. But also as the anticipation of what the fed decision was going to do in september. Were past that decision, but we turned the calendar into october sort of had to deal with the fiscal cliff and all the other things were looking at in raising the debt ceiling. Hopefully well get to see these Capital Markets<\/a> activities start to come back. We know what the Third Quarter<\/a> was. It was, like you said a disappointing revenue quarter. But as we started to see the first trends of some rebound that we can anticipate in the Fourth Quarter<\/a>. We had talked before about them, you know, incremental revenue being created with higher margins. Is that can they still do that . Is that story still in play . Well one of the things that were looking at today is we have about 50 to 60 cents reduction from last quarter. The market is expecting closer to about 90 cents of reduction in eps. The big difference can be expenses. Make some adjustments to what youre looking at in the sense of commissions, looking at what you would look at. Yearend types of bonuses and accruals. So we might see a lot bit of that this quart he hoping to soften the month on the revenue side with expense savings that maybe you wouldnt anticipate typically in the Fourth Quarter<\/a>. Monte, good to see you this morning. Still to come, as yuan investors cheer the debt deal yesterday, but a brief rally looks as though its already petered out. What happens next . Well get into it. [ male announcer ] more room in economy plus. More comfort, more of what you need. Thats. Built around you friendly. [ female announcer ] what if the next big thing isnt a thing at all . Its lots of things. All waking up. Connecting to the global phenomenon we call the internet of everything. Its going to be amazing. And exciting. And maybe, most remarkably, not that far away. Were going to wake the world up. And watch, with eyes wide as it gets to work. Cisco. Tomorrow starts here. We have september Housing Starts<\/a> production that have been punished off because of the shutdown. We have jobless claims at 8 30. We have dallass rush ard fisher Esther George<\/a> in addition to Goldman Sachs<\/a>, we have earnings from verizon before the opening bell. After the close, well hear from google amt. Within minutes of the house vote thursday night, the wheels of the u. S. Government started to turn again, as well. The director of the office of management and budget said furloughed employees should report back to work today after going two weeks without pay. Museumes and monuments should reopen today. The national zoo wasnt open until friday. But the popular panda cam is going to be back online. Thank goodness for that because i had missed that. Mean wile s p governments saved at least 6 off of forty quarter gdp. S p, which if you remembered cut the u. S. Credit rating during the last debt ceiling in 2011 says is short turn around for congress to negotiate a longer budget deal is still likely to end Consumer Confidence<\/a> as we head towards the holiday season. George concalvas is still joining us. The dollar didnt do an awful lot during this process. People have wondered whether people might china made lots of noises about maybe well try and ease up on our holings. Funny enough i was reading breaking views today. Since the last time we had this problem, back in 2011, they now owned 16 more of u. S. Debt. Thats a great point. And it goes to show you that there really arent you know, other viable alternatives at this juncture. The more we go down this road of always having to govern by crisis as a put, there will be time where people challenge the dollar and challenge the treasury market and more from a credit standpoint. But at this juncture there are very few alternatives and thats thats one of the reasons why were seeing stable markets. I think it goes down to fundamentals. At the end of the day, the u. S. Is now like i said earlier, this year is probably a watch. The s p has downgraded growth of the Fourth Quarter<\/a>. We also downgraded growth for the Fourth Quarter<\/a>. The fundamentals dont look that great. Its not fully resolved in terms of whats coming down in washington. The uncertainty lingers into a crucial time of the Holiday Shopping<\/a> season. Its nothing to really hope for in the next couple of weeks and months. What is trading now for the tenyear . So we know for the better part of the year had a forecast of just the tenyear treasury would end somewhere around 2. 5 2. 6 . We overshot that throughout the summer and that caused a lot of damage, too. In mind side they probably didnt want rates revised that quickly and thats why they did not taper in september. What we were witnessing was analogous to open heart surgery. You dont want to hear all the gory details about how you fixed the problem. There was too much information perhaps about how they would slowly pull back on easing. That caused enough damage for rates to rise too quickly. I think we still end the year around 250, not a major rally from here but whenever we do see rates back up people will be buying them. And thats a different psychology than we had earlier this year. George, thanks for that. Thats just about it in todays edition of Worldwide Exchange<\/a>. Coming up next a countdown to markets stateside. More on whats happening in the fallout in washington. Goodbye for now. Good morning from the Nations Capital<\/a> within the government is officially reopening for Business Today<\/a> after Congress Passed<\/a> a last minute budget deal and president obama signed it into law. But dont get too excited. Its only a shortterm first. A, as we say, kicking of the can. Washington has just months now to get a real deal done and win back the trust of the American People<\/a> if its possible. Its thursday, october 17th. Thats the name thats the day weve been talking about. Were here its done but were going to do it again. Its 2013, squawk box begins right now. Good morning, everyone. Welcome to squawk box here on cnbc. Im becky quick along with joe kernen and andrew ross sorkin. Today is such an important day for the country and the Global Markets<\/a> that weve made our way to the capital and we stand out across washington. Im at the cnbc headquarters here in d. C. Joe is spending the morning on the senate side on capitol hill. Andrew is Holding Court<\/a> on the house side. Our guest list this morning is a virtual whos who of power players in town. Well have more on that in just a moment. But first, lets get you up to speed on what happened late last night. If you are just waking up this morning, Congress Passed<\/a> a temporary spending bill. Also a temporary increase in the nations borrowing authority. This legislation permits the treasury normally through february 7th. And it funds the government through january 17th. 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