Transcripts For CNBC Worldwide Exchange 20140227 : vimarsana

Lay out his turnaround plan for the business. And wpp weak margins. The ceo says he should have done more in emerging markets. They are our most profitable markets now. I think over the coming years well be more aggressive and if theres one thing i regret about the last ten years, its that we didnt go faster. And a split picture for two of the worlds biggest asset managers, pimco owner allianz suffers. Okay, welcome to the thursday edition of Worldwide Exchange, plenty to get through today. Im looking at the Russian Military exercises down at the ukrainian border, 100,000 troops. Posturing, 150,000. Exactly. Well talk about that. Also on todays show qantas lays out plans to cut jobs and grounds some of its fleet after a disappointing set of numbers. Well get the latest from sydney. As weve been saying the russian flag is raised over the crimea Regional Parliament building. Well be in moscow for the latest. And some positive news from retailers stateside, jcpenney swings to a profit in the Fourth Quarter sending shares higher. How the firm shrugged off the Winter Weather headwinds. Fed chair janet ylen is set to testify before the Senate Banking committee starting at 10 00 a. M. Eastern. Yellens appearance was originally scheduled for february 1th but postponed because of the snowstorm as well as her outlook for the u. S. Economy and the effect the weather has had, the markets will be looking for clues on how the feds tapering plan could progress and what impact that may have had in emerging markets. The biggest impact so far has been on the fragile five a term coined by morgan stanley, that club includes wra zillion, indonesia, turkey, south africa and india, the countries most as risk during the tapering cycle. The response of a number other nations has been to hike rates and brazil continued its fight against against inflation. The 25basis point increase marks a slowdown in the policy of monetary timing. Now the story is fairly similar for asias third biggest economy, where growth remains stuck below 5 , a near decade the country has suffered from a weak currency. Forthcoming elections could pose a risk. The latest Pew Research Center poll suggests 6 of the population could vote for the opposition bjp if the election was held today. The governor has blamed the economic turmoil on the u. S. And the nations selfish fiscal policies. Well know more when we get the latest gdp figure tomorrow. In south africa ripples being felt this side of the atlantic from ongoing mining strikes that have halted production and escalated into violent protests. The rand is being pushed close to record lows despite the central bank raising rates and elections in may seem to be contentious with new parties adding to the new ancs challenges. Broadwin, i think its incredible what he said about the u. S. Monetary impact of the dollar, not actually the domestic issues requesting goin country. Tell us what he had to say. Reporter absolutely, thanks very much, julia. Taking you a step back in the context of the interview we spoke to president jacob zuma tonight. Its important he starts engaininging with stake holders ahead of the election on the 7th of may. The anc is starting to lose votes. Opinion polls are indicating that there could be getting less than 0 of the total vote. If that happens it will be the first time that the anc finds themselves in that position since they took power in 1994, against that political backdrop we have the economic back drop where the International Monetary fund is forecasting a growth rate for 2. 4 for 2014. The african continent has an average growth rate of 6 so south africa is proving a drag to that overall african story. Of course weve got unemployment in the countries sitting over 24 that is the formal been static at that level for the better part of a decade. Youth unemployment is higher than that and its against that background i asked president jacob zuma whether south africa was in for its own arab spring. Were running a very democratic country. I dont think the reasons for people to go to that extreme that they have enough space to protest and voice their views, as it should be in any real democracy, because i think some of the actions come in a sense to express the situation, whether people have enough room to be able to raise their views. Of course, in the state of the nation address we stressed this point but again, its not a South African problem. Its a global problem, the unemployment, particularly the youth so we are dealing with a problem that is afflicting everyone. Youve also expressed concern about the rand weakness, fueling inflation, ultimately the rand looks as though its set to remain weaker for longer. Your thoughts on where the currencys going . Its difficult to predict that, because its not because of our currency it is the dollar, the key controlling currency in the world. Once the dollar is in problems, many currencies are in problems. So its difficult to say we cannot move this direction or that one. You know for a fact that the fact you have the economic measure down is because of the dollar. Once the dollar is in trouble, that impacts all of us. We are trying our best to ensure that we handled the currency, but as i say, its not totally in our control because it has to be part of the xwloebl volatile situation. Would you agree some of the rand weakness is related to heightened risk in the Mining Sector, do you not think that is heightened risk from foreign perspective . Because of the economic meltdown and the markets were no longer able to buy platinum and gold and once that happened it affected mining, so it was not it affected what they were doing but it was the economic meltdown. Once that happened then the mines reacted in a particular way because one particular mine thought that they should deal with workers, others would not strike so whatever way we look at it, it was not viewed in isolation. We supply 80 of the worlds platinum, a Huge Industry for us. Do you think well see our way clear . Absolutely. As the economies of the world that we trade with are beginning to come back, i think that means then our commodities are going to be bought and that will make us come back to where we were before. There president jacob zuma is net confident about the outlook for the Mining Sector in south africa. Now finance minister gordon tabled the budget in article amount yesterday, a debate is raging. Is a weak rand good or bad for the South African economy . Lindsey williams asked the Prime Minister whether local manufacturers exporting out of south africa are benefiting from that weaker rand. Life is about balances, so the currency has to be at a level where exporters can export, exporters can be competitive and exporters can produce goods that are wanted outside at a price that is acceptable to the customers outside. On the other side we have lots of consumers and investment projects which require capital goods for example to come in. We import all of our oil or much of it, so weve got to maintain a position which says watch the import side and the export side and each one must make the best proposition out of it. Reporter in south africa Prime Minister gordon had a tough balancing act to conduct in Parliament Yesterday when he tabled the South African budget. Back to you, ross and julia. Thank you for that great stuff from south africa. Here we are in europe, and hour and ten minutes into the trading day and decliners have it over advancers more than 5 4 at the moment, the dow jones stocks 00 pretty flat close for u. S. Equities today. Ftse down 100, individual corporates to focus in on, rbs posted a fullyear pretax loss of more than 8 billion pounds that has unveiled a 570 Million Pound bonus pool, stock off 6. 4 . Man group up 10. 5 after impressive full year figures. Funds under management left the companies aa slower pace than expected in 2013 as the firm attracted more new investment. Rsa down 3. 4 is where we stand, the firms planning to plug a capital hole with asset sales the former rbs ceo Steven Hester now taking over at rsa and wpp, 5. 25, saw sales rise in 2013 but investors left unimpressed by a warping on margins. The ceo told cnbc he should have been more aggressive in emerging markets. They are our most profitable markets now. Over the coming years well be more aggressive. If theres one thing i regret about the last ten years is that we didnt go fst aer. Posting a 2013 net profit of nearly 4 billion and allianz down 2. 3 , raised its 2013 dividend after roughly meeting market expectations. The company saw a Strong Performance from its Property Division but life and Health Insurance missed analyst forecasts and ahold, the dutch retailer up nearly 4 today, spending by u. S. Consumers still fairly cautious but the Fourth Quarter numbers did come in a notch above market expectations. Thats where we stand with the corpora corporates. Pretty much on that mark a fairly healthy five auction well bid despite new home sales coming in at a 5 1 2 year high. Yields have gone a little bit low so that so big beat on new home sales. On the currency markets the dollar basket is up a twoweek high, 1. 3646, and we havent changed an awful lot oef tver t last 24hour period. Thank you, ross. The shanghai composite managed to gain 0. 3 , despite that the pblc drained liquid from the markets. The china export lost more ground with chine jxt down. 3. 5. The nikkei lost ahead of the yellen testimony while the dollar yen pair has been largely flat at 102. 36 during asia trading. Kospi gained marginally. Australia suffered the biggest loss in three weeks hurt by a steep drop in Business Sentiment and poor earnings from qantas. Panasonic shares gained 2. 6 today, hitting a fourweek high thanks so its better than expected dividend plan it comes a day after the report about its Investment Plan in the u. S. Car battery plant but japans realistic counters saw increased selling. In china, some electricity stocks are higher on expectations that the country may build new Power Transmission lines in the Eastern Region to reduce coal consumption and tackle the smog problems. So thats a look at asian markets. Back to you. Still to come rbs posted its sixth annual loss but that wont stop it dishing out over half a billion pounds in stock bonus. Well have more on that as soon as we come back. We needed 30 new hires for our call center. Im spending too much time hiring and not enough time in my kitchen. [ female announcer ] need to hire fast . Go to ziprecruiter. Com and post your job to over 30 of the webs leading job boards with a single click; then simply select the best candidates from one easy to review list. You put up one post and the next day you have all these candidates. Makes my job a lot easier. [ female announcer ] over 100,000 businesses have already used zip recruiter and now you can use zip recruiter for free at a special site for tv viewers; go to ziprecruiter. Com offer2. The Ukrainian Foreign ministry summoned the russian envoy in kiev, requested immediate consultation with moscow, since russia put 150,000 troops on an exercise. Jaime maceda joins us from the russian capital with more. Hi, jim. Whats the intention here do you think from the russian government . Reporter well, the russian government wants two things, to exert its influence in the region but at the same time it doesnt want yet i think nor do other analysts weve spoken here to rock the boat too much. Theres no question, ross, texts have spiked in the past 24 hours just as russias Foreign Ministry came out condemning large scale Human Rights Violations against its ethnic russians in the ukraine, the Russian Defense ministry confirmed that fighter jets were now on high alert along the border with ukraine thats of course part of the surprise, war games weve been reporting on since yesterday including long range aircraft, warships as well as some 150 troops and some 900 tanks. The main flash point is ukraines crimea peninsula, strategic for russia, the home of the black sea fleet, scuffles broke out yesterday between proand antirussian protesters outside crimeas parliament. Overnight the building was seized by armed men speaking russian with rpgs, sniper rifles, in effect vigilantes who raised the russian flag over the building. Today Police Surround that building hoping to contain the situation while ukraines acting president warned russia that any troop movements outside of the black sea fleet base would be seen as an aggression against ukraine, and all of this going on, ross, based on as a result of many things but now were seeing photos even of Ukrainian Armored personnel carriers and troops on the road to seba sebastopol, it looks like an intense stand yourseoff and onl to get worse. The head of markets at bcs financial group, to find an analyst that thinks theres any possibly of military action as far as russia is concerned. Have investors got it right here, the bond markets and the equity markets if we look at whats going on the investors are positive on the ultimate outcome here. Ukraine is an extreme version of a frontier market, has very little Access Points to gauge what happens in the Capital Market there. Its true if you look at the equity market in the ukraine and the bond t seems like it stabilized. You look at the credit default swap its an elevated level above 1,000 which is distressed but below the 1300 level. And liquid as you just pointed out. Very much so. The reality is the kremlin has been quite a responsible actor, the Putin Administration in terms of how its been dealing throughout its long tenure and the situation is much more complex than what you can gauge from looking on the surface. There is no imaginary line between the west and the east that you can split off to russia. The crimea which is russian in terms of the way we conceptualize it. It was russia until the 1950s. When it was passed over to ukraine and the naval fleet of the black sea is there and indeed is an autonomous region within the ukraine. Even there, theres a sizeable minority not only of ethnic ukrainians but the tartars are on the front of it. The Putin Administration is well aware of that. The notion they can sweep into crimea and be greeted by the large minority is not realistic and theres no interest from the russians or europeans to escalate this further. Lets move on to yaush. You came on cnbc at the beginning of this month and said that the rube was due for a pullback. Investors who believed in you, talk me through. Its a good point. Even we have a huge debate on the direction of the ruble. We came into 2014 expecting the trubl depreciate. The pace of the deterioration was surprising. Even today its quite surprising to see where the ruble is. We came into 2014 with a selloff in emerging market currencies due to external vulnerabilities. We have discussing south africa, india and turkey and russia is not in that camp. It seemed like the ukrainian situation is not helping. The fact that i miscalculated to be fair when we discussed is the central bank of russia, the central bank of russia is seizing on this opportunity to orchestrate a bit of a devaluation in the ruble. This is positive as long as its in an orderly fashion for the russian economy for investment in russia, for profitability of corporate russia and the current account in russia which has been deteriorating. Net net youd expect the ruble to be further downside in the lubl to be limited but again we do see monetary situation in the u. S. Tightening, more fears, its hard to call that. Tends to overshoot. Joseph, great to chat with you. Now rbs ceo ross mcewen said to set out his plan for the bank, this announcement is taking place after rbs posted a loss of more than 13. 5 billion for the last year. The head of Global Banking at pimco joins us now and also joined by helia even hibrahimi. We heard its a buying opportunity but for most in the market youve seen shares side this morning. Its a real massacre. Youve got a high loss number, 8. 2 billion pounds, a massive bonus number higher than we expected but importantly youve got a whole load of costs associated with it and you havent seen the Cost Reduction so if you look at the markets business, you can see that actually income has come down about 26 , profits down 58 . Thats with the costs only coming down 11 and if you come back and have a look at the wider group you can see that in the last year, even though income has fallen 2. 3 billion pounds the actual Cost Reduction theyve managed to do is just half a billion so youve got this massive cost income ratio of 67 which is a long way off from where the bank was hoping to be. Felipe, come in here. Three to four years through this process of restructuring for rbs. Seems like they have an upward struggle to improve this business. I think thats right. The numbers this morning are very weak, expectations were not high. I think the most concerning number here is the top line the income line where basically you see the french eating into the franchise to generate earnings going forward. Thats the bigger concern to me and in addition to that what effect you have now is a bank signing up under government pressure primarily for two or three years of massive restructuring and that creates a lot of uncertainty and the governments vision to transform rbs from this massive global universal bank into an 80 uk institution is certainly an appealing message politically but in the reality and practicality of it, are difficult to implement and you have to question the value of that Worldwide Exchange<\/a>, plenty to get through today. Im looking at the Russian Military<\/a> exercises down at the ukrainian border, 100,000 troops. Posturing, 150,000. Exactly. Well talk about that. Also on todays show qantas lays out plans to cut jobs and grounds some of its fleet after a disappointing set of numbers. Well get the latest from sydney. As weve been saying the russian flag is raised over the crimea Regional Parliament<\/a> building. Well be in moscow for the latest. And some positive news from retailers stateside, jcpenney swings to a profit in the Fourth Quarter<\/a> sending shares higher. How the firm shrugged off the Winter Weather<\/a> headwinds. Fed chair janet ylen is set to testify before the Senate Banking<\/a> committee starting at 10 00 a. M. Eastern. Yellens appearance was originally scheduled for february 1th but postponed because of the snowstorm as well as her outlook for the u. S. Economy and the effect the weather has had, the markets will be looking for clues on how the feds tapering plan could progress and what impact that may have had in emerging markets. The biggest impact so far has been on the fragile five a term coined by morgan stanley, that club includes wra zillion, indonesia, turkey, south africa and india, the countries most as risk during the tapering cycle. The response of a number other nations has been to hike rates and brazil continued its fight against against inflation. The 25basis point increase marks a slowdown in the policy of monetary timing. Now the story is fairly similar for asias third biggest economy, where growth remains stuck below 5 , a near decade the country has suffered from a weak currency. Forthcoming elections could pose a risk. The latest Pew Research Center<\/a> poll suggests 6 of the population could vote for the opposition bjp if the election was held today. The governor has blamed the economic turmoil on the u. S. And the nations selfish fiscal policies. Well know more when we get the latest gdp figure tomorrow. In south africa ripples being felt this side of the atlantic from ongoing mining strikes that have halted production and escalated into violent protests. The rand is being pushed close to record lows despite the central bank raising rates and elections in may seem to be contentious with new parties adding to the new ancs challenges. Broadwin, i think its incredible what he said about the u. S. Monetary impact of the dollar, not actually the domestic issues requesting goin country. Tell us what he had to say. Reporter absolutely, thanks very much, julia. Taking you a step back in the context of the interview we spoke to president jacob zuma tonight. Its important he starts engaininging with stake holders ahead of the election on the 7th of may. The anc is starting to lose votes. Opinion polls are indicating that there could be getting less than 0 of the total vote. If that happens it will be the first time that the anc finds themselves in that position since they took power in 1994, against that political backdrop we have the economic back drop where the International Monetary<\/a> fund is forecasting a growth rate for 2. 4 for 2014. The african continent has an average growth rate of 6 so south africa is proving a drag to that overall african story. Of course weve got unemployment in the countries sitting over 24 that is the formal been static at that level for the better part of a decade. Youth unemployment is higher than that and its against that background i asked president jacob zuma whether south africa was in for its own arab spring. Were running a very democratic country. I dont think the reasons for people to go to that extreme that they have enough space to protest and voice their views, as it should be in any real democracy, because i think some of the actions come in a sense to express the situation, whether people have enough room to be able to raise their views. Of course, in the state of the nation address we stressed this point but again, its not a South African<\/a> problem. Its a global problem, the unemployment, particularly the youth so we are dealing with a problem that is afflicting everyone. Youve also expressed concern about the rand weakness, fueling inflation, ultimately the rand looks as though its set to remain weaker for longer. Your thoughts on where the currencys going . Its difficult to predict that, because its not because of our currency it is the dollar, the key controlling currency in the world. Once the dollar is in problems, many currencies are in problems. So its difficult to say we cannot move this direction or that one. You know for a fact that the fact you have the economic measure down is because of the dollar. Once the dollar is in trouble, that impacts all of us. We are trying our best to ensure that we handled the currency, but as i say, its not totally in our control because it has to be part of the xwloebl volatile situation. Would you agree some of the rand weakness is related to heightened risk in the Mining Sector<\/a>, do you not think that is heightened risk from foreign perspective . Because of the economic meltdown and the markets were no longer able to buy platinum and gold and once that happened it affected mining, so it was not it affected what they were doing but it was the economic meltdown. Once that happened then the mines reacted in a particular way because one particular mine thought that they should deal with workers, others would not strike so whatever way we look at it, it was not viewed in isolation. We supply 80 of the worlds platinum, a Huge Industry<\/a> for us. Do you think well see our way clear . Absolutely. As the economies of the world that we trade with are beginning to come back, i think that means then our commodities are going to be bought and that will make us come back to where we were before. There president jacob zuma is net confident about the outlook for the Mining Sector<\/a> in south africa. Now finance minister gordon tabled the budget in article amount yesterday, a debate is raging. Is a weak rand good or bad for the South African<\/a> economy . Lindsey williams asked the Prime Minister<\/a> whether local manufacturers exporting out of south africa are benefiting from that weaker rand. Life is about balances, so the currency has to be at a level where exporters can export, exporters can be competitive and exporters can produce goods that are wanted outside at a price that is acceptable to the customers outside. On the other side we have lots of consumers and investment projects which require capital goods for example to come in. We import all of our oil or much of it, so weve got to maintain a position which says watch the import side and the export side and each one must make the best proposition out of it. Reporter in south africa Prime Minister<\/a> gordon had a tough balancing act to conduct in Parliament Yesterday<\/a> when he tabled the South African<\/a> budget. Back to you, ross and julia. Thank you for that great stuff from south africa. Here we are in europe, and hour and ten minutes into the trading day and decliners have it over advancers more than 5 4 at the moment, the dow jones stocks 00 pretty flat close for u. S. Equities today. Ftse down 100, individual corporates to focus in on, rbs posted a fullyear pretax loss of more than 8 billion pounds that has unveiled a 570 Million Pound<\/a> bonus pool, stock off 6. 4 . Man group up 10. 5 after impressive full year figures. Funds under management left the companies aa slower pace than expected in 2013 as the firm attracted more new investment. Rsa down 3. 4 is where we stand, the firms planning to plug a capital hole with asset sales the former rbs ceo Steven Hester<\/a> now taking over at rsa and wpp, 5. 25, saw sales rise in 2013 but investors left unimpressed by a warping on margins. The ceo told cnbc he should have been more aggressive in emerging markets. They are our most profitable markets now. Over the coming years well be more aggressive. If theres one thing i regret about the last ten years is that we didnt go fst aer. Posting a 2013 net profit of nearly 4 billion and allianz down 2. 3 , raised its 2013 dividend after roughly meeting market expectations. The company saw a Strong Performance<\/a> from its Property Division<\/a> but life and Health Insurance<\/a> missed analyst forecasts and ahold, the dutch retailer up nearly 4 today, spending by u. S. Consumers still fairly cautious but the Fourth Quarter<\/a> numbers did come in a notch above market expectations. Thats where we stand with the corpora corporates. Pretty much on that mark a fairly healthy five auction well bid despite new home sales coming in at a 5 1 2 year high. Yields have gone a little bit low so that so big beat on new home sales. On the currency markets the dollar basket is up a twoweek high, 1. 3646, and we havent changed an awful lot oef tver t last 24hour period. Thank you, ross. The shanghai composite managed to gain 0. 3 , despite that the pblc drained liquid from the markets. The china export lost more ground with chine jxt down. 3. 5. The nikkei lost ahead of the yellen testimony while the dollar yen pair has been largely flat at 102. 36 during asia trading. Kospi gained marginally. Australia suffered the biggest loss in three weeks hurt by a steep drop in Business Sentiment<\/a> and poor earnings from qantas. Panasonic shares gained 2. 6 today, hitting a fourweek high thanks so its better than expected dividend plan it comes a day after the report about its Investment Plan<\/a> in the u. S. Car battery plant but japans realistic counters saw increased selling. In china, some electricity stocks are higher on expectations that the country may build new Power Transmission<\/a> lines in the Eastern Region<\/a> to reduce coal consumption and tackle the smog problems. So thats a look at asian markets. Back to you. Still to come rbs posted its sixth annual loss but that wont stop it dishing out over half a billion pounds in stock bonus. Well have more on that as soon as we come back. We needed 30 new hires for our call center. Im spending too much time hiring and not enough time in my kitchen. [ female announcer ] need to hire fast . Go to ziprecruiter. Com and post your job to over 30 of the webs leading job boards with a single click; then simply select the best candidates from one easy to review list. You put up one post and the next day you have all these candidates. Makes my job a lot easier. [ female announcer ] over 100,000 businesses have already used zip recruiter and now you can use zip recruiter for free at a special site for tv viewers; go to ziprecruiter. Com offer2. The Ukrainian Foreign<\/a> ministry summoned the russian envoy in kiev, requested immediate consultation with moscow, since russia put 150,000 troops on an exercise. Jaime maceda joins us from the russian capital with more. Hi, jim. Whats the intention here do you think from the russian government . Reporter well, the russian government wants two things, to exert its influence in the region but at the same time it doesnt want yet i think nor do other analysts weve spoken here to rock the boat too much. Theres no question, ross, texts have spiked in the past 24 hours just as russias Foreign Ministry<\/a> came out condemning large scale Human Rights Violations<\/a> against its ethnic russians in the ukraine, the Russian Defense<\/a> ministry confirmed that fighter jets were now on high alert along the border with ukraine thats of course part of the surprise, war games weve been reporting on since yesterday including long range aircraft, warships as well as some 150 troops and some 900 tanks. The main flash point is ukraines crimea peninsula, strategic for russia, the home of the black sea fleet, scuffles broke out yesterday between proand antirussian protesters outside crimeas parliament. Overnight the building was seized by armed men speaking russian with rpgs, sniper rifles, in effect vigilantes who raised the russian flag over the building. Today Police Surround<\/a> that building hoping to contain the situation while ukraines acting president warned russia that any troop movements outside of the black sea fleet base would be seen as an aggression against ukraine, and all of this going on, ross, based on as a result of many things but now were seeing photos even of Ukrainian Armored<\/a> personnel carriers and troops on the road to seba sebastopol, it looks like an intense stand yourseoff and onl to get worse. The head of markets at bcs financial group, to find an analyst that thinks theres any possibly of military action as far as russia is concerned. Have investors got it right here, the bond markets and the equity markets if we look at whats going on the investors are positive on the ultimate outcome here. Ukraine is an extreme version of a frontier market, has very little Access Points<\/a> to gauge what happens in the Capital Market<\/a> there. Its true if you look at the equity market in the ukraine and the bond t seems like it stabilized. You look at the credit default swap its an elevated level above 1,000 which is distressed but below the 1300 level. And liquid as you just pointed out. Very much so. The reality is the kremlin has been quite a responsible actor, the Putin Administration<\/a> in terms of how its been dealing throughout its long tenure and the situation is much more complex than what you can gauge from looking on the surface. There is no imaginary line between the west and the east that you can split off to russia. The crimea which is russian in terms of the way we conceptualize it. It was russia until the 1950s. When it was passed over to ukraine and the naval fleet of the black sea is there and indeed is an autonomous region within the ukraine. Even there, theres a sizeable minority not only of ethnic ukrainians but the tartars are on the front of it. The Putin Administration<\/a> is well aware of that. The notion they can sweep into crimea and be greeted by the large minority is not realistic and theres no interest from the russians or europeans to escalate this further. Lets move on to yaush. You came on cnbc at the beginning of this month and said that the rube was due for a pullback. Investors who believed in you, talk me through. Its a good point. Even we have a huge debate on the direction of the ruble. We came into 2014 expecting the trubl depreciate. The pace of the deterioration was surprising. Even today its quite surprising to see where the ruble is. We came into 2014 with a selloff in emerging market currencies due to external vulnerabilities. We have discussing south africa, india and turkey and russia is not in that camp. It seemed like the ukrainian situation is not helping. The fact that i miscalculated to be fair when we discussed is the central bank of russia, the central bank of russia is seizing on this opportunity to orchestrate a bit of a devaluation in the ruble. This is positive as long as its in an orderly fashion for the russian economy for investment in russia, for profitability of corporate russia and the current account in russia which has been deteriorating. Net net youd expect the ruble to be further downside in the lubl to be limited but again we do see monetary situation in the u. S. Tightening, more fears, its hard to call that. Tends to overshoot. Joseph, great to chat with you. Now rbs ceo ross mcewen said to set out his plan for the bank, this announcement is taking place after rbs posted a loss of more than 13. 5 billion for the last year. The head of Global Banking<\/a> at pimco joins us now and also joined by helia even hibrahimi. We heard its a buying opportunity but for most in the market youve seen shares side this morning. Its a real massacre. Youve got a high loss number, 8. 2 billion pounds, a massive bonus number higher than we expected but importantly youve got a whole load of costs associated with it and you havent seen the Cost Reduction<\/a> so if you look at the markets business, you can see that actually income has come down about 26 , profits down 58 . Thats with the costs only coming down 11 and if you come back and have a look at the wider group you can see that in the last year, even though income has fallen 2. 3 billion pounds the actual Cost Reduction<\/a> theyve managed to do is just half a billion so youve got this massive cost income ratio of 67 which is a long way off from where the bank was hoping to be. Felipe, come in here. Three to four years through this process of restructuring for rbs. Seems like they have an upward struggle to improve this business. I think thats right. The numbers this morning are very weak, expectations were not high. I think the most concerning number here is the top line the income line where basically you see the french eating into the franchise to generate earnings going forward. Thats the bigger concern to me and in addition to that what effect you have now is a bank signing up under government pressure primarily for two or three years of massive restructuring and that creates a lot of uncertainty and the governments vision to transform rbs from this massive global universal bank into an 80 uk institution is certainly an appealing message politically but in the reality and practicality of it, are difficult to implement and you have to question the value of that Company Going<\/a> forward. Theyve got to sell by the end of 2016 the u. S. Bank as well. 8. 6 at the end of 013, higher than 2012 when moodys were talking about possible credit downgrade. Has that threat gone away . I think the Capital Position<\/a> looks weak today because the bank has been consistently loss making for the past five years so its been left mind compared to peers that have been profitable and retain earnings and build up capital organically. They are certainly left behind. The good news from a capital perspective is that theres big chunks of assets to sell that should boost the capital ratios going forward, citizens, the u. S. Bank is going to be part ipo this year so theres a lot of capital benefit from that so they have a target of 12 and i think that is achievable. There say problem if you want to boost capital thats one thing but at the same time youre stripping out assets like the u. S. Retail business, restructuring from seven Business Units<\/a> down to three, stripping out employees, also impacting and gaining their top line of where they generate revenue here. Are they getting the balance right . No, so i think the government has made a mistake when it did that strategic review. My view and my recommendation has been to keep the hester management team. I think that were getting close to a point where the bank was ready to initiate the privatization process. I think for mostly primarily political reasons the government has decided to follow a different path which is to transform rbs into some sort of lloyds but with the focus on uk smes. I think thats primarily intellectual appeal rather than economic appeal and you will see that strategy is creating a lot of value destruction for shareholder answer therefore taxpayers. Maybe theyll get the bank to a smaller safer size that scott rand could support it on its own. Maybe thats where well end up. Its better supported going forward. Good to see you. Helen will stick around for the ramifications of it, back to that. Still to come is the chinese yuan going to be the next World Reserve<\/a> currency . It could topple the u. S. Dollar to snatch the top spot. Well bring you that story right after the break. We needed 30 new hires for our call center. Im spending too much time hiring and not enough time in my kitchen. [ female announcer ] need to hire fast . Go to ziprecruiter. Com and post your job to over 30 of the webs leading job boards with a single click; then simply select the best candidates from one easy to review list. You put up one post and the next day you have all these candidates. Makes my job a lot easier. [ female announcer ] over 100,000 businesses have already used zip recruiter and now you can use zip recruiter for free at a special site for tv viewers; go to ziprecruiter. Com offer2. The headlines from around the globe, blame it on the dollar, South African<\/a> president jacob zuma tells cnbc that selloff in the rand is not down due to domestic issues. Once the dollar is in problem, many currencies are in problem. So its difficult to say we can mott move this direction or that one. Rbs shares drop after the lender posts a 13. 5 billion loss. Chief executive ross mcewan expected to lay his turnaround plan for the business. Wpp disappoints investors with its weak margin guidance despite driving profits higher, the ceo says he should have done more in emerging markets. They are our most profitable markets now. Over the coming years well be more aggressive and if theres one thing i regret about the last ten years, its that we didnt go faster. And split picture for two of the worlds biggest asset managers, pimco owner allianz suffers a high outflow of client cash but man group boosts its dividend after attracting more investment in q4. So rbs Ceo Ross Mcewan<\/a> laying out his turnaround plan for the bank. Few Key Headlines<\/a> restructuring means making difficult choices on jobs in the years ahead, no real detail as far as how many job losses were likely to see. Technology investment in the next 12 months will be to improve system resilience and make it more agile, flexible for the company, a change in annual bonuses is needed. They dropped 15 from the prior year, rbs will continue to be a back marker in Investment Banking<\/a> and theyre going to have fewer branches over time. Theres been a 30 decline in branch usage since 2010, incredible figures. Theyre also saying not strong yet enough to be privatized at a profit for the taxpayer, not going to be privatized at a profit for the taxpayer in the immediate future, funny enough our last guest was saying not likely until 2016, 2017 at the earliest. This bank produced 40 i think 44. 6 billion of losses ever since 2009 and we were told this was a fiveyear Restructuring Plan<\/a> when hester came in and it would all be tied up. But it was tied up just about and then the government changed their mind. Depends whether you wanted rbs the bank that was rbs in a smaller size or you wanted as mark, too. Politicians wanted rbs to become a mirror image of lloyds which is a much more complex task to achieve. Is it a new ceo though. How much of this is about kitchen sinking in this day . The banker is so selfcritical i think in a wish to avoid being criticized by others and one of the investor presentations they put crosses next to all the things they do badly which is questions remain about technology, our reputation has been damaged, our market share trend is flat or declining, theres nothing in here that theyre not doing badly. I asked you this morning what was good. What was good in the report . We got a bit confused, didnt we . I think what ross mcewan would say, rbs is still the uks biggest Corporate Bank<\/a> and in line with this cyclical recovery in the uk, it should be able to benefit from that upswing, but actually when you look at the numbers for q4, they havent done particularly well in that franchise either and you have the at strosk numbers from the markets division, profits down 58 and this is when costs are not coming down. Remember, today they paid out over 570 Million Pound<\/a>s in bonuses, that was slightly higher than people expected. When the loss was slightly more than people expected so its a really difficult conundrum. On the analysts call one was asking the finance director Nathan Bostock<\/a> soon to leave to santander was asking why are you issuing equity again to pay your coupon, again why do we as shareholders have to bear the cost of you going into the Capital Market<\/a>, the debt markets and raising money and he was saying well, unless we produce a profit we cant pay in cash to our debt holders. So on scotland he was very interesting. He said he wanted to remain neutral and let the people of scotland, this is ross mcewan, decide, but he said we need to consider what the risks are. We dont know what the rules of engagement are, which i think is how a lot of the scottish voters feel. Interesting, also heard from Standard Life<\/a> this morning, its going to leave parts of its or look to leave parts of its business away from scotland if the country votes for independence. The firm says the move would protect interests of its shareholders and interesting about that 90 of its policy holders are in england and wales, not in scotland and i think maybe what theyre trying to do here is probably get some clarity in the debate as it goes. Were going to have to know before. Whats going to happen. Last month they talked about the fact that voters in scotland arent sure, weve got a currency issue, a regulatory issues around banks whether the bachkz of england are the lender of last resort for scottish banks if theyre regulated up. Theres lots of questions. Standard life of the big employer in scotland as well. Thank you for that. European equities were about an hour and 40 minutes, well twibl about the 1 30 short of that, down half a percent for the uk xetra dax off nearly a percent. Ftse down about a percent. Spreads certainly tight in the pond market, the u. S. Tenyear trading around 2. 65, more than threeweek lows in terms of yields. Number thinking the geopolitical concerns will benefit even the periphery and not just core bonds here taken seems to be the case. U. S. Dollar index up at a twoweek high. This time yesterday dollar yen slipped down to 1. 02. Just the 1. 66 handle after being up nearly 1. 67 early in the week. Angela merkel will address Parliament Today<\/a> and joins the queen for a pot of tea no doubt. Uk Prime Minister<\/a> David Cameron<\/a> will be hoping to use the visit to get the chancellors support on renegotiating the uks relationship with the eu. So what are his chances of making some leeway with germanys version of the iron lady . Chief economist at lundberg Street Research<\/a> joins us now. Charles, in between the discussions between merkel and cameron whoo he asks for. Were not clear on what he wants back precisely from brussels. How can he ask for what he doesnt know . Hell ask for stuff which sounds good in a speech and ask for everything and he wont get everything but the key question i think is going to be over time first of all how voters react to whats currently happening inside the eurozone and secondly, how the economies develop and whether or not the eurozone can actually stabilize itself satisfactorily. When you say react to the way things are going in the eurozone, what are you hitting or alluding to . I dont know to what extent people in spain froeror example going to be content with 26 unemployment and 55 youth unemployment. Its fine for us here in britain, we get all their talent who come oef here but not so hot for them and the willingness of voters to do something about this in terms of voting for people who if you like have a sort of cameronesque or slightly thats more reform of the way the eu is in competitive practice really, isnt there . Angela merkel is modification rather than general renegotiation . Well im not sure where the line is drawn between modification and renegotiation. Any modification is a change which is, could be presented by mr. Cameron as a renegotiation. I think as far as germany is concerned it will be presented. You dont have to go back, countries have to go back and have referendums. Thats what they want because they never have referendums themselves and if they had, of course, we wouldnt have the euro. Do you think the parliamentary elections changes anything here, because were talking about a possibility of having 30 of the Europe Parliament<\/a> skeptics. Do you think that makes, Angela Merkel<\/a> will change her mind at all on this . The pressure on merkel is currently mostly i would imagine at least on the daytoday basis from her social democratic partners inside the coalition who are very kind of integrationists if i can use a word which probably doesnt even exist. If Something Like<\/a> if youre deutsche, youre a skeptic by which i mean euro the currency Skeptic Group<\/a> makes a substantial breakthrough in the elections that creates alternative pressure because theyre mostly appealing to her own christian democratic voters. So thats one of the things thats there to play for and then of course a question of what happens in the other countries. I think its really interesting the meeting between cameron and the dutch Prime Minister<\/a> because i sfoek him a few weeks ago and hes still adam ant that the time for more surp over and we do need to repatriate. As crucial as getting the germans on side is building a consensus amongst some of the other countries and he does have that. He has a growing consensus among some of the big countries, the core countries. Yes, confronting the fact that the head man of the socalled Freedom Party<\/a> is eu skeptic rather than just euro skeptic and wants out and is currently the leading party and thats exactly the kind of pressure which could build in germany and those are the guys who are playing up this thing and the other people who are suffering from it because the germans effectively through their sort of competitive devaluation have exported their deflation down south, those guys are suffering, too. So its how those people react in the voting booths which i think is crucial. The last time german chancellor addressed parliament was in 1970s. The irony. I voted to go in 1975 or to stay in rather by then and now i still think were better off inside the eu and outside the euro. I thought you were going to Say Something<\/a> revelatory charles. I havent changed. The world has moved from left to right around me. Charles, fantastic to chat to you, lundberg Street Research<\/a>. Logon to cnbc. Com to get a preview of the big meeting today and of course well have live coverage of the joint press conference at 10 downing street from 3 30 cet. Change of pace now, cnbc confirmed with government sources that egypts finance minister will not be in the countrys new cabinet. Decision on the post is expected within the next 48 hours. This as broadcaster al jazeera called for protests outside egyptian embassies across the world. Yousef al din talks to us now. I remember talking to the former Prime Minister<\/a> a month ago and he was looking forward to the parliamentary elections, the president ial elections. What changed . Well its been a real roller coaster, julia, but i landed just a few hours ago and effectively walked into a series of labor strikes, likely to have been a key contributing factor in that surprise resignation by the last cabinet. There are also power cuts again as a result of gas shortages despite aid coming in from the oil rich gulf states, those are going to be central in the priority list of the new Prime Minister<\/a> ibrahim. As he puts his Team Together<\/a> cnbc learned from sources that gelel will not continue as finance minister and dimyon former chief negotiator from egypt with the imf will take up that position most likely. Now in either case, the transition is going to be short lived. The mandate is will be short lived because president ial elections are slated to take place in a few months again before parliamentary elections so just putting together the framework, the legislative framework for that and also keep in mind that the political ambiguity has been that ratings agencies like moodys, like fitch have maintained their negative outlook over the last two weeks, a Central Bank Decision<\/a> on rates is also expected later on today, analysts have told me dont expect any change on that front because of whats happening politically. Perhaps ironically the stock exchange, the equity markets have reacted positively to the Political Uncertainty<\/a> in this country. Now, on a slightly different note, julia, and you brought this up as well, al jazeera calling for a global day of action. We spent more time telling the story rather than sharing with you the risks and the challenges we take on to bring you that information. Al jazeera calling for the release of four journalists that have been detaped since december 29th and its really part of a growing debate or a wider debate about freedom of expression in this country, egypt was the third deadliest destination for journalists in 2013 and the hope many have is that the government will take a closer look at these issues and resolve them to make it easier for journalists to do their job. Julia . Thanks, yousef. Well wait and see if we get some progress on that. Blackstone is buying 20 of versace, going to inject 150 million of fresh capital, acquiring 60 million in stock and have one seat on versaces board. Theres a slight different investment, fashion, darling, versace, are they out, are they in . Where are you on the versace scale . I couldnt really give you a no . Positive that tells you everything. Reading between the lines. Its so far out its time for it to be in. Shes quite a flamboyant character, isnt she . I dont know. Our director says its out. Shes braver than me. Youre wrong its coming back. Its all cyclical. Shell be back. Also still to come, qantas is forced to cut jobs and its fleet as the competition takes off. Well jet across to sydney next for analysis of the Australian Airlines<\/a> turbulent first half coming up after this break. Could save you fifteen percent or more on car insurance. S Everybody Knows<\/a> that. Well, did you know that when a tree falls in the forest and no ones around, it does make a sound . Ohhh. Ugh. Geico. Little help here. I needthats my geico Digital Insurance<\/a> id card gots all my pertinents on it and such. Works for me. Turn to the camera. Ah, actually i think my eyes might ha. Next Digital Insurance<\/a> id cards. Just a tap away on the geico app. Welcome back to the show. Few more headlines coming out here on that versace deal with blackstone, agreeing to a 20 stake. Versace is saying the family will remain at the heart of the company, the transaction implies total enterprise value of around 1 billion rue euros for the company now. Also versace or blackstone taking one seat on the board so thats the latest on that deal. Now the yuan will take the dollar, a survey of 200 investors, 100 headquarters in Mainland China<\/a> and 100 outside it published pi state street and the Economist Intelligence<\/a> unit, they expect beijing to complete its final liberalization within ten years. For more and the renminbis recent slide head to cnbc. Com for all the details, this comes as Chinas Central Bank<\/a> sets another week a midpoint band for the chinese yuan. The currency opened below the fixing but it did recover midday trading around flat. The yuan depreciated about 1 over the past few weeks and expected to continue to slide ahead of Chinas National Peoples Congress<\/a> next week. Tommy shea, Economist Research<\/a> and strategy at ocbc bank joins us now. Tommy to what extent is this a warmup our prelude for the widening trade of the yuan . Right now we have a lot of speculation in the market. Right now we have seen the gap between the yuan fixing in the onshore market has been closed so next question is when chinas going to widen the trading bands. So we think its likely for us to, i mean for the next few months likely for us to see china to widen the trading band. We know next week we are going to have the National Peoples<\/a> congress which reform will be one of the key focus in the congress so i think i wont be a surprise for china to widen the trading ban during the Congress Meeting<\/a> next week. Are the pbc trying to change the view that the renminbi will appreciate against the dollar and that encourages do they assume because theres that assumption in the market it encourages speculative inflows . Are they now saying we dont want the speculative inflows so well change the view for the currencies automatically rising maybe its at fair value . Okay, i dont think they want to change the view that the renminbi is going to appreciate. I think what they do actually they probably try to clamp down on certain speculation flows because right now its kind of the consensus trading in the market is going to bet on the renminbi appreciation. I think the inflow is too strong. I think thats why opbc is not comfortable with that. The move for the past week theyve tried to clean up some position but i think pboc has to allow the renminbi to appreciate. Speculative inflows are down to the fact theres an expectation currency is going to appreciate . Well, i think theres no official statistics on how much the speculative inflow is in china but if we look at the capital population and chinas forex just by the chinese banks its quite huge hundreds of billions which cannot be explained by the fdi so thats a huge number we are looking at. So again we are going to see pboc is trying to balance the flow. Great to chat with you tommy xie at ocbc bank. Ross im with you. Im right here. Im with you i believe one of the biggest short trades out the carry trades out the short dollar trends. The funny thing is actually theyve been speculating on increasing volatility so the hedge funds theyre benefiting from this not losing out therell always be somebody who benefits. Playing for greater volatility. Shares of baidu up. Fourth Quarter Sales<\/a> doubled to 1. 5 billion, beat analyst expectations. Invested herself nil mobile content which makes up a fifth of its top line and says more acquisitions will likely keep net proflt flat in the year ahead. Lets give you a look at whats on the agenda in asia tomorrow, spending figures, cpi, industrial output and retail sales, and full year results after hong kongs glom rate and india will report q3 gdp figures, retail poll suggests lackluster growth 4. 9 for the december quarter. Still to come on the show jcpenney ceo says the challenging part of the turnaround is over. Well have more on how the Company Managed<\/a> to eke out its first profit in more than two years, after the break and a pretty decent performance from target after its earnings after all we talked about that. Plenty more coming up on the u. S. Market. The second hour of Worldwide Exchange<\/a> is coming right up. [ male announcer ] meet jill. She thought shed feel better after seeing her doctor. 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Lifelocks comprehensive Identity Theft<\/a> Protection Guards<\/a> your Social Security<\/a> number, your money, your credit, even the equity in your home. It doesnt matter how old you are or how much money you have. Identity thieves steal from everyone. You have to protect yourself. I protect myself with lifelock. [ male announcer ] while Identity Theft<\/a> cant be completely stopped, no one protects you better than lifelock. And lifelock stands behind their protection with the power of their 1 million service guarantee. You have so much to protect and nothing to lose when you call lifelock right now and try 60 days of Identity Theft<\/a> protection risk free. 60 days risk free. Use promo code onguard. Order now and get this document shredder to keep sensitive documents out of the wrong hands. A 29 value free. Welcome to Worldwide Exchange<\/a>, im chullia chatterly. Im ross west gate. The headlines today from around the globe. Blame it on the dollar. South african president jacob zuma tells cnbc exclusively the selloff in the rand is not down to domestic issues. Once the dollar is in problem many currencies are in problem so itsive to say we cannot move this direction or that one. We know for a fact that the fact you have economy down because of the dollar. Fed chair janet yellen will say about the impact on emerging markets from u. S. Monetary policy and if u. S. Storms have chilled the economy. Rbs shares drop after the lender posts a 13. 5 billion loss. Chief executive ross mcewan says hell have to make difficult choices on jobs in the years ahead. W. P. Pierce disappointed investors with weak margin guidance despite driving profits higher. The ceo says he should have done more in emerging markets over the years. They are our most profitable markets now. I think over the coming years well be more aggressive and if theres one thing i regret about the last ten years its that we didnt go faster. If youre just joining in, thanks for joining us here on Worldwide Exchange<\/a>. Ill give you a look as always as how the markets are faring ahead of the u. S. Open today and as you can see futures indicating lower despite minor gains in yesterdays trading session a selloff into the close again we saw in intrading in wednesdays session, lower here on the dow futures by around 54 points so far for the nasdaq, trading around the 14year highs but indicating by around four points and s p 500 similar story, too, indicating around four points lower. Quick look what is going on as far as the global top stocks are concerned, its a weaker session here for europe despite a mixed picture in asia overnight. Ill give you a quick look at the individual stock performances for the european markets mere the ftse 100 down by around 1 , rbs are weighing on the index, german markets down 1. 3 , french markets by 0. 8 and for the italian markets lower by. 2 . Nudging a little lower. A host of earnings to digest as well. Ill have to wear green tomorrow, all mint. Youre calling the market higher tomorrow . You heard it here first. Rbs today very much in focus the Stateowned Bank<\/a> still majority owned by the British Government<\/a> stock down 7. 6 , posted a full year of more than 8 billion pounds and unveiled a 570 Million Pound<\/a> bonus pool. The ceo says he has to make difficult choices on jobs but plans to sell its citizens u. S. Business as well, there will be a part yol flow to that too. Man group up 11 on the other hand impressive with its full year numbers the asset manager said it left at a slower pace than last year the firm attracting more inward investment. Rsa the Insurance Group<\/a> in the uk exrbsceo Steven Hester<\/a> is taken over at irc, parachuted in to help it out and hes unveiled a 1. 3 billion rights issue and the Firm Planning<\/a> to plug a capitol hole with asset sales as well and doug pp down 5 . May have seen a rise in sales in the last quarter of 2013 but investors unimpressed by warning on margins, Martin Searle<\/a> telling cnbc he should have been much more aggressive. They are our most profitable. If theres one thing i regret about the last ten years we didnt go faster. How fast do you want to go, break the speed limit . I dont know. Moller maersk is the its the shipping company. Allianz trading lower after a weak performance. And dutch retail group ahold has a big presence up 3. 39 . Fourth quarter figures were not above market expectations. Thats the individual. Yields are lower as cross the board today. Accelerated during the session. Were at 2 pn 66 yield on the ten year when we finished the u. S. Market. It was a big we had a well received auction yesterday. Of the currency markets, dollar index is at a twoweek high today. Dollar yen has gone down to e e below 1 pn 0 1. 02. We have an update on whats happening in asia. Managed to gain. 3 despite the drain of the markets this week. But within china down 3. 5 . Over in japan, lost. 3 ahead of the testimony. While the dollar yen has been largely flat at 102. 36. But australia suffered the biggest loss in three weeks. Also poor earnings from quan it is a. Panasonic shares gained 2. 62 today. Tha thanks to its better than expected dividend plan. This comes a day after the report about Investment Plan<\/a> in the u. S. Car battery plant. But saw increasing selling extending a down trend since the start of this year. Some electricity is higher on expectations on the country they build new transmission lines to reduce coal consumption and tackle the problems. So thats the asian markets. Back to you. We just had a few on the ukraine to keep you abreast of developme developments will. Former president said hes still the president of ukraine and this according to russian news agencies. So thats an interesting question about whether hes in russia. We still dont know that. Hes also saying hes asking russia to guarantee his personal safety from actions of extremists. E he also says southeast ukraine doesnt accept leadership. The Parliament Yesterday<\/a> said they did want to remain as part of the ukraine. Thats just his personal opinion here. But hes saying hes still the president of ukraine. Janet yel season back on capitol hill today. She was to appear in february, but it was delayed because of freezing weather conditions. Shes also likely to face continued requests. Joining us is the managing director andrew good to see you this morning. Is the weather different from what she said to the house today to the senate . A little unusual that we have a pause between the two speeches. The weather has been a factor in a lot of the economic data. I think that will be one of the primary focuses. But i think three keys essentially to the statement today, the q a i dont hi the statement will fluctuate much from what she said a few weeks a ago. I think they will continue to press her on this idea of is it really just whether distortions or is there something more fundamentfund mment l going on that would cause them to alter the pace . Thats not interrupting sales or home prices. Also data out on new lending for home construction, which saw a good pickup in the Fourth Quarter<\/a>, which has been an inhibitor in terms of the Housing Market<\/a>. The Housing Market<\/a> started to pick up. Builders were having a hard time obtaining financing for new construction. That was really slowing the pace in terms of new home sales and new construction. So i would say that was a bright spot we got yesterday as well. Andrew, what would you if you were asking the questions, what would you drill down specifically and is there anything what would it take for the fed to change the course that its on right now . Theres an kppation we wrap up by october. I think if you step back and say if you look over the last six months when taper really kind of came on to the forefront. It looked like it was getting going. Essentially what was happening is the economic momentum was strong in the u. S. Data in the third quarter, beginning of the Fourth Quarter<\/a> just as taper talk started to develop. A the lot of that was an inventory build. So what i would ask and press on that is how much of the strength did we see as they were make in the decision to start to taper was really the jurnd lying fundamental versus an inventory build. Since we have had the weather distortions, thats impacted things significantly. That would be one issue i would be interested in is what are the drivers of growth that the fed is looking at and are they inclined to actually alter their forecasts at this point. Now that we are quite a bit through the first quarter, it definitely looks like the feds assumption is probably too high. What would it tyake for them to downgrade their assessment and say maybe were too optimistic coming into the year. Okay. Stick around. Get a cup of coffee. Have one of those excellent bagels they have there. Whatever your thing is at this time of the morning. South africa has been one of the emerging markets hit by the feds tapering cycle. Mining strikes and allegations of corruption have all weighed on the rand. But speaking to cnbc, the South African<\/a> president has blamed the fall in the currency on the dollar. Life is about balances. So the currencies have to be at a level where exporters can export, exporters can be competitive and produce goods that are wanted outside that is acceptable price. We have lots of consumers. And investment projects, which acquire capital to come in. An Oil Dependent<\/a> company, we import much of our oil. So we have to maintain a position which says watch the import side and watch the export side and each one must make the best proposition out of it. You may have spotted mistake there. That was the countrys finance minister. He was speaking ab the benefits of the country. E we will bring you the president later on in the show. Thats in 15 minutes to talk us through those details. Some of the other stories meanwhile, buying 1. 3 more shares. Berk shires stake is worth 2. 5 billion. The company, has been trading around 52week highs. Another development in General Motors<\/a> recall of faulty ignition switches. The government is opening a probe into the timeliness of the recall. It wants to know if gm properly followed the Legal Process<\/a> in requirements for reporting them. It affected 1. 6 million of its small cars. Open a probe, it sounds like the thing the aliens do. When you get sucked up into a spaceship. Im not sure where you were going with that one. No one ever remembers when its happened. Still to come, blackstone getting into high fashion. The firm is taking a 20 stake. You think versace that they are not in fashion . Not the top focus for fashion brand. This could be the turning point. All the details coming up after the break. Return on investment wall isnt a street. Isnt the only return im looking forward to. For some, every dollar is earned with sweat, sacrifice, courage. Which is why usaa is honored to help our members with everything from investing for retirement to saving for college. Our commitment to current and former military members and their families is without equal. The headlines blame it on the dollar. Their president tells c nbc exclusively the rand is not down due to domestic issues. A bumper loss. The bank is not Strong Enough<\/a> yet to be privatized. And is yellen going to stay the course . Investors looking for clues twh n what the fed chair could say during her testimony later today. Developments on the ukrainen story this morning. We heard ten minutes ago that the their president was asking russia for protection. We have reports from the russian use agency kwaeting a source saying that russia has agreed to ensure the personal safety of the ukrainen president. I was wondering why we havent seen more of an impact on markets given whats going on in the ukraine. The likes of venezuela and th thailand. They are not yet systemic. I think the ukrainen situation has the capacity. In russia it was already under pressure this year. They are not the at moment. Seeing some kind of Market Reaction<\/a> risk sell off today makes sense. Yep. Meanwhile, u. S. Stocks did manage to recount kind of a mixed performance wednesday. About 14 at one stage. Should investors be prepared for further volatility . Ann. Drew has been enjoying his coffee in that short sbrerm sbrerm or tea. I have been watching out for the alien probes too. Thats very important. But we never remember them. They are clever like that. Andrew, are we in for a more volatility . Is that what happens with prices . Yeah, i think that was our outlook for this year is high Single Digits<\/a> for the overall markets. But more volatility through the ebbs and flows. Its challenging when youre dealing with this weatherrelated data. Our sense is that as we get into the springtime and things start to heat up, the economy will also spring back and start to heat up as well. Thats the balancing act that the fed and chairman yellen will be dealing with in the near term is not to alter their policies based on a couple months of volatile data but look for the trend that we think is going to continue to improve. Strong fiveyear action. Yields on the tenyear tracking between 2. 65 and 2. 78 yield a the moment. Do those boundaries stay in place . I think so. Thats important for the equity market as well. They are the round numbers we have been looking at thats where the 10year yield has been in that bound. Every time we have gotten up to 3 or higher, we have seen the market get into trouble as the relative evaluations look more attractive on the bond side. The best thing is this continued kind of 2, 2. 5 Economic Growth<\/a> that keeps the fed on the modest trajectory but doesnt require them to alter their policy one way or the other. Now were a little below that. When all settles out, well still remain in the 2, 2. 5 trajectory which should keep the yield in that range. Good to see you. Thanks for that. Have a good day. Stay away from the flying saucers. Flying bagels. Versace says they have signed a deal in the fashion house. The agreement values sler is a chi at 1 billion. The luxury group says the family will remain at the heart of the company. Is that a good thing . That was my point earlier. I question that. She does have a unique look. Flamboyant is the word youre looking for. It is a look. Lets give them a look at the market. We have continued to slide as we head towards u. S. Session. Were down on the lows in europe. 8 to 1 decline. Well have more right after this. In the new new york, we dont back down. We only know one direction up so were up early. Up late. Thinking up gamechanging ideas, like this dozens of tax free zones across new york state. Move here. Expand here. Or start a new business here. And pay no taxes for 10 years. 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Fifteen minutes could save you fifteen percent or more on car insurance. Ahead of the u. S. Open, futures are dipping downwards. The s p is down around 5 points. The dow down about 43. Further developments on the ukrainian front. The disposed former president asked for russia for protection. We then heard on Russian News Agency<\/a> saying they have granted him protection in russia and will continue to give you further developments on that front. For now, were joined by Charles Robertson<\/a> joining us here onset. Light at the end of the tunnel, thats your final point on the ukrainian situation. What do you think of the developments we have seen in the last 24 hours . Thats the good point. We did a report six months ago saying ukraine was the worst country for a whole host of reasons. What we saw yesterday, floating the currency, allowing it to reach a level 9 of gdp, constant drain on the reserves. Floating the currency means they can address the issue and help get themselves out of a problem. You have a new government. Just over two months, the point on the reserves. They cant defend this currency. I have been doing it long enough to remember countries days of cover. Two months is not so bad. Yet were surrounded by noise in the likes of them offering the president protection. Is that all noise we should just cut out at this stage . Do you believe a deal is going to be signed quickly . They will be doing a deal. You can catch coming through after the may elections. So youll get preliminary agreement. Does it matter . They can remain viable over the next two months . What they have done in the past was just freeze the deposits in the banking system. You couldnt take your money out. They devalued that as well, but they stabilized the currency and stopped a meltdown at that time. So its a different issue. I went to e see the ministry in moscow just after the georgiaen conflict. Now it was an issue back then. And there are a lot of legal issues which the russians could draw up. If they decided to get more serious. It was until 1954. They argue it was never given so there was legal status. The polls are interesting on this. 75 of the russian population wanted to remain there. They wanted the russians to be military to be involved. This time around, 75 dont want action. The ethnic russian people might have a different view about which country they would like to be aligned with. How does putin play this . I dont think he will act rationally. He was ready for georgia. Here i think we have had three or four days of incredibly rapid moves and i would be surprised if he moved rashly today. No one probably wants something that ends up as a civil war. Theres always a risk of that. Its the worst case scenario. I was worried last week talking about going in that direction. I was worried about what would happen on the west of ukraine instead. You see vigilantes taking over government posts. Taking over government posts and thats the thing that makes it worried, isnt it . Image is more inflammatory than perhaps the situation. Every time ive been in a crisis country, youre in this square mile of terror and beyond that its common. Well bring you back for a lot more over the next few months. Thank you very much. Well take a short break. Still to come in her appearance, may have been delayed but will janet yellen still be blaming the weather when she talks about the u. S. Economy. Welcome to Worldwide Exchange<\/a>. The headlines from around the globe. The South African<\/a> president tells cnbc the rand is not down because of that specifically. Its difficult to say we cannot move this way or that way. You know its down because of the dollar. What the fed chair might say about the impact of Monetary Policy<\/a> on emerging markets. And just how much u. S. Storms have chilled the economy. Struggling u. S. Retailer jcpenney surprises wall street with their latest earnings profit showing a profit in the Fourth Quarter<\/a>. Shares jump in afterhours trade. And weak margins despite profits coming in higher. Wpp should have done more in emerging markets. They are our most profitable markets now. Over the coming years, well be more aggressive. If theres one thing i regret about the last ten years its that we didnt go faster. Youre watching Worldwide Exchange<\/a>, bringing you Business News<\/a> from around the globe. If youre just tuning in, thank you for joining us here on the show. Ill give you a look at how the markets are fairing ahead of the u. S. Open. In a weaker session in the u. S. So far this morning, you can see by the futures we have the dow around 45 points so far. The nasdaq trading around those 14year highs. The nasdaq down about 5 points. The s p not managing above the 1850 level. Weaker session, some of the political concerns really weighing on sentiment here. Ill give you a look at the individual performances of these markets. The first gaining back off the lows. German markets are still performing lower. And the italian markets gaining a little bit back here around 1 . Just off the session low. But what are you supposed to do today if youre an investor . Here are some of the recaps of some of the guests we have had on the channel today. Im very, very ghoulish on eurozone financials. So thats exu. K. . Exswitzerland as well. You look at them trailing u. S. Financials by about 30 . Thats justified, of course. There are still in the lower core of the performance. If you start getting upside numbers and the weather factor wears off, thats going to change things. But to be honest, they are not too keen on the fed right now. They are wondering whether to get back into emerging markets. I think theres a reason its cheap. Rbs today looks like 18 to 24 months ago. I see a clear runway to rbs becoming highly investable, low risk bank. Fed chair janet yellen set to testify before the Senate Banking<\/a> committee starting at 10 00 a. M. Eastern. It was originally scheduled for february 13th but was postponed because of a snowstorm as well as her outlook for the u. S. Economy. Markets will be looking for cues on how the feds plan could progress and what kind of impact that could still have on emerging markets. The biggest impact so far has been on the fragile five. The Group Includes<\/a> brazil, turkey and south africa. There are the countries judged to be the most risk during the tapering cycle. Now in south africa, ripples have been felt on this side. The rand has been pushed close to record lows despite the central bank raising rates. Upcoming elections added into the mix look to be contentious with new parties adding to the ruling challenges. And joining us for more, speaking exclusively to the South African<\/a> president , what kind of mood did you find him in . Sdplr he was in a very buoyant move after his recent state of the nation address. But i want to go back to the fact that you point out that south africa is part of thatgro. All of those countries are experiencing pressure on their currency. South africa has one of the most volatile. Having fallen 17 against the u. S. Dollar over 2013. Many economists believe that corruption allegations against the ruling party and unraced in the Mining Sector<\/a> are further fueling that rand weakness. I asked the president what he thought was behind that rand fall. It was difficult to predict that because its not because of our currency. Its because of the dollar. The dollar that is the key controlling currency in the world. Once the dollar is in problems, many currencies have problems. Its difficult to say we cannot move this direction or that one. You know for a fact that to have the economic meltdown is because of the dollar. Once the dollar is in trouble, that impacted all of us. We are trying our best to ensure that we handled the currency, but as i say, its not totally in our control because it has to be part of the global kind of volatile situation. That was South African<\/a> president speaking exclusively to cnbc africa about the rands weakness. Back to you on the desk. Top of the agenda, state side today is from the Federal Reserve<\/a> chairman janet yellen. She returns in her second testimony before congress this month. The managing director and head of rate strategy joins us from new york. George, recent speeches by the fed president s have basically put the weakness in the data down to what we have seen in terms of bad weather. How much more information janet yellen can add here . Thanks for having me. The key question is her testimony was postponed and now she has another opportunity to qualify the recent data run. Its true that most forecasters including the fed have been attributing this weakness to weather. But i think were getting to a point theyll have to access that theres something more than that happening and potential for entering into a soft patch. Largely a lagged response to the higher rates we saw throughout 2013. I think shes going to start to change the narrative as we get closer to her First Official<\/a> meeting, which will be later on in march. So i think today what were watching for is to prepare comments because thats stale. Its about how she responds to q a. Hes going to change the discussion to saying perhaps theres something going on here we have to be conscious of and really saw a little more today. Its kind of the moment of truth for her. Were getting to the moment of truth as far as the data is concerned. The data improves or expectations need to be ratcheted down to meet them. How do you play this market wise . I think we have been seeing a tug of war between the equity markets and the fixed income markets have been, in my opinion, operating more towards the fundamentals. Meanwhile the hope trade has been more about how risk assets will see through this and well see growth rebound as we head into the spring and summer. The risk, again, is that people are expecting kind of a hockey stick type of transition. Once we get past march and april, the data is going to improve. It takes time for things to clean out. And if theres something more systemic going on, its going to carry on through q2. Were more constructive fixed income. If you look at the flows into bond market funds, theres decent flow there is as well. Investors are starting to think about maybe theres some sort of an allocation switch thats happening. Were not really seeing it clearly. Its hard to keep track of those flows. Were seeing some interest more in fixed income. Well be back with you shortly. Some of the other stories were looking at, arizona governors jan brewer has vetoed a religious freedom bill. She made the decision o block the bill because it could have unintended negative consequences. After weighing all of the arguments, i have vetoed senate bill 1062 moments ago. To the supporters of this lgs, i want you to know that i understand that long held norms about marriage and family are being challenged as never before. Our society is undergoing many dramatic changes. However, i sincerely believe that senate bill 1062 has the potential to create more problems than it purports to solve. Opponents of the legislation called it state sanctioned discrimination because it would have provided Legal Protection<\/a> to businesses who refused service to gays. Thats huge. Big companies have come out against this. American airlines, which is merging with u. S. Airways, is no longer giving special fares to passengers who must book flights last minute due to a relatives death. It brings American Airlines<\/a> in line with the policy, which also doesnt offer bereavement fares. Still to come on the show, jcpenneys ceo says the important part of the turn around is over. More on how the Company Managed<\/a> to eke out its first profit in more than two years. In my world, wall isnt a street. Return on investment isnt the only return im looking forward to. For some, every dollar is earned with sweat, sacrifice, courage. Which is why usaa is honored to help our members with everything from investing for retirement to saving for college. Our commitment to current and former military members and their families is without equal. Predibut, manufacturings a prettin the United States<\/a> do. Means advanced technology. We learned that Technology Allows<\/a> us to be craft oriented. No ones losing their job. Theres no beer robot that has suddenly chased them out. The technology is actually creating new jobs. Siemens designed and built the right tools and resources to get the job done. Welcome back to Worldwide Exchange<\/a>. These are your headlines. The South African<\/a> president tells cnbc exclusively the selloff in the rand is not down to domestic issues. Struggling u. S. Retailer jcpenney surprises wall street with their latest earnings in the Fourth Quarter<\/a>. Will yellen stay the course, investors look for clues for what she could say to lawmakers later today. Struggling u. S. Retailer jcpenney surprised wall street with their latest earnings report. Courtney reagan breaks down the numbers. Reporter jcpenney seems to garner an outsize amount of attention for the past few years and with good reason. The 112yearold Department Store<\/a> is now just a shadow of its former self. They have shed more than 16 billion in market cap since its 2007 peak sitting under 2 billion today. The retailer was already struggling when it brought in ron johnson, though his bold turn around plan cost jcpenney a 50 stock price decline in his 17 months at the helm. Former ceo mike ulman returned in april of last year, but the stock has fallen a further 65 in just 10 months. Cash is another concern. Jcpenney closed with 2 billion in liquidity, but some think the Department Store<\/a> wont register enough in sales to offset the cash burn and might need to raise capital at end of this year or the beginning of 2015. Investors are losing faith in a jcpenney turn around and analysts are growing pessimistic about their future. While the company had positive sales for the first time in nine quarters, wall street expected more. I dont think this is necessarily an em nnt bankruptcy, as i think a lot of people out there believe, but i think you have to come to grips with what is going to be the timeline and the magnitude of recovery here. Reporter he doesnt think jcpenney is a lost cause but doesnt think it will ever be a 17 billion retailer again. They arent recommending to clients echoing the advice of the majority of Analysts Covering<\/a> the retailer on wall street. Versace signed with black street. The agreement values 1 billion. Blackstone will have one seat on the board. The Italian Group<\/a> says the family as seen here on the screen, will remain the heart of the company. Its a look. I said this earlier. That is a look. Its certainly a brand that you can recognize. Yes, you can. I think versace is doing a comeback. Brands kbo through these stages. When they are so out and no one thinks, thats the time they come back and thats the time to buy them. Theres only one way to go. Maybe blackstone is seeing something that others arent right now. Its a rebranding exercise. Still cocome, her appearance may have been delayed because of freezing conditions state side. Will janet yellen still be blaming the weather when she talks about the u. S. Economy in the senate later . Well head to washington in a few moments. [ male announcer ] whether it takes 200,000 parts, 800,000 hours of supercomputing time, 3 million lines of code, 40,000 sets of eyes, or a million sleepless nights. Whether its building the worlds most advanced satellite, the space station, or the next leap in unmanned systems. At boeing, one thing never changes. Our passion to make it real. Im spending too much time hiring and not enough time in my kitchen. [ female announcer ] need to hire fast . Go to ziprecruiter. Com and post your job to over 30 of the webs leading job boards with a single click; then simply select the best candidates from one easy to review list. You put up one post and the next day you have all these candidates. Makes my job a lot easier. [ female announcer ] over 100,000 businesses have already used zip recruiter and now you can use zip recruiter for free at a special site for tv viewers; go to ziprecruiter. Com offer2. European markets down about a percent across the board this morning. Were looking at inflation numbers. Regional cpi looks have been weaker. We know why thats important. It will pose more risks and what they might say. Holding the rest of the economy up. Lets look at todays agenda in the United States<\/a>. This morning well get weekly jobless claims numbers and durable goods numbers from january. Also big earnings in the retail space. Best buy, kohls and gap. Lets give you a look at the u. S. Futures. Weaker picture and getting weaker as we head towards the u. S. Open indicating around 70 points for the dow. Nasdaq lower by 12 points. The s p down by 8 points. Unchanged session yesterday, but all the focus today on fed chair janet yellen set to testify before the Senate Banking<\/a> committee at 10 00 a. M. Eastern. Hampton pearson is in washington, d. C. With more. Very british tendency to talk about the weather here, but what can we expect from janet yellen today . Weather is going to be a big theme in her second appearance on capitol hill as fed chair. This time before the Senate Banking<\/a> committee in about four hours. And i say that because weather is an overriding theme in what everybody believes is going to skew the data that the fed will be looking at between now and its next meeting. Weather was a factor in what she was asked repeatedly about ten days or so ago when she testified before the house. Specifically as regards to the unemployment numbers, which have been weak over the past couple months and when we get the jobless figures next week, theres likelihood well see more weather impacts than we have seen in previous jobs reports because the survey week that the Labor Department<\/a> was in the feel have been top one of the times we had some of the worst weather of an outrageous winter here especially on the east coast any way. But remember the fed chairman told the house members and well expect hell tell the senators the same, the two months of jobs data does not make for a significant change in fed policy especially when it fight be weather impacted going forward. Were expecting frankly tougher questions from the senators on the Banking Committee<\/a> whether its about the tapering prospects, which you covered in an earlier segment, wanting more guidance as to where the fed might be going, but also about the movable target on the Unemployment Rate<\/a> of 6. 5 as the touchstone for raising interest rates. All that coming up in about four hours from now. Thank you. Have a great day. The managing director is still with us. George, how much expectation is baked into the cake here today from what janet yellen can say and whats the risk of disappointment . Can you guys hear me . George, can you hear us . Actually we dont appear to have george. We have lost him there. Well try to reestablish contact. I wonder how much expectation. We have heard they put weakness down to the weather. The question is what more value can she add. They probably dont know either. They will have their agents out. What do the markets need here to rally . Everybody is saying they are bullish. We have taken the heat out of the markets. The s p had fresh highs today. We just got to get through this period. We had a big run last year. Thats not how we make money. There are many, many ways for people to make money. You dont need everything to go up. It will be interesting if she says anything about guidance on that. They were suggesting they might start changing how they are guiding everybody. Tying down forward guidance. Thats just about it for this edition of Worldwide Exchange<\/a>. Coming up next, ahead of the janet yellen testimony. We hope you have a profitable day. Have a great day. Opportunities arent always obvious. Sometimes they just drop in. Cme group can help you navigate risks and capture opportunities. We enable you to reach Global Markets<\/a> and drive forward with broader possibilities. Cme group how the world advances. Good morning. Janet yellen, part two. Ready to deliver testimony on capitol hill. Jcpenney shares move higher. And arizonas governor vetoes the highly controversial antigay bill. Its thursday, february 27th, 2014. Squawk box begins right now. Good morning, everybody. Welcome to squawk box here on cnbc. Several potential market moving events today including testimony from fed chair janet yellen. She will be testifying at 10 00 a. M. Eastern time. This is the appearance that was postponed because of weather earlier this month. I think that was two weeks ago we were supposed to be hearing that. That was two weeks ago, we were supposed to be hearing that, two weeks ago today. The markets are going to be waiting to see how much yellin mentions the weather as an excuse for slower Economic Growth<\/a> and some of these disappointing numbers weve been seeing. During her last appearance, she made it clear the fed would continue its tapering course. Squawk on the street will be carrying all of that live. But before she starts talking, the markets will get two key economic reports. Weve got jobless claims and durable goods hitting today. Economists are expecting 335,000 new employment claims for last week. Thats pretty much flat from the week before. Durable goods orders for january also out at that time. Theyre expected to fall 2 . Both of these reports are hitting at 8 30 a. M. Eastern time. On you are earnings calendar, well be hearing from retailer best buy, ko","publisher":{"@type":"Organization","name":"archive.org","logo":{"@type":"ImageObject","width":"800","height":"600","url":"\/\/ia600703.us.archive.org\/13\/items\/CNBC_20140227_090000_Worldwide_Exchange\/CNBC_20140227_090000_Worldwide_Exchange.thumbs\/CNBC_20140227_090000_Worldwide_Exchange_000001.jpg"}},"autauthor":{"@type":"Organization"},"author":{"sameAs":"archive.org","name":"archive.org"}}],"coverageEndTime":"20240620T12:35:10+00:00"}