Sovereign debt. And a slowdown in australias mining boom catches up on revenues. It sent the nations deficit looming well past earlier forecasts. Plus, the prognosis with doctors, less than healthy. Gsk will stop paying doctors for promoting its drug, a first for the pharmaceutical industry. Announcer youre watching worldwide exchange, bringing you Business News from around the globe. And welcome. Youre now watching cnbcs worldwide exchange. Plenty to get through on todays program as we get into the christmas and new years spirit. Will there be much cause to celebration as far as assets are concerned . Well speak to an expert who is advising caution on european equities in around to minutes. After months of rapid gains, the u. S. Housing market appears to be well on the way to recovery. But buyers beware, the seconder could cool off. Were going to check on housing at 11 00 cet. As glasso smith cline announces a shake up in its policy to promote drugs, well take a look at pharmaceuticals and the road ahead to industry. Plus, its been a dramatic couple of weeks in north korea, but could the event trigger wider instability . Well discuss the Political Risks at a 10 40. But first, dominating the global investors, the fed, it begins a twoday meeting today with the announcements expected wednesday at around 2 00 p. M. Eastern. It will be followed by Ben Bernankes final News Conference as fed chairman at 20 30 p. M. Now, many believe the fed will hold off on announcing when its going to stop tapering its Bond Buying Program at this meeting. Paul donovan is the managing director at ubs, joins us with his own thoughts. How significant is it, paul, that theres a press conference . I mean, theres a scheduled press conference today. Theres no scheduled press conference at the moment in january. They could easily announce one. And the markets are ready. Are the markets ready for tapering . Well, the economics profrgz is more than ready for tapering. If you look, the economic consensus is convinced tapering takes place by the end of the first quarter. The markets seems seem to be a bit more broadly spread out. Now, theres been a growing expectation that tapering is going to happen earlier. But over the course of the last month, ive had clients saying theyre not going to taper at all, theyre leave it later, theres quite a lot of confusion there. The markets were ready for tapering in december. Now i think theres an element of confusion. The shutdown in washington a few weeks later, they made the right decision. Frankly, i dont think the shutdown in washington has made any difference, it hasnt made. Difference to the economic performance. If the feds really believe the shutdown in washington was a threat, it should have had something way before the policy announcement. I think it gives the opportunity to frame the contents but also for what is going to be the first key policy next year, emphasizing that rates are unchanged. And weve got a ahead around that point, obviously, because investors or assets are rather binary in the sense. We got a ahead around the fact that you dont have to be binary . I think that there is a growing expectation that there were two separate policies. The market confused quantitative policy. So its easy to get them confused. But there are distinct policies with distinct drivers. Is it possible for them to say we wont start tapering now but we will start tapering in january . I dont think theres much point in doing that. I think they will hit, but they will actually move in january. Then youd have to have a scheduled press conference to announce the details for what youre doing. The problem with going now is that we are in the middle of the key retail sales period in the u. S. Economy. You do not mess with christmas in america, ever. You cant stop that. People arent going to buy taper because theyre pulling back on asset purchases, are they . I think it depends on how its portrayed. That might have an impact. Even if its a 5 chance, when the bulk of this retail sales in the six weeks around christmas, leave it before christmas. Its only another 85 billion. Nothing. Like me, you bought all your christmas presents already. For the first hour today, now Angela Merkel is being reelected as chancellor in a secret ballot in the bundestagg. Not that secret. We knew she was going to be reelected. I suppose the point is we dont know who voted against her. Is that the point . Did anybody . I actually dont know if anybody voted against her. But i would say probably perhaps some voted against her from the left or so. But in general, her own party was very close behind her. She literally has almost calmed or stopped any opposition to her role in the cdu. But what we expect actually from the government for the next four years and where there might be disagreement, as well, with the social democrats, im going to discuss now with peter mataschek who is a political analyst with the policy institute. Thank you very much for joining us. Today will be rather a ceremonial day, i would say. What is the big what s st issue you are looking at for the next four years . What is interesting with that government . Well, i think what is interesting is how the two partners will behind from the policies theyll perceive. I do not expect any major changes compared to the former government. It will be interesting how these two partners will get together and how they will govern together. We have been discussing quite a lot that the social democrats might be the big losers of that grand coalition. Do you think that its going to happen . This was a widespread feeling among the social democrats before the elections which schans the resistance within the party against a grand coalition. I dont think this is something which will happen by law. This depends very much on the performance of the social democrats within the government and on whether they will be able to demonstrate competence on key issues which they lacked in the eyes of the electorate so far. So looking perhaps a little bit on what means the new government for an International Audience or internationally, so will there be a lot of on change that it comes to international politics, eurozone politics . I think the issue will be the Foreign Policy where there will be changes among the policy changes. Both in europe in the european issues and on positions on the euro, there have been only minor differences between the christian democrats and the social democrats. All rescue packages have been voted among the two major parties. So i dont really expect major changes in this field. Looking at the domestic policy, as well, what does a new economist mean for the German Economy . Are you positive or are you skeptical . Well, i think at least the social democrats have negotiated well with the christian democrats. He has a strength in ministry. He has more competences than his predecessor. He will responsible for Energy Policy and for everything related to it. So it remains to be seen, whether he will be able to fill this ministry. But at least from the conditions he has formed now, he is in a stronger position than the former minister was. One of the bigger surprises is becoming a defense minister. Do you think that he is positioned by that move to become, perhaps, the successor to Angela Merkel . Well, this ministry is a challenge for any minister. She will have the chance to demonstrate that shes able to lead this ministry which always may cause problems given the difficult circumstances and the deployment of troops abroad and the internal aspect of the ministry. So she will have at least the chance to demonstrate that she is a real leader and to qualify herself for higher positions. Thank you very much, peter. So, ross, that is probably the case, as well, in other countries. But im always wondering how you can change between being a labor minister or a family minister straight into the defense ministry. So i dont really know. Do you know the answer . Its like being a journalist, isnt it . You qualify as a journalist and then you decide which area you want to be in. You could be crime correspondent, the next moment you could be doing sport. And then the next moment you could be doing business. So, you know, thats how i see it, anyway, annette. There you go. Its the same skills, just with a different topic. Hi. Thanks for that. Meanwhile, ecb president mario draghi has urged lawmakers to finalize the details of a Banking Union as soon as possible. Giving evidence to the european parliament, he warns the latest plans to wind up failing eurozone banks may be overly complicated. We should not create a single resolution mechanism that is single in name only. In this respect, i am concerned that a decisions making may become overly complex. And financing arrangements may not be adequate. And it comes always the latest data from the European Banking Authority reveals that banks have been using increasingly cheap funds from the ecb to buy sovereign debt. 89 Holding Government debt in june, up from 78 in 2010 and italy with 76 up from 59 . The numbers will add to concerns that the link between weak banks and sovereign has not been broken. There is some reason to be optimistic about the spanish sector. Six firms have lodged bids for an 89 in the stake rescued lender ncg banker. The Strong Demand suggests a growing appetite which until recently had been considered too risky by international investors. Paul, picking up on the middle story there, we talked about banks loaded up with sovereign debt. And that was the whole point of the ltro, anyway. Yes. And its very easy risk next year. If we see the feds scaling back on bond buying, u. S. Yields rise somewhat, what does that mean . It means two things, rising yields elsewhere in the world and potentially given the communication problems that we had, it means increased volatility in financial markets. Now, neither of those things are good for banks which are holding large amounts of sovereign debt or paper or whatever. And i think this is still a vulnerability next year. Are the stress tests going to stress test the Sovereign Holding because at the moment, you get rated as the most you can have. Actually, youre going to say maybe theyre not and all this sovereign debt youve got is a risk. So with its impeccable logic, the ecb has said that the asset quality review will treat sovereign bonds asterisk free, but the stress tests will stress sovereign debt. So sovereign debt is risky, but not risky fending on what youre looking at, basically. Perfect. Good. Thats europe all over, isnt it . Sums it up rather neatly. We have some comments coming out from mr. Kerry. Its warning against china imposing the South China Sea air zone. Discuss can continue around that, of course. Meanwhile, lets check in with Global Equities right now. Were just over an hour and 15 minutes into the an hour and 40 minutes into the trading day here in europe. You can see were weighted to the downside. Decliners outpacing advancers by around about 7 to 3 at the moment on the Dow Jones Stoxx 600. Yesterday, the stoxx europe 600 did okay. It was up. This morning, were back down 0. 5 . Heads you win, tails you lose. Xetra dax is down 0. 5 . Cac 40 is down 1 at the moment. The ftse mib is a part of 0. 5 . Cgg is down 15. 5 . This is the oil services, the Geological Survey company. Theyre going to compliment what they call a new strategic phase. I love that corporate speak. This is after they revise forecast down full year earnings between 400 and 420 million u. S. Dollars. Customers have been pushing back major orders. Glaxosmithkline off 0. 75 after it announced its going to stop paying doctors to promote its products through speaking engagements. It will cut a link between compensation Sales Representatives receive and the number of prescriptions that doctors write. It comes amid a major bribery investigation into china, although the ceo suggests those two things arent connected. Zurich, up 1. 4 . Zurich insurance, its post george quinn, the cfo is replaced. Quinn has been cfo since early 2007. Hell take up his role in may of next year. As far as the bond markets are concerned, we keep our eyes on u. S. Treasury yields, really. The yield at the moment, 2. 78 . A slight particular up, 2. 87 . On the currency market, dollar yen just below 103 at the moment. 104 was the fiveyear high that we hit on friday. Euro dollar, 1. 3767. And sterling, well take a look at 1. 6322 is where we stand at the moment. 1. 64 is sort of the twoyear high that we get. We heard the Swedish Krona is a little higher. Sixuan has all the details for us in singapore on the asian session. Sixuan. Thank you, ross. Most asian markets traded to the upside as tin decks added 0. 4 at the moment. The volumes were thin ahead of the fed meeting. In japan, the nikkei 225 ended higher by 0. 8 helped by a stronger dollar trading near the 103 handle against the yen. China markets reversed early gains trading lower on profit taking and some liquidity concerns towards the yearend. The pboc refrained from pumping liquidity into the Banking System today. Facing urbanization plans failed to address the funding issue leaving some authority on the markets. And the shanghai composite ended lower by 0. 5 . The hang seng endecks down by 0. 2 . Elsewhere, thanks to upbeat u. S. And european data, korean Ship Builders continue to lend support to the kospi by 0. 2 . And australia paired down some early gains after a warning of bigger budget deficit ending the year to june, but still ending higher by 0. 3 . In terms of individual stocks, china steel producers will face more shutdowns next year as beijing tries to tackle pollution. Last weeks shutdown stokes worries and pushed up shanghai rebar futures to 111week highs, but steelmakers came under prsh your in todays trade. Back to you. Sixuan, thank you for that. Staying in singapore, the sovereign city state is working hard to improve its green potential to keep up with its growing population. Well bring you that plan in detail right after this. [ male announcer ] the new new york is open. Open to innovation. Open to ambition. Open to bold ideas. Thats why new york has a new plan dozens of tax free zones all across the state. Move here, expand here, or start a new business here and pay no taxes for ten years. Were new york. If theres something that creates more jobs, and grows more businesses. Were open to it. Start a taxfree business at startupny. Com. Were considering our focus on innovation cities. Right now, we go back to singapore and discover how its responding to challenges of an increasing population. Our very own deidre wongmorris is in singapore. Hey, dee. Good morning, ross. It is much warmer on this side of the world. You are seeing the landscape. Were known for high growth, sometimes at any cost. But singapore is a perfect example of how you can have development as well as a sustainability. Have a look. For singapore, going green is a national imperative. As one of the most populated cities in the world, it wants to be a Global Leader in Green Building and sustainable example. There are so many big cities in this region, jakarta and its highly urbanized. So sooner or later, there is this need to do something, to make sure that the development is sustainable in these cities. So we thought, why dont we take the lead . Bca wants 80 of singapores buildings certified as green by 2030. It retrofitted its only 20yearold bca academy to showcase zero energy building. We retrofitted an exiting building, providing shading, using solar chimney and having a very efficient cooling system. You put all this together, you can cut down the energy needed by half, which is very substantial. Inside, Natural Light and more Efficient Air circulation provides further energy saving. But these can provide noneconomic benefits, as well. To get employees, good people, talentsed people to join the company, it makes a lot of sense for the business to embrace sustainability. The Pan Pacific Hotel group implemented strategies from the start when designing this Park Royal Hotel property. Singapore authorities have a standard for developing buildings in the greenery that you need to add to that particular building. We are about eight times higher than that standard. The result is an urban oasis, right here in the middle of singapores Central Business district. 15,000 square meters of sky gardens, water features and open teara tearaces. A gravity griffin irrigation system keeps the green walls green that cools the guest room corridors. And a first in singapore, a new construction technique replaces some of the concrete slab with recycled plastic. These features can result in Energy Savings of anywhere from 5 to 15 . The hotel has a platinum rating in singapores green scheme. This is what we believe this brand could look and feel like going forward. And its a very, very good example with a very high benchmark, i would say, when it comes to sustainable building and living. The next step for singapore is to get into research and development, building a test lab at the bca to see how innovations from around the world fare in this tropical climate. Now, youd be hard pressed to find a more innovative and more green city than singapore in the region or really in the world. But the question is how transferable are the lessons and the policies that singapore has had in place to make it such a city, how transferable is that to other cities around the region . Weve been talking to guests throughout the morning or afternoon and theyve been saying that it starts with policy. But they are optimistic that leaders, a new generation of leaders have their eye on sustainability to put more Sustainable Practices in places like china in particular which really need it. And ross, im sure as you can see the background behind me, if youll remember, i paid you a visit in london. I think youre due for a visit here in singapore. I probably am, although i probably wont be able to