Transcripts For CNBC Worldwide Exchange 20150526

Near 70 jump in profit after turning around its customer image. The cfo tells cnbc digital is key to the strategy. Theres a new mobile website coming out in the autumn. That will help us get to know our customers a lot better which will help drive it. So were listening to the customers. Signed and sealed. Charter communications ended a 55 billion deal to buy Time Warner Cable. Sending altice lower in holland. A very good morning to you. Lets get straight to markets after a holiday for a lot of markets yesterday. Including the u. K. Germany and the u. S. We opened up this Tuesday Morning in the red. We open slightly in the green but you can see its just sold off over the last hour or so. Were down 0. 34 . Last week was a positive week for european equities. We just corrected as the weeks kicked off. Yesterday the markets were meaningfully down. Lets look as you can see pretty much the same. Ftse 100 down 0. 7. Germany down more than that and france down less than that and italy down 0. 2 . Italy was off sharply yesterday. Down a little bit less than that today. Lets look at the biggest individual movers. Altice in the red as it looks like the company missed out on the deal to buy Time Warner Cable. Its down 1. 4 . A source told cnbc that john malone backed the takeover of wtc by Charter Communications and thats been signed. Europes largest Budget Airline flying to the top of a stoxx 600 after a 66 increase in its profit. Its always Getting Better and behind the strong performance. Lets move on the euro dollar selling off quite sharply today. Down 0. 75 at 1089. A bit of debate internally as to what the cause of this is. Perhaps elevated greece fears or other Political Developments including spanish Election Results over the weekend or more than likely the hawkish tones we heard on friday. Given the markets were closed yesterday its seeing a more pronounced move today but below the 109 handle again. The dollar against the yen, 122. Aussie dollar at 0. 778 and 104 against the dollar. Weve seen the 10 year in germany start to bounce back again and start to rise and the yield to come down after the big correction we saw. Were now look at 0. 53. The yield in the u. S. 2. 97. When does that mean well see a rate rise in the u. S. . The u. K. 1. 88 this morning. A quick look at commodities, oil has been healthy since the middle of march. Its just pause for breath the rally which at the beginning of last week was helped by geopolitical concerns in the middle east. Those concerns less pronounced today. Wti 59. 5. Brent 65. 0. Lets get an update on markets in asia. Sri standing by for us as ever. Its a fairly robust session all in all despite the fact that we didnt get much in terms of lead from the external markets. Closed overnight on monday and many markets in europe were closed but the action and the large part of the gains are to be had in the north asian markets. Greater china with a strong day for the hang seng and shanghai comp sit. I wanted to talk about the hang seng. The Hong Kong Market was closed yesterday. Theres an element of playing catch up. We saw some further news hit the tape over the weekend and beijing allowing funds domicile in hong kong and china to be sold in markets since july 1st. Its going to expedite more cross border trade. Thats good news for hong kong and good news for the Hong Kong Exchange and experience. So that stock up by almost 5. 5 today. So hong kong very much reacting to this Mutual Fund Recognition scheme. Elsewhere australia having a solid day. It has been under a lot of pressure because of the oil prices bouncing as much as 15 today in australia. Thats on speculation that chinese investors could bulk up their stake and it does need to be recapitalized. This is coming as some relief for investors but still has to be substantiated. Back to you. Thank you. Greeces finance minister says the country is committed to reforms but not austerity. Athens will run a reasonably primary Budget Surplus but demands for further cuts would cripple its ability to carry these out. It comes after they warned over the weekend that greece will not be able to repay debts over the last month unless it reaches a deal to unlock aid. Lets look at how the yield curve is shaping up this morning. The two year 23 and the 12 year getting close to 12 once again. Joining me is david who is the chief european economist at jeffreys. Good morning. Good morning. And julia joins us on set. Lets kick off with you and another set of comments as is par for the course at the moment. This time writing in an italian paper. Is there any real change in tone in what he said. No but he makes a good point. Were happy to do reforms. Theyre not so willing to do pension and labor reforms but the point he is making is we know we have a physical gap for this year. They were expected a deficit of 3 if they cant reach that. Some of the commentary that we had when talking about a two part deal was suggesting they needed to do about 5 billion euros of spending cuts so even if we can reach an agreement there we still have some level of spending cuts in order to meet the budget this year. So you know its a complex set of negotiations. It is. David lets bring you in as well. A lot of focus on june 5th imf payments. Thats not the crucial ultimate date for you. No the crucial date has been the 20th of july when they have to pay it back to the ecb. If they dont pay that back with the ecb continue finding financing to greek banks. If they cut out greek banks they have to somehow nationalize the banks and they take all of that risk on their balance sheets. The other theory is the end of june when they should have signed off to get financing Going Forward. We simply dont know when the money is going to run out. Thats the issue. We dont know how much money they have left. We have a little bit of time left perhaps but is this risk nonetheless, priced into markets or is it being overlooked . Big move in the euro this morning. Is that related to greece . Part lit but yellens comments last week the idea that is the u. S. Will be tightening Interest Rates at some point may be the key drive for what were seeing. Greece is obviously an issue but considered a game changer for the euro zone. Most view greece as a very small part of a much larger piece and the ecb buying the bonds around the corner. I think one thing not confirmed is perhaps the greeks cannot make the payment on june 5th but actually do a balloon payment at the end of the month rather than fitting it down so that would give them a little leeway. Negotiations are continuing. Other negotiations taking place. David cameron hosted the Commission President at his country retreat. This ahead of a week long Charm Offensive to press the case for a rethink of britains membership with the eu. He is said to try and convince them for the need of renegotiation. Would have been an interesting dinner to be present at listening to what they were saying. Its the First Official meeting since the embarrassment of last year when he was elected. Cameron saying he thought it would be a big mistake. He thought, i think he was stabbed in the back by some members changing tune but they rolled out the red carpet there. Quite a lot ofeitish press about what they ate. Roast pig and it was also held in the war rooms and apparently he suggested to him, look this is where he wrote the speech well fight them on the beaches so again maybe a little tongue and cheek sending of the message there but the most important here is actually what was going on elsewhere and this is that the agreement to push for closer Political Union in particular and not do it with treaty change so if ever theres been a slam in the face it has been the message behind the scenes we can do negotiations at the side. It doesnt have to be in the treaties yet then perhaps this was it and the discussion will take place at the same time in june at the summit there so cameron likely to be up staged with closer union versus what u. K. Wants to negotiate. Weve seen a huge amount of resolve from greeces creditors not to give almost any leeway at all. Will this negotiation be different . Its an interesting one. Our European Partners know that ultimately the u. K. Leadership doesnt want to leave the eu. At the same time they need to have some concessions in order to push that vote through and, you know sort of ensure that we do stay within the eu. I how old also highlight that for france and germany it makes sense because they are part of the euro zone and one of the failings was it was a monetary union. So the u. K. s part of that. It makes rational sense for france and germany to come together and u. K. Not be part of that. He openly said to osborne lets see how we can work this and negotiate what the u. K. Wants. That suits the britts as well. Interesting what the germans say as well. Germany and the u. K. Want to have competitive eu economy. Germanys rate of growth is about 5 . It has to raise its game as well and part of the issue here is making them more competitive. I think as well the key thing of course as we all know is this is going to be with merkel and kicking off the discussions with him yesterday. In style. I do want to bring it back to the menu because pork belly was the main course. They finished on a lime dessert which leaves a bitter taste in the mouth. I understand on the sound track was baby please dont go. So im sure its a very enjoyable supper but the most awkward thing would have been on arrival is him having to say congratulations mr. Cameron im so pleased for your victory. Both would know thats a lie. I dont know, hes a bit of a character, isnt he . He was seen as a real political negotiator banging a few Heads Together and burning the midnight oil. He has a pretty impressive do you think they burned the midnight oil . No they probably ran out of conversation. David cameron is going around seeing all of his European Partners so he has a very busy week ahead of him. And as you said the commission playing less of a role in this than other eu countries. So hell save his work for other places. Thank you very much. Both stay with us for another light hearted discussion coming up because over the weekend, memorial day of course could be a holiday memorial day weekend a holiday that hollywood may like to forget. Its typically one of the best weekends of the year. But this take was only 100 million. Ticket prices were up 44 over that time. The top movie was tomorrowland which was a disappointing showing. Xmen days of futures past made 110 million over the same weekend. We want to hear from you, do you think hollywood has run out of steam and needs some fresh ideas . Get in touch at worldwide cnbc. Com and get in touch by twitter. Julia you went over the weekend. I did. I went on friday night and i watched mad max. I hadnt seen the original. Ive seen the originals but not this one. I was anxious. I had anxiety. Even the sound track behind it was like a con tantrumable. Fortunately i had a glass of wine or two to calm myself. I hadnt seen any of the originals or mad max. For our u. S. Viewers you probably dont know about it. Its a british mi 5 tv show they made into a movie. Im looking forward to specktor that comes out later this year. Do we think hollywood has run out of steam. I have been on planes all around asia. Ive watched multiple films that you remember some of. Catch them later. Thats the bigger problem. Not the movies themselves its just that were all much more content to watch them on a smaller screen these days. I think thats true but cinema is coming back. How was the weather over the weekend in the u. S. . In the u. S. . I dont know. Well we will have to find out. Let us know. Get in touch with us. Well talk about the latest movies and whether youre happy to watch them at home. Thank you very much. Still to come here on Worldwide Exchange twitter is eyeing flip board in a 1 billion deal but are they chasing the app or its work force . Well discuss that. Plus as apple promotes top talent in its design team we hear from one analyst that says a tech giant is at a strategic dead end. And betting on 3d, Procter Gamble is the latest firm to explore bio printing. All the details coming up on Worldwide Exchange. The white house is in damage controls over remarks made about carter over forces. He said iraqi troops lack the will to fight. Vice President Joe Biden ran the Prime Minister on monday to reaffirm the United Statess full support in the countrys efforts against isis. It comes as iraqs Prime Minister says ramadi could be back in the hands of Government Forces in days. Thousands of displaced people fled to baghdad to escape the violence. More than 40,000 iraqis have fled in recent days. Meanwhile, a video posted on the iraqi minister of defenses youtube page shows the countrys special forces receiving weapons from the u. S. Led coalition. Hadley joins me on the set with the latest. Its very interesting to see what the u. S. Response has been to the fall of the iraqi army in ramadi. Whats going to be more interesting is the conversation surrounding whether weapons are going to be enough. We talked about the Obama Doctrine quite a bit today and Going Forward in terms of what its going to look like. I was speaking to so many business guys over the weekend at the dead sea in jordan and they were telling me they are worried and worried about the relationship with the u. S. Going forward. I also had the chance to speak with the princes son. He was in jordan and making Big Investments in renewables and i asked him about the weapons. How worried are you . Take a listen . Im not sure weapons is the answer but even if america were to give these weapons and russia were to give these weapons to iraq. Iraq still has to use them as opposed to turn back and run around and go somewhere else. Isnt the worry then that they might actually fall into the hands of the revolutionary guard. Thats the issue for me. If youre going to take these weapons, use them. If you look at where youre going to do your next investment, when you look at your next project its not something you worry about, the destabilization. Youre saying its in pockets. Of course we are. Were in jordan and were next door neighbors to whats happen happening in syria and iraq. Im concerned about that. I do see stable middle east and stable areas in the middle east and me not wanting to invest in certain areas. With the Iranian Nuclear negotiations looking likely to come to a fruitful conclusion well see that economy opening up. What does that mean for saudi arabia. Im all for Peaceful Nuclear reactors. I want everyone to coexist. I want everyone to just live. Theres no reason for this fighting. Honestly who wants to fight . Who wants to wake up in the morning and say who am i going to kill tomorrow . Theres no reason for that. Am i for iran having Nuclear Reactors for peaceful reasons i am. Youre not worried about an arms race in the region in. Arms race. I am worried about a arms race for sure. Nuclear arms race . 100 . Who wants that . Id rather everyone just focus on Renewable Energies, clean Renewable Energies as opposed to nuclear but since we are going through a nuclear route im for iran having it but im also for saudi having it and uae having it in a peaceful way so that we can lessen the dependency on oil in my region specifically. So his son there talking about the worries over iran and iran Nuclear Deals and how thats going to be Going Forward. We even heard from the Prime Minister talking about the problems involved when you have not just the Iraqi Special forces but the malitias and tribes working together. Theyre backed by iran. I had the chance also to talk to the president and i was asking him whether or not the iran Nuclear Negotiations play into what were seeing happening on the ground in terms of isis. Take a listen. We would like to see an agreement reached peacefully on this portfolio. We believe if there were less tensions perhaps there would be less problems in this region. How does that impact your fight against the Islamic State. Translator probably we will not see any direct impact. But in general in the region it will be a positive change. Your exthank you for joining cnbc. So you hear him saying this doesnt directly impact us but we worry about it. Of course he does. Hes getting his weapons from iran as well. Obviously iran is backing the militias so you see this playing out as the wider war between them. Just want to bring it back to something we mentioned at the top which is what is going to be obama and kerrys legacy in the region. There was huge issues when he took power but from Different Reasons from why there remain big issues today. Its incredibly complex when you look at this in terms of what is the Obama Doctrine. Because what we thought it was which was to focus on domestic politics as opposed to Foreign Policy has evolved and the Obama Administration is realizing they cant get away from whats happening, particularly in the middle east. How thats going to play out is any guess. Hes coming to the end of his presidency. He sent out joe biden to make amends with the iraqi Prime Minister after Ashton Carter spoke out of turn. Maybe he did or maybe he didnt but they were sending out joe biden is a signal that they didnt agree with what he said. Weve seen that happen over and over again and thats unfortunately playing into the relationship with our allies. Great work there. Now, coming up next on Worldwide Exchange flying high on solid profits. What does this tell us about the health of the Budget Airline industry. Straight after the break from dublin. European stocks get back to business but the euro heading toward a one month low against the dollar. The rally in asia shows no signs of slowing down. Greek yields jump higher as the country continues to send out mixed messages on its upcoming debt repayments. The finance minister says athens will reform but will not adopt further austerity. The irish charm pays off for ryanair. They deliver a 70 jump in profit after turning around its customer image. The ceo says digital is key to its strategy. They have a new mobile website coming out in the autumn and that will help us get to know our customers better. So were listening to the customers. Signed and sealed. Cnbc understands Charter Communications inked a 55 billion deal to buy Time Warner Cable sending shares and altice lower in holland. Lets have a look at what european markets are doing so far this morning and as you can see were in the red having had most markets close yesterday although those that were open were down quite sharply. We started today with a little bit of green but we have softened as you can see across the board. This does follow last week which was quite a strong week for European Equity markets and thus a little bit of read so far this morning. Lets also quickly look at markets where the euro softened significantly. Its bang on the 109 handle as we look at things. Partly because of greek concerns and partly because of other developments in spain over the weekend but mainly because of the hawkish stonestones on friday. Quick look at bonds as well where we have seen a continuation of the trend over the last ten days where were seeing the ten year german bund. We have seen buying once again in europe and the ten year in the u. S. Shy of 2. 2 after janet yellen suggested we will see a rate rise at some point this year. Lets look at the biggest individual movers today in european markets. Bmps resumed trading after a nearly 8 drop for shares to be halted. This on the second day of the rights issue which has been offered at a steep discount. Lets have a look. Its now down 11. 3 . Altice is off 1. 3 after sources told cnbc that Charter Communications signed a 55 billion takeover deal for Time Warner Cable. They secured financing to make its own offer but clearly that deal is less likely to happen today today. Up 4. 6 after a 66 increase in profit. Capacity growth helped boost top line numbers. Speaking earlier on cnbc the groups cfo says theyre confident on higher earnings Going Forward. This time of the year you have very limited vizability. We have low oil at the moment. A number of airlines are underhedged so we could see irrational pricing from them. Were not seeing it at the moment but if that was to develop then you could have pressures on them and thats why were being conservative but profits in the region of 10 last year. So ryanair is up 4. 4 . Easyjet is also benefitting off the better than expected results. Up 0. 75 . The market clearly taking the results. Whats the bottom line . Why have they beaten . I think theres a couple of things. First off the performance in fy 15 pretty well flagged but slightly above guidance or most recent guidance. Thats a reflection of the momentum in demand and the pick up as we saw in q4. I think really the key is that momentum continues into the current year and really guidance which they tend to try to be cautious looking forward for the current year 940, 970, thats a pretty significant number. So really positive on that momentum of demand. Great. The other thing of course which the cfo is talking to us about this morning was this digital stat ji strategy. The way they tried to change the public image for years. In the consumers eyes it wasnt that positive. Have they successfully turned that around or is there more to do . More to do. They have taken the best of the playbook and put it into their operations in terms of offerings for the likes of family product or significantly the business product and also looking to change the Network Structure so particularly on the business side getting into more primary airports and well see that as we go again into the second half of the year in those winter months really trying to ease out some of the volatility of the cycles. And ryan air doing a lot better than easy jet over the last year or so. Easy jet suffering significantly from that . I think they are. They tend to talk about direct airport to airport competition its much greater than that. You need to look at it on a city to city basis and on that approach closer to 30 of the network being competed by ryanair in particular but also seeing people coming into some of their roots but its the ryanair push into the primary airports which is going to be a real change for easy jet and i dont think they have an easy answer for that. Whats the key for these airlines . Not just the low Cost Carriers but all of them in europe in terms of their hope to expand over the last couple of years. A few years back it was all the focus of airport landing slots. Is it more on being able to get the available new aircraft . I think its two things happening. One obviously have a longterm yield and again ryanair stands out in terms of the order profile but also the hedging on their capex. So very attractive cost of ownership which will give them an advantage but also access. Access to airports and were seeing increasingly airports looking for growth and turning to the lccs in order to achieve that. So on the ground getting access to markets and were seeing that particularly in germany Going Forward as offering an opportunity to grow their business. Its more, i think, the lcc opportunity at the expense, continuing to be at the expense of the incumbents. Just something up for us. Whats your recommendation on ryanair and easy jet stocks . On ryanair, a strong buy. I have a target price of 13 euros 88 and still more to come on distribution in terms of special dividends. So maybe if they receive cash coming in from the assets in the shortterm that may continue to be a theme. We recently changed our recommendation but i cant see any catalyst to change that again to the upside at the moment they need to find an answer to the level of competition theyre putting on to the network. Thank you for joining us this morning. Much appreciated. Aviation analyst. Now just want to bring you some flashes that we had from the ecb in the last few moments. Visco says deflation fears eased but asset purchases must go on. He says directly fears of deflation have abated but the positive effects of the program observed so far should not weaken our determination to take it forward. He said it was vital that inflation be brought back permanantly to the ecbs target level of close to 2 . And he dismissed concerns that the Interest Rates created by the ecbs qe measures could encourage reckless risk taking on financial markets. This is a continuation of course of the messages that we got last week from the ecb that slightly reignited those ecbqe related trades and of course have seen the euro slide significantly over the last week. In particular today. Lets have a quick look at the euro and see what its at at the moment. Its nicely below the 109 handle. Comfortably in the 108 and is off a large amount. 0. 8 today. In and around session lows but it had weakened a lot today even before we had seen those comments. Now lets move on and talk about japan. The japanese beverage and food giant is buying japans tobaccos vending machine operations. Its the latest move in an acquisition spree. Lets get out to the nikkei with the story live from tokyo. Thank you wilfred. This deal which is worth 1. 2 beside will bring the number of vending machines closer to the number one player cocacola japan. Its important to understand that the vending machine is a vital Sales Channel in japan hence the big reason theyre willing to pay them such a high premium on the deal. In fact nearly a third of all soft drink sales in japan are raised through vending machines. Beverages and snacks are really discounted which helps make them profitable which is not easy for companies to add more vending machines because most prime location versus been taken and for years the number has remained flat so in order to increase the vending machine locations it decided to buy japan tobaccos machines before its competitors could and the vending machines are considered particularly valuable as theyre in the best locations including major office buildings. Some view this unnecessary and others criticize the expensive deal. Shares both went up but suntory sales closed down 0. 7 . Thank you very much for that. Now its one year since Prime Minister modi of india took over the reigns and wasted little time getting to business. Head to cnbc. Com for a time line of highlights thus far. Apples top designer get ace promotion but is it enough to stem worries that theres things in the armor of the tech giant. Find out more after the short break. Welcome back. Twitter held talks to pie flip board. The social media mobile app. Ric recode says the deal would be worth more than 1 billion. Lets have a look at twitter pricing and its up about 0. 8 in frankfurt today. Apple has promoted design guru jony ive to chief design officer. Hell focus on new ideas and future projects. He worked closely with steve jobs to create a distinctive look for products. He has worked on packages for products and with the retail head on redesign of apple stores. As you can see its up 0. 4 in frankfurt trade. Now apples iphones have been a big seller for the tech giant but a new report warns that theyre starting to appear for demand of the popular smartphone. We caught up with the analyst and asked him about the report which surveyed smartphone users around the world and asked for their buying intentions. So we did a survey of about 9,000 smartphone users globally as part of a team that does primary research for us. That survey we have been doing for the last six month. Theres some of the other device vendors so one of the Key Takeaways we found is for the overall market what we have seen is lowering of intention to buy a new device in the next six months so slightly weaker market and thats true in china where we have seen weakness already in the First Quarter. That probably carries on for the next couple of quarters. This is both in the high end market and low end across the board. We have been focused on the high end smartphone in the surveys but its across the range of the Smartphone Market as a whole and what it shows is that people are willing to pay for smartphones and thats also going up. So about 30 of a participant said they expected to spend more on the next device purchase than the last one. Were willing to pay more but if theyre in china hell hold off purchasing. Exactly. Its slightly more negative for smartphones but more positive for pricing. Thats consistent with the market. People are holding off on purchasing but going for that aspirational purchase when they do buy a phone. You talk a lot in the report about the difference between apple and samsung and it seems if im reading the report correctly samsung is really gaining traction. Yeah they both have very good retention rates so whether they keep their customer each time they buy a hand set is very very high. Its unprecedented in pretty much consumer electronics. Almost 80 buy another apple device. Its the ecosystem argument. Samsung has been going up which is encouraging for samsung. Theyre driving that retention rate up and that ability to gain customers back each time. So the two of them are dominating the industry. Theyre finding it difficult to maintain their customer base. What is it consumers are questioning with regards to apple . Theyre largely questioning the ability of apple in the second half of the year to keep growing after having such a strong year last year and this is suggested by the evidence work is that in q2 theres upside estimates to consensus to iphone eun shipments and to the second half of the year theyre able to see continued upgrades. But in terms of what it is that the consumer wants, is apple still putting out products the consumer wants . It seems that way with their earnings constantly beating estimates . Its interesting because the survey, some of it confirm what is you know and other things are very interesting. Apple is seen as one of the aspirational brands. Theyre seen as very high quality in the eyes of consumers but they also have very low value for money score. So 22 of apple consumers actually see it as a product with value for money. Thats falling. It was 27 in the last survey. So its consistent with what you would think. When looking at pricing in europe for example when compared to the u. S. Is there a big difference in what the consumer is willing to pay at this stage . Not really. In terms of the pricing levels across the world were not seeing huge differences in willingness to pay in differ prices. So not so much. Who would you say are the winners and the losers. How should i be making my choices . Right. And you go for the strong warriors and stay with them. For us theyre Companies Like apple and samsung that manage to maintain and keep growing their customers. For the smaller players wed steer clear of. So we have some ratings in some of the smaller players and then what we call the arms dealers. The companies that sell into these Companies Successfully and theres a whole array of those but particularly around some of the products weve seen recently we like some of the asian companies. In europe we like arm and ams. Im just going to bring you some flashes that reuters are reporting coming from the imf on china. They expect the economy in china to grow 6. 8 in 2015 and for inflation to be around 1. 5 . Theyre saying imf is saying that the labor market is still stable and supporting consumption but china still faces risks from unsustainable credit and investment growth. So lets have a look at more of these flashes. 6. 8 for 2015 is the gdp forecast and 6. 25 in 2016 is the other forecast. So progress on enterprise reform has been quote, too slow and china should aim to achieve a Floating Exchange rate within 2 to 3 years. Those are the flashes coming out of the imf relating to china. Nothing new confirming quite a few of the issues we already know at present and saying that growth will remain pretty high. In numerical terms thats something that remains to be scene. Moving on, market uncertainty provided a boost to a new asset class. Diversified funds. Fund flows increased 5 fold. From 25 billion pounds to 117 billion today according to a new survey. Joining me now is the managing director steve butler. Good morning to you. Good morning. Lets talk about this asset class. Diversified growth funds. What exactly is it . Just unbenchmarked total return vehicles . These are products that start in institutional space. They invest in a basket of Asset Classes. Anything from 8 to 20 different Asset Classes and the Asset Managers will allocate around different classes depending on the Economic Situation at the time. So they dont have a specific return. They try to beat cash. Right. But the general positioning of these, investors are expecting equitylike returns with a half or 2thirds of the volatility of the equity market. If we look at the last four or five years weve had equity bull marks. Have they achieved those returns or not. Theyre not 100 invested in equities. We saw in december and january of this year a bit more so tillty in the market and the dgf funds outperformed them. Lets talk about the Investment Universe for these funds. Not always Asset Classes hugely liquid. So as these funds have grown significantly as we just illuded to is it an issue to be the right sorts of investments . Is the profex delining as the funds grow . The thing about this asset class is its not a lot of products all clustered around the same space. A lot of the products are doing similar things. They closed their fund to new investors where as other funds that are investing in more liquid Asset Classes have been able to take greater flows of assets. The people investing in this asset class, what are the concerns in the marketplace and Global Economy that is making them opt for this safer option as it were. These are longterm investors and it was the shock of the credit crunch that stimulated this asset class. These investors are looking on the medium to longterm. And theyre managing their assets toward a risk target. Its the volatility theyre concerned about. Are there specific Global Concerns you think are worthy of taking a safer bet . Were looking at each pension fund on an individual basis and were looking at the risk theyre looking to take and for the assets that they want to invest actively this is an asset class well consider. One final point on this steve, your analysis is mainly focused on the u. K. Based Fund Managers offering this thing. Is it a trend we see happening in the u. S. And elsewhere. Certainly. They have different naming conventions in the u. S. But its a product growing very rapidly in the u. S. Market as well. Steve, thank you so much for joining us. Much appreciated. Steve butler managing director at punter southhall. Now memorial day weekend is just past it could be a holiday that hollywood would like to forget. Its one of the biggest weekends of the year for the box office but this years take was only 191 million. Thats especially bad since ticket prices were up bad over that time. The top movie, disneys tomorrowland. A slightly disappointing showing since it had 180 million budget. Xmen made 110 million over the same Holiday Weekend. This got us talking. We want to hear from you. Do you think hollywood has run out of steam and needs fresh ideas . Jeff tweeted in and said yes. How many more sequels, reboots and Disney Princess variations are we going to get . I love movies but nowadays its all pure scifi and no genuine stories. Ive had quite a few tweets in directly as well. One coming from josing weather was largely warm and stormy throughout much of the weekend but there were no big movies this weekend and more americans willing to wait for movies to appear on payperview at home. The new james bond movie is out on the 20th of november. Thank you very much for getting that. Continue to get in touch with us on cnbcwex. Lets give you a quick update on markets before we go to break. Were in the red. This follows a lot of markets in europe being closed yesterday. Those that were open were in the red. You can see a relatively strong week last week for european equities so a little bit soft at the moment. A quick look at u. S. Futures, they were closed yesterday as well. Were looking at a soft opening. Nasdaq down about 20 points. Still to come here on the show a done deal. Sources tell cnbc that Charter Communications signed a 55 billion deal to purchase Time Warner Cable. We have all the details after the break. A very warm welcome. This is Worldwide Exchange. Here are your headlines from around the world. Signed and sealed cnbc understands Charter Communications inked a deal to buy Time Warner Cable. A billion dollar takeover. Twitter is in talks to buy flip board. The dollar comes back stronger after the Holiday Weekend hitting an 8 year high against the yen. This as Stanley Fisher says too much weight is being put on the timing of a rate hike and Texas Governor greg abbott declares a state of disaster as flood waters sweep away homes in an area south of austin. At least 12 people are missing. A deal has been signed for Charter Communications to buy Time Warner Cable. 195 in share in stock and cash. Thats a 13 . Charter will also emerge with Bright House Networks. The combined company will have 23 million u. S. Cable customers trailing only comcast. The parent of cnbc with 27 million. Lets have a look at the price action both up today in frankfurt. Speaking in israel on monday he says the process of returning to more normal levels will take a few years. While they expect the first hike in september it will be determined by data and not by date. Fisher says the fed ex pekts shortterm rates to reach 3. 25 to 4 in the next two to three years. Now lets have a look on what to expect for markets today. Of course the u. S. Was on holiday yesterday and were expected to open in the red today with the s p expected to open down by about 7 points. The dow down about 36 and the nasdaq down by about 17. Last week was fractionally negative for u. S. Markets but new highs were hit at various points during the week. So a little bit of negativity being expected off the back of that today. Of course we also had weak european markets both yesterday and today which well now look at next. Yesterday quite a few markets closed including the u. K. And germany. What was open was down. On thin volume. That trend continuing today the ftse 100, 7,000. Germany also off half a percent and france off better than that. Italy which was open yesterday and down sharply is fractionally up today. Lets look at rates thats really the story to focus on today. The euro dollar off significantly back below 109. Its down 0. 7 . We have had elevated fears on greece. We also had results out of the spanish elections over the weekend which werent great for markets but really this focused on those hawkish come mens on friday but given that volumes were thin yesterday its really reacting today. As i mentioned the u. S. Dollar pretty strong against the yen. 12285. Up 1 . Aussie dollar 0. 778. We saw the big correction in the european qe related trades. Saw the ten year rise to 0. 7 but over the last week or so we started to see trades related to european bond buying reignited. Thats pushed the german ten year to 0. 56. Elevated levels for the u. S. Ten year. 2. 18 . Lets check in on markets in asia. Sri is standing by in singapore for us. Sri. Yes, the leadership coming from the Greater China markets and take a look at the shanghai composite. Fresh 7 year highs here and it wouldnt surprise me if we would bump up and possibly take out that key 5,000 psychological resistance level for the shanghai composite. So whats going on here is we did see a period of consolidation in the market. A lot of the Retail Investors that have been and continue to be very active in mainland equities do believe that period is now behind them so they are diving back into the market. Elsewhere, i wanted to talk about hang seng as well because remember the market was closed yesterday. It reopened today. Renewed buying interest. So elements of playing catch up but theres also more momentum from beijing on the Capital Market liberalization front. Hong kong was reacting to the Mutual Fund Recognition scheme to expedite cross border assessments between the mainland and hong kong. That will start july 1st. This will essentially allow funds in both of these jurisdictions to be sold in each others markets. So once again theyll expedite in flows into the hang seng and vice versa as well. Thats what is firing up the hang seng today. Up by almost 1 at the close. Back to you. Just heard a flash coming from a german official saying that they have an encouraging signal that greece wants to repay its debt to the imf. They have signalled a desire to pay them on the 5th of june. Of course thats the next payment that greece is due to pay coming up soon on the fifth of june although probably not as crucial as the payments in july which are due to the ecb. Nonetheless, of course a lot of focus will be on greece up until between now and the 5th of june and seeing if they pay that or not. Twitter held talks to buy flip board. The article sharing app that operates as a sharing network. It could be worth more than 1 billion. Talks have been on going since the start of the year but appear to be stalled. The deal would bring in an experienced product team to twitter including flip board cofounder that used to be a twitter board member. Lets look at price action. Twitter up 0. 8 today in frankfurt. Apple has promoted jony ive to chief design officer. He will focus on current products, new ideas and future projects. He worked closely with the late steve jobs helping to create a distinctive look for apple products including the iphone ipad and apple watch. He worked with the retail head on resign of am stores. Apple is up in germany today. Meanwhile, we caught up with the analyst and asked him about the survey which asked smartphone users around the world about their buying intentions. One of the Key Takeaways that we found is that for the overall market what we have seen is lowering of intention to buy a new device in the next six months so slightly weaker market and thats particularly true in china where we have seen some weakness already in the First Quarter and our survey would suggest that probably carries on the next couple of quarters. Founding principle president and managing director of agan jones Rating Company and joins us on the line from new york. Very good morning to you. We were just hearing from a ubs report that and i note in your assessment various Company Managements and whether theyre delivering that am also in your eyes are starting to struggle. Is that right . That is correct. From our perspective apple has done a fantastic job of building the company to date but the foundation has a few cracks in it. Theyre no longer the leader in what put them on the map and that is itunes. We heard about apple tv for the past three years and we found out last week that that is in coming theyre not going to deliver that product so apple has questions although theyll probably do it over the next six months. Ultimately that doesnt sound like as you quote in one of your notes, a strategic dead end. Its perhaps a shortterm issue which at least in the past they have shown the ability to innovate around. Do you think their ability to innovate might wayne from here . Yes, in fact theres been a number of cases that have preceded apple where they were dominant in the category. You in blackberry. You had palm before that. You had motorola. Apple isnt as much of a Software Company as a hardware company. If you look at itunes that market space is now dominated by pandora and spotify and once you lose that dominance its hard to get it back. Additionally they face a threat from disruptors such as wifi delivered phones google may be entering that in a big way. In fact theres some announcements recently and you had to look at other similar firms looking at a much cheaper and easier way to deliver phone services. Its such an important part of ones arsenal so youre likely to see additional competitors in the near future. Who do you like at the moment, sean . Were in transition right now. I would say its even beyond smartphones. You look at netflix that has done a fantastic job of building out the delivery of video content. You have a number of other players that are threatening the traditional operators because the technology is changing. Some of the products are being comod tiezed. Theyre cheaper, better easier faster used products coming down. So its a space thats always been in transition but likely to face a lot of transition over the next couple of years as these technologies are being rolled out. I wanted to pick up on one of the companies that youre more positive about. Thats visa. Why do you like visa . Theyre in a terrific position. Our reports are on the internet. Theyre available to all Institutional Investors and they assist Institutional Investors in determining whether or not the companies are properly positioned. Whether management is protecting and enhancing the franchises being paid appropriately for that. Theres relatively few companies that have their Global Presence and processing mamtpayments. Theyre the leader and are likely to be for the next five to ten years and theyre drive a lot of shareholder wealth as a result of their proper strategic positioning. Great stuff sean thank you for joining us today. Much appreciated. Founding principal at egan jones Rating Company. Blackberry is laying off a number of workers in its device business including those focused on developing software and apps. Its heart its part of the effort to boost sales. Shares are up 2. 2 in frankfurt today. Coming up on Worldwide Exchange the battle to take back ramadi continues. Could more weapons from the u. S. Get the swrob donejob done . Well get the view from saudi arabia after this short break. Welcome back. Twitter is reportedly in talks to buy flip board the social media magazine app for more than 1 billion and the feds Stanley Fisher says too much weight is being put on the timing of a rate hike. 12 people are missing in texas after the holiday home they were staying in was swept away by flood waters in the small tourist town at least 2,000 had to evacuate their homes following tornadoes that caused major flooding in the area. 250 to 400 homes were destroyed in the town. The weather forced safety precautions and travel restrictions throughout the region. Fans at the Houston Rockets playoff game were asked to remain in the arena following the victory. Dwight howard was also stranded and remained on the court in solidarity with the fans. At least ten people were killed in the northern mexican city on monday it has a population of 100,000 and is across the border from del rio. Nbcs Pete Williams has this story. Two u. S. Military fighter jets scrambled to escort flight 22 into the airport today after an awenonymous caller said something was found. Thank god its over and the plane is safe. It was one of ten flights today that were the subject of telephone threats. The calls apparently came from the same person a man that phone them in early this morning. The calls were made to local police the fbi says including in maryland illinois oregon and new york. Each conveying the same threat but naming different flights. Among others a delta flight from paris to Boston American Airlines from england to the u. S. To newark united flights and delta to london and canada to dubai. The threats were not considered credible but they were passed along to the airlines to be extra cautious. They told tous get off the plane. Pick out our luggage. They took it. They were directed to escort the flight after the airline whose offices in the u. S. And france were closed for holidays could not be reached in time. Telephone threats to airlines are common but this one was unusual because it involved so many flights. The penalty for hoax threats like this can be up to 8 years in prison. Pete williams nbc news washington. Now still to come here on Worldwide Exchange. Taxi drivers are bringing the center of mexico city in halt in protest over uber. But little love for them on social media. Well tell you why after this short break. The white house is in damage control over remarks made by defense secretary ash carter over iraqi forces. They said troops lack the will to fight following the loss of the city ramadi. Joe biden rang the Prime Minister on monday to reaffirm the United Statess full support for the countrys efforts against isis. It comes as iraqs Prime Minister says ramadi could be back in the hands of the government in days. Thousands of displaced people fled to baghdad to escape the violence. Some estimates say more than 40,000 iraqis had to flee in recent days. Meanwhile a video posted on the Iraqi Ministry of defense youtube page shows the special forces receiving weapons from the u. S. Led coalition. Hadley brings me to discuss everything. Things are moving at a rapid pace and theyre making plans to try to at least retake ramadi and within that plan is special forces and militias and those with the cause. When you think about how big this is Ashton Carters remarks coming on the heels of the defeats, theres no way that the United States couldnt know the status of the Iraqi Special forces. What they were able to take and able to do. We have been training these guys now for over a year so the idea that he would now be announcing they dont have the will to fight is not sitting well with the Prime Minister of iraq and Vice President biden had to do serious damage control there. It does speak to the Obama Doctrine and whether or not its working and whether or not youre ever going to get a clear idea of any strategy to defeat the Islamic State. I was at the dead sea over the weekend and speaking to Business Leaders about their worries. I asked how worried are you about the weapons . Im not sure whether weapons is the answer. But even if america were to give these weapons and russia were to give these weapons to iraq iraq still has to use them as opposed to just turn back and run away and go somewhere else and have isis or whomever take control of israel. Isnt the worry that they might fall into the hand of the irani revolutionary guard. Thats the issue for me. If youre going to take these weapons, use them. When you look at where youre going to do your next investment, when you look at your next project its not something that you worry about, the destabilization . Youre saying its in pockets. Look how close we are. Were in jordan. Were next door neighbors to whats happening in syria and iraq also. Im not really concerned about that. I do see a stable middle east. I do see stable areas in the middle east and pockets of me not wanting to invest in certain areas. Obviously with the Iranian Nuclear negotiations likely to come to a fruitful conclusion well see that economy opening up. What does that mean for saudi arabia. Im all for iran having Peaceful Nuclear reactors. I want everyone to coexist. I want everyone to just live. Theres no reason for this fighting. Honest honestly, who wants to fight . Who wants to wake up in the morning and say who am i going to kill tomorrow . Theres no reason for that. Am i for iran having Nuclear Reactors for peaceful reasons . 100 . Youre not worried about this creating an arms race in the region region. I am worried about an arms race for sure. A Nuclear Arms Race . 100 . Who wants that . Id rather everyone focus on clean Renewable Energies as opposed to nuclear but since we are going through a nuclear route im for iran having it but also for saudi having it and uae having it in the peaceful way just so we can lessen the dependency on oil in my region specifically. So there you see, the Younger Generation of saudi arabia really. Very outspoken member of the saudi family and interested in making his opinions known as well. Slightly confusing. Essentially what hes trying to say and maybe not being as articulate as he could be is its a bad idea to have an arms race in the region. But speaking to the broader context of what were going to do Going Forward as the United States its anybodys guess because what were hearing is rather confused and were not hearing anything but a conflicting narrative from the pentagon but i also got to speak to the president and ask him how much does whats happening in the Iranian Nuclear negotiations impact it. Wed like to see an agreement reached peacefully on this portfolio. We believe if there were less tensions there would be less problems in this region. How does that impact your fight against the Islamic State . Probably we will not see any direct impact on them but in general, in the region i think it will be a positive change. Thank you for joining cnbc. Thank you. Its interesting of course Going Forward that theyre not getting weapons just from the United States but also from teheran as well. It was very clear that he wasnt going to say anything he was being careful but he was strong coming out in his criticism of the iraqis and stating his surprise that they werent able to do more with the weapons they had already. For that and all the middle east coverage thank you so much. Well have a quick look at futures before we head to break which are pointing to a negative open. S p expected to open down 7. Dow to open down 40 and the nasdaq expected to open down 20 points. Were back in two. More and more, data is visual. In fact, the number of mris has increased by ten percent a year. And a radiologist might view a thousand images to find one tiny abnormality in shape, contrast or movement. Because its so challenging a Research Project is teaching ibm watson to see. In the future, it could help clinicians spot key patterns quickly and precisely. Ibm watson is working to make healthcare smarter every day. A very warm welcome. Im wilfred frost and here are your headlines around the world. Signed and sealed. Charter communications inked a 55 billion deal to buy Time Warner Cable. Twitter is in talks to buy flip board. The social media magazine app. The dollar comes back stronger after the Holiday Weekend hitting an 8 year high against the yen. This as fed vice chair Stanley Fisher says too much weight is being put on the timing of a rate hike. And greg abbott declares a state of disaster as flood waters sweep away homes. At least three people are reported dead. Thank you for joining us here on Worldwide Exchange. Heres how markets are fairing ahead of the open in the u. S. Were expecting a soft open. Expected to open down 2. 5 points. Dow to open down 7. 5 points and the nasdaq to open down 21 points. U. S. Markets taking a queue from europe the last couple of days. Were in the red today which follows declines yesterday in only selected markets. We also have the u. K. And germany on holiday. Its just the likes of france spain, italy and portugal down yesterday and as you can see germany in the ftse 100 playing catch up with the other markets that were down yesterday but lets put these in perspective. Last week was a positive week for european equities. Going to quickly have a look at the greek yield curve as well which has been a little bit on the rise once again we had flashes coming out over the last couple of minutes on Greece Greece must focus on overhauls and if its going to boost growth. Nothing drastically new but the biggest date is later in july. Lets have a look at euro dollar down 0. 7 . Part of that was attached to raise greece fears but this is a two dare reaction including yesterday in a less pronounced fashion to the hawkish tones that janet yellen echoed on friday. Were looking at 109 for the euro dollar this morning. Now the brazilian president is under pressure of a renewed program. Announced spending cuts of 22 billion last week but delayed voting on some pressures including tax increases. Brazils finance minister failed to appear as a press conference on the budget cuts on friday. He has said the cuts were adequate. They lost more than 1 verses the dollar but since paired some of the losses. Joining me now is james smith. Good morning to you. Thank you for joining us. Of course that budget announcement yesterday confirming that gdp will be lower for the year ahead. How much more pain do we have to go through . Were already in a period of sustained pain. Just going back to missing the press conference on friday he said he had the flu. Thats clearly speculation but we can say theres differences between him and the rest of the government about how serious the illness brazil has. Is it just a passing thing or something much more serious . Looking at inflation, direction, were likely to see it end the year upwards of 8 . I would expect for it to go up by another 50 basis points. But the central bank wont be look at that and be ready to ease off on the tightening cycle. But look in dollar terms thats almost 25 . Roughly. A quarter. Gdp this year coming up is going to be a quarter smaller than it was last year and in that context youre going to have on going drivers of inflation, you know frrks the know, from the import pass through. Im glad that i think the corner has been turned in brazil. It would be much more worrying if Economic Policy was as close as it could have been to normal last year. If they were just continuing with the status quo. The fact that you now have a more hawkish finance minister along side the central bank. I would actually see that as positive and if they can survive the next 6 to 8 months in office then i think eventually in 2016 or 2017 youll see the country turning a corner. James, a good summary there. Were also going to mention action from china in the latin america region. Chile and china are paving the way for the first of its kind to be established in south america. An agreement was struck during chinese premiere leagues visit to santiago. Theyre looking to step up agreements with various projects including rail link which would connect peru to a brazilian port. China wants to get significantly involved in the region. How significant are the developments i just mentioned . Theyre two a piece. Thats about opening them up to chinese trade and on the railway thats significant. Youre seeing a transition in chinas interest in latin america where before it was all about buying latin american commodities. And investing in limiting sectors. What were seeing is like a stimulus. The top has come off commodity prices. Infrastructure companies have Spare Capacity and china also sees that latin america is in need of Infrastructure Development which is will help china to get lower prices on some of latin america exports down the line. So theres very much a marriage of interest here and it really sees the country deepening its foothold in the continent. You already saw this is nothing new. You already saw a major strategic transition toward exports in china in commodities and were now really seeing that relationship going to the next level which will put china in a very strong place when latin america economies turn around. James thank you very much. Im afraid we have to leave it there. Now hundreds of taxi drivers blocked major streets demanding a government crack down on uber. It sparked a backlash on social media with the uber stays trending worldwide. Now fed vice chairman says too much weight is being put on the timing of the first fed rate hike. Speaking on monday the process of returning to more normal levels will take a few years. It will be determined by data and not by date. The fed ex pekts shortterm rates to reach 3. 25 to 4 in the next two to three years. Joining me now to discuss more about markets, chief investment strategist at Ned Davis Research group. Developments on friday. Quite hawkish tones coming out of janet yellen that seem to suggest well get a hike of some sort this year. Is that your expectation . Yes, our expectation is september as mr. Fisher just pointed out. This does reflect the fact that growth is coming through. Thats what the equity markets have been anticipating. And other factors that are being mentioned which well see toward the end of the year is numerically inflation is going to have much easier compareing in order to be positive by the end of this year because oil prices rebounded. Will that spark the first hike . Thats likely to be the case but of course the fed is focused more on the Employment Situation which has been improving in the u. S. We heard the news that target and walmart had been hiring and overall if we look at the numbers on things that the market was so focused on before such as Labor Force Participation, these are moving in the right direction. Also if you think about the bull market it started back in 2009. Backs then the Unemployment Rate peaked at 10 . And even though weve had all of these discussions about Labor Force Participation and hiring and so on weve had a steady trend lower down to levels that the fed wanted to see where they would start to normalize policy and during that time weve seen the stock market gradually move higher. It just shows the markets been climbing a wall of worry. We see a steady improvement in Economic Conditions in an environment that remains extremely acome day tif with more liquidity provided and the Economic Growth is going to continue to come through. Is that growth though Strong Enough to maintain the momentum were seeing in equity markets once the policy ceases . I think so. What we need to be more concerned about is not that were going to have a macro development to frighten the equity markets but that the market gets a head of itself. That we get valuations to stretch. Too much optimism and too much good news priced into the market and then we become vulnerable to disappointment. I would think about this also in terms of earnings expectations. As we go to the end of the year the combined effect of the Dollar Strength and oil weakness started away on earnings expectations. That set the barlow for earnings as we got in the First Quarter earnings season. We got into earnings and then we saw the earnings came in poorly but still more than 70 of earnings reports actually beat expectations. So now were in a situation where oil has come back down. Oil is stabilize. The dollar has come back down. We have been through this soft patch in the u. S. Weather related. A lot of the negatives are in the past. The stock market analysts are likely to start raising thosest m estimates. We need to worry about longer term is if expectations get too high and too much good news is priced in. Then you enter an earnings season and youre vulnerable to those disappointments on earnings that could drive the market lower. Sum it up for us. Is there elements of protection needed or are you still bullish on the equity market . Were actually maximum overweight equities. We have been at 70 since last november. That last six months we said let your profits run. Stay in this market. Stay underweight bonds and underweight cash and the thing to do is watch the valuations. Were focused on a top watch report that will tell us if were getting those levels of overvaluation and overoptimism that tend to precede market tops. And then we look at the internals of the market and see if fewer sectors are taking part. We have very healthy broad based participation. We have three quarters of the markets around the world. We dont have this sector situation we had last year what we look for is see if they start to have an impact on financials and discretionary. They start to die vergeverge, that could be a warning sign and then sectors like utilities are defensive consumer staples, that would be a sign that the market is moving on the defensive. That together with overvaluation, excessive optimism would set the stage for weakness later in the year. Thank you very much. Well have to leave it there. Pleasure having you on. Now coming up a huge deal linking to the biggest u. S. Cable companies. More details after the short break. Welcome back. Signed sealed and almost delivered. Sources tell cnbc Charter Communications reaches an agreement to buy rival Time Warner Cable. Megajoins us from cnbc hq with the latest. Charter will pay 55 billion for Time Warner Cable a month after comcast abandoned its 45 billion offer. The deal is expected to be announced today. Charter will pay 195 a share in cash and stock. Thats a 14 premium to the Closing Price on friday. Theres also a 2 billion break up fee. Time warner cable previously rejected bids from charter before going with comcast last year. Charter will also buy Bright House Networks for more than 10 billion. Charter previously had a deal with brighthouse contingent on buying Time Warner Cable. Reports say Liberty Media will buy 5 billion of shares and the stake in the combined company will drop below 25 . This deal may have a better shot at getting the green light than comcast they would have 23 million u. S. Cable customers behind comcast with 27 million. It would also serve a quarter of the high Speed Broadband market while Time Warner Cable would have concerned more than half. The fcc would have been prepared to block that deal on the grounds. They would have had too much power over broadband. Hurting development by competitors including netflix. Time warner cable is up 12 while charter is up 1 . They also faced altice but reports say they wont make a higher bid. Thank you. Now twitter has reportedly held talks to buy flip board, the magazine format social media mobile app. The deal could be worth more than 1 beside. The deal would bring in an experienced product team to twitter including flipboard cofounder that used to be a twitter board member himself. Twitter is up 13 year to date. Apple promoted jony ive to chief design officer. Hell focus on new ideas and future projects. He worked closely with steve jobs helping to create a distinctive look for products including the iphone ipad and apple watch. He worked with the retail head on redesign of apple stores. Apple is up 0. 5 in germany. Charter communications reaches an agreement to buy rival Time Warner Cable. At least 8 people are reported dead after storms sweep through texas and oklahoma. And the feds Stanley Fisher says too much weight is being put on the timing of a rate hike. Were back in two. Shopping online. Is as easy as it gets. Wouldnt it be great. If hiring plumbers, carpenters and even piano tuners were just as simple . Thanks to angies list now it is. Weve made hiring anyone from a handyman to a dogwalker as simple as a few clicks. Buy their services directly at angieslist. Com. No more calling around. No more hassles. And you dont even have to be a member to start shopping today. Angies list is revolutionizing local service again. Visit angieslist. Com today. Down 7 points. 6 points the dow down 43 and nasdaq expected down by 20. 5 points. What are we expecting in terms of action today . Lets give you the run down. April durable goods are out at 8 30 eastern time with big ticket items expected to have slipped. In march we get the home price index followed by april new home sales and macon assumer confidence. The fed president is speaking this evening and auto zone workday and tivo report earnings during the day. Lets get out to the president of traders audio. Com. After the Holiday Weekend trying to digest the hawkish tone that janet yellen struck on friday. Has that altered your own rate rise expectations at all . No for the most part i dont have a lot of rate rise expexations to be honest. Im one of the few. The elite waiting until it happens. My personal belief is that the economy if we do get a rate rise its actually strong and thats a good sign. Its a robust sign that the fed is actually able to act and needs to act. Its my opinion that the stock market isnt going to be derailed from the major move from the upside. Its anyones guess in terms of how investors and traders are going to react. If they do raise rates this summer or this fall its a good sign in terms of the economy. Thats good for the banking sector. They need to keep the Freight Train on the tracks. We dont need to see the same return but were trying to avoid all out derailment but focus is on the dollar which has been very strong recently and thats just a sign you know if you will, that indication that they feel that the change or increase is on its way sooner rather than later but im not one of those types of people predicting because everybody that has been has been wrong up until this point. The fed is kicking the can down the road and that continues to be the case. So fantastic top sector pick then because as you were saying we are continuing to touch new all time highs so not everything can keep going up forever . No not everything. Im very bullish across for the most part across the board. We have been seeing the strong trend with follow through. We need to resolve the divergence in the small cap. Its been mostly the dow and s p enjoying the rally. We should see fuel to the fire in the bid. The bank sector is going to be the leader or stronger sector. Its different sectors in the higher Interest Rate environment we know that banks tend to do better so theres a lot of investors and traders going to attract a lot of attention in the next couple of years and we have seen that with the bond market on the move. So its my opinion that again a lot of focus will be directed toward that sector. Thats what id be watching. Ben, just very quickly i want to have your view on the euro dollar which started the week pretty softly. Its ranged between 104 and 114. Where does it settle over the next few weeks . Well it has been range bound for the most part. A sharp move lower today. Dollar is strong in the overnight session. Thats continuation of last week off of the 115 area. That was a significant area. It would have changed the trend which has been lower basically throughout last fall and again it is still intact. The trend to the down side. Still rangebound but testing key levels to the down side. Thank you for joining us. Much appreciate it. President of traders audio. Com. Thats it. Thank you for joining us. Squawk box is coming up next. In the us, three in ten College Students drop out. But how can you spot whos at risk . The one who lives far from campus . The one who works the night shift . The one with new responsibilities . One thing cant tell you, but the right combination can. Universities are using ibm analytics to understand pressures in and out of the classroom some expect to cut dropout rates by twentyfive percent. Ibm analytics is working to make education smarter every day. With xfinity from comcast you can manage your account anytime, anywhere on any device. Just sign into my account to pay bills manage Service Appointments and find answers to your questions. You can even check your connection status on your phone. Now its easier than ever to manage your account. Get started at xfinity. Com myaccount good morning, deal news Charter Communications expected to announce its buying Time Warner Cable for about 55 billion. Also mna chatter trending today. Twitter reportedly in on going talks to acquire flip board and a scary story in the skies. New this morning, the fbi looking into a series of phone in threats that had jets fighter jets scrambling around commercial Airline Flights headed to the u. S. Officials now say the calls were a hoax but one of them prompted the military to scramble fighter jets. Its tuesday, may 26th 2015 and squawk box begins right now. Live from new york where business never sleeps this is squawk box. Good morning, everybody. Welcome to squawk box here on cnbc. Im becky quick with joe kernen and andrew ross sorkin. Texas and oklahoma are two of the hardest hit states. Yesterday was the wettest day in the history of austin and houston. Dozens of high water rescues. 8 people have been declared dead and 12 people are missing in connection to storms from texas to oklahoma. More than 30 million americans are told to brace for more dangerous thunderstorms which could bring additional flooding hail and possible tornadoes. Right now lets get to the markets. U. S. Equity futures this morning, look at this point, like theyre a little bit underwater. Dow futures down by 42 points