Of a program and those are good signs. In addition to which we see some good numbers. 1. 9 billion and counting. The coceo of Deutsche Bank signals they may have to set aside more money for litigation as they settle u. S. Mortgage claims. After years of talking, apple clinches a deal with china mobile to sell iphones. It could increase their revenues by 10 billion. Announcer youre watching Worldwide Exchange bringing you Business News from around the globe. Hello, everyone. Its almost christmas and Ross Westgate has already started his christmas vacation so thats great for him. Im filling in for him this week. Lets get back to one of our top stories. The imf is raising its forecast for u. S. Gdp citing the budget talks to taper Bond Buying Program. In october the imf said gdp was expected to expand 2. 5 next year. While she didnt offer a new number, imf manager christine will he guard appearing on nbcs meet the press says she sees a lot more certainty for 2014. Most people who invest, who hire will tell you that theyre uncertain. They were uncertain because seeing a budget deal, seeing tapering by the fed, which is a sign of confidence in the real economy, should lead them to invest, to hire, and to be more confident into the future of the u. S. E how will. Will he guard says she hopes she wont threaten the economy with, quote, another debate on whether the u. S. La offer another deal. Were joined for the full hour. Thank you so much for coming in this morning. How are you . Very well. Fantastic. Waiting for the holidays. Same here. Same here. Couple days away. Lets talk about the u. S. Because weve seen the imf upgrading its forecast for the u. S. We dont know by how much. In october they said they see the u. S. Growing in 2014 by 2. 5 . Do you think what Christine Lagarde alluded to will have the same shocking effect on the markets . It is a risk, but im not very concerned. Actually, the u. S. Story has been extremely interesting. We started the year with a u. S. Economy that was relatively weak despite the substantial stimulus by the fed. Were concerned about the fiscal cliff. We avoided the fiscal cliff. We had the sequester and then the Government Shutdown. Despite the uncertainty, the euros numbers are Getting Better and better. We dont expect such a risk next year because the political cost of the Government Shutdown was substantial. Most likely were going to get some help. Looking forward we are bullish. What does it mean for the u. S. Dollar . Weve seen some strength after the tapering last week but it seems as though the dollar rally that everyone is expecting hasnt really kicked off. Its not making a lot of head way against the euro or the pound. It is higher against the yen but thats all related to abenomics. When do you expect that . When we look at the data this year, that will suggest a much stronger dollar. Its a very loose Monetary Policy by the fed which to a large extent was trying to off set the tight fiscal policy. Looking forward with a fiscal policy with more growth friendly and as the fed is stepping up, the fed should be more consistent with the strong Economic Data in the u. S. What does more supportive mean . What are some of the targets that youre looking at for the dollar against the euro specifically or against the pound . I guess the euro would be expected by the end of next year at 125. This is driven primarily by the change in the Monetary Policy. The gap between the two will close. As the fed will be tapering, the acb will be watching it. Were expected to gradually weaken below 160. The u. S. Recovery is stronger than the u. K. Recovery. Well talk much more about the sterling especially against the swiss frank. The head of the european g. 10 strategy at bank of america staying with us for the full hour. All right. Let me show you where we are in terms of the euro penal market session. The stocks are up 600. Is up by a quarter of 1 . Keep in mind the volumes as we go into the holiday of course are going to be somewhat lower. That means trading could be choppier and more volatility. Europe 600 following on the strong gains from what we saw at the end of that taper trade. Let me show you the markets one by one. We have the xetra dax close to that record high up by around. 4 . The cac 40 adding. 3 and the ftse 100 is up by 30 points. Rbs has denied reports in the sunday times that it is planning to raise salaries for some of its highest paid Investment Bankers in order to dodge european bonus curves. The newspaper claimed a handful of executives at the u. K. Bank could be set to see their monthly wages almost double in order to compensate for the new rules. Shares in arm holdings have risen today on the news that apple has signed a much anticipated agreement to sell the iphone 5s to china mobiles 750 million customers. Huge deal. That deal gives apple a foothold in a market currently dominated by rival samsung. A dutch court has ordered tiffany to pay in an agreement between the two groups which came in 2012. The largest watch maker terminated that agreement blaming tiffany for blocking and delaying development of the business. Take a look at swatch group shares up by. 6 . Last but not least, Deutsche Bank shares up by. 8 this month. They have signaled more money may need to be set aside for litigation costs. This follows the 1. 9 billion settlement with the u. S. Over the sale of mortgagebacked securities. We have annette standing by in frankfurt. Why is the stock up today . Thats actually a good question. Probably a lot of people had been weary about that ruling with the u. S. Federal Housing Finance agency because, remember, jpmorgan had paid quite a lot more than Deutsche Bank and Deutsche Bank was one of the biggest players in the market so if youre having a look at the fine print, its quite interesting there. Still carving out individual single issues like libol potential liabilities by Deutsche Bank. All in all i would say its a little bit of a relief that the payment wasnt bigger but also a lot of investors are happy that fienltly the bank is starting to settle its litigation issues. Deutsche bank hasnt settled anything yet material i should say so we have libol still waiting for a settlement with the s. E. C. , for example. That might actually be extremely expensive. That might be one reason as well why the coceos of Deutsche Bank are hinting at increasing their litigation. So looking at the litigation reserve, right now after the payment to the u. S. Authorities it stands at roughly 2 billion euros, which is probably too little to serve all those Outstanding Litigation charges because we have some here in germany and also as i mentioned libol. Carolyn, with that, back to you. Annette, thank you so much for that. It seems as though investors certainly are relieved by that Deutsche Bank ruling. Could have been a lot worse. Lets show you what asian markets are doing. Theyre following wall street. The nikkei closed for a holiday today. The shanghai composite actually quite resilient. Up by. 25 . The markets have crept higher yet again despite the fact that the pboc is injecting liquidity into the market. The shanghai composite falling to the lowest levels in four months. The losses, theres a technical bounce back. Moving onto the bond markets, well, theyve been remarkably calm in the face of tapering. The ten year treasury yield over the week up only two basis points on friday. Fell four basis points to 2. 89 currently. Still at 2. 895 and sitting at 1. 83 . Euro dollar pretty much unchanged on the day, 1. 3675. The dollar against the yen fell back below the 104 level just a few minutes ago. Its just hovering above that level right now unchanged on the day. The fiveyear highs that we saw last week and the aussie dollar bouncing back a little bit by around. 1 . Finally, the pound against the u. S. Dollar setting up 1. 6355 by around. 1 . Lets get back to the european g 10 strategy leader. Hes with me for the full hour. Lets finally get to your calls on pound sterling. Why do you like the pound sterling . Well, the u. K. Is a very interesting story. Remember, we started the year with the market that was very bad in stocks. The u. K. Data we were getting was cite bad. There was a lot of tight fiscal policy. In the second half of the year its surprising to the upside. We believe the u. K. Recovery story is broadening. Its more persistent and looking forward. The fiscal policy is not what we have seen in the last two to three years. The u. K. Will do well this year despite the guidance who believes the markets will focus on the data. As a result we believe given inflation also in the u. K. Is consistently much higher in the eurozone shorting euro investors is a very good trade here. I agree with all your points about fundamentals of the economy. I agree with you on unemployment, on inflation, on the recovery overall, but one thing that i dont understand right now, why you still say that this pair are very attractive positioning. Isnt everyone long, the pound sterling, especially against the euro right now . Isnt this a very, very crowded trade . Not yet. When we look at the year, the market was very short euro and there was a massive advancement in positioning. Short on european equities. It might even suggest that the market is long euro at this point. Most of them suggest that the market is low. I dont think the market is ready yet. When we compare it to the data, there is more rom to establish long standing positions. There is always a risk on us, isnt there, that the b. O. E. Is going to be talking down the currency . Right now we have euro sterling around, what is it, 83 . What if it falls to 75 . Wouldnt the b. O. E. Come in and talk down the currency as other Central Banks are doing . Isnt that a risk . This is a risk. The bank of england for the first time referred to the strength of the currency as one of the risks, however, during the same time they made the statement we saw continued good data in the u. K. And the market focused on the data. We see euro standing at. 80 at the end of next year so not a substantial strength necessarily but, still, the direction will be strengthening. We believe increasingly as data improves, the market focuses much more on the data. Just quickly in this holiday, do you think that well see any major boost in the foreign markets . No . The markets dont make a lot of sense. I wouldnt focus much on it. All right. Thank you so much for that, but youre going to stick around for the next hour. The hunt for the chinese tiger woods is on as the u. S. Pga looks to catch in on golfs growing popularity in the country. We tee that conversation off after the break. Stay with us. Well be back in two. [ 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. Announcer youre watching Worldwide Exchange. The imf has raised its growth forecast for the u. S. On the back of the budget deal by congress and the feds decision to taper. Lets look back on how both of those events played out. The yeahs are 257, the nays are 157. The motion is adopted. Without objection a motion is laid on the table. Breaking news, the futures are surging on the news that the fiscal cliff has been averted. The washington drama comes to an end. The budget cutting sequester is on but not before president obama takes the National Stage one more time to bash republicans. Agencies of government are in the process of closing down. The president has gone missing, forced to cancel his trip here just at the last minute. Well begin reopening our government immediately. I am very proud to stand here today with chairman ryan to announce we have broken through the partisanship and the gridlock and reached a bipartisan budget compromise that will prevent a Government Shutdown in january. Today is Tim Geithners last day as treasury secretary. Were going to talk geithners legacy and the challenges for his successor, jack lew. I look forward to joining the Treasury Department. I also want to announce my choice for next year of the Federal Reserve. Continuing the policies of bernanke. Its thought to be someone who will be quicker to provide more stimulus. We could in the next few meetings, we could take a step down in our pace of purchases. The market threw the equivalent of a taper tantrum. A taper spasm. A true taper. How much they taper. Investors are bailing out of emerging markets dumping indian and indonesia equities. The federal government talking about a 10 billion taper and they say if the data comes in as expected here with further improvement, they will taper further at future meetings. Lets get back to our guest. That was a very nice package with the big themes of 2013. Taper and the debt debate on congress. Now next year what are the big topics going to be because tapering, the start of tapering is out of the way. Are we really going to be focusing on any additional Forward Guidance on tightening or what will it be . Could it be china . Could it be the middle east . Next year the market will focus much more on the data because we dont expect any major changes in policies. Forward guidance at the end of the day links Monetary Policy to the data itself. I think inflation will be a theme potentially. So far its not a big concern because inflation is low. However, it will get increasing deflation risks in the eurozone. The ecb may be forced to go into the conventional territory. If we get some inflation pressure, the fed may be forced to tighten much faster than market effects currently. Also the tapering and its in part on emerging markets is a risk. Emerging markets reacted very well to the interest. Fed. Its all pressed in. Absolutely. Looking forward it will be difficult in a way for the fed to taper in a way that will be smooth for the u. S. Economy and emerging markets. This is another risk worth watching. Whats left out here is the fact that were seeing the emerging markets at a spike. Does that worry you . It doesnt seem like the pboc has a grip on tightening its schedule. The markets were concerned about china. Most of the risks did not materialize. The chinese authorities are trying to strike a very delicate balance. Minimallize the risks. On the other hand, to address some concerns, bubbles over heating the economy. It is likely to continue to see volatility as it tries to see the balance. They believe they will manage to avoid extreme risk and to have a soft landing in the economy. Youre not seeing any major implications from this china story on the u. S. Dollar and risk taking at all . Im not very concerned. There is a lot of policy room to manage to have a smooth adjustment of the economy. Thank you so much for that. Lets switch gears. Want to stay in china. The u. S. Pga tour has unveiled a new developmental golf tour in china next year. The first seeds of chinas success in golf appeared in china. The 14yearold dominated the back pages in april when he became the youngest competitor at the u. S. Masters. Then in may a 12yearold compatriot became the youngest player to take part in a European Tour event when he competed at the volvo open. Were joined on set. Hes not an expert on golf in china. Feel free to come forward with your questions. Thank you for coming in this morning. This golf tour in china, is it really just a publicity stunt, a marketing gimmick, or is it warranted by the tall length or interest in the country . Its a bit of both. There are 12 tournaments set for next year. There are only 200,000 in prize money for each vent so its fairly low level. They will graduate to the web. Com tour. It will be interesting to see how those players do. You mentioned the teenagers, 12yearold, 14yearold. Theres a whole batch of others. When they start to progress and perhaps turn pro, then well start to see whether these chinese stars of the future can become stars of the present. Mark, you do need someone to perfect sonny phi the sports like tiger woods in the u. S. . Absolutely. Is there someone in china who can fit that role . At the moment the 14yearold who made the cut in the masters last year is the best bet. He is only 14. That has to be an issue not just for him but all his peers. As good as tiger woods is, of course the chinese want to support one of those. Weve seen yau ming do that for basketball. If he can do it and make it to the next level, well start to see things change. Worth mentioning, the five times opens champion Peter Thompson said chinas been asleep for 40 years in terms of golf. Its finally woken up. We saw they won the nissan cup just recently. Why has china woken up to golf now . It has to do with money. Its an expensive sport around the world. Especially in china. It is the elite. As the middle and upper classes have a lot of expendable and disposable income, they are turning to golf. But sometimes with these kids, its like mini state School Systems where theyre driving their kids sometimes late into the night, practice, practice, practice as a way to try and make it. A lot of people with a lot of money and theyre choosing to spend it on golf. Okay. So money is one part of the equation. The other is culture, isnt it . Golf, does it fit the Chinese Culture . It doesnt really, does it, in terms of the etiquette, in terms of what the viewers tend to be like . Do you think that will change throughout the next couple of years . Well, crowd control has been a big issue. We saw a tournament just a one on one friendly exhibition match between tiger woods and rory mcilroy and it was carnage on the course with crowds roaming everywhere. Michael phelps played, the american swimmer, hes a keen golfer. He ha