Host: Martin Soong

About CNBC's Squawk Box (Asia)

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Anchored by veterans Martin Soong and Karen Tso, the new Squawk Box continues to be the jumpstart on the business day for the corporate and financial communities. CNBC's signature show is better than ever, providing viewers with the edge to stay ahead: breaking news, connecting with newsmakers and chasing the hottest stories, as well as the ones that aren't hot... yet.

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Host : Let’s get to Todd Everts, President and CEO at Wall Street Global. He joins us live from our studio up in Hong Kong as our guest host for this hour. Todd, good morning. Great to see you. What do you make of what’s going on with Lehman? You know, they came out with earnings 3.9 billion loss, worst they’ve done in the quarter but more than re-structuring plan all these coming earlier pushed ahead because the KDB strategic take sales talks broke down. I mean this is great they come out with plan but in terms of the details, in terms of execution that’s what investors are waiting for.

Todd G. Everts: Yes, they’re certainly waiting for it and it’s probably a little too late. Unfortunately a lot of the talented at Lehman Brothers has probably looking to go elsewhere, the clients, their counterparties, they deal with are probably trying to find other relationships to make sure that they’re not caught in a sinking ship. Their flagship jewel Neuberger Berman probably will be sold -- it is a you know fantastic fund house and management firm but as some of the other guests have said without a clear definition of what the plan is, they’re basically saying we’re putting ourselves up for options but the clients, the investors, many other top talent are probably already heading for the door.

Host: Yes, that’s a scary thought you know even with the official word that guys like Citi … Etcetera, Goldman they’re still doing counterparty business that’s safe but on the other hand yes, you’re probably right. They’re probably looking for other business elsewhere. I got to ask you though even if they do match to execute on this plan let’s say sell Neuberger, pick up 4 billion from that, sell their UK real estate assets and also spin off their commercial real estate assets, at the end of the day could they be still looking -- could they still be net down on equity?

Todd G. Everts: It still could be, you know the problem that they have is taking on new equity would sell such a substantial stake. It’s very difficult for them to take the kind of equity they need to really clean up their balance sheet. And meanwhile you’ve got -- the unlike one of your other guest that was quoted earlier saying it won’t have that much effect. The fourth largest investment banking firm with over a hundred seventy five years of experience that has spent a tradition of sound money management since they acquired Neuberger Berman a few years ago and as a very well respected firm it’s very very difficult to see how they could ever emerge from this.

Host: Okay and the knock out effect you know a couple of minutes ago we were showing folks how financials are here in Asia are getting hurt. Does that surprise you at all?

Todd G. Everts: No it doesn’t. You know there’s a deleveraging effect most of the banks worldwide are cutting or drastically reducing the amount of leverage that they’re providing to their institutional investors. Institutional investors typically and most often need massive amounts of leverage to execute their strategies. Many of these institutional investors will find very small nuance to a specific market or to a specific security and they need a lot of leverage to execute that. The banks are pulling back, these institutional investors just can’t trade in a manner in which they want which has a follow-on effect. And it means less capital for many different emerging markets and it means emerging market institutional investors are also going to stay in their own market which is the market that they know so well.

Host: Okay Todd, hold that thought. Come back to talk more in just a bit. Todd Everts there from Wall Street Global live from our Hong Kong studios.

Host: Todd, you left off saying that you know emerging market investors are probably more comfortable keeping their money in their own backyard. What about big western money though, you know if you look at the realist mutual funds of the last , say 2 months or so, there’s been a lot of money cashing out and going back home.

Todd G. Everts: These mutual fund investors ,middle America just slightly high net-worth investors, many of them have their money tied up in a pension plan or there’s a vehicle in the US which is a 401K that they can self-direct and they can make their own choices but these are the same people that are finding it very hard to make their mortgage payment or they have a 2nd mortgage they have to make a mortgage payment on and they’re in the possibility or they’re in default. So they borrow from their pension plan to fulfill these obligations or they simply redeem these mutual funds. Many of these Americans you know unfortunately they can’t find a rock in a map, they don’t understand the Asian economy, they don’t understand the world economy, so because they don’t understand it they’d rather buy something in the US that they do understand or liquidate that so they could transfer those assets to pay that mortgage obligation.

Host: Interesting. You and I were talking offline a couple of minutes ago and you’re describing what exactly you do. You’re basically an honest broker, almost the sort of a dating service most of your clients are institutional clients. What are the certain trends out there in terms of flows that you can ascertain from the business that you do with these guys?

Todd G. Everts: We represent hedge fund managers, funds of funds, private equity, real estate investment trust and these managers’ time is best spent managing money whether that’s in New York, London, Switzerland, wherever they are. But they want to raise money from other market so we find a Brazilian institutional investor might understand that there’s an opportunity in Korea but they don’t know how to allocate so we bring those 2 parties together. But we are finding it this year it’s a little bit more difficult because institutional investors in their own market are judged by their either clients or their shareholders of their board in their own currency and their own local interest rate their last reticent to move money into other markets because if the other market or the other investment doesn’t perform well then there is possibly an exponential effect in their local market. So everyone in these transactions they might want to think of doing could be a career-ender so it’s much easier for them to stay plain vanilla and stay at home. But that’ll change overtime. The price of oil will definitely go back above a hundred, the dollar will continue to have a steady decline and money will follow emerging markets and opportunities.

Host: Interesting! Okay let’s talk a little bit more about those two trends, what’s happening with the oil..and also what’s happening with the dollar you think they’ll always going to go back sinking notwithstanding this recovery we’ve had and the oil’s going to go well back above a hundred…why?

Todd G. Everts: We’ll start with oil. First there’s this deleveraging effect. The speculators… and I don’t have any problem with speculation, I don’t have any problem with the speculators driving up the price of oil or taking their capital way and the price of oil going down, the fact is that these speculators are finding it harder to leverage because the banks have their own credit problems and they’re just not going to lend for the possibility of the failure of one of these speculators. So with less capital you see where there’s a hurricane coming you see where OPEC is saying we’re going to cut output and the price of oil still falls? Well that’s because the speculators don’t have access to the leverage which would drive it up. All we need is another major political event or a catastrophic event or terrorism event and we’ll see oil rise dramatically and the amount of consumption is going to continue to edge oil prices back up, commodity prices back up and the outflow of money from the US is going to continue to drive the US dollar down over the long term.