welcome to hardtalk. i am stephen sackur. a year ago, massive pro democracy demonstrations in hong kong seriously rattled the chinese government. a little later in the summer of 2019, my guest today, simon cheng, who was an employee of the uk consulate in hong kong, was arrested by the chinese authorities. he said he was then interrogated and tortured. now, mr cheng is here, in london, seeking political asylum. the chinese government is about to impose new, national security laws in hong kong. so, will anything stop the chinese government imposing its will and its system in hong kong? simon cheng, welcome to hardtalk. nice to meet you, stephen. you have been through a truly extraordinary year. one year ago, you were living a normal life in hong kong. today, we sit together in london, your status is uncertain. what is your current situation here in the uk? well, i am now come to london using the working holiday visa that is the tier 5 youth mobility scheme, that is a de facto holiday visa and now, i m applying for political asylum from the home office and i am waiting for the result and i m gonna have a result by latejune. you, in essence, you are a political exile, aren t you? yeah, yeah, you can say that. i just wonder now that you look back on everything that s happened, do you feel that the united kingdom government which, of course, was your employer, you were working for the consulate in hong kong do you feel that they failed in a duty of care to you? well, i would say that at least apply political asylum. i would like to wait and see whether they will grant me the political asylum. if they do, then i think that is good enough for me. at least i can have a sanctuary for me to live here and stay here. a sanctuary? yes. that is what you need, is it? yes. because you feel that events a year ago, just under a year ago, when you travelled on a business mission for the uk government to shenzhen, in china, what they ended up with you facing a very real and continued threat, in your view, from the chinese government? yes, exactly. i was on a business trip for my department within the british consulate in hong kong, and when i went back to shenzhen and then finished the trip and went back to the hong kong west kowloon station, the high speed railway station, i was stalked and delivered back to shenzhen, where i experienced torture and political interrogation by the secret police the state security police. why do you think the chinese authorities detained you and we will discuss the treatment of you in a second but why did they detain you? first, i think it was because i wanted to collect information that i was on the frontline in protests in the midst of the anti extradition bill protests in hong kong, and also i worked for the british consulate and i had been instructed to collect information about the protests. so that is the way they wanted to get the information and also, they are wanting to blame me and also to prove, so called proof, that that the uk instigated the protest. but i am already a little puzzled and i m thinking if i was were in the position of a chinese official looking at you, i would be somewhat concerned about your role because your official title is involved in trade and business missions from the uk consulate in hong kong but, in fact, you have just told me that you were instructed by your diplomatic masters to observe and report upon the democracy demonstrations which, of course, were very large last summer in hong kong. so were you some sort of an undercover spy? not exactly undercover spy. i mean, i was on frontline. i mean, when i was. but you were on the front line to report back to your masters? i was on the frontline because i personally support the pro democracy movement and i onlyjoined the legal rally and but, meanwhile, i was instructed by the consulate that i needed to collect information that s amongst those news channels. right. butjust to be clear, because of this notion that you are some way spying, you did not declare who you were to either your pro democracy colleagues on the front line or to any police or authorities that may have tried to intervene. you were there, ostensibly, as a private hong kong citizen but in fact, you were there working for the british government. isn t that a slightly odd conflict of interest? indeed, that is slightly odd but. but you were a spy, mr cheng. i mean, i have a few identities one is that i work for the consulate that is nothing relevant to politics, but meanwhile i am a hong kong citizen. that is a clear guidelines, that s the consulate saying you as a hong kong citizen, you have your own right, you are free to join the legal rallies in hong kong. when the british first asked you to report back to give them information on what you were learning about the pro democracy demonstrations, did you, at any point, pause for thought and think, hmm, this could get me into trouble? at that time, no. you know, like, at that time, i do believe there was a great chance for me to let the british government to get the information or keep tag why the protestors would go on the street. that is why ijoined, because i think that was meaningfulfor me. who is your first loyalty to the british government or hong kong, which, of course, is ultimately sovereign territory of china. where was your loyalty? my loyalty would be the hong kong people first, because i am a hong kong citizen. and of course, i work for the uk government because i believe in democratic systems and i do believe that it is not safeguarding the interests of the uk but also it s because it can reinforce the people s voice for democracy. so, so to fast forward a little bit, you now tell me that the chinese detained you in shenzhen because they had either filmed you, they had some record of you being involved in the pro democracy protest. the chinese, of course, are quite clear that you were picked up because you had illegally solicited for sex in shenzhen. you, at least, the very least, you violated china s security administration punishment law. is that true? not true. you said, i think, afterwards that you had visited a massage parlour. there is a massage parlour, but nothing else. i mean, what he what they claim i clearly denied that arbitrary accusation, especially the accusations through illegal processes, including torture and coercion. right, because there are videos, of course a video of your confession, notjust to soliciting prostitution but betrayal of the motherland. why did you record those videos? well, i think that is for public relations. i mean, when i was asked out for doing the enforced confession tapes, actually, i am a bit relieved because i guessed at that time that my situation had been exposed to the news and then, so you have to do something to try to persuade the people that i, i so called solicited prostitution which is not true. if you can see that footage, that is a very decent massage parlour with very decent business certification on the wall, and if you carefully watch that footage at the end, there are a bunch of family members including children to come and if that country is very careful about the rule of law, they don t have enough evidence to prove anything. you have already, in this interview, used the word torture . yes. ..and in previous descriptions of what happened to you, you have used words like, i was shackled, blindfolded, hooded . you say that your hands were cuffed and you were hung in a difficult and uncomfortable position and then forced to sit in an uncomfortable position. is there any way you can prove any of this, because the chinese of course have denied absolutely that they used any form of physical abuse orforce on you. i would say that what the chinese authorities say is absolutely lies and nonsense. although i cannot prove that i have been tortured, but, as i am the first hand experience, i experienced the torture. i clearly saw that detention centre, the doctors within the detention centre, in the first week, they jot my bruises, and my hurt on the paper, the medical record. and if the chinese authority did slightly slightly did a very small investigation, they would know, they would know that within the detention centre, the medical records, if they checked the first week, they would see i already got hurt. you have any marks on your body now? just a bit, but it s recovering because one of the prerequisites i had to be let out was because i had to be fully recovered. in the second week, the secret police brought ointments to help me. to get rid of the bruises and the marks? yes, exactly. you also said while in detention and while you claim suffering this physical abuse, you saw a bunch of other hong kong people getting interrogated. you were aware that there were other hongkongers people involved in the pro democracy demonstrations who presumably, like you, had been taken to shenzhen to be interrogated. any proof of that? because that is an extremely inflammatory claim at least viewed from china. well, stephen, if you ask me to prove that, you know, at that situation, at, like, that situation, i was detained, i cannot. did you gather any names, or names you could follow up afterwards to see what happened? i m not allowed to have contact with them because i am being put into solitary confinement. but what i in the past, when i saw that bunch of people, from the bottom of my heart, i guessed they were hong kong protesters. but from two different sources the interrogators and interrogators told me that had been arrested because of the protests in hong kong. they are protesters. as you say, you eventually, after more than two weeks in detention, you are allowed to leave china and i believe you went to taiwan for a couple of months and then you came to the united kingdom, where you are now pursuing your claim for asylum which you say will be settled in just a couple of weeks. have you any contact at all with your family in hong kong? no. well, you know, early this year, i was still maintaining contact with my family members in hong kong but afterwards, that s the first time, i received the media in cantonese, in chinese, and afterward that, i cut ties with my family. cut ties you mean you ve cut ties with a permanent basis with them? at least for the security reason, yes, because several family members in mainland china are afraid of being harassed because i chose to speak out, especially in cantonese, and it affects the chinese audience. do you feel that since all of this happened to you, the british government has responded with sufficient vigour to the seriousness of your case? you, after all, were an employee of the uk consulate in hong kong when you were detained and, according to yourself, when you were tortured by the chinese authorities. this happened less than one year ago. are you satisfied with the way the british government responded to your case? well, at least the foreign secretary dominic raab called the xiaoming, the chinese ambassador in the uk, and at least the official statement made by the foreign secretary recognised that my treatment amounts to torture. to me, it s quite enough already because i don t expect too much from the uk government because usually, when i worked for the uk government and what i saw, usually their statement to hong kong, very, very moderate. and that is very rare. very moderate? do you think the uk government, in your experience, as both an employee of the uk government and, as you say, as a private citizen who supports the pro democracy movement, you feel that, over a long period, that the british government has been, to use your, euphemistic term, very moderate in its dealings with china? yeah, definitely. i would say, for example, because of the british diplomats and those people living in the uk, they are not on the front line to deal with the authoritarianism. so that they could naturally moderate that s why one of the reasons i wanted to inform them, actually, they need to stand with the hong kong people. let s bring it up to the present day because things have become even more sensitive in recent times since you left hong kong, with the chinese government, thanks to the latest decision from the national people s congress, about to impose a raft of national security laws that apply inside china on the mainland, apply them to hong kong as well. that will criminalise people who are said to be advocating separatism, subversion, terrorism, acts of foreign interference, hong kong citizens who are part of the movement believe that national security law will be used to repress all of their freedom of speech. what is your view of what the chinese government is doing now? it s very hard to imagine less than a year what i entreat would be applied to all the hong kong people now in hong kong. before, this national security law that i have been threatened, if i spoke out when i got back to hong kong, i would be secretly abducted from hong kong to mainland china. that happened long before this law. exactly. afterwards, the main point is that they legalise their behaviour. it means that they are not secretly doing it, they willjust openly do it, and they have legal grounds to do it. we are in a dark room because we don t know exactly what they will execute, and what is the jurisdiction between mainland china and hong kong, that is what i am so worried about. you are worried that the chinese government has a very clear message. the deputy director of the hong kong affairs office in beijing says it s quite clear the security laws that have now been applied to hong kong will give the majority there much more freedom and protection, because they will no longer fear violence, they will be able to speak the truth on the street without being beaten up, and they will no longer have to worry about the young people of the territory being brainwashed by people like you. no, totally nonsense. because of course you can check, you can simply check all the judgement statements on the courts on mainland china. all the people, they just leave a critical comment on chinese leadership and chain authority, then, they will be criminalised as making trouble, or provoking quarrels. sure, but hong kong does have its own government, and the chief of the hong kong government, carrie lam, she says she supports the new national security law, because she says it will bring an end to chaos. chaos that has badly affected the hong kong economy, so the hong kong government, under the one country two systems edict, the hong kong government itself is supporting the national security law. it means they have ruined the two systems already. that introduce the secret police to come to hong kong, they will charge you, detain you, torture you, deliver you back to mainland china because what you said, and that is the thing we are worried about, and the chaos they claim is caused by those powerful fields, by the authorities, not by the people. do you really believe that the system of one country two systems and all the basic law that is supposed to guarantee hong kong s special status under chinese sovereignty, you believe all that is now dead, do you? all dead, already. a few years ago, people will say that it was just pretend, it was still a lie when the chinese authorities say that the declaration of independence is a historical document, that attitude of the chinese is very clear. let s bring it back to the british. you have seen in the last month or so the british government make a clear commitment that because of their concerns about the application of this new national security law, they are now promising to meet their obligations to british national overseas passport holders, the number more than 300,000 in hong kong, thanks to the handover agreement of ‘97, and potentially, up to two and a half or 3 million more hong kongers could potentially get access to those so called bno passports, and it seems would be allowed to come to the uk for at least one year and maybe even apply for citizenship. what you make of what you have heard from borisjohnson on that issue? i would say that is a very encouraging signal, at least we finally see that the uk government, the attitudes to china have been made, u turn, and is encouraging to most people. to me, comforting. you are a hong konger, you said to me i always think in the end is a loyal resident of hong kong. do you really want to see hundreds of thousands, potentially millions, of the brightest and the best in hong kong making an exodus, a rush for the exit door and leaving the territory? i would say why not? i mean, at least we need to protect the people of hong kong, that is the first duty. we need to safeguard them because if they are still staying in hong kong, and they have sacrificed their lives, it is worthless to me. i would say that is notjust to rescue the hong kong people, we need to rescue all of democracy, and we need to rescue british citizens as well. you think many hong kongers will choose to leave? at least we need to give lifeboats for them, and if they want to help themselves, they have a way to leave. lifeboats? it is about more than just the capacity for those who have the passports to leave, it is about whether the international community will try to put real pressure on china in terms of economic sanctions, joshua wong, one of the prominent, young pro democracy activists in hong kong has called on the uk government to impose wholesale sanctions in order to push for the withdrawal of the national security bill by the chinese. he says we should at the very least expel the telecoms giant huawei from involvement in the uk 56 network. are you now as an activist here in the uk, who actually wants asylum in the uk, are you pushing for the uk government to be much tougher? yes, we are working on it, and that is good news for us. at least what boris johnson said, it will sort it out by 2023, and i do believe that the uk government and also the west, they can stand up to china. interesting, because one of the most important players is donald trump and the united states. his messages are very mixed. 0n the one hand, he has blamed china for covid i9 pandemic, he talks tough on china, but he has not, he very notably has not torn up the phase one trade deal with china. do you believe donald trump is serious about putting pressure on beijing? well, we will wait and see, but at least what we see compared with other western countries, the us, at least they show the strongest bond to stand against china, and what we see, the statement made by the secretary of state, they are brave enough, they would treat the special status to hong kong, so i do believe they have a determination to save hong kong. i want to and with a personal thought. i think i m right in saying, a young man who is still under 30, is that right? yes. you have made a massive life decision. given your experience last year, you have come to the uk, you are seeking political asylum, you have chosen to speak out, you are now part of the worldwide pro democracy hong kong movement. your life has changed for ever, you will always, at least in the foreseeable future, be regarded as an enemy by china. do you believe that, in some ways, you will always face threat in your life? definitely. that is the threat and even a smear campaign against me will be for the rest of my life. people ask me if i have solicited prostitution, if i am a traitor, and i am well prepared for it because i do not regret, i believe we need to fight for democracy, not only in hong kong, but in china. no regrets at all? because you have handled things very differently. you could have refused the british government, refused to report for the government, the british government, on the pro democracy demonstrations, and i am just wondering, sitting here with you, whether you don t have some regrets about your decisions? no, not at all. i am very determined. i do believe at that time, i collected information for the better good, for the world, for the diplomats, and we can learn and hear about the voice of the true hong kong people, the people that have no power, nothing they can do any more but the only way they can do, is go on the street, fight for democracy. simon cheng, thank you very much indeed for being on hardtalk. thank you so much. hello. a lot going on with our weather the next few days, and it s all being driven by an area of low pressure this beautiful swirl of cloud here on the satellite picture. and rather than moving through quickly, this area of low pressure is just going to sit around, it s going to spin areas of rain up in our direction. brisk winds for a time, as well. and with the flow of air around this area of low pressure, we re going to tap into something rather warm and potentially quite humid. so, to sum up the next few days, there will be some heavy, thundery downpours, with some sunny spells in between, and that warm and humid feel across most parts of the uk. now over recent hours, we ve had a lot of rain across northeast england. that rain continues here, pushing into northwest england, northern ireland, eventually up into southern and eastern scotland. and across the south of england, another pulse of very heavy rain working in through the afternoon. some flashes of lightning, some rumbles of thunder are likely. this rain starting to get up into the southeast of wales, and the south midlands. the odd heavy shower following on behind. the temperatures a little bit higher than they have been, 2i celsius there in london. sunshine and showers to the north midlands into wales. a lot of cloud with some outbreaks in rain for northern england, and northern ireland. some of that rain eventually pushing up towards the southeast of scotland. but towards the northwest of scotland, well, here probably the best of the dry and sunny weather, although for some coasts in the northeast, it s likely to stay more murky. and it s going to be quite a breezy day, as well. now as we move through friday night and into saturday, you can see further pulses of wet weather pushing across the map. some clear spells, as well. it s going to be a very mild night. we ve got quite a few mild nights to come, actually. temperatures as we start saturday in double digits for most. now potentially another area of rain to push across northern england into northern ireland, parts of southern scotland. to the south of that, sunshine and really heavy showers breaking out they will be quite well scattered. not everyone will get a shower but, if you do, it could bring some thunder, some lightning, some large hail and certainly a lot of rain in a short space of time. but look at the temperatures, 25 degrees in norwich, 20 there in glasgow. a bit cooler for some of these northern and eastern coasts where we keep a lot of cloud, some mist and fog. it could be quite grey and murky again for northeastern coasts on sunday. for most, it s another day of sunny spells and torrential, thundery downpours. and once again, it will feel warm temperatures of 17 degrees in aberdeen, 2a celsius in london. this is bbc news. i m maryam moshiri with the latest headlines for viewers in the uk and around the world. president trump renews his threat to intervene in seattle after anti racist protesters pccupy the city centre. after anti racist protesters occupy the city centre. worldwide markets suffer their sharpest fall for three months as fears grow over a second coronavirus spike. in an apparent u turn, the uk government drops plans for full border controls when the brexit transition period ends. audio of crowd singing. spanish football is back behind closed doors but with the sound of cheering crowds providing the atmosphere.
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[singing] hoveround takes me where i wanna go. call or log on to hoveround.com to find out where a hoveround can take you! i saw some barbell selling today. one part of the barbell, the kellogg proctor side really, really soggy. the other end, the material side that goes to china. that, too, not so great. what took up the slack? the industrials looked terrific and you still get a lot of retailers that look good. so remember, they re just rotating from expensive to cheaper. like i say, there s always a bull market somewhere. i m jim cramer and see you tomorrow! welcome to today s worldwide exchange. italy leads european stocks higher as gen rally shares rally. they posted better-than-expected earnings after the ceo promised a revolution. lufthansa is taking flight saying its revamp will help boost operating profits. and samsung fires the next shot in the global smartphone wars, getting ready to set its next device right in apple s backyard. and pope francis begins the day with a prayer outside the vatican as the pope continues to celebrate the election of the first non-european pope in 1300 years. announcer: you re watching worldwide exchange, bringing you business news from around the globe. well, the dow did it nine days straight, 16 days higher. about 34 the points above fair value on the dow. adding about 20 at this point. the nasdaq is pointing higher. take a look at what s been happening worldwide. the cnbc ftse global 300 is up about 11% today. pretty much a mirror image of what we saw yesterday. the same is true when we take a look at european markets. it s rebounding, adding about 1.3%. this follows yesterday, italy coming to market with four bonds that didn t necessarily go over as strong as expected. italy will be looking to raise longer term debt. the same is true for spain today. if you look at the ibex 35 rallying about 11% ahead of that auction, it was one of the lone green spots on the map yesterday. and the ftse 100 which has underperformed on earnings weak ps issic maing up ground this morning above 6 500, we should add. here is the bond space. you can see here relatively steady 37 italy is rallying today, 4.65%, the yield coming down. spain meanwhile is moving out a little bit. it s interesting to see out here the opposite of what we have seen. italy, again, we re seeing some demand. investors are filing out of german bund this morning. for more on what that impact we re seeing across the forex space, let s take a look here. the aussie dollar is was to one in particular adding 0.5% after stronger than expected data that suggested perhaps this loosening cycle is over. in fact, also according to the city analysts, maybe the u.s. dollar strength story isn t the only story in town that people still like some of the commodity or other stronger based stories, as well. dollar/yen is at 96.41, weak weakening about 0.3%. on that note, let s get straight out to li sixuan. more weakness for the yen. what s going on with the nikkei? the nikkei, in fact, outperformed the rest of asia. but as we can see, it s a mixed bag for asian bourses. regional issues over-shadowed another record breaking close for wall street. the nikkei 225 gained over 1%. hopes of reflationary policies boosted property counters ahead of kuroda s widely expected confirmation as the boj s next governor. but seiko cut its full year dividend outlook and dropped over 4%. the shanghai composite today gained a modest 0. % after losing for five sessions, so nothing to shout about. some sectors that had recently lablgd the market made a modest comeback such as law eshg mas, environmental stocks, media and medical shares. both miners lost their sheen. according to chinese media reports, the lower prices of the pressure metal have put pressure on local miners. meanwhile, the hang seng reversed early weakness to finish marginally higher helped by utilities and financials. prudential s hong kong shares jumped a whooping 12% after the uk insurer posted higher dividends and profits. property plays took the brunt of the selling today after big banks hiked mortgage rates for the first time since 2011. elsewhere, south korea s kospi ended marginally in the green with automakers and technology shares capped by losses and financials. australia s asx 200 lost over 1% today as strong jobs data dampened hopes of another rate cut by the rba. and india s sensex still in action, now trading higher by a slow 1%. back to you. good to see you this morning. thanks for that. the s&b has given its view that it will enforce the minimum exchange rate with, quote, considerable determination. this in the last hour or so. you can see the euro/swiss stronger by more than 0.11%. steven, great to see you this morning. there s much to talk about. let s start with the swissy. any major news here? at this point, swiss has been one of the world s biggest buyers of foreign reserves. it says it will continue to defend this 1.20 ceiling. they haven t had to buy that many reserves lately. they did lower their inflation rate, express concern about the economy. i was surprised that the market is buying euro/swiss on this. we feel that euro/swiss is going to head out, that they are very concerned. the actual statement didn t break any new grounds, but i guess the vigor with which they reiterated their desire to defend the floor influenced some people in the market. don t they just love a central bank to come i know the message has been here. in some points, the swiss bank is benefiting more from the fact that people seem more willing to take a risk with the euro as opposed to chooting to fight it on the floor at this point. i think so. it s interesting with respect to the italian election that even though this considerable uncertainty doesn t seem to be showing up in terms of the sorts of tail risk factors that were taking the euro down last year. so i think that the snb is benefiting from that. they do have a lot of credibility and they indicate that they will use opportunities to push euro/swiss up. and i think that the market is mindful of that, as well. very few people think that there s a significant chance euro goes below 111 is.20. when they do downside/upside considerations, the downside is weaker than up theside. how much of that is going to affect the central bank and switzerland s ability to defend this cap here? in other words, if we re not necessarily seeing this kind of aggressive flight to safety bid for the euro but starts structurally, what would that mean? well, you know, i think that the the s&b wouldn t mind if the ecb cut rates. obviously, in the short-term, that could put some pressure, but the real issue is tail risk. but by cutting rates and becoming more aggressive in terms of stimulating growth, we see markets even more convinced that the tail risk is diminished. i think that opens the door for the ecb i m sorry, for the s&b to weaken swissy. i think they will take the risk of pushing up the floor, not very high, but just to indicate that there is a direction and to tell investors in switzerland that it s not just a rate differential that they have to pay attention to, they have to pay attention to the prospect of capital losses on their swiss holding. which is a great point. i want to talk briefly about the dollar, too, because it has become a main part about the story, trying to figure out what this new trading environment is that we re in. is it a strong dollar point, steven, or you guys were making a point about the australian dollar today. is it premature to say that is where we re headed here? i m on the it s relatively fragile. we re in a period where europe, japan, asia, the brix, they re all disappointed they re going sideways. so u.s. asset markets have been the only game in town. the real test of the dollar cycle will come when we start to see the rest of the world the pick up and it looks to be now the uniqueness of u.s. assets right now is nowhere near as profound as it was, say, in the late 90s and we had the internet boom or the reagan period. so, you know, as far as i m concerned, the jury is still out. we ve gone long dollars, but i wouldn t say that we re deeply committed to that dollar long. that s a great point. so just in summary, what is your target for the u.s. dollar index here for the next couple of months? you know, we can see it drifting up a couple of percent. i think that the dollar index, even if it goes up, the bigger trades are still short the yen, short sterling, and short swiss for that matter. and if we begin to see asia pick up, probably the em will start picking up smartly again. so, yeah, it s kind of dollar positive. i d say weak dollar positive rather than, you know, grabbing it with two hands. yeah, exactly. best house on a bad block, too. steven englander from citibank, thanks so much for joining us this morning. generale shares have rallied today after italy s biggest insurer posted a better than expected profit. up 60%, not the kind of move you typically see for an insurance name. in an effort to clean up its balance sheet. claudia, good morning. for the most part, pointing more towards weakness than strength. what s different with generali? generali is, this is the clean up. the ceo took over in august and has been in the last month silently working on this clean up of all of the numbers at generali. you mentioned that the impairment that they took on for this year of 1.7, the majority in the fourth quarter was bigger than what the market was expecting. but they are actually really appreciating two things. one is the dividend of 0.20 that he said he is intending to keep going in this direction as far as dividends and as far as payout is concerned. he wants to provide return for investors. the 20 cent dividend is what they had in 20121. the other part is the operating profits. they came in at 4.2 billion. the market was expecting 4.11. and on this mario grekco has said he is very confident that their core business is of high quality. the premiums rose by 2.3%. their ratio improved from 150 to 117% at the end of 2011 and also their combined ratio decreased, which is another positive note, came in at 95.7 from 96.5. so all of these numbers are showing positive signs for generali. and clearly, the fact that this is an important moment for mario grekco in taking over generali certainly given the market a move forward. we are going to be interviewing him in the next minute. we will be bringing you this interview later on today. and we will hear what he has to do about these numbers and for 2013 because so far he is positive this will bring in a full year of 4.4 billion. thank you very much. we re also going to talk to the ceo of ani yesterday. china s national petroleum corporation is just over $4.2 billion in smack. you can catch that interview later in the day on european closing bell. and staying with italy, some big news, it would appear, out of the region out of the country, i should say. the bank of italy is telling banks which recorded a loss in 2012 or have a core tier one capital below the central bank s target not to pay a dividend. it s telling banks to adjust their loan loss division to match current and future economic context. i believe what that suggests is take future weakness into account. now, italian banks, we wanted to look at the reaction here which appeared to be shrugging it off. mario banko, up 278%. bmps up 11%. perhaps there will be more as they continue to digest the news. also bonus policy might be in conjunction with the gains. pope francis quietly slipped out of the vatican this morning. the former cardinal, jorge bergoglio is expected to meet with officials today. claudia, great to see you. you know, what was really unusual last night, because we had a pope who retired and didn t pass away was this atmosphere of almost naked celebration. there was no sense of somberness, really. what is it like today? well, today is kind of business as usual here in st. peters square, kelly. as you can see, there s lots of tourists back there, but far away from the tens of thousands of people that packed this square last night cheering for jorge mario bergoglio when he appeared on that balcony. pope francis has been praying and one of the biggest for this year in rome is the measure. later on, as you mention dollars, he may go visit america s pope benedict xvi. we were told the vatican press conference is here. tomorrow will be the official closure of the conclave. it s business as usual here in the vatican and he s already down to business. kelly. thank you very much for that. it s nice almost just to hear the latin as people around the world were tuned in, bilingual, almost a trilingual event. we re going to take a quick break and leave you with a look at how people around the world have been reacting to news of pope francis. zap technology. departure. hertz gold plus rewards also offers ereturn our fastest way to return your car. just note your mileage and zap ! you re outta there ! we ll e-mail your receipt in a flash, too. it s just another way you ll be traveling at the speed of hertz. you are watching worldwide exchange. italian insurer generali soars to the top of the ftse mib after the ceo suggests the company is cleaning up its act. samsung is stepping up its site with a highly anticipated launch later today in new york. and celebrations continue in vatican city to welcome the new pope francis. still to come on the show, corruption allegations tend to dominate headlines coming out of russia, but the country is scrambling to repair its image. more when we come back. [ kitt ] you know what s impressive? a talking car. but i ll tell you what impresses me. a talking train. this ge locomotive can tell you exactly where it is, what it s carrying, while using less fuel. delivering whatever the world needs, when it needs it. after all, what s the point of talking if you don t have something important to say? . speculation surrounding the kremlin s battle continues following the appointment of economist elvira nebulina as the chief. she s seen as a close ally to vladimir putin. what does it all mean for investors? charles robertson from renaissance capital, he suggests this appointment is yet another politically motivated move seen in companies like japan. what s going on here? and hungary, as well. you have politicians who are trying to get growth higher. they re concern about the slowdown in russia. putin is concerned. he wants growth to be 5%, 6 of%, 7%. we think 4% or 5% is more reasonable. he s appointed one of his people from inside the kremlin to take over the central banks. russia is not japan. you could draw the parallels between japan, the u.s., europe, all of these countries which has been through the financial crisis in the period of bust, maybe if you want to call it the command sharp, whatever, there s a clear case for fiscal stimulus. not so with russia, correct? is it not a structurally different story that makes it more vulnerable? i agree with you. it looks less necessary. he could have appointed there someone from the central bank. he s appointing someone to try and push growth up. we re concerned that s going to lead to a weaker ruble. she s got an easy job in six months time. when she takes over in june, they ll have inflation coming down. they can ford to cut so she can be all dovish. the markets won t mind that at fist. but a year out, i think the markets might be more skeptical about. tell us what s happening in russia generally now. what kind of condition is it in? it s going to best unrecognized credit boom going on in the world today. everything is loving thailand, indonesia, philippines, but it s happening in russia, too. it s been happening for two years. they have a current account surplus. they can afford this credit boom. inflation we think will turn in the summer. so there s no problem on the inflation side, too. growth is going to come back stronger in the second half, anyway. whoever is at the central bank. so we re not convinced they need to be taking a more dovish stance. if it becomes clear that russia s economy is doing well, that it doesn t necessarily need or should want rate cuts, how much pressure will she really be under to cut rates? i guess what i m saying is it almost describes what you re describing as a win-win. putin is pretty happy or it doesn t do well and so then there s the case for her to cut rates and maybe that will help with growth. we will fairly bullish on russia. now, we re saying that. the capital is based in russia. but we are fairly optimistic. i guess the question is two to three years out and whether or not you ve got inflation expectations picking up, people potentially selling auftd ruble, selling rates and that then being an impediment. that s a great point on the ruble, as well. we ve seen it weaken, a lot of structural problems with that economy, obviously looking to pressure monetary policies as policy tools. but in russia, do you sell the ruble here? too early. i would have thought the ruble would be fine for the next few months. i might have thought with interest rates, ruble bonds are trading at, what, 10.7% yield, that s attractive globally. if you like the global dead did he tell trade, you should be in russia, i wouldsy think, for at least the next six months, maybe a year. so we have our first potential g8 central bank chief, a russia story that while it has its concerns isn t making headlines as much as it should be. sounds like it will be roughly intact here. what are we most concerned with when it comes to giving up the independence of monetary policy? hungary worries us more and it s not just monetary policy. it s the combination of government policies across the board. you re seeing the markets worried about south africa also with a female central bank chief, but that s irrelevant to the issue which is seen as the sell off on the rand. there is concern there about the market. they do have limits on the emerging market, just how loose monetary policy can be on the emerging market. and that issue we re seeing on the rand to the dollar. last question, has there been any change in correlation between the emerging markets doing well because they re tied to rash ya and china relative to the u.s.? meaning who is the strong who is powering the global economy at this point? china is still the most significant. i think the one thing which is getting missed on the chinese slowdown is if it slows to 7 1/2 this year, it s going to be a bigger gdp lift in 2013 than in 2012 even if the headline growth number is slower. it s still china, which is playing a massive role. and still russia, which has some interesting times ahead, we shall say, but you like the story? we re bullish on russia and bullish on africa. we ll leave it there. charles robinson joining us, chief economist. thank you very much. we ll be hearing from one of russia s most powerful men in an exclusive interview today. that s coming up on closing bell. make sure you tune in from about 1700 cet. still ahead on worldwide exchange, well, europe s periphery be granted wiggle room when it comes to meeting deficit targets? we ll go live to brussels coming up when we come back. welcome back to worldwide exchange. i m kelly evans and these are your headlines from around the world. generali stocks rally as the insurance giant posts better than expected numbers. the bank of italy reportedly warnings lenders not to pay a dividend if they re operating at a loss or have less than expected capital ratios. samsung is getting set to launch its latest device right in apple s backyard. and pope francis begins today with a quiet morning prayer outside the vatican as the world continues to celebration the election of the first non-european pope in 1300 years. announcer: you re watching worldwide exchange, bringing us business news from around the globe. well, the dow did manage a nine-day winning streak yesterday. will it be ten today? it does look as though futures are pointing to a higher open. the dow jones industrial average about 27 points above fair value. the other indexes haven t been quite as strong, certainly haven t seen the same nine-day winning streak, but are rallying, as well. looking down a couple of points for the nasdaq and the s&p respectively. european markets, we mentioned that the ftse mib in italy was rallying. it was down 1.7% yesterday, now today it s adding better than 1 is% and so is the ibex here. both spain and italy are going to market with longer dated paper. the results from the spanish auction should be out very sool soon. the cac 40 adding about 0.2%. the xetra dax strong, the if it is rebounding after being one of the weaker performers yesterday. and that s your recap of european markets. and now we re going to take a look at what s been happening in the rest of the world. but first, how do you make money in these markets? here is what some of our guests have been telling us all morning. i m sure euro/aussie. dollar/yen, we ve got kuroda next week. we ve got turn house buzzing tonight. it s a shoo-in. through the monetary easing, i m shorting yen and i m also long dollar, but i think there s a trade to be short the euro. outside of london, yeah, the picture is pretty bleak on the high street. like you said, i think it s a relative value play during the retail state and the same sector. they were trying to from the uk consumer, generally. what we re gradually seeing is we re seeing the winners emerge, the return of stocks coming back up as the kospi comes down. but they ll never recover to anything like that. so it s a question of calling back, we think we re getting close towards the end of this year, maybe, and picking the winners based on cost, balance sheet and differ yen rating. and here is a look at today s other top stories. it is pie day, as well, by the way, march 14th. big u.s. banks will find out today whether there are plans to raise dividends or do share buybacks have been approved or rejected by the fed. the central bank will release the second part of its results at 4:30 eastern. the fed s decision comes after it determines if banks can afford the payouts. ahead of the fed s announcement, take a look at bank shares, trading in frankfurt, generally higher. goldman interestingly sitting it out down almost 11%. the rest led by morgan stanley led by 9%. and the senate subcommittee on regulations will release its report on trading losses this afternoon. the panel will hold a meeting on friday morning. several jpmorgan top executives will testify, including vice chairman braunstein who was cfo at the time and the bank s former head, ina drew. jpmorgan shares like goldman s are trading lower in frankfurt. today, down about 0.5%. president obama makes his third trip to capitol hill this week having lunch today with senate republicans to discuss budget and economic issues. he ll meet separately with house democrats. he spoke with house republicans on wednesday, but apparently made little progress in convincing them to accept his demands for tax increases as part of a deficit deal. the senate budget committee began debating its counterproposal to paul ryan s budget. the sausage making process continues in the u.s. and in europe where the european parliament, get this, has stripped down a budget deal reached by eu leaders last month that called for significant changes. mvps did not change the 960 billion euro spending limit, but pressed for the distribution of funds and a mid year review. the european parliament chair called the move an important step for democracy. the parliaments want to be taken as a serious partner. we are prepared to negotiate. this is an offer to the council to compromise and improve the framework. now, this comes as european union heads of state are kicking off another two-day summit in brussels today. leaders reportedly making plans to loosen the rules which will allow the companies more time to balance their budgets. julia chatterly is live in brussels. julia, germany made a point ahead of this meeting to say even if there s discussion to give people more time, it needs less time to meet its own target. absolutely. not only are they cutting to another 5 billion euros, but as i said, they re going to balance the books a year early. germany s statement coming into this is far stronger than many of those other countries. a very important statement to make ahead of the german elect. making their view on austerity here likely. we ve had the likes of italy pushing for an stangz to meet their deficit targets. this year, we ve come out and said, hey, we re not going to meet the 2% target. it s going to come in at 277. do we get a language shift that s suggested we re going to see the draft move from short-term growth. we do need to move down. arguably, it s shutting the case down after this long since run given they re bending the rules, anyway. and you mentioned, too, the european parliament. they voted down the long-term budget. i ll tell you what, they may not like austerity. my cameraman has been coming here for 13 years. this is the first summit where he s not able to get a feel. 6% inflation on a cup of coffee. so the camera crew is going on strike. never mind anybody else. the other thing on the agenda is going to be cypress and the potential for a bailout deal. the eurozone finance minister will be meeting here tomorrow night. lots of things to discuss over the next 36 hours. it will be a long one, as ever. julia, we hope we can follow this progress with you. if kurt walks off, we ll have no way of knowing what the latest nondecision to come out of the meetings is. i couldn t agree with you. i couldn t agree with you more. camera crew goes on strike here, we re completely lost as has been proven to me many times when my random outside broadcasts, lots of things to watch. and 6% inflation, as well. watch out for your cameraman. and xi jinping, formerly elected as china s president today. we ll give you more on the analysis of what that means when we re back. all stations come over to mission a for a final go. this is for real this time. step seven point two one two. verify and lock. command is locked. five seconds. three, two, one. standing by for capture. the most innovative software on the planet. dragon is captured. is connecting today s leading companies to places beyond it. siemens. answers. it s official. china has a new leadership lineup. early this morning, the cup s parliament formerly elected xi jinping is china s president and will i yuanchao is vice president. not only on the economic front, but horribly and environmentally, as well. eunice yoon has taken to the streets to find out just what the public is expecting from their new leader. a chance few people in the world will ever have, a sit down with china s new president, xi jinpi jinping. xi visited his family. translator: i felt like it was the starting point of xi reaching out to the people. he s understanding ordinary citizens, our work and our way of life. that s what a lot of people here are counting on. china has been on the same path for the past 30 years. its leader prioritizing fast economic growth as a way to keep the communist party in office.but now the economy is growing at its slowest pace in over a decade. the wealth gap is widening, corruption is ripe, people here are calling for their leaders to be more in touch with the public s need. president xi jinping inherit these past, son of a revolutionary hero, he s backed by the thart, but is not seen as a great authority leader as past leaderships. to link himself to dong s legacy, he took a trip to the south of the country. when dong felt reforms had stalled after the protests and crackdown in tee an men square in 1989, he took a journey to the city of shenzhen, the birthplace of china s market economy, reaffirming his commitment to economic reform, known as dong s famous southern tour. xi laid flowers at the foot of a statue to the man who transformed china s economy, a signal that he, too, would embrace reform. but public pressure is mounting. weeks after xi jinping became party chief, protests broke out in the nearby city of gaungho. lan li xian worked as a columnist in the until last year. people s patience wore out. the society is too oppressed. in a rare show of support, those who benefit from the system, celebrities, businessmen and lawyers publicly backed the journalist. online or otherwise by signing a petition demanding the party rule according to china s constitution. the constitution has long mention dollars people s right to freedom, he says. experts say reform needs to go much deeper. they say xi needs to reign in state enterprises, mirror the income gap and accommodate civil liberties and rule of law. throughout china s history, if a regime cannot change, a power rises up and it s overthrown. china could have a revolution. back in shenzhen, he hopes the new leader will bring about enough change so that never happens. eunice yoon, cnbc. and eunice yoon now joins us live from beijing. a fascinating package. as the last person was saying, its reform or revolution. how urgent do these reformed need to be? well, they re very urgent. but what was interesting today was not necessarily that she inping became president, but who he choose as vice president. everybody until recently, was expecting the vice president position to go to a man who is a conservative propaganda chief. but instead now it s somebody who is considered much more reform minded. so this is telling us two things. one, perhaps xi jinping is serious about reform and wants to do something about it. and number two, maybe he does have the chalk to stand up to the establishment. and eunice, what about, we re hearing the first lady in china may start to make more public appearances. if she is she something else to read into this move? she is very appealing. there s been talk about how she might be dispatched overseas in order to try to make some public appearances. it seems like it would be a no-brainer in a western contest. at the same time, women in china have not had a prominent role in politics. so we don t know exactly where this is going to go. well, we ll keep an eye on all of it, of course. that trip to south africa will be an important one to watch for that reason. also important to look at that vice presidential selection and possib potentially a more reformist china. spain s latest debt auction, these have just crossed. there wasn t necessary lay formal target here, but spain hasn t reached the soft target of what markets had hoped it would raise in the longer term auction. it was a 2029, 2040 and a 2041 bond. altogether, spain has raised about $800 million euros. the market was looking for $1 billion to $2 billion euros to be raised here. the bid to cover ratios were pretty strong. the yields were down in the last time spain went to market with these particular bonds, but again, just shy of potentially what markets are looking for. you re seeing the spanish curve there from the 2 to the 30. we are seeing yields higher across the board, not majorly so. the ten-year is at about 4.83%. so there has been a higher move. the bank of italy reportedly warnings underperforming lenders not to pay a dividend and are cautioused on bank dividends. samsung has a highly anticipated launchin new york and celebrations continue in the vatican city to welcome the new pope francis. but there are some things i ve never seen before. this ge jet engine can understand 5,000 data samples per second. which is good for business. because planes use less fuel, spend less time on the ground and more time in the air. suddenly, faraway places don t seem so.far away. at a hertz expressrent kiosk, you can rent a car without a reservation. and without a line. now that s a fast car. it s just another way you ll be traveling at the speed of hertz. welcome back to worldwide exchange. european markets are rallying today, shedding about 1.7%. today it s rebounding, although it s been dealt a blow on news that the bank of italy is telling banks not to issue a dividend if they ve had a loss. we re still waiting for more clarification on that announcement. but we have seen italian banks which were rallying to start the day now turn into the red, unicredit, san paolo there. the question will come down do to whether this is quarterly or an annual loss and who is really affected. now, u.s. futures are pointing higher off trades in europe. the dow is looking to add 10 points, extending its win streak today. and its nine-day win streak was the first in 16 years as of yesterday. nasdaq and the s&p 500 looking to add a couple of points. here is is what s on the agenda today in the u.s. weekly jobless claims are out at 8:30 a.m. eastern. looking for small gains. 330,000. at 8:30, it s february ppi. stripping out food and energy. towards 8:30, the fourth quarter current account as for earnings, look for numbers today from clothing retailer aeropostale and krispy kreme doughnuts. we ll seet that can tell us about the state of the u.s. consumer. i expect they re still sucking them down. jack lew make his first appearance as treasury secretary today. he ll highlight the importance of investing in infrastructure, manufacturing and job creation. steve liesman will be travel, jack lew and we ll have a one-on-one interview with the new treasury secretary today at 4:00 p.m. on closing bell. samsung will launch the latest model of its galaxy smartphone tonight in new york at 7:30 p.m. eastern. the hype is growing for the galaxy 4 with reports suggesting an eye-controlled screen. apple isn t taking the samsung launch lying down. it s believed rival devices are inferior to the iphone. joining us now, david garrity from new york. david, we re just, wa, a little more than 12 hours away from samsung s launch tonight. do they have to come out with this i controlled screen here, do you think, to justify all the hype? no, not necessarily the icontrolled screen, although that will probably be a nice of technological innovation from the company which is being seen as a user for other people s technology. for samsung, using other people technology has risks with it as we ve known from the successful verdicts that apple has won against samsung previously for ip infringement. samsung has been setting higher expectations of saying they re the next big thing. what do you make of apple s response here inspect the suggestion that people are switching away from android to the ios, anything to that? obviously, talk is cheap and it s more important for apple to come out with new product and there s some speculation that the iphone 5s won t be coming out until sometime perhaps late in the third quarter here in the united states and around the rest of the world. so for the time being, as much as phil shiller from apple may say, you know, that they, samsung, are depending critically on google s an extraordinary and that android is a poor platform compared to what people have, samsung is coming out with newer products at a faster iteration more frequently than apple is and that subsequently has led to a significant advantage that samsung has built upon given strong execution. in the meantime, blackberry coming out and saying it s had a major order for the new device. i wonder at this point what is more important, is it brand perception generally, is it hardware, is it software? i think at the end of the day it ultimately is going to be software. software is what gives the manufacturer the ability to get a deeper understanding in terms of the consumer. for google, the fact is, android, they give away the operating software for nothing. what does google get in return? google gets to develop an app library greater than apple s and going the gets to work across a wide range of hand set manufacturers and gain a greater owning what have people do online with their smartphones. and there s more to it than meets the eye, if i can use that awful bond. david garrity, thanks very much for your time this morning. again, that launch happens in new york. it s the first time samsung is launching a device like this in new york. it s 7:00 p.m. eastern, so i don t know if i m going to be able to stay up for it. that s it for the show today. i m kelly evans. thanks very much for tuning into worldwide exchange. coming up on european closing bell, it s an exclusive with oleg, the ceo of russaou. in the meantime, have a great day. time for u.s. squawk box southbound.
oh ye of little faith. david novak from yum, kfc, delivers a terrific number tonight. i think there will be a squeeze up tomorrow. who didn t believe in novak? how could you not? like i say, there is always a bull market somewhere. i promise to try to find it for you here on mad money. i ll see you tomorrow! welcome to today s worldwide exchange. these are your headlines from around the world. financials in focus again with italy s biggest retail bank expected to post a fourth quarter loss. sharns in munich re trading higher after they issue a higher than expected profit target for the year. and more power for germany. angela merkel calls for the country to have greater voting rights. and to super size or not to super size, a judge tosses new york city s ban on sugary drinks just as it was set to take effect today. we ve had a seven-day win streak for stocks. we managed to flip into the green and as a result, this is a seven-day win streak. identities the s&p s longest winning streak of the year. so if there s some caution creeping into the markets, you maybe kind of understand why. we are pointed lower this morning, looking to give up some of the gains we ve had which has been an impressive week. a quick look at what s happening across europe, we re seeing green across the major index, the ftse mib up 0.7% despite the fact we get relentless client notes out from major banks. in fact, in just a little bit later today, we re going to see whether we get a new pope elected in italy or at least the beginning of that process. the ftse 100 trying to add about 0.1% this morning. but it s been an uphill battle given what s happening overnight in asia. you saw green mind me in europe, but li sixuan joins us from singapore where it s mostly been red where you are. you re right, kelly. asian markets hurt by worries of the recovery. after a volatile day of trade, the shanghai composite give back gains of nearly 1% to finish lower by 1%. the shenzhen tumbled 2.4% today. the markets are down for the fourth strayed session partly due to worries about share fly. we saw profit taking in environmental and agricultural stocks. mid sized banks took a beating over liquidity concerns. the hang seng extended losses in the afternoon session, ending lower by almost 1%. china life lost over 3% today on trade consumption after the insurer clarified that as chairman comments on better profit for only personal instead of a forecast. but there was a market debut in hong kong. in japan, the nikkei snapped its eight-day winning streak, ending marginally in the red. exporter stocks ended mixed. while the yen has weakened against the green back, the financial stocks retreated earlier on mormon tear easing. south korea s kospi eased 0.5% weighed down by a weaker yen and a geopolitical risk on the peninsula. tracking the losses reversed early gains to end lower by about 0.6% with resources lagging behind after goldman sachs downgraded the sector. india s sensex is still on the move, but reversing early weakness now trading along the flat line. back to you. sixuan, thank you for that. the dow has extended its winning streak for eight days now. where does it go from here? let s ask gina sanchez. are you still bearish? roubini, maybe not the most maybe not the guy that s going to tell you, yeah, stocks are going to the moon from here. newerel has been positive on stocks here at the beginning. he s been warning of some disappointments later. but you ve had a couple of things, sentiment and money flow. money flow has been extremely supportive of stocks in the u.s., and particularly in europe where it s been recovering from a really, really low level. it s been impressive, the performance of european equities and a lot of people are asking how much longer can the fundamentals and market levels continue to disconnect or is there a disconnect? there is a disconnect. obviously, in europe, you ve seen the lost earnings season was a disdisappointment. and that s not surprising. i m expecting continued recession. there s going to be a recovery, obviously. i think, you know, roubini s economics is estimating that there should be a recovery by next year, 2014. so from here to there, that s a positive story. but we re still mired in very high unemployment in europe. it s really hard to paint a good picture there. and i think earnings forward earnings estimates versus actual estimates that are coming in are still way off track. what about buying italy here? not a guy typically bullish on equities. you would think after the performance we had last year, which is a strong one, perhaps people would start to see no, we can it s super cheap, all of this political turmoil notwithstanding. what is your take? i agree with him that it s still hael cheap but it s not as cheap as it used to be. especially particularly in italy where you re looking at banks that are going to have to raise provisions. generally rising npl provisions and earnings don t go hand in hand. not usually the most positive situation there. definitely not. we ve seen the mi b sometimes on this board disconnect from other markets. but at the same time, they appear to be rising and falling together. at this point, is it still a case where the ecb backed up in place, that s all we care about? why isn t there more of a sense of concern across these markets? well, i think there s an enormous faith that everything is going to turn out okay. the omt is in place and, therefore, there s a box top. the problem is, you have an italian government that s failing to form. and will say one that is threatening to short of go in the other direction and start to reverse austerity measures. if that happens, then we ll never call on the omt, the back stop. all this is getting complicated. as an investor, if you were to say italy is going to roll back on austerity, you would almost need to applaud that, right? italy needs some fundamental growth to convince investors longer term, but if they re not pushing through measures that would hurt growth now, is that not a positive? a certain amount of pain has to be felt. the question is, do you feel it now or do you feel it later? and if you don t take the structural reform soon, then at what point do you get more negative repercussions in the future as a result of not taking your medicine now? that s generally the balance. the markets are saying, you know what? it s all going to be fine. in the end, there s going to be a backstop and everything is going to be okay. i think there s some disappointments later on in the year or early next year. i would say that that s coming down the road. for now, you know, i see a strong sentiment recovery and cash flow. as long as that cash flow is flowing in, that s going to be a big positive. we have seen italy and is shape, at least the spread between those ten-year rates narrow considerably during the italian elections. now you re looking there, yield is about 4.611 is 4% for italy and 4.72% for spain. more widening today, about 11 basis points between them. it s interesting to see prices up across the board. it s not just sovereign debt. we re seeing a lot of influence. it s not just equities, it s really across 2 the board allegations are taeg place. the euro/dollar is down about 0.3%. interesting to see that happening even though we ve seen risk across the place generally picking up now. city points out the australian dollar is seeing more volume than the euro trade today. sterling is a little bit weaker. the dollar/yen has been moving quite a bit overnight as sixuan mentioned in her hit. plus turkey, we re seeing some deterioration in the current account situation. that s speeding in. there is also some sign of concern for a lot of these emerging markets. now, two senior members of germany s coalition government approaching for the country to have more voting rights on the ecb s governing council. ryan buderi said the current system is unfair as germany is the biggest contributor to ecb capital that has the same voting rights as the smallest contributor. coming up on cnbc, our very own julia will be speaking to the president of germany s bundes bank. catch the interview right here coming up later in the day. gina is still with us. you said gina antico is the god of fire. yes. symbolic? naming a company is not an easy thing to do, but i chose the aztec goddess on of fire because she rules the fires of the volcano. she rules pressure things because they re formed from the fires of the volcano. and the ancient aztecs would bestow upon the households do you like latin america here? there are some interesting consumer stories. that play is a very long-term play. i think there s robustness to that. typically you focus on equities, do you not? right. but we have seen gold recently starting to bottom out, start to go show signs of moving higher. do you buy into that? do you watch that as a sign of anything? well, gold lately has been moving with the forex market. one thing worth noting, you m mentioned forex markets are making headlines this morning. it is interesting that you ve seen the euro/dollar start to pile on and net short. it s like the question is, is it a good euro fall or a bad euro fall? gina will particular around for a couple more minutes. in the meantime, it s crunch time in athens as samaras meets with troika to discuss civil service. and it comes as greece s privatization agency launches a tender for the sale and lease back of two dozen state-owned properties including the athens headquarters. greece s privatization fund so far has raised about 2 billion euros. this year, it has a target to raise 276 billion. italy has asked the eu to ask regions that come close to hitting budget targets more flexibility to achieve their balance budgets. with the lingering recession and last month s inconclusive results, some officials want austerity measures imposed to meet the target. today, catholic targets begin in rome to begin the process of choosing a new pope. a man from iowa has created a basketball playoff bracket game to determine the new pope. and there s a catholic group, youth 2000, which has set up a website to choose a candle who you can play for during the conclave. anyway, long on to adopt a cardinal.oral right now, i should say, right now, math is getting under way. you can hear there and see the shots from the carpals. it s only been a couple of years since the last time around. most people only get to see this maybe once in their lifetime. a new york judge has put a lid on mayor bloomberg s ban on super shuggiery sized drengs. carfirmation. only hertz gives you a carfirmation. hey, this is challenger. i ll be waiting for you in stall 5. it confirms your reservation and the location your car is in, the moment you land. it s just another way you ll be traveling at the speed of hertz. you are watching worldwide exchange. all eyes turn to milan with key italian bank earnings later today. two senior lawmaker res pushing for more new on the ecb governing council. and a state judge has put the lid on mayor bloomberg s sugary drink plan. mayor bloomberg vows to fight on. india s industrial output beats forecasts, but the rate cut is still seen. cpi out earlier showed prices continued to increase in february up nearly 11% from a year earlier. and it s been a sterling debut for hong kong s largest pawnshop. shares trimmed as much as 30% today. 1.31 versus the issue price of 0.98. that s not surprising while pawnshop shares were oversubscribed more than a thousand times. the company managed to raise $112.5 million. that is at the top end of its ranges. china galaxy securities is reportedly willing to raise in an ibo. beijing based company had originally planned to list both the hong kong and the shanghai bourses but skrabd that plan. there are reports that the china galaxy is looking at bringing the total number of underwriters to 16. after that strong debut, you can t blame them for looking to the market in hong kong. results were bolstered by the lunar new year holiday and easing worries about a food safety share last year. kfc, pizza hut, taco bell with, if you want to pick one? yo kiero taco bell. you can see investors are pretty relieved. a judge has truck down new york s ban on sugary drinks. it was expected to take effect today. the ban arbitrarily applied to some beverages and places that sell them. convenience stores were going to be exempt because they fall under state jurisdiction. the judge said mayor bloomberg s board of health intruded on the city council s authority when it opposed the plan. bloomberg has vowed to appeal. i don t think it will hurt your bottom line, but even if it did, we re talking about lives versus profit. nobody can make the case that serving 16 owns cups versus 32 ounce cups could cause anybody any appreciable amount of money. i would argue it doesn t have to cost you anything. regardless, i think we all have an obligation to try to do what we can to help each other. take a look at shares of coke, pepsi, starbucks and movie theater chains. coca-cola as 0.11 ers this morning. we want to know what you think about the move. e-mail uswidewide@cnbc.com. do you think it s a smart move? do i think it should be in place? yes, i do. really? part of but you re in the market. i guess the point about free market, the problem is the health care costs that go with that down the road are sizable. and i think the point isn t necessarily to reduce sales. the point is to reduce how much you get in one serving. the there is an argument that people eat .drink in excess simply because they re given proportions in excess. it will be more time before that ban on sugary drinks goes into effect. still to come on the program, is there any hope for recovery? partnershipco s will join us when we come back. it s a big day for italian bank earnings. the lenders are expected to post losses for the period as the sector continues to struggle with large provisions. and italy s recent sovereign downgrade. for more, phillipe, managing director at pimco, joins us now. it doesn t sound like it will know a pretty picture in the fourth quarter. is there any sign that this is the bottom? i don t think this is the level. they will candidate that, you happen, they re all. i don t think you ll continue to see that, especially in light of the recession. you know, they trade at a significant discount. i think partially it is quite savings. but really, again, the pressure on the levels of structure on the provision in italy is something that s been a bit under the radar. but i think it s coming through, as well. there s a negative feedback here and is a lot of the italian banks have been buying italy s debt. have they not? right. but i think that s the least poorly performing port follow he yos. the concern here is the level of s&p around 15% and the level of provision in the nfls is very low and it can be adjusted. so i think the pressure is coming from the real economy in italy, not from the sovereign side of things any more. we ve seen a rise in bad debt in italy. that tends to harm the small and mid sized banks far more. to what degree is that priced into or sort of the small cap and midcap banks versus the large cap banks which have more liquidity? the large cap banks, you re right. i think you will see some pressure there. phillipe, are there any names you like here or do you just shy away from the sector altogether? so i think it s clearly a high quality play in italy and the one to sick to. when you look at the smaller lenders, especially looking at the bottom of the cappal structure in the stock, i think that s that. but still looking at intessa, shares are up 0.5%. thank you, sir. a little battle over credit derivative losses is headed for a london court. nomura investment bank is looking to defend its role in the risky trades under uk jurisdictions where latitudes more favorable. shares there, as you can see, have been hammered. they were up about 0.1% today. straight ahead on the program, it s two years on from the fukushima disaster. where does the energy sector lie? apparently at the bottom of the ocean. stay tuned to find out more. that s not much, you think. except it s 2% every year. go to e-trade and find out how much our advice and guidance costs. spoiler alert: it s low. it s guidance on your terms, not ours. e-trade. less for more for you. [ male announcer ] i ve seen incredible things. otherworldly things. but there are some things i ve never seen before. this ge jet engine can understand 5,000 data samples per second. which is good for business. because planes use less fuel, spend less time on the ground and more time in the air. suddenly, faraway places don t seem so.far away. welcome to worldwide exchange. i m kelly evans and these are your headlines around the world. stocks drop in asia. italy s biggest retail bank is expected to post a fourth quarter loss. shares in munich re are trading higher after the world s biggest re-insurancer issues a larger than spec d for the year. we ll speak to the head of the bundes bank later on cnbc. and to super size or not to super size? a judge toes new york city in, s ban on sugary drinks just as it was about to take effect today. announcer: you re watching worldwide exchange, bringing you business news from around the globe. it s going to be eight straight days of gains for the dow and for the s&p 500, not from the looks of things this morning. although, in the past, most of the last phase of this rally we have seen stocks start off in the red, futures, as well. we ll hold our breath and see what happens. but it does look at this point, taking fair value into account, the dow will shed about six points. the nasdaq and the s&p 500 looking to give up a couple of points. the cnbc ftse 300 gives us a fraction of a point. there has been selling across most of asia, what better attitude in europe. the uk being an exception as we just got data showing industrial production was surprisingly weak last month. the ftse is just barely, the xetra dax has just turned enough. it s now going to be an uphill climb. industrial production fell about 1.2% versus the small uptick that was expected month on to. manufacturing production down 1.5%. it was supposed to be flat. how do you make money in these markets? here is what our guests have been telling us all morning. political risk generally tends to associate itself in weakness in sterling against the dollar. we ve still got some ways to further fall, probably back towards the 1.45 threshold. now investors are start to go price in pretty extreme negative scenarios for the uk. not to say the uk is going to have a terrific and significant bounceback. but there s a huge amount of pricing in. from flattening of demand from the metal companies is going to continue for a while. the rally is probably a short-term one. you should sell into the rally rather than buying into the dip. that would be how i would read the mining industry. i would argue that it will only get positive against by january 16. so i think it would be to be very scared by that prospect, although markets will have to come around the idea that at some point qe stops which from a perspective is bad news. from absolute, it s like, okay, it s still very easy. turning now to the u.s., the senate has rejected president obama s request to improve permanent funding to the imf. it s a setback for imf. those reforms require congressional approval because they involve shifting ads 65 billion contribution to an imf treasury fund. the u.s. tried to send that bill. congressman paul ryan is set to unveil the federal today. ryan says his plan will build approval for the controversial keystone oil pipeline. the proposal will privatize medicare and it s certain to face opposition from senate democrats. paul ryan will be talking to larry kudlow later in the day. gina sanchez is still with us. gina, i want to go back and well, before i do that, let s talk about the u.s. since we re on the news. do you buy into equities here inspect do you think the s&p 500 can be next to claim that level? he think it s hard to want to buy in here. and if you look at forward earnings, those are going to have to rationalize. average expectations is somewhere around 108. i kraelz this is a redeck yuls mart, but you ve done well. i think the jobs report is a little behind. is it the fed who is dictating things here? well, obviously, the buy has been to basically the markets have had plenty of faith. it s even more so in the u.s. there is a tremendous amount of faith that everything is going to work out okay. fiscal cliff? no problem. now weir headed towards the government shutdown and the markets are saying, no problem, it s going to be fine. after seven straight days of gains, usually we see that behavior towards the end of trading, not the beginning. and i would say once you get past this next issue, we think that the market is going to give you the effects at the time. they re there, and i think the markets haven t priced that in. and you need someone to tower the second that s. gina, thanks very much. thank you. still struggling after the fukushima disaster, japan s energy policy needs reviving. they might have found the answer at the bottom of the ocean. hi, kelly. the future with energy policy could be about to change as the resource poor country embarks on a new drilling program. the government said their company has taken out large amounts of methane, which is a key component of natural soils. so it s a promises can cte as a new generation energy source. japan has been struggling to deal with energy short aemgs and increasing costs after fukushima nuclear crisis three years ago. japan will try to create meth yan hydrate policy by 2013 and start production during 2016. coming up, john paulson may be thinking about trading in his manhattan dogs and the future. zap technology. arrival. with hertz gold plus rewards, you skip the counters, the lines, and the paperwork. zap. it s our fastest and easiest way to get you into your car. it s just another way you ll be traveling at the speed of hertz. all stations come over to mithis is for real this time. step seven point two one two. verify and lock. command is locked. five seconds. three, two, one. standing by for capture. the most innovative software on the planet. dragon is captured. is connecting today s leading companies to places beyond it. siemens. answers. i be on to the program. we re just getting news out of spain with its debt auction as it continues to furntd itself for the end of the year. more on the 12 month. the yield coming in at 0.2% versus 0.88% on february the 12th. coming in at 1.4% versus 1.5%. it s just shy of 2 billion for the six month and about 3.8 billion of the 12-month. bid to cover ratios on the shorter dated paper were higher, the.2% versus 3.9%. and for the 12 month, a little lower, 1.25 versus almost two the last time around. you can see the reaction here across the bond curve. we re seeing yields falling this morning, consistent with what we re seeing with other sovereign paper. the ten-year in spain, 4.72%. if you re just joining us on the program, we ll get to your headlines in a moment. first, the biggest insurer in europe has forecasted a profit of 3 billion euros this year. stell, the insurance giant it could she additional losses in its unit. up about 1.2% right now. and coastco reported second quarter results this morning. profits better than expected 39%. same-store sales were up 5%. boosts of higher gas prices and stronger foreign currencies. costco, which has about 650 locations in the u.s. plans to open 14 new warehouses by the end of september. addsing about 0.2 outperformancing the program. if you re joining her and a state judge puts the lid on new york city s sugary dling ban. and here is a look at today s other top stories. hewlett packard is looking at a takeover of autonomy. reggie gupta said the board laid a solid foundation for hp s turn around. hp has disclosed the uk serious fraud offer as joining the justice department. hp took a massive write-down on the deal last year, accusing mike lynch and others or accounting fraud. h 3/shares up about 0.16 over the last month. quay close slim and the yun s market. the bill would reign in media giant televitsa, which holds 60% of the broadcast market. and it stipulates any company with the market shares above 50% will be deemed dominant and force sanctions, including forced asset sales 37. biven urt better than 2% this morning. and john paulson may be willing to move. u.s. citizens are normally taxed under their income no matter where they live, but under a new law, new immigrants may be exempt from capital gains taxes after they move there. you must spend 183 days a year in puerto rico and prove you have family and social connections there. so he guess everyone is going to have on move at once if they want to take advantage of the deal. and could washington, d.c. affect the koosh keel talk about this when i come back. 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[splash!] welcome back to worldwide exchange. here is a look at the trade across europe. it s difficult to find a real direction. the xetra dax wearer, the ibex in spain is trying to stay to the upside. we have seen sovereign debt up across the board. u.s. futures now suggesting that it s going to bre hard to continue eight straight days of gains. we ve been pointed lower and futures for most of the trading sessions over the last couple of weeks only to reverse and move higher. the questions is what catalyst might help us get there today? at the moment, the dow is looking to fall about 26 points above fair value. today, catholic karnts read in rome to give the chance to be creative. you can tried for a cardinal of your choice or try to gauge the output of the new pope. it will know milan as al tian banks get results in about an hour tower s times. it was set to take effect today. jackie, are is there huge queues of the 7-eleven? that s right, this commute is getting under way. there are a lot of people in new york city. the sugary ban is not going into effect today here. it was struck down by a judge yesterday. the american beverage association issued a statement on this. they said that the court ruling perhaps a slew of business business. and let s talk about that business a little bit. where we re standing right now is a prime example of how ka prieshus this ban would have been. you have a gourmet food restaurant that would have been affected but it, but right nkts door you have a 7-eleven that wouldn t have been. the concern was that consumers would start to leave the mom and pop stores and they would go to the convenience stores. not only would you have the business impact on the bottom line, but then you have a procedural business. now, mayor bloomberg, of course, does not take this leaning down and he sees this in the best interest of the city and people s health in terms of the relation between sugary drinks and obesity. he is going to do a tour starting on the today show and hopping around the city to address this issue. he was on letterman last night, kelly. you re standing in front of a 7-eleven. this is part of the problem with this law. countri countries will to figure out whether it was last night or at another time. they said they weren t, but at the same time there was a concern that there would be a shift in the city as to how consumers would spend their dollars on the sugary drinks. thanks for that. in a rare reversal of fortune, the united states has seen its credit rating fall. it s not all rosy for europe as nearly 75% of respondents think a default for greece is likely or very likely within two years. tom berkeley, author of that report and international editor, time. this is basically your own sovereign ratings gauge. it s not unchartered territory to be in 12th place. but the absolute ranking, the rating is we rate on a scale of zero co-100. the united states scale is around 88 points and that s the lowest its ever been in the history of the survey. when is this information conveying to investors? the survey reflects a range of economic and political factors. the u.s. credit rating is a result of the debt increase since we said nurse aren t there any more, are they? the risk creators at major banks to form the basis for this survey are relatively upbeat on the u.s. economy. they expect growth to continue at a relatively moderate rate. what concerns them is the continued dysfunction. there s a commonality with issues with the government not cooperating well. and compare this with norway. a small poll lagz, tremendous oil reserves. they now have ads 600 billion sovereign wealth fun for a population of under 10 million people. they re buying tr there some list where actually lessons can be learned? well, there was a country 40 years ago, few national resources except its people. singapore is, today, one of the most prosperous countries on earth. it s not just a question of natural resources, i think. 75% stolen. and some of the are up. there s a history sense that the debt crisis isn t been resolved. we ll see you tomorrow. you ready? we wanna be our brother s keeper. what s number two we wanna do? bring it up to 90 decatherms. how bout ya, joe? let s go ahead and bring it online. attention on site, attention on site. now starting unit nine. some of the world s cleanest gas turbines are now powering some of america s biggest cities. siemens. answers.
hell lowe. welcome to today s edition to worldwide exchange. i m ross westgate. and i m kelly evans. hesitate are your headlines around the world. china s mainland markets knocked off balance by beijing s latest property curb, hitting shares of real estate developers there and around the world. the battle lines are drawn in d.c. after the sequester goes into effect. but for now, the white house and republicans aren t giving any ground. plus, executive pay is in focus across europe with voters overwhelmingly backed plans giving voters more say. announcer: you re watching worldwide exchange, bringing you business news from around the globe. welcome to today s program. and you re headed to italy. i am. it s supposed to be about emerging markets and global growth and all those sort of issues, but it happens to be in italy where we don t have a government. speaking of italy, can we go ahead and show my favorite chart. if you look at what s been happening on market action, we ve seen the back up at 4.9%. you have to wonder, oh, look at that. beautiful chart. you just have to wonder if we re heading that toward inversion. usually it s a gauge fof eu crisis risk. promise, plenty more on that on the show later. gilt yields down at two-month lows, on the other hand, post the moody s downgrade. exactly. so lots of market chatter to get through. and lots to get on today s show. besides that, president obama and congress failed to reach a deal to avert $85 million in automatic spending cuts as the sequester kicks in. we ll be in washington, d.c. as we look ahead to what s next in the budget battle and the potential impact. swiss voters overwhelmingly backed voters to get a cap or executive pay. and the bonus battle launched into london s property sector. the talk of capping bank bonuses as a possibility to end central london status as a real estate safe haven. clearly not the case in china this morning as real estate developers suffer their worst. how much lower can the index go? we ll ask at 10:30 cet. first, hsbc posted full year earnings just below expectations. coming in at $20.3 billion. that compared to an average analyst forecast around 23 billion. the bank has pledged to raise its dividend next year s growth and its core asian markets are predicted to boost its capital. shares have had a pretty volatile start to the day, down 2.6%. julius, managing director for uk banking, thanks so much indeed for joining us. what are your thoughts on what we ve heard this morning? it is a little bit below the forecast, but a robust performance and reflects the fact that hsbc are to some extent ahead of the curb in terms of doing some of the real global restructuring that these groups have to do. it s interesting because we re seeing so much strength in the businesses. uk and europe down significantly. where does hsbc go from here? well, there is a, you know, too big to grow question mark over any of these groups. hsbc has proved that quite early coming out of the insurance business in china and pang an. completely out of general insurance worldwide, reducing its japanese food print. what you see is they make clear choices around emerging asian and material markets. they put that into the future. i think the risk for all groups, the sun charts, the city, the global groups with asian aspirations are going to make the right betts in emerging markets. not all emerging markets are going to come up with a tie this time. what is the right emerging market, do we know? i probably wouldn t have to sit here if i knew the answer to that. indonesia has the right kind of demographics and basics. i wonder how much more the uk might shrink and is whether the latest back and forth or the bonus caps that are being discussed out of brussels will have anything to do with that. i don t think you make decisions about the structure of your business based on those factors alone. really, it s fundamentally around demographics. demographics, trade flows, growth potential, and whether the regulatory environment in the round is particularly ba nine on the line. but on one of those issues, we re not going to make a ten-year decision. but on the fundamentals which have clearly deteriorated, we get a fresh numbers today with the spanish unemployment. they did not do well in these markets. does that call into question their future operations here? well, the whole of legacy european banking, let s call it that, has a return on equity which is currently below cost of equity. so you could say the whole of legacy european banking at the moment doesn t have a future. that could find a way back. are you talking about across the sector or just the whole sector. for the whole sector. and how much is the uncertain nature of future regulations also going to be a cause to weigh in on sentiment? it s a very big factor. every time we get a set of results out, we get a big restructuring chart from one factor or another. penalties on ppi in the uk, penalties on money laundering. the suv on the horizon looks crazy and uncertain. the icb review for the uk could have an impact of $1 billion to $4 billion per annum. we re halfway through the ppi. we have 12 billion and we may have another 12 billion to go sterling. that s before we get into some of these other issues. and stewart grover future? he s been restructuring hsbc for two or three years. i don t know what his personal plans are, but i would say he s safe at the helm. hsbc has been a business growing sense 1865 and it shouldn t underestimate the amount of pain you have to go through to restructure that into some businesses. i think there s a job in italy that may be open for someone who could restructure a couple dozen units, cut costs, perhaps you can have a chat down on where are you going? ambrosetti? just a thought. julius, good to see you. china s stocks have plunged overnight to their lowest level since 2008, leaving a drop across markets as tightening measures have kicked in to ease home prices. you can see the shanghai composite down there 3.6% today. the government is stepping up its three-year campaign to cool the property market. did i edra joins us for more. what measures are they that are going into effect here and do you expect more? well, kelly, the government talks a lot about these measures, a lot of talk about the clampdown on the property sector. it s really confusing because sometimes they say they ve never gone to place. but in this case, investors stir. today was the eve of the national people s congress. that is the biggest most important political event in the country all year and this is the damage. policymakers were probably hoping for stability. they got this, volatility. the shanghai composite was down 1.4% at one point, ending with lows nearly 11.7%. the shanghai composite down 3.7%. beijing has been on a campaign to cool the property sector for the last three years. but we ve seen increasing prices as well as sales. there has been rhetoric trt government saying they would clamp down on this sector. higher down payments, higher mortgage rates, that got investors spooked. we saw them limit down. it affected shares in hong kong and affected sentiment all across the region as far as australia and certainly in europe, as well. it will play into your trading day over there. now, all this, as i said, on the eve of the npc where property is certainly to be in focus as well as pollution, corruption, economic reforms. now, the new set of leaders coming in not exactly known for their political reform agenda. but they are known for their economic reform being a little bit more aggressive on that side. so we are going to be looking ahead and, of course, kelly and ross, as you saw, it had a big effect on the stock markets here. so investors are certainly going to be looking. and you know what? honestly, i wouldn t be surprised the if property shares saw a big rebound yesterday because that s the nature of this market, guys. it is momentum driven. you can see limit down one day and limit up the next. deidre, thank you so much. let s bring you up to speed with where the implications are for equity. an hour and ten minutes in the trade, weight is to the down side seven to three. we can look at hsbc stock in london and the ftse 11100 off firmly above 6300. the xetra dax off 0.6%. we see the ftse mib down another 1.4% this morning. what is the china affect? weaker sectors, basic resources down 2%. then we ve got banks being dragged by hsbc. defensive and health care utilities up and telecom tt best performers. we talked about the spread between italy and spain narrowing. we re not far away, around 30 basis points. narrow spreads. ten-year gilt yields, now below 1.9%, 111.8%. we re down at fresh two-month lows, as well. on the currency markets, the aussie/dollar taking something of on a hit, 1101.32 is where we stand at the moment. so the aussie get to go an eight-month low. investors spooked by beijing s decision to hit. the property sector, dollar/yen, 93.60. euro/dollar, flat 1.30 mark, as well. sterling is hemmed down at those lows of 1.5042. let s check in on the rest of the market action, go back to singapore. this time we re joined by sixuan. hi, sixuan. thank you, ross. what a day for the china rs bos. the stock market, indeed, not celebrating the two sections of the npc and pccc. the shanghai composite lost nearly 4%, seeing its steepest decline in months. property stocks took the main fall with a subindex slipping over 9%. we also saw broad based losses in property related sectors such as cement and steelermakers, home appliances. so from upstream to downstream took a beating today. the property sector dragging the hang seng lower by 1.5%. shine na s came under pressure. but the nikkei endinging higher by 0.4%. property developers, on the other hand, got a nice boost on the thought the boj wasn t continue to pursue aggressive reflationary policy. elsewhere, south korea s xosty lost 0.7%. china related stocks such as chemical and steelmakers weighed on the markets. australia s asx 200 fell 11.5% on profit taking ahead of the rba meeting and more economic data later this week. resources lost ground on fears of a china slowdown. india s sensex les than ann an hour from its market close currently trading lower by a modest 0.2%. sixuan, thanks very much on that. news on our website, a couple of stories you might want to follow. the italian election and u.s. budget cuts may provide uncertainty. head over to cnbc.com and find out what he has to say about the wave of new money that s actually the driving force behind recent gains. but watch out for the falling oil price. u.s. oil consumption in to 12 hit its lowest annual level since 199637 and despite potential protection from the upcoming jobs report, others predicting u.s. crude futures could drop below $95 a barrel. might be good news for consumers. tom smith explains how his company is overcoming the challenges of the shipping container industry, often seen as a global gauge of demand and some weakness ahead of what he sees for 2013. ross. yep. meanwhile, the battle lines between brussels and the uk on big bonuses have been drawn, but could splashing compensation affect the boosted property markets? according to our next guest, it already has. find out how when we come back. [ male announcer ] let s say you pay your guy around 2% to manage your money. that s not much, you think. except it s 2% every year. go to e-trade and find out how much our advice and guidance costs. spoiler alert: it s low. it s guidance on your terms, not ours. e-trade. less for more for you. [ male announcer ] what?! investors could lose tens of thousands of dollars in hidden fees on their 401(k)s?! go to e-trade and roll over your old 401(k)s to a new e-trade retirement account. none of them charge annual fees and all of them offer low cost investments. e-trade.less for u. welcome back to the program. swiss voters overwhelmingly backed a plan to give shareholders overwhelming authority over beanus pay. and it requires greater disclosure on loans and retirement packages. the proposals now go to the swiss parliament where lawmakers will draw the new legislation and the rules could come into law as soon as next year. carolin roth is in zurich. are the swiss shooting themselves in the head here? well, that s hard to say. a lot of people say it could impact switzerland s competitiveness negatively, though other experts have told me this morning that the fundamental res still in place because switzerland has a very low corporate tax rate, still has the right business environment. now, also, we re going to have to wait and see. to what extent these strict pay laws are actually going to be xwlekted because some people say they could be watered down quite significantly. but what it does ensure, of course, is this, you know, lower extent of short-termism in the swiss labor market. so it ensures that no corporate executive from overseas is coming to switzerland just to get that big signing bonus. but i just want to show you what the reaction has been in the newspapers. the french daily says this is a triumph. and you see his corner office as being smashed here. now, another paper says this is the historic coop. of course, they re referencing to the person who is behind this idea. the initiator. his name is thomas menda, and he s a politician who has been slobbying for this referendum to take place for more than four years. and he is now being called the new robin hood of switzerland. ross. does he run around in green? carolin, thanks indeed very much for that. it s a very big man called little something or other. over the weekend, british politicians described proposals as a moronic piece of economic policy. the prime minister david cameron called for the initiatives to be more flectble. but politician might find support within europe. german and french finance ministers recommending that the eu business finance plan be watered down. this as we ve heard from hsbc this morning. highest paid banker is not a director. he s paid 7 million pounds for 2012, as well. so the highest paid employees were paid 27.8 and that s five of them. and that includes 21.5 million in bonuses. so there s basically 20 million in bonuses. that s a that s more than one to one. yeah. or two to one, which would be it is more two to one. meanwhile, british politicians may have an impact on the economy. is it too late for central london s red hot property market? according to a new report, cash sales fell by a quarter last year. there has already been an impact on the bonus culture received. good to see you. is it cash bonuses having an impact? and how do you separate cash bonuses out from also that duty level, as well smp. i think it s a complex situation, really. what we ve seen is that last year 75% of properties and prime central london were bought in cash. this year, it s 50%. and that is in the prime central london. so we re talking about the core area. how many of those buyers are overseas? that s a good question. it s a mix. i think it was overstated because is a banker working in this country here an overseas buyer or no. i think purely of money that has come a lot of that is there is caution, but a lot of the overseas money is going to the new build property as well as the other locations. so there is a proportion of that. but i think it s a complex story, really, because, one, there is a little less lump of cash around. but also, prices have gone up over the last year. prices have gone up over 6% in central london. therefore, if you re buying a 1 million pound property, which that doesn t buy much in that area, sadly, that is on top of that, that is quite a lot of extra money. it s over 50,000 pounds. 7% now over 2 million and that has to be paid for in cash. absolutely. so we re seeing people buying with mortgages because they need the extra because there s less cash. so they re having to pay more. also, because of property, because of the extra costs, we re are deciding i want to buy for the longer trm. i want to reduce those costs further down the line. so i ll buy slightly more now, therefore mortgage, and there are more mortgages around now. they re actually a pretty good value. if you re putting in quite a chunk of deposit, no doubt these people still will. you get some extraordinary five-year record low rates on the five-year money. that s right. light the rest of the money. but some of the high street banks are getting back into that market. is this not a lucrative place for them to look now, they re probably a relatively high credit quality. yeah. i think the difficulty is, though, we don t quite now how the remuneration structure is going to work in the future. and a lot of banks, particularly high street bank, want something quite simple and well, the good news is, these guys are going to have much higher based incomes. we think. there we go, yeah. if that s how it works out, then everything is fine, yes. i suspect it could be more complicated than that. okay. they re going to get higher based income? no. it s a great point it s hard for them when you have such a variable income to convince the bank to give thaw that s why if you wait for the bonus, you do it all at once. if you were earning a hundred thousand and is then you were getting a 900,000 bonus, it s hard for a bank to work that and that is so variable every year. and then they ll give you a 300,000 pound salary or whatever. a 300,000 pound bonus. has it resulted in the changes clients are looking for? i think there isn t much property around. so the fact that we ve seen less people buying with bonuses hasn t affected the market. we re still seeing prices rise. what s the supply like? people are not selling, partly possibly because they re being cautious and staying in the market. people are staying put because they can t find somewhere else to go to. is it also because there has been an influx of investor buyers or long-term i mean, if long central london has become a safe haven for int international money, those people presumably stick it there and walk away, right? yes, i would agree with that. but lots of that money has got into property and the flats. let s say they re sort of working finance family looking for. they re looking for family homes and, you know, in these areas and where are they going to find themselves having to move out of villages or further out and further out or we certainly are after town. and given how prices are going to go, by the end of the year, they ll probably be about 10% ahead of the peak in prime central london. and it becomes harder and harder. for a family home that is a good commutable distance. and that s if you re a working finance family, not to mention just a typical working family. thanks very much for coming by. that s good news. thanks very much for that. yep. let s recap where we are with hsbc share prices. we re down almost now 3%. 3%. 2.98%. and we ll see which one is this one is slightly delayed. hsbc shares not responding well to that news. it s an overlay of news, isn t it? they re supposed a bit to what happens to china and china s property, as well. so we have that overlay, as well. meanwhile, has arsenal football club have you gone to an arsenal football game? i should because i m in the neighborhood. it has become the latest middle east takeover target. there s a 1.5 billion pound target for the team and it s requested a meeting. but the sporting franchise includes the nfl s lui rand has no intention in selling his stake in the club. and don t know your shanghai shenuous from your beijing yuan? that might be all about to change as the chinese football association has named david beckham his first global ambassador for football. beckham said he was honored. the chinese super league co comprises 16 teams across asia. he s now topped out. take your word for it on this one. do you know who dennis rodman is? i do know who dennis rodman is. former nba basketball star, he s been speaking out about his friendship with king jong un. he was asked about pun yang s right to destroy america. the u.s. state department has criticized north korea for wining and dining rodman while its people go hungry. meanwhile, rodman had his own message. i think he s going to change something. it is a different view. i sat with him for two days and the one thing he asked me to give obama something to say and do one thing. he wants obama to do one thing. call him. call him. on that, we want to know, are athletes helping or hurting the cause? are they better diplomates than politicians or do they just interfere? i don t know. get in touch with us. e-mail us, worldwide@cnbc.com, tweet, @cnbcwex. still to come property markets are sent stocks tumbling. what s on the agenda this week? more when we come back. hsbc stocks are down after recording a profit of $20 billion. it has lifted its yearly dividend. shares of real estate developers in china are tumbling. the budget battle lines are drawn in washington after a sequester goes into effect this weekend. but for now, the white house and republicans aren t giving any ground. and executive pay is in focus in europe. swiss voters have opted to give shareholders a greater say. we ve got data out. february construction pmi 46.8%, 48.7% in january. the poll was ready to tick up to 49. it s the lowest since 2009. that follows the disappoint we just saw in manufacturing. and we got the latest on the bank of england s lending scheme. net lending to lending scheme, sure, i have to work this out, kelly. negative. since june 30th, negative 1.5 billion. lenders have drawn down 13.8 billion in the sls since launch. and i suppose it s still waiting for that to leak through. lloyds has lending of 3.11 billion. minus 3.1 billion. barclay s fourth quarter net lending, 1.49 billion. right. not helpful. we re going to take a walk through those numbers and follow up on this. sterling/dollar, about 0.1 is% weaker. it did bridge the 49 level. not just personally, but jaus just because it s been such a fast move to the down side over the last couple of weeks here. the question is, again, with the latest set of data, we saturday to sit below 1.50 is not any technical level, but it is deeply psychological. people have extra additionally looked at sterling/dollar trading on a cable. cable, yeah, trading on a purchasing parity between, you know, 1.50 to 1 is.65 is about right, somewhere in that spread. so anything meaningful below 1.50. like you said, i does have an impact on psychology and beyond trade beyond whatever the latest chart level might be. take a look at the bond space. here is a broader look at what s happening. look at that, sitting below that 1.30 level. a lot of key levels here today that we re watching. the aussie/dollar is 101 to the u.s. dollar. i think this is a story, if i can point, how about that? look at that. does that work? anyway, the ten-year in spain is falling. the 10-year in italy is 4.8%. i think that spread itself could be used as european crisis stage. the last time we saw spain above italy was a year ago. this time around, will it be different? yeah. but then both sets are coming together. here we have spain coming down. meanwhile, the shanghai composite has suffered its do you want to look at what do you want to look at? european markets. let s take a look at those. and now the shanghai. this is the story, anyway. we might as well just look at it, down 3.6% on the latest move to curb property markets there in china. it s amazing how quickly we started talking about tightening as opposed to last year when concern about hard landing was all the rage. the shanghai composite has suffered its biggest loss in months. limit down today on the back of fresh tightening measures on beijing. for more, joining us from singapore is andrew leon. andrew, there was some suggestion that this was spurred, as well, by a media story in the u.s. last night. 60 minutes did a story on the chinese property market. the question is whether today is an overreaction to some of these headlines. well, i don t think it s an overreaction, really, because we were seeing china with this national people s congress ordered to meetings. it s after it s going to be a kind of equitable change in china s policies. this is because the policies is an existential threat to its stability. so they ll probably change the economy, they ll probably change the society in order to maintain the stability. economy, as far as the economy is concerned, there s is a huge kind of bubble developing in the property market. and, of course, premier wen jiabao wants to leave a legacy of some sort of credibility policies to maintain the stability in the market. as far as the society is concerned, there s huge inequalities. we re seeing policies which would put more emphasis, more investment in health care, education, infrastructure, to balance the society and balance the economy towards more local consumption. if that is an incurving development, why are stocks getting hit so hard? well, it s because of the clamp down on the property market and with the clamp down in the property market, there s going to be tightening of lending. there is going to be a ministry of controls against speculative in flows and speculative investments. and is, of course, these investment res huge. is and so people are looking for other opportunities, for example, they would like to invest more in the stock market. but unfortunately, china s stock market is also policy led. and then with the new leadership coming, although there are some positive signs, still people would like to adopt a wait and see attitude. and all this translates into a more cautious appropriate to investment. if we saw this hit to the property sector today and the shanghai xotsit was rallying because people were going to rotates funds out of property and into stocks or because we saw strength in the consumer names, then, perhaps, you could tell a more encouraging story. today they would suggest whatever process spengts for investment, investors broadly would hinge on what s happening in the property market and absent that market going gang busters, they re not interested. well, apart from the property market, though, call for china s economy is driven by something more fundamental. and look at the urbanization story that is going to define the development over the next five years and more in the new cities and also the growing middle class, the policies askew to internal consumption. so you re talking about retail sales, registering were a healthy sign and the building of cities and roads and high speed rail translates into investment in infrastructure. together with transport and all the basic commodities which goes into building of cities. so all these also present investment opportunities. but at the end of the day, there s no it s a no-brainer, sort of putting your money locked up in banks, paying very, very low interest rates. but while there was an asset valuation increase. so money is going to chase after, you know, higher returns. but unfortunately, there are lots of other uncertainties a and in the market at the moment. andrew, liquidity is one thing you don t want to reduce, liquidity is probably one thing you don t want to do in the property market because it will drive up prices. well, of course, the government wants more liquidity to help with the small and medium size enterprises. but as far as the enterprises are concerned, they have too much liquidity and they have a very close relationship with the big banks. so it s the balance this kind of dichotomy. on the run hand, the china s leadership would like to clamp down on a lot of speculative investments. and in the fact going towards reform of the prices, they want to provide more liquidity to the small and medium size enterprises. andrew lung, thank you for that. a ruling in its favorite with the ongoing apple, samsung got a boost. the smartphone will continue and the new trial is being set to determine damages. and joining us from seoul, chery has more on the story. hi, ross. the $1 billion victory that a u.s. jury gave apple over samsung last summer was cut by more than 40%, that is for now. a judge said that the jury, the damage payment was incorrect and is that she needs a new trial to determine the final dollar amount of damage payment that samsung needs to pay apple. samsung was happy about this ruling saying it was pleased about the cuts. but did ask that it s seeking further review as to the remaining award, which means it s looking to further cut the damage payment if possible. this case is not over. we still need to continue watching how the new trial goes, recalculate the damage payment on 14 samsung products and that recalculation of the damage payment in the new trial doesn t necessarily mean a smaller damage payment down the road. plus, we also are eyeing the international trade ruling due out in august on whether they will face an import ban. basically, we can say whether this is a partial and temporary defense for samsung and that we still have a very long way to go to see the end of this story. ross, back to you. chery, thanks for that. sony wants to be number three in the smartphone business after apple and samsung. that pits the japanese company against chinese phonemakers, as well. according to abc, sony came in fourth place last year after wahwei. shares have outperformed the broader markets today. we have the story live from tokyo. yes, kelly, the bank of japan s newly nominated governor has told parliament he will take whatever measures necessary to bring an end to more than a decade of the world s third largest economy. this morning, the current head of the asia development bank says he will work on bold monetary easing in order to achieve bog s 2% inflation target. the time frame in his head is around two years, pointing out that the boj s effort buying scheme had not seen enough in terms of scale and scope. can you roda says he plans increases giving government bonds as an example. the boj currently buys jgb set in sterling one to three years. he also will consider bringing forward boj s plan to introduce unlimited monetary easing which is currently set to start in 2014. now, the tokyo market welcomed the pledge for the aggressive easing and the nikkei 225 even touched the full year end price month high. the foreign exchange market reacted and the yen started 93 again against the dollar which was a one-week low. the leading party hopes to pass that before the new governor sits down. now, china is to be mum on its military spending plans for now. beijing typically reveals the budget a day before the national congress. but today they declined. the official did say china s defense spending is not a threat to any other country. last year, the official military budget rose 11%. analysts say the actual figure is likely much higher while they ve increased spending on the nuclear ars mall. i love that. it s not a threat. no, clearly. the world s biggest aluminum produces is feeling the effect of less prices due to tough market conditions. the result wasn t as bad as some analysts have been forecast b. but sales still underperformed the broader hong kong market down near 3.5%. and let s take a look at what s on the agenda in asia tomorrow. the npc continues. the 12th national people s congress officially begins where the decade transition will take approximately two weeks. australia is expected to hold rates steady at 3%. we have key earnings due from property developer vanke and haitong international. after hsbc s results, you can bet there will be a focus on standard chartered. looks like they re down. but, in fact, everyone else is weakening further. still to come on the show, italian politician beppe grillo is calling for an online referendum and the latest on attempts to form a government when we come back. [ male announcer ] here s a word you should keep in mind. unbiased. some brokerage firms are. but way too many aren t. why? because selling their funds makes them more money. which makes you wonder isn t that a conflict? search proprietary mutual funds. yikes! then go to e-trade. we ve got over 8,000 mutual funds, and not one of them has our name on it. we re in the business of finding the right investments for you. e-trade. less for us. more for you. the fund s prospectus contains its investment objectives, risks, charges, expenses, and other important information and should be read and considered carefully before investing. for a current prospectus, visit etrade.cotualfunds. italy s president has made comments and is largely pushing towards a technocrat government. meanwhile, five-star leading beppe grillo has been quoted in a german publication asking for an online referendum of the euro. he says he is a fan of europe, but it is the italian people who should have a say on membership. good to see you. the italian yield is spiking up. how much closer is that going to get, do you think? we think the italian yields will continue to rise. there is potentially some feel-good effect here if a coalition is announced. during the weekend, there were talking about a coalition between the democrats, pd and grillo. i don t think that a coalition will last longer. because the parties defer a lot on key issues like tax he, accurating the debt. we have situation short. we took our short off a few days ago. grillo is not really a party, is it? i mean, you know, let s look at the people who have been late. aren t they there? they ll vote on issue by issue law by law. i agree with you. on the run hand, this could be taken positively by the market. but it will not last long. my view is there will be elections in the next six to 12 months. you first need to elect a new president. you need to wait until may until the new president is elected. and after that, you can call for what happens between now and may? there is a lingering of two to three months. all of the markets push italy s hand during this period of time. do you think they re going to look through it and say, well, we just have to wait a little while for this process to move forward or do they choose this market to attack? the markets will test anything that is not a stable majority. during these two or three months, firms won higher. you have a status in the economy. everything is stock. and this makes growth deteriorate even more. all right. let s get a couple of other stories, as well. italy s antiausterity vote established a prime minister over a proven techocrat, but could this be germany s fault? find out why that might be the case if indeed it is on cnbc.com. jobless claims up 11.2% in february according to the latest figures out of the labor ministry. that means almost 1 million people were out of work at the end of 2012. stephane pedrazzi has more out of madrid. not a very encouraging report. no. but it was expected. more than 5 misdemeanor people are looking for a job in spain. that being said, it s not the most accurate report. we have to look at the other ones from the national statistics institute, which takes into equity logistics and people looking for german nearly 6 million people are actually out of work, which means 26% of the population in spain. the youth unemployment rate is at 5517%, that s a record level, of course, and the situation is unlikely to improve in the next months coming, despite all the reforms on the labor market. we are not expecting any improvement because the spanish economy remains in recession. it s unlikely to get out of a recession until the next year, according to most economists. the spanish gdp shrunk by 1.2% last year. that was the worst year since the country returned to democracy. on the grown, plenty of countries are planning for job cuts. in order to restore profitability. angry workers today, another week of strikes which is going across siberia. 1 million euros today. back to you. stephane, thanks for that. we re seeing the spanish ten-year continue to fall. what gives? there s a bit of complacent. everyone that the that the ecb would do what it takes everywhere. when a government does what it s required to do, the ecb austerity is there. in spain, there is good leadership and the deficit and the regions have done but even that leadership which is stable and pushing forward, has very fragmenting public support. we ve seen a series of scandals, but that has had no market impacts the. and spain has a lot of improvement on the fiscal side. but growth continues to deteriorate. if you look at exports, there s been some recovery. people are talking about a revival in exports and the declining labor costs. but on the other hand, internal demand is basically collapsing at a much faster pace which means the growth continues to decline. and despite the effort to cut the deficit, this continues to pose a risk for the next two years. are you guys short spain? do you think the market is missing something here? we re still cautious on spain. one of the things we are concerned about is that the central government has been giving help to regions, to banks, local authorities, to everyone, really, and burdening its balance sheets. so we may have seen the worst. probably we are out of the cliff affect. but we still have a lot of mountains to climb in the next few years. what happens to the ecb if things in italy get a little bit worse and we don t get any growth going in spain? any spot on the ecb or not? well, i think the major worry at the ecb is despite theirest, it will probably a back stop. governments don t respond and don t do anything back, which is potentially the case if you don t have a stable government. now, in italy, we had electiones and they re inconclusive. in spain, we had a government with a majority but there is potential risk at the regional level as well as the scandals could destabilize the current majority. we start from a better starting point politically. but a worse one economically compared to italy. so are investors questioning the validity? will they be questioning the validity if the politics get worse in italy? i think they are rethinking about how much and how quickly it is applicable if there s no political consensus. as you know, with austerity social unrest rises, we have social unrest in sport tu begg l portugal, spain and italy. the greek economy has been a world concern since 2009. the reclassification from developing market status comes after investments failed key macro risk caps. this comes as officials are trying to determine whether to release the next tranche of aid. we re not too worried. they are already in a program and as long as there is a majority government which is pro euro, they are effectively bound to some extent to do what they re required to do. does that include cypress inspect. in cypress, we re probably looking at an agreement this month, as announced. and that s why we haven t seen the late nest greece and cypress do more to upset the apple cart? yeah. i mean, the view remains that there is an agreement without a lot of systemic impact, so without dmofters seeing haircuts. we re much more worried about the two bigger countries, spain and italy, where social unrest derail the trajectory of the austerity and worry the ecb. and too big to fail, to some extent. we ll see. alberto, thank you, credit research at rbs. now, with all the athletes making business headlines this morning, we want to know are athletes politicians? join the conversation on worldwide exchange. e-mail us, or tweet us, @cnbcwex. we ve had dennis rodman over in north korea and making a talk show rounds in the u.s. this weekend saying that kim jong unwants president obama to call him. you have to wonder whether all this helps or hurts the diplomatic cause. yes. or does it just get lost in the wash? still to come on the show, plenty more in the second hour. the battle is on in europe over banker bonus caps. boris johnson is calling them more onic. and we ll bring you the latest overpay when we come back. welcome to worldwide exchange. i m kelly evans been. and i m ross westgate. here are your headlines from around the world. hsbc shares are lower after the banking giant misses full year expectations of $20 billion. it does, though, lift its yearly dividend. china s mainland markets knock off balance. real estate stocks tumbling. and the battle line res drawn in washington after the sequester goes into effect this weekend. for now, the white house and republicans are capitol hill aren t giving any ground. executive pay is in focus across europe. swiss voters overwhelmingly back plans to give mra shareholders control over bonuses. announcer: you re watching worldwide exchange bringing you business news from around the globe. so is this the week the dow jones industrial average will finally reclaim its nominal 2007 highs? this is, of course, the question. maybe we can ask warren about it. becky quick will be speaking to him coming up in just about an hour s time on cnbc. the dow jones industrial average this morning is going to make that a harder hill to climb. this comes after china in particular saw a sharp sell-off on concerns about the property market, measures to further cool it there, europe not doing much to help turn sentiment around. the nasdaq and the s&p 500 are looking to turn profits around. take a look at what s been happening across europe. also we re seeing indexes reach multi year highs before falling back into the latest couple of weeks. the ftse 100 down 0.5%. we just learned construction joins manufacturing as the sector of surprising weakness in february. manufacturing contracted for the first time in several months last month. the construction activity is at its lowest level in 2 1/2 years. gilt taking a hit of that. potentially going to retest that level below 1.50. the xetra dax do you know 0.5%. the ibex is adding 0.1%. spain s ten-year is outperforming today, as well. we ve had some lending data out of the bank of england. elsewhe elsewhere, no new net lending from it. they re-check the balance and cheaper funding coming through. as far as upon markets were concerned, we re focused here on this spread between spain and italy this morning. now around 27 basis points between italian debt and spain. spanish yields going down. also in the uk, gilt yield, 1.87%. now down at a two-month low. clearly its weaker growth helping to drive bond yields down. it was weaker growth that moody s cited for the downgrade, but the downgrade knot having any impact on the yield level. we talked about the chinese property curve. they brought in new curves to try capital games. we re down here at 101.34.. aussie/dollar against the u.s. dollar this morning. down to an eight-month low on that basis. euro/dollar at the moment, 1.2990 is where we sand. swish win has the update in singapore on the asian trading day. thank you, ross. a big sell-off on chinese stocks aus mentioned. the hang high composite saw its biggest falling 19-month, dow 3.7% today. blame it on the property counters as we just talked about. chinese property stocks trade at limit down today by about 10% on the back of fresh tightening measures from beijing. we also saw broad based losses and property related sectors such as cementmakers, heavy machinery and home appliances. from upstream to downstream all took a beating today. meanwhile, property shares were dragging the hang seng lower by 1.5%. chinese banks came under pressure after a ubs downgrade. the nikkei managed to buck the downward trend ending higher by 0.4%. property developers in japan on the other hand got a nice boost. this on expectations that the boj will continue to pursue aggressive reflationary policies. elsewhere, south korea s kospi lost 0.7%. some of the china related stocks such as chemicals and fuelmakers weighed on the markets. australia s asx 200 fell 1.5% on profit taking ahead of the rba meeting and more economic data due out later this week. ru source stocks lost profit on fears of a shine na slowdown. india s sensex ended down by 0.14%. back to you. hsbc posting full year earnings today below expectations. it came in at $23.3 billion. that compares to average analyst forecasts around 23. the bank pledged to raise its dividend next year as growth in the market is due to boost its capital. shares have been dipping around 3% during the session. that s exactly where we are at the moment. thanks for joining us. what s your own reaction? well, these results followed a well worn path that we re seeing in the larger universal banks in particular. it s a big number, but it s still short of expectations. but it s obviated by many different large one-off charges and profits. some sales in there sold 47 different operations in the past couple of years. we were joking he should go run italy. he has done a remarkable job of slimming this company down. hsbc five years ago had sort of lost its way. you could almost imagine that it had a giant atlas and it was just trying to put as many pins into the atlas as possible at any cost just to build this global brand. now, since 1987 they ve been refocused on this strategy of this is what we do well, international trade finance and that s what we re going to do. a lot of banks have done that, focusing on what they can make money at. are we going to get through the exceptioners? whether it s ppi, other scandals, continuous trading in regulation, are he we going to get through the exceptional costs? it s an interesting overlap. on the run hand, we re seeing the results of the new strategy since 2011. that s proved to be very good. they re ahead of their annual cost reduction. they ve done that. that was the old strategy or the old problems or concerns of the market. now the new concerns of the market is how big is ppi going to be? how long is it going to continue? what are the kind of scandals that are going to come out? the more regulation, the more attention you have on banks and how they operate, the more problems we might potentially uncover. and the ceo was just coming out and saying the bank was loss making in both britain and the united states? yes. well, the united states was an epic episode for hsbc. i believe that the first profit warning in 2007 came from the united states and they distinguished themselves as not being subprime lenders, although they premuch coined that phrase. they ve identified some portfolios that he would like to sell when conditions improve the accelerate that runoff. they re really sort of refocusing. they point out that over half of the revenue drivers in these results come from the growing emerging markets or the growing markets on record. and tell us about what happens with the legacy stuff at home. will they ever be able to achieve its double digit return on capital here? well, a lot of people are stuck on this mind-set that after this crisis is over, how many we re going to return to the old levels of profitabilities that we saw on banks. by the fact that regulations demand so much more equity, not capital, but equity capital, that unless you dramatically krez your returns, obviously your roi will be completely diminished and in a completely new range. what you think is the most they can achieve at this point? hsbc is doing fairly well. the revenues are up in all the main businesses including markets. which is always a bit of a question mark for hsbc. yes, we know asia is a great driver of the business. yes, we know they re sort of moving to develop their core skills, which is joining us business across the world, providing international trade finance. but, of course, it s not going to turn its back on the bread and butter in the uk and in europe. ollie, more to come with you after the break. first, head over to our website and read why one analyst says stewart gull ver s results aren t working. comments on the bonus plan salary caps. we ll get into that, as well, in just a second. president obama has reached out to congress seek ago resolution to across the board government spending cuts that went into effect over the weekend. republican leaders are adding little hope to an end to the sequester. the president spoke with a select group of lawmaker toes try to find a bipartisan compromise. house speaker john boehner, he met with president obama on friday. says that spending cuts will stay and republicans won t raise taxes. this is not the smartest way to cut money. the smarter way would be to move a bill that deals with the long-term spending problem. you can t continue to spend money that you don t have. we re only going to get the kind of agreement that gets rid of the harmful sequester, that takes away from the credit shutdown and defaults if both sides are willing to compromise. congress bases a march 27th deadline to continue funding the u.s. government or face a potential shutdown. yes, another one, a different one. both boehner and senate majority leader mitch mcconnell says it won t happen. the national business of economics is weighing in on the sequester saying a plan is needed to cut the deficit but spending cuts aren t the way to do it. we ll have plenty more to walk you through what s happening with the sequester, and the continuing resolution at 10:30 cet or about 5:30 for the early birds there eastern time. ahead of that, here is a reminder of what s on the agenda stateside. investors are gearing up for the friday jobs report. janet yellen will be speaking at 8:00 a.m. eastern followed by fed governor jerome powing at 1:15 p.m. the jobs report friday is going to be the main thing people are watching for. lots of central banks meeting this week, as well. u.s. budget cuts may provide uncertainty. one analyst says the stock market will ride it out. head to cnbc.com so often out who and what is the cause of new money. despite some potential protections from the upcoming jobs report, there is worry that u.s. crude futures could drop below $90 a barrel if those fundamentals continue to change inspect. in your corporate news, meanwhile, north asia s ceo tom smith is explaining how the company is overcoming the challenges of the shipping industry. and they are legion at this point. ross. yeah. so what do fat cats and morons have in common? that s a question for you. we ll tell you if you don t know when we come back. welcome back to worldwide exchange. hsbc disappoints ininvestors with its full year earnings. shares are down. beijing wraps up efforts to call the chinese property market. and uk leaders speaking out against eu bonus plans. yes, swiss voters have overwhelmingly backed a plan giving shareholders sweeping authority over executive pay as well as giving investors power overpayout. but the plan pays golden handshakes and separation agreements. it involves greater exposure to loans and retirement packages. likely the rules will come into law at some point next year. carolin roth is in zurich with more. carolin, how much of a setback potentially is this for the big banking industry there in switzerland? well, it remains to be seen. we don t know when that law will go into effect right thou. they were talking about 2014. it could be watered down, it could be delayed. we may be looking at an entry date of around 2014. apart from that, spoken to a number of experts this morning and they say no, it s not going to be hitting switzerland s competitiveness. the fundamentals are still in play. you re talking a low tax rate and is stage policy. it s too early to say what the effect will be, but what surprised people is just how clear the vote oak really was. 68% of the swit voters voting in favor of that proposal and keep in mind that these are going to be some of the strictest rules on executive pay in the world. and if they re not being adhered to, some of the managers responsible could be facing up to three years in prison. so i think in large part, this is also down to what we saw happening over at novartis. remember that scandal happening two or three weeks ago when the outgoing chairman was awarded a golden handshake worth $78 million. there was a lot on r of public backlash, a lot of public outcry over that. but it was later canceled. this is in part why we saw a decisive positive outcome for this proposal. carolin, thanks for that. over the weekend, british shareholders london mayor boris johnson described it as a moronic piece of legislative policy. the sunday times suggest both german and french finance ministers will reconsider or consider recommending that the bonus caps be watered down. we just heard from the hsbc ceo, as well. he said the bonus cap proposed doesn t put moving headquarters to hong kong back on the agenda. they re still assessing the impact of the new rules. that is one of the fears, ollie, is if you can t anybody in europe can t pay their guys, it s not even in europe. can t pay their guys in new york or hong kong or singapore, what american banks, local banks be paying their guys? how much of a disadvantage does that put them at? i think actually the question is how will it be implemented and how far ranging will it be? this sort of mirrors what we ve seen the ongoing debate since i think september 2011 which is the discussion of the financial transaction tax across europe. and what you see there is that all transactions, both parties to the transaction will have to pay a small fee to the government that they represent within the e you. but it doesn t matter where that is traded. you could be a u.s. bank trading in french shares and you would have to pay the tax, for example. so bringing this back to the discussion of bonuses, which i can t believe i m talking about with you on air, but, you know, it s still very early, you d have to see exactly how it would be carved out. you re talking about something that apply toes banks with shareholders, what about banks that don t have shareholders. you work in the city, you have friend in the city. are people worried about this or are they saying there s no way? well, again, this is one of many pieces of legislation or regulation that s coming in to change the face of banking, which a lot of people can t really get their heads around. the knee jerk reaction to this sort of legislation is it will never happen. it can t happen. it will kill the industry, etcetera, etcetera. take a step back and think, why are they doing this? i haven t read anything to do with the eu in the past couple of years that hasn t had to do with remuneration in general. look at what we ve been talking about in general on ppi or the interest rate hedging products in the uk banks. how is that linked to ferrari scale banking bonuses? that is for our next time. by 20 to us pounds, you know, and having on performance and selling products, you could argue that that drives them to more oriented volume activity. as i say, we need to pick up on this. ollie bank, senior bank analyst at rabo bank. china property stocks have a domino effect on asian markets today. what can we expect during the national people s congress as it kicks off this week? 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[ male announcer ] get the spark business card from capital one and earn unlimited rewards. choose 2% cash back or double miles on every purchase every day. told you i d get half. what s in your wallet? aw this is tragic man, investors just like you could lose tens of thousands of dollars on their 401(k) to hidden fees. thankfully e-trade has low cost investments and no hidden fees. but, you know, if you re still bent on blowing this fat stack of cash, there s a couple of ways you could do it. or just go to e-trade and save it. boom. major story markets today. china s property stocks plunged to their lowest is levels since 2008. shanghai composite down about 3.6% today. the government is stepping up its three-year campaign to cool the property market. deidre has more from singapore. today was the eve of the national people s congress. that is the biggest, most important political event in the country all year. this is the damage. policymakers were probably hoping for a little bit of stability. they got this volatility. thou, the shanghai composite was down more than 4% at one point adding losses of nearly 3.7%. the shenzhen composite down at 3.5%. beijing has been on a campaign to cool this sector for the last three years, but we have seen a revival over the last six months or so. we ve seen increasing prices as well as sales. so there has been rhetoric from the government saying they would clamp down on this sector. the recent news, higher down payments, higher mortgage rates, that got investors spooked. it affected shares in hong kong and affected sentiment all across the region as far as australia and certainly in europe, as well. it will play into your trading day over there. now, all this, as i said, on the eve of the npc where property is certainly to be in focus as well as pollution, corruption, economic reforms. the new set of leaders coming in not exactly known for their political reform agenda. but they are known for their economic reform being a little bit more aggressive on that side. so we are going to be looking ahead and, of course, kelly and ross, as you saw, it had a big effect on the stock market here. so investers are certainly going to be looking. and you know what? honestly, i wouldn t be surprised if property shares saw a big rebound yesterday because that s the nature of this market, guys. it is momentum driven. you can see limit down one day and limited up the next day. back over to you. now, in other asian news, former nba basketball star dennis rodman has been speaking out about his visit with kim jong un. he was asked about pyongyang s threat to destroy america and its human rights record. while rodman said he couldn t condone it, kim is a human being. meanwhile, rodman had his own message from the north korean leader for president obama. it is a different view. he asked me to give obama something to say and do one thing. he want obama to do one thing, call him. so are athletes better diplomates than politicians? they might be in d.c. at the moment. we want you to join this conversation here. it s not a very high bar, is it? no. that s the point, isn t it? it s not a high bar. everybody s approval ratings are all down. public approval ratings and bilateral discussions with other are two very different things. i feel like the presence of celebriti celebrities, whether or not dennis rodman realizes what they re doing, it cannot be seen as anything other than interference. mild irritation. do they think it s worse than that? i don t know. but i m sure there s the potential for these kind of trip toes cause greater problems. ve working for langley? you never know. still to come on the show, the see zester standout continues as the white house and republicans stake out their positions. both sides are convinced they ll be able to avoid the government shtdown at the end of the month. [ male announcer ] how could a luminous protein in jellyfish, impact life expectancy in the u.s., real estate in hong kong, and the optics industry in germany? at t. rowe price, we understand the connections of a complex, global economy. it s just one reason over 75% of our mutual funds beat their 10-year lipper average. t. rowe price. invest with confidence. request a prospectus or summary prospectus with investment information, risks, fees and expenses to read and consider carefully before investing. welcome back to worldwide exchange. here are your headlines from around the world. battle line res drawn in washington. for now, white house and republicans on capitol hill aren t giving any ground. hsbc stocks are lower. the banking giant is above annual dividend. shares of real estate developers in china leading the tumble. and executive pay in focus in europe. swiss voters vote overwhelmingly to back plan toes give shareholders greater say against a planned eu wide bonus cap for bankers. you re watching worldwide exchange, bringing you business news from around the globe. lots of speculation as to whether this will be the woke the dow jones industrial average can take out its nominal 2007 highs. today suggests it s going to be an uphill climb. we are seeing the start to the week lower. looking to shed about 35 points or so for the open. we have come off the lower levels this morning just a little bit. nasdaq s&p 500 also after hitting multi year highs are looking for a catalyst now just for further gains. the cnbc ftse global 300 overnight shows you gave up about 0.2%. we were down, as i said, a little weaker the last time we checked in, about 30 minutes ago. the nikkei helping to bolster sentiment and here in europe, markets have been digesting news flow, negative news on the uk in terms of construction and lending data. nevertheless, markets are trying to stay afloat here. we can take a look at what s happening across the major bourses. the ftse 100 is down about 0.4%. the xetra dax roughly the same thing. the cac 40 is weaker. the ibex 35 is adding about 0.3% approximated we re seeing a rally in its debt levels. how should you play what s going on this week? hue are our guest views on the top trades. we ll be watching. you know, that 1.50 has provided support, but how long can that last? if we see easing on thursday, we can be in the high 40s pretty quickly. property is a very frustrating market whereby easing of monetary policy, ininvestor cash sitting on the sidelines underpins equity markets. but are we going to have the repeat of january when global equity markets are going to be up 5%? probably not. it s going to be one of these stops. it goes back into emerging market, mainly into asia, japan and back into america. took a bit of profit on the mostly defensive sectors and our biggest exposure at this stage is in consumer discretionaries. now, prs president obama has reached out to congress seeking a resolution to the across the board government spending cuts that went into effect over the weekend. but republicans leaders are adding little hope to an economic end. the president spoke with a select group of lawmakers to try to find a bipartisan compromise. house speaker john boehner who met with president obama says the spend cuts will stay and republicans won t raise taxes. this is not the smartest way to cut money. the smarter way would be to actually move a bill that deals with their long-term spending problem. you can t continue to spend money that you don t have. we re only going to get the kind of agreement that gets rid of the harmful sequester, that takes away from the private shutdown and defaults and all the things holding back economic growth and job creation in our country if both sides are willing to compromise. joining us now from washington is jonathan allen, senior washington correspondent at politico. jonathan, good morning. thanks very much for your time. we wake up here on monday morning. are the lights on there in washington? the lights are on here in washington. this isn t an issue of the federal government, though. i think you can see behind me it s still dark across most of the city here, 5:30 in the morning. most people get up, they will go to work, they will have jobs. certainly there is some projection of furloughs in some of the government agencies. but this is actually not as bad as a government shutdown, which you often hear talk of is and is often on the table. a federal shutdown would be a lot worse. and jonathan, that s what we re now turning our attention to. today, futures are pointed down. it has something to do with news out of asia and is europe. but there s the sense, too, that just as it looks like the u.s. is going to bolster its recovery, in fact it s weakness at home that is looking at the point. are remembers feeling as though perhaps their bargaining power has improved given that people are shrugging about the see kweter? i think there s a consensus here in washington that the government won t shut down. march 27th is the date. you have about three weeks left to continue government funding through the end of the fiscal year. i think there s a belief on all sides that s going to happen. basically, all sides have been bucking for some sort of meltdown for a couple of years now, and the safest way to do it walls oversee quest ragz. they don t really want to shut down the government or reach the debt ceiling. there will be a few adjustments made to the current course of spending which is a continuing resolution of previously levels and i think what will happen is you ll see more spending for the defense department s operations and maybe some of the domestic agencies will be able to shift the cuts around a little bit. but i expect that by march 27th, you ll actually see an extension of government spending through the end of september. where is this leaving is anybody gaping from this in terms of support, jonathan? or is everybody being dragged down? to some extent in artisan warfare on the united states, it s a zero sum gain. one side loses a little bit, the other side gains. frankly, i think the whole city has egg on its face right now and the dysfunction is somewhat deleterious for the country itself, but also for america standsing in the world and certainly for markets that want to believe that people can get things done, that they can resolve their differences. jonathan, we mentioned off the top about long-term deficit reform, long-term deficit reduction, something to cap ratios at levels that aren t significantly higher than what we re seeing now. are we actually getting that? where is simpson bowles in all of this and bill passing issues, how much really has fundamentally changed other than some near term hits to growth? i suspect simpleson & bowles are somewhat near cameras right now. the dynamics of this haven t changed at all. the white house believes there should be some mix of tax increases and maybe spending cuts to try to get rid of the across the board cuts. the republicans don t believe in increasing taxes to do that. they just want spending cuts. and the truth of the matter is, whether it s done one way or the other way, ultimately, you re trying to achieve the same amount of deficit reduction. i think it s important to remember with sequestration, that that really just sets the levels of spending. and so when they talk about some of these other things, the continuing resolution, appropriations for the year, that s really the question or the details within those spending cuts. so it really is, as you sgd, an effort to kind of cap the spending as a function of well, actually, in real dollars, but then also as a function of gdp. i just wonder what john boehner, too, is trying to accomplish here in terms of his legacy as speaker. how does he want what does he want the headlines to be? what does he want ultimately at the end of the day to have won from this entire process? he wants the headline to be that john boehner was the adult in the room and finally got washington to stop spending well beyond its means. now, the truth is, there s still a huge gap, even with this sequestration between wa washington spends and what it takes in in revenue. but i think he wants to be able to say, look, i turned that ship around. spending certainly deficits and debt had been announcing for years and years and i think his view is he d like to be known as the person who reigned all that in. all right. we will see if history will be so kind. jonathan allen, senior washington correspondent at politico. still to come, anheuser-busch, michelob and other brewers, are they what they re cracked up to be? i m serious, we compare our direct rates side by side to find you a great deal, even if it s not with us. [ ding ] oh, that s helpful! well, our company does that, too. actually, we invented that. it s like a sauna in here. helping you save, even if it s not with us now, that s progressive! call or click today. no mas pantalones! welcome back to the program. hsbc s pretax profits fell. the bank has pledged to raise its dividend next year, citing growth in its core asian markets saying its predicted to boost capital. ross, it still doesn t account for some of the weakness it s seeing in its traditional markets at home. this is a company, of course, that s been hit by record fines for what s happening on money laundering sites. the stock at the moment, as you can see, down nearly 3%. down 2.6% at the moment, down 2.8% on the week as well. and as far as the sort of six-month time frame is worth, just worth looking at, it s up 28% in the last six weeks wsh as well. 21 billion profit underperforming is what ininvestors are saying. i think analysts will probably take the view that, look, it can absorb losses better not losses, but absorb hits better than any other bankers out there because of where it is positioned globally, as well. if you need more on those hsbc numbers, find out why cost cutting measures aren t working and the results call strategies into question. it s all on cnbc.com as a varied opinion around it. kelly. that the. and hsbc dis appoiappoints inve with its full year earnings selling shares lower. and the sequester kicks in, but the white house and lawmakers making no headway on a deal despite ongoing meetings. and president obama is rallying out his second term cabinet. it s expected to announce sylvia matthews-burwell to be the next white house budget director. she s currently head of the walmart foundation. she s a veteran of the clinton white house, having served as omb director and dprut deputy white house chief of staff. now, in corporate news, the nasdaq is reportedly executing u.s. stock trades at a loss. the financial times has been using the strategy since last month, betting the move about boost its overall market traction. both nasdaq and the new york stock exchange have been losing market shared competing exchanges, alternative trading platforms and the industrywide downturn in trading. it s interesting the amazon strategies that you might hope to pick up on volume what you might lose on individual possibility. absolutely. and, you know, it just shows you how badly they were hit by their own exactly. they have the industry generally moving against them, volumes goggles where regionally and in terms of products and some of the concern on the facebook ip last year. > . pratt & whitney uncovered fraudulent engine testing scheme. it could affect thousands of engine parts used on business jets and turbo part planes. the parts in question don t pose any safety hazards, but the faa has opened its own investigation. stocks pretty flat. an heightser bush is fighting back. the world s largest brewery has taken out full page ads defending itself against claims it s watering down its beer. consumers have filed a class action lawsuit alleging the company is mislabelling budweiser, bud light, michelob and other brands. anheuser busch doe naets water to the american red cross and other relief organizations. i just have to wonder about this strategy. why if you re trying to fight this image would you reinforce the image about taking out a national campaign about it and drawing attention to the issue? but i don t run their marketing strategy, so well, they re meeting it straight on. straight ahead, the dow sets its sights on an all-time high? we ll head to the cme to preview the trading week ahead. e your financial advisor should focus on your long-term goals, not their short-term agenda. [ male announcer ] join the nearly 7 million investors who think like you do. face time and think time make a difference. at edward jones, it s how we make sense of investing. a talking car. but i ll tell you what impresses me. a talking train. this ge locomotive can tell you exactly where it is, what it s carrying, while using less fuel. delivering whatever the world needs, when it needs it. after all, what s the point of talking if you don t have something important to say? ahead of the u.s. open, european stocks a little mixed. we see spanish yields continuing to fall in the spreads between italy and others narrow. italy down 0.5%. the german market cac 40 down about 5 points, just about. fed chairman ben bernanke is defending the central bank s low interest rates policies. he says the fed s policy are mirroring what others are doing. inflation is low and stable and given expectations of weak growth, expected real short rates are also low. premature rate increases would carry a high risk of short circuiting the recovery, possibly leading, ironically enough, to an even longer period of low long-term rates. bernanke says the interest rates struggle gradually over the next several years, although i wouldn t necessarily take fed forecasts to the bank as we were in recent years. and the economist forecast, really. even the markets, you can t trust anyone. no. warren buffett, you might be able to trust warren buffett. do you think? maybe. he s called 2012 a subpar year for profits. that s because berkshire s book value were up, both the s&p 500 at 16% growth. in his annual shareholders level, buffett sounded optimistic on the economy urging other investors to invest. he also says berkshire lant done searching for acquisitions. he says, we still have plenty of cash and are generating more as a good clip, so it s back to work. charlie and i have doned our safari outfites and resumed our search for elephants. he s been making this met for for a couple of years now. this analogy, i should say. they are searching for elephants and they just got a big one with heinz. they did. it s not the elephant in the room, though. elephants that will boost the bottom line. buffett will be on squawk box today from 6:00 to 9:00 taking your questions. it s a once in a quarter once in a year he s on a bit. anyway, not that much. e-mail them to askwarren@cnbc.com or tweet them with #askwarren. how many times would you actually have an e-mail that s responded to? there you go. that s very view. here is a look at what else is on the agenda today. no major economic investors are gearing are you suggesting he s a first up on cnbc? investors are gearing up for friday s jobs report. janet yellen speaks in washington at 8:00 a.m. eastern and she ll be followed this afternoon by fete governor jerome powell. u.s. futures are down about 40 points. are we going to climb to 141164? ben lichtenstein from tradersaudio.com joins us now. is this going to be the week, ben? quite possibly. if you go for what behavior the market has been exhibiting over the last couple of weeks, certainly, it s been resilient. as we saw last week, a couple tests of lower extremes, key area of support. most recently was friday. the market tested that psychological level on the s&ps, cut a nice bid, basically traded throughout the morning session higher and is side weighs throughout the day and closed them out strong. we ve been unable to get up above major levels of resistance. again, unable to get below these major levels of support. recently over the last week or so, while we ve been seeing increased ranges, we haven t really gone anywhere for the most part. ben, what would you ask warren? oh, good question. i wasn t really prepared for that. i would have sk to ask him how much longer he thinks this low interest rate environment will continue. even amid the activity or the speech we saw from bernanke or the testimony we saw, there was very little talk about continued quantitative easing. so what we re starting to see is investors and traders are starting to feel like we re going to see the next move in the interest rate arena or spectrum, if you will, will be to the upside. that was something that you just mentioned bernanke talking about again on friday, is that in the longer term we are going to see the slow continued increase rate hike but, again, it s going to be slow and the dollar really picked up on that, in my opinion. the dollar had a nice spike, up above 82 even last week. we saw the low currency come back off the 1.30 level. again, i d like to know and i think a lot of traders out there would like to know when we re going to start to see that speculative type trade come back into the market, resolving and associated with interest rate increase or cut, but, again, for the most part, there hasn t been that component associated with the trade over the last years. i think. the dollar, not a bad week last week. do you think it can still build from here? i do. i do, ross. i think with the concerns of the euro is currency, there s been talk of easing there. and i think the dollar right now is seeing continued strength. notable is amid the dollar strength we re seeing, again, still holding up the levels in the stock. we re so used to seeing that dollar rally stock sell-off, there was a bit of that component in the market last week. but for the most part, the market continued to make higher highs and is higher lows, and so did the dollar. we re seeing a lot of strength in the currencies. all the traders talking about gold and the weakness there. but as long as we re about 1500, we re still in bullish type activity. ben lichtenstein, president of tradersaudio.com. thank you. ben, thanks very much. the question i guess becomes we re seen more people speculate about this, can markets move beyond a knee jerk reaction to europe to sort of comments out of the fed, etcetera, to something more fundamentally sustainable? meaningful. yes. earnings driven, etcetera. it s more imminent this week. the long-term rate, short markets. it will be interesting to see what buffett has to say about all of that. mr. buffett on squawk box. it s all starting in just a few moments. get your e-mails in. becky, andrew, joe, they re all there. we hope you have a good day. and join us back here tomorrow on worldwide exchange. have a good one.
it can help us achieve our goals and satisfy our people. jalili met with representatives of the five permanent members of the security council and germany. they want scientists to stop enriching uranium to 20% purity. beyond that point it is relatively easy to turn it into weapons-grade material. jalili is open to talking about the purity question but he s against shutting down the controversial enrichment facility known as fordo. translator: it is impossible for us to accept the suspension of uranium enrichment. all the iranian people are united in support of nuclear development. we will continue the development because it is our right. the delegates agreed to meet again in almaty in april. u.s. secretary of state john kerry says the latest talks were useful. kerry said he hoped iranian leaders will respond positively. we look to iran to carefully review an incredible and confidence building steps and put it on the table. kerry said u.s. president barack obama made clear his determination to implement his policy that iran will not have a nuclear weapon. pope benedict xvi says he will have unconditional reverence and obedience for his successor. he is just hours away from officially retiring as the head of the catholic church after spending nearly eight years in the post. the pope greeted cardinals on his final day. he told them their advice had been important and he said he was happy to have spent time with them. vatican officials say the cardinals will meet in early march to set the date for a conclave to elect a new pope. benedict xvi is resigning because of old age and poor health. no pope has done that since 1415. he is scheduled to fly by helicopter to the papal retreat in a suburb of rome. his resignation goes into effect at 8:00 p.m. local time. weather authorities are urging residents of beijing and surrounding areas to avoid any outdoor activities. people have been struggling with polluted air for months now. cars and factories have spewed out tiny particles. known as pm2.5. weather officials warn levels of the pollutants are 10 to 20 times above world health organization guidelines. that s left people in beijing and neighboring hebei province in a fog. translator: it must be very hazardous for my skin and lungs. i bought a lot of masks. airlines have canceled many domestic flights at airports in hebei province because pilots can t see through the haze. south korean defense ministry officials have warned that north korea is likely to conduct a large-scale national military drill early in march. a defense ministry spokesperson told reporters pyongyang ramped up its training to an unusual level. the drills included artillery, air attack, special warfare and other exercises. he said the north tends to provoke the south whenever south korean politics change. if they go ahead, the north s drills will coincide with joint south korean/u.s. exercises. the two nations are scheduled to hold their regular joint drills from the beginning of march through the end of april to enhance the mobility of their air, ground and naval forces. north korean officials have strongly condemned the plan saying if the exercises go ahead, the two countries forces will experience miserable destruction. the president and ceo of boeing s commercial airplane division has visited japan s transport ministry with an apology and an explanation. he outlined a plan that may get the troubled 787 dreamliner back in the air. the president of boeing commercial airlines met the transport minister. he apologized for the problems the dream liners have caused two of japan s leading airlines. his visit comes about a month after a series of battery problems forced the grounding of 787s worldwide. ministery officials said conner outlined a proposal for improving battery safety that the company submitted to the u.s. federal aviation administration last week. the plan includes a design change aimed at preventing lithium ion battery cells from overheating and catching fire. the ministry s plans to examine the proposal before discussing the matter with the u.s. authority. conner told reporters that his company engineers have considered every possible scenario involving battery problems and then worked out measures to deal effectively with the cases. what we did today was discuss the solution that we are looking at that could be a final solution to get the airplanes back in the air and flying again. in january, a 787 operated by all nippon airways made an emergency landing in japan after a battery started emitting smoke in the cockpit. another dreamliner operated by japan airlines had a battery catch fire at an airport in boston. japan s prime minister says he will try to revive the economy and increase incomes by expanding farm and food exports. shinzo abe laid out his plans on thursday in a policy speech before the lower house. translator: the more affluent people around the world become, the more popular japanese food is. so the government should adopt an aggressive policy to expand farm and food exports. abe argued japan should be involved in setting the rules for international trade and investment. he said it s the government s responsibility to decide whether to join the negotiation for the transpacific partnership free trade agreement. translator: japan and the united states restored their close bilateral alliance when i met with president barack obama last week. abe said the u.s. military realignment in japan will be implemented in line with the 2006 agreement. he noted his government will do what it can to reduce the burden on okinawa which hosts the majority of american bases. abe voiced his willingness to improve ties with china and south korea but he urged chinese leaders to use restraint over a territorial dispute involving islands japan controls in the east china sea. he said the use of force to change the current situation will accomplish nothing. the prime minister said he hopes to strengthen ties with russia by visiting the country later this year. he said the relationship has great potential. abe said it s unacceptable that north korean authorities went ahead with their recent nuclear test. he said he will work with other countries to deal harshly with them. the prime minister spent his first two months in office focused on jump starting the economy. he s betting his pick for the next bank of japan governor will push his agenda forward. haruhiko kuroda has been nominated as the nominee. he s president of the asian development bank. kuroda was once a senior finance ministry official. the 68-year-old has head of the adb since 2005. it approved by the diet, he will take over the boj post. the prime minister put forward the names of the two deputy governors. they are gakushuin university professor kikuo iwata and boj executive director hiroshi nakaso. it needs support from the opposition parties as the ruling coalition does not have the majority in the upper house. many members of the major opposition democratic party are of japan are set to support abe s nominees. they say there isn t much doubt about kuroda s ability, especially his negotiating and management skills. asian development bank spokesperson announced kuroda is resigning from the top post of the manila-based institution on march 118th. u.s. tech giant apple has won a patent lawsuit in tokyo over south korea s samsung electronics. the ruling is the second in a series of court cases in japan involving smartphones and tablet computers. the tokyo district court on thursday ruled that apple does not infringe on samsung s patents for mobile data transfer technologies. presiding judge ichiro ataka upheld claims by apple s japanese operations. the ruling also rejected samsung s request for a ban on sales of some apple devices. the tokyo court upheld samsung s claims in a decision over a different technology last summer. court decisions on the mobile data transmission technologies have been split worldwide. last august apple s claims were upheld in the united states but samsung won in a south korean ruling. robotic engineers in japan are putting the final touches on an invention that s expected to take a giant leap forward for robot kind. they re getting ready to send the first talking robot into space. the plan is it will keep astronauts company during their long stays and give researchers ideas for how to help people who struggle with loneliness on earth. nhk world has the story. reporter: they can speak, they can play soccer, robots can do much more these days than ever before. this business in tokyo s neighborhood has some of the latest robot technology offered. translator: we have a variety of robots, cute ones with soothing functions and those controlled by radio. nowadays, robots are a lot closer to us in our daily lives. reporter: you won t find them in stores, though. it is called kirobo, a combination of the japanese word kibo meaning hope and robot. a group of academics and engineers have been developing it to send it to the international space station this summer. kirobo won t just visit the station, its mission is to help astronauts. many who stay in space for a long time suffer from loneliness. the people who made kirobo hope it will provide some company. a 30-centimeter tall robot weighs 1 kilogram. it s undergoing feasibility tests in the zero gravity state created inside an aircraft. before long researchers at a leading maker will equip it with the latest voice recognition technology. then it will be able to communicate in japanese. it will make the trip to the space station this summer. japanese astronaut koichi okawa will head there at the end of the year for a six-month stay. he ll do something no one s ever done in space before, speak with the robot. kirobo creators say he hopes the pair will become buddies. he and his colleagues are putting the finishing tos on the robot. translator: once it s in space, we won t be able to fix it. so we must make sure it s in perfect condition. i hope it reaches the station all right and starts working without any problems. reporter: project leaders are interested in seeing how effective kirobo is at keeping people company in space. they envision robots one day helping to alleviate loneliness on earth among the elderly and other members of society. a group of japanese researchers has applied for a government approval to conduct the world s first clinical trials of ips cells. the stem cells can develop into any type of body tissue. the scientists want to use the cells to help people with damaged retinas see more clearly. a research group led by the kobe institute plans to regenerate ips cells from the skin cells of patients. last year an unmanned spacecraft developed by a u.s. venture firm delivered supplies to the space station. mars is also in the sights of the u.s. government. president obama has announced a plan for a manned mission to mars by the 2030s. attention is now focused on how the latest projects will be financed and how the technical challenges will be overcome. a group of japanese researchers has applied for a government approval to conduct the world s first clinical trials of ips cells. the stem cells can develop into any type of body tissue. the scientists want to use the cells to help people with damaged retinas see more clearly. a research group led by the kobe institute plans to regenerate ips cells from the skin cells of patients. they will then cultivate the ips cells into retinal tissue and transplant it into six patients. translator: our goal is to develop new treatments for patients. the application in october is the first step towards the goal. it is significant that we are making progress in our medical techniques. reporter: kyoto professors developed human ips cells in 2007. he says he s gratified that it took the researchers only five years to reach this point. he says he respects their efforts to realize unprecedented medical treatments. japanese police say 2012 saw more than 1,000 cyber attacks aimed at stealing corporate data through the sending of virus-carrying e-mails. the national police agency on thursday released a report based on information chaired by some 4,900 companies using advanced information technology. the report says attackers have become more sophisticated in recent years. some new methods include making contact with the company posing as a job seeker and then sending a virus-infected resume. the report also notes that a growing number of attackers send viruses as compressed files protected bypass words to avoid detection by anti-virus software. police say the viruses are able to send stored data from the infected computers to the outside network through a third party computer. 26% of the stolen data was sent to the united states. 21% to china and 20% to japan. police believe the attacks are in violation of the country s illegal access law. people who operate the fukushima daiichi plant have apologized for failing to report their radiation exposure of their employees. the revelation raises questions over the safety of 20,000 people who have worked or are presently employed at the crippled plant. utilities in japan are legally obliged to measure individual radiation dosages of their workers and keep them under certain limits. power companies submit the data every year to a national database, but representatives of tokyo electric power company say they have filed no radiation figures for people who have worked at fukushima daiichi since the nuclear meltdown of march, 2011. tepco officials say it took time to transfer the data into electronic form because for some time after the accident workers recorded their radiation doses on paper. the officials say they will submit the data by the end of next month. australian federal police seized a ton of illegal stimulants in the largest ever methamphetamine bust. the drugs were hidden in a shipment from southeastern china. police say the drugs weigh 585 kilograms and have a street value of around $440 million u.s. dollars. they entered australia from the southern chinese city of shenzhen. police arrested three people, a singaporean, a man from hong kong and an australian. they came to collect the shipment from a storage facility in western sydney. a police spokesperson says the drug syndicate based in southeastern china may have been involved in the case. investigators are talking with authorities in china and say further arrests may follow in australia and abroad. they re one of the world s most persecuted minorities. rohingya muslims from western myanmar have been denied citizenship by the government and face sectarian violence that broke out last year. increasing numbers of them choose to flee by sea in rickety boats, but those who survive the dangerous voyage face another danger, ruthless human smugglers from southern thailand. reporter: the tide of rohingya refugees going to cross the sea is coming faster. they have reached here in just six months. these rohingyas were found at an isolated plantation in southern thailand. human smugglers con fined scores them for six weeks. translator: they hit us with wood, punched and kicked us. we were divided into small groups by the smugglers. we were afraid about what would happen to us. reporter: rohingyas fleeing myanmar initially head for malaysia, hoping to find protection among its muslim majority. many drown at sea and others face detention by thai authorities. but there s another threat. human smugglers catch them what want to go to malaysia and hide them in southern thailand. translator: after we were caught at sea, smugglers carried us away in sacks and put us in a truck. they threatened us. they tried to force us to pay $2,000. but because we have no money, they beat us. reporter: we travelled to an island that s become one of the main smuggling groups to malaysia. it is just ten kilometers away. one night in january, some 50 rohingyas were kept. this is a cabin where they survived a dangerous sea journey. scores of people were hiding with no idea where to go or what the future would hold. reporter: they were confined without food or water. smugglers took what money they had and abandoned them. on the island we met the man who works inside the smuggling network. he says this shadowy illegal group has never been busier. translator: we know rohingyas can t live in myanmar anymore. if we promise to take them to malaysia, they ll quickly pay large smuggling fees. if we don t like them, we sometimes just throw them into the sea. reporter: the man gives details about the people operating the human smuggling network. translator: there are burmese and thais in the smuggling network. i m sure both military and police officers are also tied up in this. without them, smuggling would be impossible. reporter: allegations about the involvement of officers have made headlines in local media. authorities say it s untrue. translator: this kind of business can t be done by individuals acting alone. they do it as a network. but an investigation by the police has shown our people were not involved. reporter: rohingyas risk a dangerous sea voyage but they are faced with harsh reality, there is no safe place to go. translator: i left my family in myanmar and i don t know what has happened to them. i want to know why our life is so hard. why do we have to struggle like this just to live? i don t know why. reporter: u.n. refugee agency is urging the international community to protect the rohingyas, but with few countries willing or able to act, these unwanted people will continue to set out to sea, not knowing what fate awaits them. nhk world, southern thailand. it warmed up in tokyo almost feeling like spring. rachel. it was a beautiful day today and it certainly felt like spring was just around the corner, but i m afraid it is going to get colder before we can really say that spring has come. we have a low-pressure system at the moment dropping snow across northeastern china, about 15 centimeters or so, along the cold front that moves through south korea, it s going to be rain rather than snow. but in behind the system, that very frigid air is going to fall into place, so the same thing will happen to japan. friday into saturday we ll see rain moving through. but after the system passes, it is going to get very chilly again. there is widespread rain also impacting the shanghai region back in towards chongching along the river and some of it a little on the heavy side. shanghai will pick up some heavy rain and temperatures will be falling into the next couple of days. let s have a look at what is happening with seoul. on friday, already impacted by that cooler air. back up to just about average by sunday. meanwhile tokyo a rainy day, but 16 degrees on friday, falling back down to 9 by sunday. heading into the americas, high pressure is dominating much of the continent and we will, however, be seeing some rain up towards the northwest. now, rain rather than snow most of this precipitation, but as it pushes into the intermountain west, it will be melting that snowpack. when it does happen so rapidly, we can have the risk of avalanches and there are some warnings posted for that. out towards the northeast, you ll be seeing snow starting to taper off across the great lakes region, but it pushes into new england. you could see about 25 centimeters of fresh snow and it will be really blown about by some very strong winds, reducing visibility even down to around zero in some places. so definitely making for dangerous travel and it would be a good idea to check the status of your flights before heading to the airport. you will be noticing a warmup towards the west, and then a cooldown to the east as our jetstream snakes up towards the north there and then down into the south just like that. and here s the impact. 1 degree in denver on thursday and then by sunday up to 14 degrees. meanwhile jacksonville falls from 21 on thursday down to about 12 on sunday. so do watch for those rapid warmups and cooldowns. into europe, most of the continent is experiencing dry and pleasant weather, but up towards the north you ll be seeing some wet and windy weather across that western coast of norway. there s also a low impacting the northeast and this one is going to be really bringing some frigid air with it, dropping your temperatures quite significantly by friday and into saturday. down to the southwest, we are seeing some heavy snow impacting spain. it s the heaviest snow you ve seen actually all winter, just as we approach the end of the season. about 50 centimeters for eastern portions and maybe you can even add on to that by friday morning. from the afternoon hours we ll start to see that system passing in towards italy. now here are your temperatures. we have 10 degrees in madrid, 7 for paris as well as london with 1 in stockholm and 1 degree in moscow, but falling to about minus 6 on your saturday. that s a very rapid cooldown we were talking about towards the northeast. here now is your extended forecast. we re back in 30 minutes with more of the latest. i m gene otani in tokyo.