Transcripts For CNBC Worldwide Exchange 20140818 : vimarsana

Housing market, Interest Rate rises are ultimately inevitable. As long as mark carney pulls a shoe with his commentary in a gradual, limited process, we feel the market can deal with that. And missouris governor calls in the National Guard after tear gas is used in ferguson to calm protests sparked by the shooting of a black teenager by police last week. Announcer youre watching Worldwide Exchange, bringing you Business News from around the globe. Very nice to see you this morning. Plenty going on on the geopolitical front, no much on the market front, but lets look at europe. Every one of those rose represents a tenth of the market. 95 of stocks are in the green with only a small smattering to the down side. The netnet is that the european euro stoxx 600 is 1. 1 to the up side. Is that to the detriment of the individual bond markets . Well look in a moment, but the xetra dax, which has been so hard hit on concerns about exposure to russia is the best performing of those major intercreainte indices, up 1. 5 today. Lets look at the bond markets and you can see the 10year is look at this, absolutely incredibly low still. The 10year bunds trading at a yield of 4 . The 10year french, just seems incredible, doesnt it, 1. 39 . 10year italian, i remember the datale days of berlusconi. Now it seems nobody has any risk associated with the italian at 2. 6 and the spanish at 2. 4 . What about the euro . Wonderful comments from the french finance minister today, saying we need the euro down, we need the ecb to do a little more work on this one as well to get it to a reasonable level, quote. 1. 3387 is currently where the euro dollar is trading. Russias foreign minister, sergei lavrov, says there was no positive results from the talks with french, ukrainian and german counterparts in ukraine yesterday. The Foreign Ministers called the meeting to discuss a ceasefire in kiev. Annettas been following that meeting from berlin. No progress, lavrov says. What have they achieved . Reporter thats a very good question. Looking at what mr. Steinmeyer, the German Foreign minister, was telling us late yesterday night, that there were areas where little progress was made. So, if you deduct now what mr. Lavrov is saying, that there was no progress on ceasefire and also political solution, what remains where progress might actually be made is the aid convoy or the delivery of aid goods. So, that could actually be the area where we could see some sort of compromise coming together between the parties, because of course, thats the easiest to do, the way of getting, or actually achieving a ceasefire really remains the overall target also of mr. Steinmeyer here in berlin, but he wanted to have that in focus of yesterdays meeting, but of course, that actually has tremendously failed. If you look at what the Ukrainian Foreign minister was saying after that meeting, its that it was really very difficult but that didnt cross their red line, and also he was saying that they probably need a lot more of those fivehour talks to actually achieve something when it comes to the really hard topics like the ceasefire, also political solution. So, for now, i would say the markets are actually a little bit perplexed about the fact that nothing has changed quite tremendously in the region, apart from some more willingness, perhaps, to go back to that negotiation table, steve. Were going to leave it there, annetta. Thank you very much indeed for coverage of that meeting, which ultimately appears relatively fruitless. Meanwhile, Ukrainian Forces raised the National Flag above a Police Station in town, the town of luhansk, a mark of the militarys protest against rebels. However, during the weekends offensive, a ukrainian fighter jet was shot down. Despite kiev claiming the separatists are on the back foot, a tank and deepmounted machine gun was seen in the east of the country near the russian border. Rebels say they have 150 vehicles, combat vehicles, in reserve. Ukrainian and russian officials have agreed, though to inspect the convoy which moscow says is carrying aid for the east of ukraine. The trucks are currently parked near the border and will only be allowed to cross into the oversight of the red cross. Thats a roundup of the main stories surrounding the ukraine crisis. Lets get to joseph diane, managing director and head of markets at bcs prime. Just remind our viewers, bcs prime is a major broker on the russian market, isnt it . Yes, the largest broker in terms of equity trading, futures and options trading, fx trading. Let me ask you the obvious question, how badly is volume, is Market Sentiment, is confident in the russian market being affected by this . Investors in russia are quite resilient at this point after months and months of negative headlines and a certain amount of deterioration. Theres no tourists left in the russian market. There is only dedicated investors on the International Front and local kind of deeppocket institutions that are on the market. So, the situation is still kind of nervous, but its hard to see how this deteriorates further from here. Now, down year to date 14 in early march, plus the ruble losses as well, so its not just down 5. 3 . The fact of the matter is, it was cheap to begin with, sub 5, but its always been that way as well. You say there are no tourists left. Wheres the real value, given the fact that it stayed low for a long time . To say the russian market is cheap is pointless, and a on agree, and russia is down. Its been quite a dramatic underperformance versus its merging market peers, around 40 with thebrazilian, the turkish emerging market index, so these are low even for russia. Even in a cheap market, these are extreme levels, but again, you shouldnt come out with a wholesale buy of the russian market at this point. Kind of theres no need to be a contrarian here. There is great assets for National Champion Industry Leaders that are priced to go at this level. Look, we know that the hawks on capitol hill want more firm action from europe. Thats easy for them to say. They dont have this enormous European Russian trade that certainly countries like germany have as well. You make the point in your notes that sanctions have been limited so far, but you dont need sanctions to be that tough or confident, and the appetite for more Business Investment into europe and russia and into russia from europe to wane under the current circumstances as well, its the implicit sanctions, the implicit meaning of whats going on at the geopolitical level, which is really hurting, isnt it . And it is hurting, despite what the kremlin is saying, isnt it some. Well, it is to a certain extent. Weve been discussing the selfimposed voluntary sanctions, as you mentioned. And to a certain extent, we have seen some of that. Russia wont grow much this year. I think it will avoid recession, but nothing dramatic to write home about. Weve seen some kind of reluctancy to lend to russian corporations, but yet again, yevrov, which is a large steel maker did manage to get almost 500 million of a loan from a syndicated european banks last week, barely after the europeans put the kind of, what they describe as level three sanctions, on russia. Rex tillerson, rex caser, the likes of carlos ghosn, people who have invested vast amounts of european and u. S. Money from the likes of renault, huge investments in russia as well, theyre making their next investment decision. They cant possibly afford to put money in russia rather than somewhere else. Thats the problem. And i agree. These sanctions are in place for a significant amount of time, and if theyre escalated, this will have a meaningful effect. At the moment, the investment is rather postponed, rather than canceled altogether. We do expect this to kind of sort of tell out. There is little appetite for all parties involved, russia, ukraine and the European Union, to take this further. As you did point out, the United States, which conveniently, if you look from the russian perspective, only has around 3 of the percentage of trade in goods with russia, is the driving force of this kind of im going to sound terrible here and put in a quote from lenin, saying something along the lines of economy is an extension of politics as well, something that mr. Putin would know as well, but when does the economic reality really start affecting kremlin policy . Putin and the administration, and this is for their kind of credit, has been a very prudent economic actor. Theyve been building up a very strong currency buffer, they have 500 billion of hard currency in reserve. Theyve been keeping debt at low levels, 15 of gdp on the public side. The central bank has been very prudent in terms of being ahead of the curve on the monetary policy, so we can in the kremlin take this extremely seriously. When they see this deteriorate further, they will act more forcibly, but its very hard to see how the European Union manages to pin down russia on the sanction front to do what they want. Indeed. A huge disparity of interests as well. Joseph, great to see you. Joseph dayan, head of markets at bcs prime. The governor of missouri has now ordered the National Guard to the st. Louis suburb of ferguson. More than a week of unrest following the Police Shooting of a black teenager, mike brown. A preliminary autopsy shows he was shot at least six times. A march on sunday in ferguson descended into chaos as Police Reportedly pushed back demonstrators using a cloud of smoke. Missouri state Highway Patrol captain ron johnson said forces did a fine job protecting the people of ferguson and the protests turned violent after dark. Tonight, starting with prayers and messages of unity, peace and justice, took a very different turn after dark. Molotov cocktails were thrown, there were shootings, looting, vandalism and other acts of violence that clearly appear not to have been spontaneous, but premeditated criminal acts designed to damage property, hurt people and provoke a response. The callus was not civil disobedience, but preplanned agitation and aggression. Journalists are once again on the ground in the Missouri Town providing updates from the situation via social networks. Twitter founder jack dorsey is also updating with retweets of vines and clashes with police. The square ceo traveled to his hometown of st. Louis on friday. Okay, coming up, London Property prices have jumped 20 so far this year, but will they continue to climb . After the break, we are going to kick off our Global Property week live from the uk capital. Stay tuned for that and much more here on Worldwide Exchange. The ca illac summer collection is here. During the cadillac summers best event, lease this 2014 ats for around 299 a month and make this the summer of style. Bank of England Governor Mark carney has told the sunday times he will not wait for real wages to turn positive before hiking Interest Rates. This follows comments made during the Inflation Report last week suggesting rates are destined to stay at historic lows until at least 2015, largely due to slow wage growth. Andrew bovis joins us now, cio and managing director at pimco. Andrew, any clarity from anyone at the mpc or bank of england or mr. Carney himself as to when we will see the rate hike . No, theres not a lot of clarity, i dont think. Previously, the bank of england, mr. Carney had gone out of his way to talk up the possibility of a hike this year. Seemed to push back on that at the press conference last week. Our best guess would be that they would probably go in february, but given this, i wouldnt rule out they go in november. And some saying what on earth are they talking about, but you have to make Investment Decisions based on this dialogue. How are you doing that and whats it mean for gilts . I think if you look at the forecast, look at the data from the last two Inflation Reports, theres a pretty consistent picture. And so, i think you focus on the data. I mean, obviously, you have to Pay Attention to the comments as well, but there is some noise around the bank of england. To be fair, they have a oneperson, onevote model on the mpc, so its not as easy for them to guide as it is for some of the other Central Banks. In terms of gilts, id say that you want to see more risk premium built in. In the front end around the bank of england, and then more broadly, 10year gilt trades pretty much in line with the u. S. , so i think there is a case for building in more risk premium for the uk market compared with the u. S. The 10year gilt is what, buy, sell or hold . I think were underweight. I think if you look at sources of global duration, given the uncertainty about the bank of england rate hike cycle, given the fact that theyre going to be going first, i think theres a good case to be under way uk duration. It is unclear about when they might start in terms of rate hikes. You know, the mediumterm guidance is also going to be fraught with uncertainty. I think if you are looking for a source of duration, for example, if youre concerned about some of the geopolitical events, i think going to the u. S. Is a pretty good place to go. All right. Lets look at euroland as well. I look at 10year spanish and 10year italian, its up 2. 5 . I remember the big old battle days whf we used to price in risk in europe. Are we wrong to think yield should be higher and they go lower because of the put still . I think italy and spain look reasonable. Theyre at low levels, about 1 bit below. So, i think the core of europe again, i dont find that very attractive in terms of call duration. Italy and spain are sources of credit risk, spread overburdens. I think they still look reasonable. Were overweight. There are clear problems in the eurozone. Growth halted again, inflation is very, very low. Mr. Draghis speaking at jackson hole later in the week. It will be interesting to see if he has anything there on the eurozone to say, but the market is building in higher probability of quantitative easing in line with what mr. Draghis guided in the past. You mentioned jackson hole if by magic. That was my next question. You sayelone wont want to make a splash, wont want to make any ripples at her speech i think on friday as well. What will she try to do, steady the ship and keep people opaque on the horizon when it comes . My best guess is she doesnt want to make too many headlines, but the market is pricing in the fed going the middle of next year and then going at a pretty gradual pace. Shes probably fine with that. In the past, mr. Bernanke a couple of times did make a splash at jackson hole. My best guess is that that wont happen this time. Theyre focused on the labor market. Labor market dynamics, which is appropriate, because you know, one of the key issues, and certainly for mrs. Yellen, one of the key issues is assessing the u. S. Labor market. If you just look at jobs growth, it looks okay, but some of the broader measures of labor market performance, you know, do suggest more slack, a bit like some of the discussion in the uk, and so, i think, you know, this gives yellen an opportunity to reiterate that the fed is looking at this broad set of macro labor market indicators and theyre not going to be in any great rush to start raising rates. Andrew, theres a piece by michael mckeynesies out of new york in the ft this weekend, says u. S. Treasury bears face Irresistible Force, talking about the 0. 4 yield on the twoyear paper as well and how tough it is to be a bear on treasuries at the moment. Do you agree with that . Its an Irresistible Force against the bears . So, i mean, from our point of view, u. S. Duration looks reasonable. We have our view of pimco, the new neutral. We think that policy rates are going to be low in the mediumterm, and then that guards against being too bearish. So, the current level, the current stretch of Interest Rates looks reasonable to us. In terms of our mediumterm outlook. Then at the same time, you have, you know, eurozone weakness, geopolitical challenges, russia and beyond. So, i think, you know, theres a good case to see the current levels in terms of u. S. Rates as pretty reasonable. So, overall, were pretty neutral Interest Rate risk in the u. S. We dont have large underweight positions here. Nice to see you today, sir. Thank you for your time. Andrew balls, managing director at pimco. Shares in bovis, as in bovis homes, moving higher after delivering a meager 150 jump in profit. 150 jump in profit in the First Six Months of the year. Theyve got a huge back divvy increase as well compared to the same period last year. The uk homebuilder expects a significant increase in 2014 earnings after a Record Number of completions. I spoke to the ceo of bovis homes, mr. Richie, earlier on, and i asked him why the company doesnt build homes in london. We are a traditional family housebuilder, and london is a very different market typically associated with certainly more highrise apartment property, and we have not been in london since the late 80s and dont have an intention to go back in. A bit of color on that. We had a big price slump in the late 80s, proving too much for housebuilders, so they provide the lack of oscillation, tipified by the fact that London Property prices have surged almost 20 this year but some surveys indicating the house price boom in the uk may be fading. Katherine boyle has hit the streets of the capital to find out what you can get for your hardearned cash in one of the most expensive cities in the world. Reporter the Interest Rate<\/a> rises are ultimately inevitable. As long as mark carney pulls a shoe with his commentary in a gradual, limited process, we feel the market can deal with that. And missouris governor calls in the National Guard<\/a> after tear gas is used in ferguson to calm protests sparked by the shooting of a black teenager by police last week. Announcer youre watching Worldwide Exchange<\/a>, bringing you Business News<\/a> from around the globe. Very nice to see you this morning. Plenty going on on the geopolitical front, no much on the market front, but lets look at europe. Every one of those rose represents a tenth of the market. 95 of stocks are in the green with only a small smattering to the down side. The netnet is that the european euro stoxx 600 is 1. 1 to the up side. Is that to the detriment of the individual bond markets . Well look in a moment, but the xetra dax, which has been so hard hit on concerns about exposure to russia is the best performing of those major intercreainte indices, up 1. 5 today. Lets look at the bond markets and you can see the 10year is look at this, absolutely incredibly low still. The 10year bunds trading at a yield of 4 . The 10year french, just seems incredible, doesnt it, 1. 39 . 10year italian, i remember the datale days of berlusconi. Now it seems nobody has any risk associated with the italian at 2. 6 and the spanish at 2. 4 . What about the euro . Wonderful comments from the french finance minister today, saying we need the euro down, we need the ecb to do a little more work on this one as well to get it to a reasonable level, quote. 1. 3387 is currently where the euro dollar is trading. Russias foreign minister, sergei lavrov, says there was no positive results from the talks with french, ukrainian and german counterparts in ukraine yesterday. The Foreign Ministers<\/a> called the meeting to discuss a ceasefire in kiev. Annettas been following that meeting from berlin. No progress, lavrov says. What have they achieved . Reporter thats a very good question. Looking at what mr. Steinmeyer, the German Foreign<\/a> minister, was telling us late yesterday night, that there were areas where little progress was made. So, if you deduct now what mr. Lavrov is saying, that there was no progress on ceasefire and also political solution, what remains where progress might actually be made is the aid convoy or the delivery of aid goods. So, that could actually be the area where we could see some sort of compromise coming together between the parties, because of course, thats the easiest to do, the way of getting, or actually achieving a ceasefire really remains the overall target also of mr. Steinmeyer here in berlin, but he wanted to have that in focus of yesterdays meeting, but of course, that actually has tremendously failed. If you look at what the Ukrainian Foreign<\/a> minister was saying after that meeting, its that it was really very difficult but that didnt cross their red line, and also he was saying that they probably need a lot more of those fivehour talks to actually achieve something when it comes to the really hard topics like the ceasefire, also political solution. So, for now, i would say the markets are actually a little bit perplexed about the fact that nothing has changed quite tremendously in the region, apart from some more willingness, perhaps, to go back to that negotiation table, steve. Were going to leave it there, annetta. Thank you very much indeed for coverage of that meeting, which ultimately appears relatively fruitless. Meanwhile, Ukrainian Forces<\/a> raised the National Flag<\/a> above a Police Station<\/a> in town, the town of luhansk, a mark of the militarys protest against rebels. However, during the weekends offensive, a ukrainian fighter jet was shot down. Despite kiev claiming the separatists are on the back foot, a tank and deepmounted machine gun was seen in the east of the country near the russian border. Rebels say they have 150 vehicles, combat vehicles, in reserve. Ukrainian and russian officials have agreed, though to inspect the convoy which moscow says is carrying aid for the east of ukraine. The trucks are currently parked near the border and will only be allowed to cross into the oversight of the red cross. Thats a roundup of the main stories surrounding the ukraine crisis. Lets get to joseph diane, managing director and head of markets at bcs prime. Just remind our viewers, bcs prime is a major broker on the russian market, isnt it . Yes, the largest broker in terms of equity trading, futures and options trading, fx trading. Let me ask you the obvious question, how badly is volume, is Market Sentiment<\/a>, is confident in the russian market being affected by this . Investors in russia are quite resilient at this point after months and months of negative headlines and a certain amount of deterioration. Theres no tourists left in the russian market. There is only dedicated investors on the International Front<\/a> and local kind of deeppocket institutions that are on the market. So, the situation is still kind of nervous, but its hard to see how this deteriorates further from here. Now, down year to date 14 in early march, plus the ruble losses as well, so its not just down 5. 3 . The fact of the matter is, it was cheap to begin with, sub 5, but its always been that way as well. You say there are no tourists left. Wheres the real value, given the fact that it stayed low for a long time . To say the russian market is cheap is pointless, and a on agree, and russia is down. Its been quite a dramatic underperformance versus its merging market peers, around 40 with thebrazilian, the turkish emerging market index, so these are low even for russia. Even in a cheap market, these are extreme levels, but again, you shouldnt come out with a wholesale buy of the russian market at this point. Kind of theres no need to be a contrarian here. There is great assets for National Champion<\/a> Industry Leaders<\/a> that are priced to go at this level. Look, we know that the hawks on capitol hill want more firm action from europe. Thats easy for them to say. They dont have this enormous European Russian<\/a> trade that certainly countries like germany have as well. You make the point in your notes that sanctions have been limited so far, but you dont need sanctions to be that tough or confident, and the appetite for more Business Investment<\/a> into europe and russia and into russia from europe to wane under the current circumstances as well, its the implicit sanctions, the implicit meaning of whats going on at the geopolitical level, which is really hurting, isnt it . And it is hurting, despite what the kremlin is saying, isnt it some. Well, it is to a certain extent. Weve been discussing the selfimposed voluntary sanctions, as you mentioned. And to a certain extent, we have seen some of that. Russia wont grow much this year. I think it will avoid recession, but nothing dramatic to write home about. Weve seen some kind of reluctancy to lend to russian corporations, but yet again, yevrov, which is a large steel maker did manage to get almost 500 million of a loan from a syndicated european banks last week, barely after the europeans put the kind of, what they describe as level three sanctions, on russia. Rex tillerson, rex caser, the likes of carlos ghosn, people who have invested vast amounts of european and u. S. Money from the likes of renault, huge investments in russia as well, theyre making their next investment decision. They cant possibly afford to put money in russia rather than somewhere else. Thats the problem. And i agree. These sanctions are in place for a significant amount of time, and if theyre escalated, this will have a meaningful effect. At the moment, the investment is rather postponed, rather than canceled altogether. We do expect this to kind of sort of tell out. There is little appetite for all parties involved, russia, ukraine and the European Union<\/a>, to take this further. As you did point out, the United States<\/a>, which conveniently, if you look from the russian perspective, only has around 3 of the percentage of trade in goods with russia, is the driving force of this kind of im going to sound terrible here and put in a quote from lenin, saying something along the lines of economy is an extension of politics as well, something that mr. Putin would know as well, but when does the economic reality really start affecting kremlin policy . Putin and the administration, and this is for their kind of credit, has been a very prudent economic actor. Theyve been building up a very strong currency buffer, they have 500 billion of hard currency in reserve. Theyve been keeping debt at low levels, 15 of gdp on the public side. The central bank has been very prudent in terms of being ahead of the curve on the monetary policy, so we can in the kremlin take this extremely seriously. When they see this deteriorate further, they will act more forcibly, but its very hard to see how the European Union<\/a> manages to pin down russia on the sanction front to do what they want. Indeed. A huge disparity of interests as well. Joseph, great to see you. Joseph dayan, head of markets at bcs prime. The governor of missouri has now ordered the National Guard<\/a> to the st. Louis suburb of ferguson. More than a week of unrest following the Police Shooting<\/a> of a black teenager, mike brown. A preliminary autopsy shows he was shot at least six times. A march on sunday in ferguson descended into chaos as Police Reportedly<\/a> pushed back demonstrators using a cloud of smoke. Missouri state Highway Patrol<\/a> captain ron johnson said forces did a fine job protecting the people of ferguson and the protests turned violent after dark. Tonight, starting with prayers and messages of unity, peace and justice, took a very different turn after dark. Molotov cocktails were thrown, there were shootings, looting, vandalism and other acts of violence that clearly appear not to have been spontaneous, but premeditated criminal acts designed to damage property, hurt people and provoke a response. The callus was not civil disobedience, but preplanned agitation and aggression. Journalists are once again on the ground in the Missouri Town<\/a> providing updates from the situation via social networks. Twitter founder jack dorsey is also updating with retweets of vines and clashes with police. The square ceo traveled to his hometown of st. Louis on friday. Okay, coming up, London Property<\/a> prices have jumped 20 so far this year, but will they continue to climb . After the break, we are going to kick off our Global Property<\/a> week live from the uk capital. Stay tuned for that and much more here on Worldwide Exchange<\/a>. The ca illac summer collection is here. During the cadillac summers best event, lease this 2014 ats for around 299 a month and make this the summer of style. Bank of England Governor Mark<\/a> carney has told the sunday times he will not wait for real wages to turn positive before hiking Interest Rate<\/a>s. This follows comments made during the Inflation Report<\/a> last week suggesting rates are destined to stay at historic lows until at least 2015, largely due to slow wage growth. Andrew bovis joins us now, cio and managing director at pimco. Andrew, any clarity from anyone at the mpc or bank of england or mr. Carney himself as to when we will see the rate hike . No, theres not a lot of clarity, i dont think. Previously, the bank of england, mr. Carney had gone out of his way to talk up the possibility of a hike this year. Seemed to push back on that at the press conference last week. Our best guess would be that they would probably go in february, but given this, i wouldnt rule out they go in november. And some saying what on earth are they talking about, but you have to make Investment Decisions<\/a> based on this dialogue. How are you doing that and whats it mean for gilts . I think if you look at the forecast, look at the data from the last two Inflation Report<\/a>s, theres a pretty consistent picture. And so, i think you focus on the data. I mean, obviously, you have to Pay Attention<\/a> to the comments as well, but there is some noise around the bank of england. To be fair, they have a oneperson, onevote model on the mpc, so its not as easy for them to guide as it is for some of the other Central Banks<\/a>. In terms of gilts, id say that you want to see more risk premium built in. In the front end around the bank of england, and then more broadly, 10year gilt trades pretty much in line with the u. S. , so i think there is a case for building in more risk premium for the uk market compared with the u. S. The 10year gilt is what, buy, sell or hold . I think were underweight. I think if you look at sources of global duration, given the uncertainty about the bank of england rate hike cycle, given the fact that theyre going to be going first, i think theres a good case to be under way uk duration. It is unclear about when they might start in terms of rate hikes. You know, the mediumterm guidance is also going to be fraught with uncertainty. I think if you are looking for a source of duration, for example, if youre concerned about some of the geopolitical events, i think going to the u. S. Is a pretty good place to go. All right. Lets look at euroland as well. I look at 10year spanish and 10year italian, its up 2. 5 . I remember the big old battle days whf we used to price in risk in europe. Are we wrong to think yield should be higher and they go lower because of the put still . I think italy and spain look reasonable. Theyre at low levels, about 1 bit below. So, i think the core of europe again, i dont find that very attractive in terms of call duration. Italy and spain are sources of credit risk, spread overburdens. I think they still look reasonable. Were overweight. There are clear problems in the eurozone. Growth halted again, inflation is very, very low. Mr. Draghis speaking at jackson hole later in the week. It will be interesting to see if he has anything there on the eurozone to say, but the market is building in higher probability of quantitative easing in line with what mr. Draghis guided in the past. You mentioned jackson hole if by magic. That was my next question. You sayelone wont want to make a splash, wont want to make any ripples at her speech i think on friday as well. What will she try to do, steady the ship and keep people opaque on the horizon when it comes . My best guess is she doesnt want to make too many headlines, but the market is pricing in the fed going the middle of next year and then going at a pretty gradual pace. Shes probably fine with that. In the past, mr. Bernanke a couple of times did make a splash at jackson hole. My best guess is that that wont happen this time. Theyre focused on the labor market. Labor market dynamics, which is appropriate, because you know, one of the key issues, and certainly for mrs. Yellen, one of the key issues is assessing the u. S. Labor market. If you just look at jobs growth, it looks okay, but some of the broader measures of labor market performance, you know, do suggest more slack, a bit like some of the discussion in the uk, and so, i think, you know, this gives yellen an opportunity to reiterate that the fed is looking at this broad set of macro labor market indicators and theyre not going to be in any great rush to start raising rates. Andrew, theres a piece by michael mckeynesies out of new york in the ft this weekend, says u. S. Treasury bears face Irresistible Force<\/a>, talking about the 0. 4 yield on the twoyear paper as well and how tough it is to be a bear on treasuries at the moment. Do you agree with that . Its an Irresistible Force<\/a> against the bears . So, i mean, from our point of view, u. S. Duration looks reasonable. We have our view of pimco, the new neutral. We think that policy rates are going to be low in the mediumterm, and then that guards against being too bearish. So, the current level, the current stretch of Interest Rate<\/a>s looks reasonable to us. In terms of our mediumterm outlook. Then at the same time, you have, you know, eurozone weakness, geopolitical challenges, russia and beyond. So, i think, you know, theres a good case to see the current levels in terms of u. S. Rates as pretty reasonable. So, overall, were pretty neutral Interest Rate<\/a> risk in the u. S. We dont have large underweight positions here. Nice to see you today, sir. Thank you for your time. Andrew balls, managing director at pimco. Shares in bovis, as in bovis homes, moving higher after delivering a meager 150 jump in profit. 150 jump in profit in the First Six Months<\/a> of the year. Theyve got a huge back divvy increase as well compared to the same period last year. The uk homebuilder expects a significant increase in 2014 earnings after a Record Number<\/a> of completions. I spoke to the ceo of bovis homes, mr. Richie, earlier on, and i asked him why the company doesnt build homes in london. We are a traditional family housebuilder, and london is a very different market typically associated with certainly more highrise apartment property, and we have not been in london since the late 80s and dont have an intention to go back in. A bit of color on that. We had a big price slump in the late 80s, proving too much for housebuilders, so they provide the lack of oscillation, tipified by the fact that London Property<\/a> prices have surged almost 20 this year but some surveys indicating the house price boom in the uk may be fading. Katherine boyle has hit the streets of the capital to find out what you can get for your hardearned cash in one of the most expensive cities in the world. Reporter the Property Market<\/a> has long been the hottest thing about london, a city better known for its cold weather and gray skies. The british capital buzzes with talk of how high prices can go ahid a seemingly unending rise thats seen doubledigit growth in some london boroughs this year. But neither are worrying signs of cooling. Behind the headlinegrabbing deals of foreign buyers paying record amounts for property, there is increasing talk of an affordability crisis in london. House prices are now more than five times the average salary for the First Time Since<\/a> the credit crunch, and those left behind are being dubbed generation rent. Our challenge was to find a home for 500,000 in london. And most Estate Agents<\/a> we mentioned that to pretty much laughed us out of the room. This is what we came up with, a onebedroom, onebathroom, 400squarefoot apartment in camden, built to specifically help people in the middle income get that first step on the housing ladder in london. November of last year, the large firm of Estate Agents<\/a> did a survey in london and reckoned there was a shortage of 20,000 Properties Every<\/a> year simply not being built. Now, pocket is not huge, its not going to add immensely to that, but we will do Something Like<\/a> 500 properties a year within the next couple of years, and thats starting to meet the need of those people who are the squeeze middle. And there are now more people trying to sell you homes in london than ever before. The most popular new job in the country last year was an estate agent. Not surprising, mark carney, the governor of the bank of england, has called the Housing Market<\/a> the greatest risk to the domestic economy. But with the general election looming and the Property Market<\/a> a key battleground for middle class votes, the question is whether policymakers on both sides will be able to take the tough decisions necessary to solve the affordability crisis. Well, katherines inside with her stilettos on just now. Shes put her boots on, her vest and hard hat and joins us from where, katherine, camden . Reporter well, its definitely a lot riskier out here than it usually is in the studio, steve, and kind of chillier, too, but yeah, weve been talking about all things London Property<\/a> this morning. And joining me now, Martin Ratchford<\/a> with the Company Responsible<\/a> for this development in which were now standing. Martin, lets start off talking about just what does it tell us that a Development Like<\/a> this is going up in this area of london at the minute . Well, we feel with our 23year history of having built 5,000 homes that, you know, londons in a great place right now. Its a global city. People are very keen to invest there. And weve invested over a quarter of a billion pounds in this alone. Here we are still on the city road in a silicon roundabout, which is londons answer to Silicon Valley<\/a> in america, and we stood here on the 18th story with fantastic views out over the city, and you know, really what were seeing is that people want a highquality product in their residential accommodation, in their homes, which were building. And the confidence we have in the market, were going to build another 2,500 homes over the next four years, thats more than one home every single day of the year. Thats how confident we are about the future of the Residential Market<\/a> in london. Reporter but martin, arent developments like these all about overseas buyers coming in, buying for investment, not really living here and, you know, driving up prices, which means that ordinary londoners cant afford property . No, not really. I mean, in our history, weve built 5,000 houses. Six out of ten of those homes have gone to people who live and work in london. And on this road alone, one in three are affordable units that go to people like firemen and policemen, people who are working in the community. Theyre affordable houses that go to those people. So, its great for the community. The other sense, you know, to take away from this is that of the 250 Million Pounds<\/a> we spent on this road alone, every home we build creates 4 1 2 jobs, which is great for london, its great for the community, its great for the economy. The multiplier effect, all of the materials that we buy, its fantastic. Reporter but isnt there potentially a possibility that, obviously, weve heard big construction cycles slightly lagging the economy and in many ways. Isnt there a bit of a risk that when a lot of this new build comes on stream that the Property Market<\/a> in london itself might be in quite good a place as it currently is . Well, i think fundamental here is about supply. Theres a pentup demand thats built up over a number of years, and that demand really hasnt been met. So, were very keen to support Boris Johnsons<\/a> office and the sounds theyve been making about working with developers in lock supply. This is really about a supplydemand imbalance. And you know, its a fantastic opportunity to invest in london today. Reporter great. Thank you very much for joining us today. Thats Martin Ratchford<\/a>, Group Finance<\/a> director of mount anvil, developer of this large site where im now standing. Back to you, steve. What a lovely view as well. Thank you for that, katherine. Still to come on this show, the onemonth countdown is under way for scotlands independence referendum. Now, a new poll shows the novote in the lead, but the yes camp is creeping closer. Find out more after this break. What if there was a credit card where the reward was that new car smell and the freedom of the open road . A card that gave you that im 16 and just got my first car feeling. Presenting the buypower card from capital one. Redeem earnings toward part or even all of a new chevrolet, buick, gmc or cadillac with no limits. So every time you use it, youre not just shopping for goods. Youre shopping for something great. Learn more at buypowercard. Com im spending too much time hiring and not enough time in my kitchen. [ female announcer ] need to hire fast . Go to ziprecruiter. Com and post your job to over 30 of the webs leading job boards with a single click; then simply select the best candidates from one easy to review list. You put up one post and the next day you have all these candidates. Makes my job a lot easier. [ female announcer ] over 100,000 businesses have already used zip recruiter and now you can use zip recruiter for free at a special site for tv viewers; go to ziprecruiter. Com offer2. Announcer youre watching Worldwide Exchange<\/a>, bringing you Business News<\/a> from around the globe. European markets bouncing back. Autos and industrials leading the way amid some signs of a breakthrough in Eastern Ukraine<\/a>. Foreign ministers meeting in berlin reach an agreement on a russian aid convoy heading for ukraine but make no progress on talks for a ceasefire. Uk housing stocks weak after bank of England Governor Mark<\/a> carney tells a uk newspaper the bank of england will put rates before wages, but the ceo of bovis homes told me hes unfazed. Were seeing clearly a strong Housing Market<\/a>. Interest rate rises are ultimately inevitable. As long as mark carney follows through with his commentary in a gradual and limited process, we feel that the market can deal with that. And missouris governor calls in the National Guard<\/a> after tear gas is used in ferguson to calm protests sparked by the shooting of a black teenager by police last week. Nice to see you all. A look at European Equity<\/a> markets, on a bit of a tear. They didnt enjoy the late rally we saw in the u. S. Indices on friday. The xetra dax, german blue chip index, 1. 6 , trading at 9,233. The French Market<\/a> 1. 3 to the good this morning. To the bad if youre short. Lets look at the forex markets. Delicious comments from sappan of france saying its the duty of the ecb to get the euro down to a reasonable level. Okay, well, if the French Economy<\/a> carries on going the way it is, i guess it will get to that level he wants. 1. 3384 is where that is trading. Sterling a bit of a rally, 1. 6732 after a couple percent decline over last week or so. The dollar versus the japanese currency 102. 46, 0. 13 higher. A couple of flashes. Julian assange, you all know the chap. Hes been stuck inside the Ecuadorian Embassy<\/a> in swanky west london for the last two years. The ecuadorian Ambassador Says<\/a> wikileaks and assanges human rights have been breached. What else have we got . Ecuador upholds Julian Assanges<\/a> status as a political refugee. Time to free wikileaks founder Julian Assange<\/a> says ecuadorian diplomat. Of course, swedish authorities and u. S. Authorities as well would argue that hes not a political human rights activist. Actually, that he needs to face very serious charges leveled against him. Two very different sides of the story. Of course, wikileaks alos angeles h assange has been seeking refugee asylum there for a couple years now. Henry dixon is with the glg undervalued asset fund and uk income fund. You put out your halfyear review. Howd you get on . I think incredibly in the First Six Months<\/a>. Markets were up a percent and we were up 3 , 3. 5 . But what we try to do is sense a record level, i think, or indecision amongst investors. Weve gone back in the data right back to 1920. So, therefore, the keys to being shortterm, but we definitely try to put the market into the context of absolute relative value relative to history and relative to fixed income. And i think probably what weve got to concede is that, clearly, equities are not maybe the value they have been, just on our analysis. We think the markets been slightly overvalued since may of last year, but we think the relative attractions in the asset class are very strong and have only grown since carneys comments of last week. Simply, i think the transition we need to make from relative value to absolute value can come by two mechanisms price falls, which weve had modestly, and also earnings growing. We feel much more constructive about Earnings Growth<\/a> into the second half, particularly given the moves in fx, again, post comments from carney last week. You talk about relative valuation, what about these chaps such as robert shiller, who to be fair, i think has been making these comments for quite a long while, but a reiteration over the last couple days. Saturdays the New York Times<\/a> now the cape, which is the cyclically adjusted pe, is above 25, and apparently, this has been surpassed since 1881 and only three previous times, 29, 99 and 2007. Do you worry about cape . I think with that pe, taking tenyear average earnings and dividing by the current price, i think what we have is definitely the u. S. Market looks expensive. Sitting in the uk, you could do the same analysis on uk equities and they definitely wouldnt be nearly as expensive as the u. S. And then going back again, back to 1920, there have been periods of time of material decoupling of uk equities to u. S. Equities. So, i know were very much integrated, but there have been periods of time when uk equities have materially outperformed u. S. Equities, and its all come from the more attractive stopping point and valuation. We had a nice chart up, the percentage attribution versus the index, different industrials which look very positive. The health care very negative as well. Do you want to just talk us through what this means and how we can make money out of it . This is our first half. What weve seen is very, very strong performances from industrial holdings, specifically with postal names. Portugal post and holland. And when we go into europe, our rules are very simple, we must find materially better value than the offers in the uk. On the down side there with the health care, like most funds in the uk, weve probably got slightly wrong footed by the bid that was a relatively drag of the fund in the First Six Months<\/a>. Youre in good company on that astra story. The Portuguese Telecom<\/a> company, postal operator, but anything with portugals name on it was sold down quite heavily at one point. Did this provide a nice entry point . Yes, we had it in portfolio about six months and sold it two months ago at highs. Were very keen to revisit it and we expect a government placement due to come up in september. Wheres the big opportunity in the second half . I think for us, we are probably the most optimistic of all year and with the move in bond yields, then if i could highlight maybe three shares within the ftse 100, i think its a really fluid environment for corporate or conglomerate discounts if youd like to realize that certain parts of their businesses have been misvalued. For example, we saw news from bill tin last week. I like a Company Called<\/a> mutual. I think all three parts of its business would be more highly rated if split out. Then actually, now i know its sort of talk of the day, but we really do like the House Builders<\/a> within the 250 and we definitely like bovis. Slow down a bit. I look to bovis, great numbers, but they havent moved this yeartodate, but theyre giving more divvy back, a big theme. Absolutely. I think what weve seen, the markets completely on board with the House Builders<\/a> almost as being good news inertia and now were worried about house price falls, which i guess we have some proclamation of overnight, but we see a slightly more stable house price environment. Land banks are very much more fluid and more cash to come back to shareholders. Apparently, because its Worldwide Exchange<\/a>, you and i cant talk about cricket. If it was squawk box, we could, but our viewers prefer the nfl or nba. Anyway, nice to see you. Henry dixon, manager of the glg assets value fund and uk fund. Moving on some u. S. Banks have reportedly drawn up preliminary plans to move some of their london operations to ireland if britain leaves the eu. This is a very long story, isnt this . Financial times says citigroup, Morgan Stanley<\/a> and bank of america are considering the move. Most u. S. And asian banks base their european operations in london, giving them an automatic passport to carry out services in all 28 eu countries, but the ft says senior u. S. Banking executives believe the uk is unlikely to be granted the same status if it leaves the eu. Theres one month left until scotland independence vote, and a new poll suggests the yes campaign advancing despite currency fears. 38 of voters want an independent scotland, as opposed to 47 who want to keep the union. 14 are still undecided. This according to an icm poll in scotland on sunday. Well, joining me is jeremy cliff from the economist. I was talking to a colleague about this earlier on and just beginning to read more and more about this, and theres so many ifs. If i was a scot and was in scotland, because scots down here cant vote as well, i would be very worried about the economic plan, not that there isnt a plan now, but its all the questions that mr. Sammond has to thrash out with westminster if they get the yes vote. Theres a huge amount of uncertainty and i think this is the no campaign, the campaign for the unions great strength, is that they can ask him these difficult questions about what currency would scotland use, how easy would it be for an independent scotland to stay in the European Union<\/a> and what fiscal position would they have and as of yet, nationalists dont have convincing answers. Hold on, does westminster have convincing arguments of why he cant have a monetary union, why he cant have the resources he wants, why he cant have the low share of National Debt<\/a> that he wants as well . The burden of proof is on the nationalists here, but i think that those in london, people like alistair darling, whos running the no campaign, they have good reasons to say were not going to simply lie down in any sort of negotiation with alex sammond. For example, take the pound. He says it would be easy for an independent scotland and the rest of the uk to continue sharing the pound. Thats all very well and there would be obvious economic benefits to having a currency union. On the other hand, scotland has a very large financial sector. Does a london government want to stand behind that sector, effectively stand behind the Scottish Government<\/a> and create the moral hazard that would entail . So, i think the london government and the unionist campaign at the moment have good reasons for saying that it wouldnt be easy going for an independent scotland. Look, one thing i do know is the scots are pretty smart and theyre smart about money as well. I mean, goodness me, they came up with some of the rules of the wealth of nations. So, they know the rules of this as well. So, why are such a large percentage of scots, despite all those risks, in favor of independence . The Independence Campaign<\/a> has a big advantage, and thats energy. And i dont think if you talk to senior unionist figures behind the scenes, they will accept that the Independence Campaign<\/a> has more energy than the unionist campaign because its about building a new nation, its about forging a new path separate from the United Kingdom<\/a>. So, those activists are energized, enthusiastic, theyre knocking on doors in edinboro and across scotland in the way that the pro Union Activists<\/a> just arent. They may not have particularly good answers to the big questions, as we discussed, but my goodness are they good at getting support for their cause. Look, so, he wants to sort out the national bank, but they want nothing to do with the union jack so to speak. Why cant they just go for the middle approach that i spoke to gordon brown about off camera, where they get massive more devolution, but confidence that they know the rules. So, they get a lot of what they want, but still get some sort of union with the rest of the United Kingdom<\/a> . And polls suggest thats what most scots want. The funny thing about this campaign is theyve been offered the status quo, offered independence, but theyre not offered this ideal middle ground that most of them would vote for, as a result of which, both campaigns are effectively trying to converge on that middle ground. Darling and the no campaign, havent they made this point . You can have loads more devolution, but we want you to be part of the union. Right. All three unionist parties have come forward with major proposals for new devolution. In fact, the conservative proposal is arguably the most radical, which is surprising in some ways coming from a party thats traditionally opposed devolution, but equally from the nationalist side, you see people, alex salmond, effectively paying down what it would mean. Well keep the pound, keep the queen, stay in the European Union<\/a> keep the bits you want, get rid of the debt. Exactly. Elections are won and lost on the middle ground. You said the conservatives, the right wing of the british establishment for International Viewers<\/a> who dont know the situation. Why, given the fact that they do so badly in scottish polls or in National Polls<\/a> in terms of scottish, why would they want scotland to still be part of the union, where actually if in wasnt a part of the union, they would potentially have a greater spread of power in english and welsh elections . Bear in mind most scottish votes could be discounted. If you ask some conservatives about this from the dark of night far from cameras, they will probably admit they would do well with scottish independence. In lots of elections over the last decade, in which we have the labor government or in the last election a hung parliament, we would have ended up with a conservative majority if not for scotland. However, they also believe in the union, they believe in britain as a political ideal, and i think they also acknowledge that if you give scotland a bit more fiscal autonomy within the union, you might get people voting for the so sort of policy than the politician they would have liked. So, it would be a bit more autonomy within the union that might be good for the conservatives after all. And the worlds talking about this as well from clinton to obama to tony abbott who got in trouble with salmond as well. Does that sway the vote . Not as much as they might like to think. Thank you for joining me. I look forward to reading the economist views on this. Still to come on Worldwide Exchange<\/a>, roche is reportedly picking up the remainder of a share it doesnt already own. We have more on what other names in the japanese pharma space could be ripe for taking after this short break. All right, welcome back. Weve got some flashes on reuters and dow jones. Dow flashes say wikileakss Julian Assange<\/a> says he is leaving the embassy soon. This is Julian Assange<\/a>. These are pictures which are prerecorded from inside of the Ecuadorian Embassy<\/a> in london. Youll recall that he believes he is a political fugitive. His detractors say that he has very serious charges in sweden that he has to answer, but the flash says he is leaving the embassy soon. The ecuadorian ambassador, who has been hosting him, says were hoping for a reaction from the International Community<\/a> soon saying, hes been here too long, says the ambassador. The International Community<\/a> should coordinate to ensure assanges human rights are complied with. Well, well watch this story with interest and see whether mr. Assange is actually on his way out of Ecuadorian Embassy<\/a> and whether that will lead to his arrest and deportation. Well be following that story. Moving on, u. S. Warplanes have carried out air strikes in iraq to help kurdish fighters retake the countrys largest land from Islamic State<\/a> militants. The white house authorized the attack, saying the failure of mosul dam could threaten the lives of civilians and the u. S. Embassy in baghdad. U. S. Central commands says 14 strikes damaged or destroyed a number of vehicles, including humvees and armored personnel carriers. Nbcs bill neely filed this report from Northern Iraq<\/a>. Reporter armed and heading for battle with the islamist militants of isis, kurdish fighters, part of a grand force driving isis back. Paving the way for them, u. S. Air strikes, another 14 today. American warplanes pounded isis targets close to iraqs biggest dam. The militants captured mosul dam two weeks ago, but Officials Say<\/a> theyve now been forced to retreat. Beyond this line is the main battle area. U. S. Warplanes flying overhead, helping targeting the heavy armor isis captured from the iraqi army, most of it originally supplied by america. The Defense Department<\/a> released video of an air strike on an isis humvee and another on an armed vehicle, two of yesterdays nine attacks. Older fighters believe victory is close, but isis holds huge suedes of Northern Iraq<\/a> and outguns these likely armed men. They are appealing for heavy weapons from america, but the air strikes, they say, have been vital. Very, very crucial. However, we do feel like it was slightly late, but better late than never, as they say. Reporter for those who fled in terror from isis attacks, the fightback is welcome. These refugees are yazidis, a religious minority, dozens of whom were massacred by isis two days ago after refusing to convert to islam. A baby born during their eightday escape is to be called bewar. It means no land. They have none now. They live literally on the edge of roads, of halffinished buildings, tens of thousands of them. Todays american air strikes against their tormenters, some small compensation for all they have lost. Bill neely, nbc news. Thailands economy avoided a technical recession expanding 0. 9 on the quarter in the apriljune period. It also beat expectations on its yearonyear growth. The pickup was attributed to increasing exports, easing political tensions and increasing consumer and business confidence. Authorities have found mercedesbenz guilty of pricefixing. The case related to charges on spare parts and sale services. Foreign Auto Companies<\/a> have come under scrutiny for allegedly colluding to keep these prices high. Daimler reiterates to reuters that it was assisting with the investigation, but it would not comment further. And reports that roche is looking to take full control of Chugai Pharmaceutical<\/a> in a 10 billion deal have sent shares in the Japanese Company<\/a> to a record high. The swiss firm owns 60 of chugai. There is speculation a deal could come some time this week. In a Statement Released<\/a> saturday, chugai denies talks of roche, saying it is in no way in the process of reviewing any plan to become a wholly owned subsidiary of roche. Roche has told cnbc it has no comment on these various reports. Okay, lets speak to ben collins, head of japanese and asian equities at sunrise growth. Ben, very nice to see you today. Good to be here. Look, for those of us who look at japan from the macro and see its all about argue no, maam ergonomics and success or failure of that, the enormous gdp has put another little debt in the confidence. Very much so, but i think the interpretation of that is where a few years ago were looking at bad news is good news for fed policy. Its a similar sort of scenario. I think we saw over the weekend i think a reshuffling of the cabinet, going to be announced in the second or the third. This will, hopefully, give the impetus for abe to maybe line up a few more supporters and probably reducing further any internal resistance, but there is still significant internal resistance to things like casino builds or immigration policy thats a little more leniency or putting more female workforce back to work, this sort of stuff, so theres a lot of everythings been thrown at the japanese economy. The abe, abenomics experiment is still on the page, depending on the cabinet . We interpret any positive shift or increase of support hes going to get on his home ground is going to enable action plans that we think are decent ones. What do they need to do to make money off the japanese market . Look top down or specifically at certain sectors . Thats a good question were trying to answer. There are a couple things we like as far as from a trading point of view, were interested in some of the gaming names, some of these. There is a lot of m a discussions following through on lets say the potential, potential again, these are low probability but high reward sorts of trades. If you look at the stocks, consolidation, that could, thats one of the reasons why Japanese Companies<\/a> are trying to consolidate, so that stock could see some pretty decent returns. Again, these are low probability and very longterm trades. Weve been actually talking about holding chugai for nearly 2 1 2 years, since they shifted over the management. So, its been in retrospect, obviously, every trade is obvious, but the writings been on the wall for a while. These sorts of things, especially in japan, seem to be able to take a very, very long time, even after announcement. So, you still are taking on a lot of risk. We like, as far as names that were liking, we like a cyclical recovery, which is proving decent. Some of the shipping names. And its advantageous to buy these in a time of bad backwardlooking macro data. What about the mobile gaming plays . Why are they interesting for you . Theyre particularly interesting for us because theyre incredibly volatile and make a hell of a lot of cash. Im not a mobile gamer at all. I dont get the concept, but these companies me neither. Do you have any favorite games . I always regret it. Waste of time, waste of life, but for sure, but they make a lot of money. Weve got a demographic in japan particularly with very affluent lots of savings and these guys dont mind spending 10, 20, 30 on the day. That could add up for games like, i dont know if youve heard of puzzles and dragons, but this is generating 10 million bucks net positive cash every day. Once youve built these things, they take off. These companies can go pretty quickly, you think this could be interesting on the telco space . Telco in japan, soft bank part of that. We like the bid since the deal fell through. We think theyre going to do something pretty special still. But you know, the market so far has proven us wrong. Its cheaper now than when we started talking a few days ago. Thats where i diverge. When you say its affluent and people with lots of savings do this gaming, i realize im not the typical user. Ben collett from sunrise brokers. U. S. Housing market, we all have a view on that, dont we . Investors turn their eye to a flood of data this week as the jackson hole fed conference gets under way. Well discuss this after a short break on Worldwide Exchange<\/a>. What if there was a credit card where the reward was that new car smell and the freedom of the open road . A card that gave you that im 16 and just got my first car feeling. Presenting the buypower card from capital one. Redeem earnings toward part or even all of a new chevrolet, buick, gmc or cadillac with no limits. So every time you use it, youre not just shopping for goods. Youre shopping for something great. Learn more at buypowercard. Com welcome to Worldwide Exchange<\/a>. Im steve sedgwick. Headlines around the world. European markets bounce back, autos and industrials leading the way amid some signs of a breakthrough in Eastern Ukraine<\/a>. Foreign ministers meeting in berlin. Theyll reach an agreement on a russian aid convoy heading for ukraine but make no progress on talks for a ceasefire. Missouris governor calls in the National Guard<\/a> after tear gas is used in ferguson to calm protests sparked by the shooting of a black teenager by police last week. And uk housing stocks are weak after bank of England Governor Mark<\/a> carney tells a uk newspaper the bank of england will put rates before wages, but the ceo of bovis homes tells us hes unfazed. Were seeing clearly a strong Housing Market<\/a>. Interest rate rises are ultimately inevitable. As long as mark carney follows through with his commentary in a gradual and limited process, we feel that the market can deal with that. Announcer youre watching Worldwide Exchange<\/a>, bringing you Business News<\/a> from around the globe. Well, everyones worried about the european trading perspective on the back of concerns of slow growth domestically and, indeed, the trade with russia and what that means for countries such as germany, which have literally thousands of Companies Trading<\/a> with their counterpart in russia. The eurozone due in trade balance. The reuters poll had 15 billion euros and the yearago figure was 15. 7. The june unadjusted exports were up 3 year on year, imports were up 2 year on year. On adjusted, seasonal adjusted exports down 0. 5 month on month. If youre just tuning in, thank you for joining us here on the show. Heres how markets are faring. Ahead of the u. S. Open. Lets take a look at the u. S. Futures. I bet theyre positive, but theyre positive really because the europeans are reacting to your rally stateside that you had late on friday. We didnt enjoy that in europe, so you can see there the nasdaq, the mini 100 up 16. 75 points, the s p seen higher as well, the dow up around 74 points. Of course, you had the late rally, you had your geopolitical risk wobble early in the session on friday, your vix shot up, then it came off again towards the close. European indices are looking pretty smart at the moment, actually. The london ftse, a bit of a laggard. 0. 6 higher. But the xetra dax now remember, the germans have a very high beat or a very high exposure to whats going on in russia, and when you see an abating of tensions there, you see the germans sighing relief. 1. 4 higher. The cac 1. 1 to the good. The ibex is 0. 7 . As we take a look at the Foreign Exchange<\/a> rates as well, the euro dollar 1. 3385. French are at it again. Theyve been saying we want the ecb to get the euro down to a more appropriate rate. I wonder what that appropriate rate is. At 1. 3387 is where its trading. Dollar versus the canadian, 1. 0882. And cable, sterling versus u. S. Dollar, is trading at 1. 6727. All right, we need to check in on how those asian markets fared. Who better than sri jegarajah. Hi there, steve. The markets are doing a reasonably good job of shrugging off the geopolitics and some of the uncertainty you were talking about emanating out of ukraine and the complex in the crisis there. But let me just stress, because it is the summer, were not seeing real conviction buying. That said, the outperformance is coming from the indian markets. Up by more than 1 for the nifty. Adding on gains throughout the session, youre looking at record highs. And the catalyst for this move higher thats come from an Independence Day<\/a> speech from the Prime Minister<\/a> talking about how he wants to fire up the bureaucracy to clear up the policy logjam and the bureaucracy thats plagued the Indian Business<\/a> climate. Twoweek highs for the s p asx 200. Theyre liking numbers, including from the banks weve been seeing over the past week or so, and the top story today from a stock perspective is Chugai Pharmaceutical<\/a> responding to this talk that roche may increase its stake in the company and buy out the shares that it doesnt already own, taking over full control of chugai. Now, both the companies have doused the speculation in cold water. It hasnt dampened the spirits of the market, though. They sent the shares up to record highs, surpassing 4,000 yen. Elsewhere, we are watching what is happening in the thai market as well, because we got some normalization on the gdp front the second quarter, so avoided recession in the second quarter, but theres still a lot of risks remaining in the entire economy coming from consumption, coming from the Business Climate<\/a> as well, and also tourists arrivals that havent really recovered fully since the political crisis there. So, all in all, steve, a fairly lackluster session with the exception of a few pockets of strength, namely in india and the shanghai composite. Speaking of which, china is going to be important this week. Wednesday we get the hsbc flash pmi, so that should give us a sense of whether we are seeing stabilization in the chinese economy. Remember, property, that sector still remains the weak link, still remains in clear and present danger broadly for china. Back to you now. Good to see you today, sri. Thanks indeed for that. Robert shiller thinks the u. S. Stock market looks very expensive right now. The noted yale professor and economist writing in saturdays the New York Times<\/a> says the cape ratio, which is a seasonally adjusted measure of stock prices which he helped develop, is at worrisome levels. Shiller says cables seeking to keep adjusted pricetoearnings ratio is above 25, a mark thats only been surpassed three times since 1881. This was in 1929, in 1999 and 2007, which were followed by major drops in the market. Lets get a view from carter worth, chief market technician at stern aegean, joining us now. Thank you for joining us. Is shiller right . Are we at worrisome levels on the s p . Well, i think it actually was a very interesting article that many of us read, and whats important about that data is, of course, that it is an important data point but not a timing tool, in the sense that markets can stay expensive, and they are in principle expensive now, and it doesnt mean you have to have some sort of epic giveback as those three other periods, in fact, is what occurred. But what is important, regardless of whether you do have a big giveback or not, is that riskreward is asymmetri l asymmetrical. And that is to say, essentially, sure, can the market stay elevated or even eke out gains . Yes, but you trade off great risk for that, and the dow side is more severe in principle than the upside potential. So, whether one uses the word wobbly, weve been a bit wobbly of late, things look dodgy of late, this is the year so far where, actually, nothing has happened. And thats a big change from the last two, three years, where weve been advancing aggressively. Were about to be september 1st and every major board in europe is essentially unchanged. Down a little bit, up a little bit, and thats basically the case with the u. S. Market as well. You have places like the russell down, the s p up a little here. But the principle is that you do have a expensive market, and we think it is not a good riskreward proposition. So, what should our viewers be doing if they want exposure to the u. S. Markets now . Right. Well, of course, now, there is elective buying and then there is mandatory buying. If youre a long only, fully invested by mandate player, professional or otherwise, of course, you have to do something. We would say if you dont have to do something, its a time to have your cash levels higher than normal, to take a defensive posture. But in terms of doing something, we continue to like utilities here. We like energy. There are plenty of Health Care Situations<\/a> that look quite good, and we could talk about any individual names that you might like. But some of the more worrisome areas, industrials are all rolling over, at least in the u. S. , but notice for instance auto manufacturers. Daimler is rolling over and ford and general motors. If you look at the nasdaq global auto index, some 35 players that make up that composite, its effectively in the throes of a bullishtobearish reversal. Housings sort of stalled in the u. S. There are plenty of warning signs in places that we would avoid. Now, if i look at the u. S. Yield curve now, i see something that looks even more of a bubble than the u. S. Stock markets. Twoyear note, you get a pathetic 0. 42 of your money, fiveyear and then 2. 4 for the tenyear yield. If i came into the year with everyone saying we would see 3 north on the tenyear, has everyone got it wrong . And what do they do now . Thats right, and if you think about it, the most sort of consensus trade on january 1st was yields at 3 exactly on the tenyear that we were going to be about 3. 75 to 3. 55 at this point. And here we are, we touched a low of 2. 30 on friday on the tenyear and then the 30year is at 3. 13 low. And the principle here is that and there are two things, of course. Theres relative and absolute. Those yields on a relative basis are quite, frankly, fat compared to other things in europe with germany below 1 and sweden, norway, netherlands and so forth. But the real principle here i think is almost the recripical of the market in the sense that ultimately there isnt a lot of room for rates to move lower, we would say. And the recent flattening of the curve, about 50 basis points between the 2 and 30year spread, about 40 basis points over the last six months in the two 10year spread, we think thats probably run its course to some extent. So, we would, in fact, be sort of flat bonds here, if you will, flat treasuries, but it is a big question mark. If things are so good and the economy is recovering in the u. S. And the cost of moneys not moving up, what gives . Yeah, im with you on this one as well. Look at those pathetic german yields at 1 , makes the 10year look positively fat, doesnt it . Carter, well have another look at this in a few moments time. Lets just tell everybody whats on the agenda today in the United States<\/a>. Weve got the National Association<\/a> of homebuilders putting out its monthly Sentiment Survey<\/a> at 10 00 a. M. Eastern time. Later this week, were going to get more data on the housing. Housing starts, existing home prices, well get some cpi numbers for you as well, as well as the minutes from last months fed meeting. Everyones looking at the fed, though, and theyre looking at janet yellen, speaking at jackson hole on friday. One of our previous guests has already said she wont want to make the same kind of ripples as bernanke at previous meetings as well. So, bated breath for what she will and wont say on friday. As for the earnings, were kind of getting there, arent we . Weve had a terrific earnings season in many ways, if you believe the fact of lowered expectations and beats is terrific. Just one notable report today. This is the retailer Urban Outfitters<\/a>. Okay, a lot of money around, including money in the sultan of brunei. He set his sights on one of the most storied hotels in the world. It is reported an Investment Firm<\/a> has bid 2 million for new yorks plaza hotel and londons grovener house and the dream hotel in lower manhattan. The sultan and the Dorchester Collection<\/a> have come under fire for strict laws imposed in brunei, including death by stoning for homosexuals. That has sparked boycotts of dorchester properties, including the Beverly Hills<\/a> hotel. Elsewhere, tesla is boosting Warranty Coverage<\/a> on its model s sedan, a week after influential u. S. Magazine Consumer Reports<\/a> highlighted problems with the electric car. The warranty on the drive frame is being extended to eight years and infinite miles, matching the battery pack. The move is retroactive to all vehicles produced since 2012. Tesla says this will have a moderately negative impact on its earnings in the short term. All right, lets tell you whats coming up on the show. We have a big focus on property on Worldwide Exchange<\/a> this week. London property prices have jumped 20 this year. Can they continue to rally . I dont know. After the break, well kick off our Global Property<\/a> week live from the uk capital. Stay tuned right here on Worldwide Exchange<\/a>. What if there was a credit card where the reward was that new car smell and the freedom of the open road . A card that gave you that im 16 and just got my first car feeling. Presenting the buypower card from capital one. Redeem earnings toward part or even all of a new chevrolet, buick, gmc or cadillac with no limits. So every time you use it, youre not just shopping for goods. Youre shopping for something great. Learn more at buypowercard. Com we stathat the kid on thehought back of the bus might have a song that he has in his head but he just cant get out. With the technology of cloud, we change all that. I can sing something into my device, up to the cloud it goes, back down it comes, sounding better. We break down the walls of creation and we give music creation for the masses. Unlock the creativity in anyone. With the ibm cloud. The ibm cloud is the cloud for business. These are your headlines. European equity markets rebounding from fridays losses as tensions over ukraine ease somewhat. This despite russias foreign minister saying he sees no progress on ceasefire talks for ukraine. And the u. S. National guard is set to be deployed in ferguson, missouri, after protests escalate over the shooting of a black teenager. Russias foreign minister, sergey las veg sergey lavrov, says there was no progress from counts in berlin yesterday. Speaking after the meeting, lavrov stressed that russia was allowed to show vigilance in the light of war by its border. The Foreign Ministers<\/a> called the meeting to discuss a ceasefire with kiev. Annettas in berlin. Annetta, ive got a really basic question for you. Bearing in mind, russia says it is not orchestrating events in Eastern Ukraine<\/a> with the separatists, why do we think anything concrete that is going on internally in ukraine can be decided by ministers who say they are not responsible for the actors involved . Reporter well, i actually think that a lot of those Foreign Ministers<\/a> are thinking that russia is orchestrating things in the eastern part of ukraine, at least when it comes to sending mercenaries into the country and also weapons. So, we have relentless reports that weapons are shipped, not shipped, but actually driven from russia into the eastern part of ukraine, and russia, well, at least should have a say of what is going to happen there. At least they could actually close their border. That is what ukraine wants. They should close their borders and they should stop the shelling, which is, of course, a fair claim. But let me bring you back to what happened yesterday evening. The four guys who are sitting together. And essentially after this meeting, mr. Steinmeier, the German Foreign<\/a> minister, said there was a little progress, but again, progress is only reached on humanitarian aid, so at least good news for the people on the ground. Back to you. Thank you indeed for that, annett annetta. Updating us on the talks in berlin. Wikileaks founder Julian Assange<\/a>, says he plans to leave the Ecuadorian Embassy<\/a> asylum soon. Speaking alongside the ambassador on the twoyear anniversary since taking refuge, assange gave no further details on where he would go or whether he would turn himself in. Presumably, if hes going out of the embassy, hes going into the arms of the british police, thats my guess. Seeing as how the swedish authorities want him. The ambassador said he hoped to speak with the uk foreign secretary in the coming weeks to find a friendly solution. Bearing in mind, there are two distinct sides to this. Assange and ecuador say he is a political prisoner, hes a human rights campaigner. Swedish and u. S. Authorities say he has some very serious criminal charges to answer to. So, London Property<\/a> prices have surged almost 20 this year, but some surveys indicate the house price boom in the United Kingdom<\/a> may be fading. Katherine joins us now from great heights. I always knew youd get to great heights, katherine. Reporter yeah, but you didnt know i was going to have to wear a hard hat to get there, unfortunately. Here i am on the 18th story of whats going to be a 36floor development known as lexicon here in the center of london. This is one of a lot of really Tall Buildings<\/a> that are springing up over london, changing the shape of the skyline, and of course, any effort to try and address the supply problem here in london, which is one of the reasons that youre seeing those prices go so sky high this year, and of course, one of the reasons people are concerned that there may be a new property bubble building here. Now, theres definitely a huge boom in construction at the minute. You can probably see from the number of cranes here behind me. There is a lot of building going on. A lot of its residential, but some people are concerned that because a lot of that is being fueled by overseas buyers, possibly there may still be an affordability issue, possibly some of the middle classes may be priced out of inner london in particular, and thats also something very concerning to the bank of england. Weve seen the governor of the bank of england, mark carney, in an interview this weekend try and suppress concerns about that Housing Market<\/a>, but of course, the average british person still is facing quite a lot of problems in terms of low wage growth. So, if theres a change to Interest Rate<\/a>s, even a gradual one later this year, it could be something that makes mortgages even less affordable. Back to you, steve. Thank you very much for that, katherine. Very fetching. I see you have a big future in yellow velcro and hard hats. Still to come on the show, kurdish and iraqi forces reportedly retake the crucial mosul dam after help from u. S. Air strikes. Well discuss whats next for washingtons role in the crisis after the break. Were going to leave you now with a look at what looks like a very bullish day for european equities. Xkc kurdish and iraqi forces have secured the crucial mosul dam, pushing back islamic militants, according to state television, this after the white house authorized air strikes to assist the operation. U. S. Central command said 14 strikes damaged or destroyed a number of vehicles, including humvees and personnel carriers. Hadley gamble is with us now. Hadley, ive got a question for you. U. S. Policy in the middle east hasnt been consistent. Its oscillated. We know that the secretary of state, former secretary of state clinton admitted as much recently as well. Is it a question of finding the least bad allies for the administration at the moment . Because theyre not naturally now allies, the kurds, are they . Or indeed, the Iraqi Government<\/a> . Thats a big question. I think unfortunately its often about finding the ally of the moment, not even just the least bad. Its just whos going to help you in the moment. And we even talked about thats terrible Foreign Policy<\/a>, dont you think . You would think, yeah. At the moment could turn into not necessarily an enemy, but antagonist in the future. Havent we learned lessons from syria, from egypt . Is this the way to conduct a Foreign Policy<\/a> . Thats a big question for the american public, but unfortunately, with the events of missouri at the moment, nobodys paying any attention to the Foreign Policy<\/a>. Whether youre in the United States<\/a> or uk, this is the same problem. What are we doing in terms of Foreign Policy<\/a> . Now theyre saying theyre going to be speaking to iran and perhaps the iranians are the way to combat a terrorist threat. But as we spoke about earlier, what they really have to do is get to the idea. I mean, isis, the Islamic State<\/a> is an idea. And unfortunately, you can take out as many terrorists as you want. You can do air strikes, you can push them back, but unfortunately, until you get to the heart of the matter, which is the idea, im not really sure if you can really take care of the threat. All right. And thats not antiamerican, by the way. The british Foreign Policy<\/a>s equally bad as well. Thank you, hadley. Carter worth is chief market technician at stern ag. Im looking at the price of oil, brent for instance, which apparently is the oil benchmark, 102. 15. Why havent we seen a rally in oil on the back of these concerns . We came from elevated prices, brent and wti. In the case of wti, we were at a high of 108 midjune and touched a low of 95 just midaugust. And so, the question is, were we ahead of ourselves and is this pullback maybe an opportunity . We went back and looked at something, which is, when you have a 12 to 15 decline in crude on a two to threemonth basis, which is actually what weve had in the junetoaugust period, how do Energy Stocks<\/a> perform in the ensuing one, three, five and six months . If you go back to 1990 and examine that data, there have been about 200 times when crude has dropped in the order or magnitude of 12 to 15 in the two to threemonth period as weve seen now. And Energy Stocks<\/a> in the s p outperform the s p itself on a consistent basis one, three, five months out. And so, actually, there are many Energy Stocks<\/a> here that we like for rebounds. They themselves having sold off aggressively, perhaps as some of the news has gotten a bit better. But we just heard just seconds ago that according to the russians, there are no deals made, no progress made, and the world is boiling. Yeah. Carter, really nice to speak to you today. Thank you so much indeed for your time. Thank you. Carter worth, chief market technician at stern ag. All right, we will move on. Still to come on the show, the governor of missouri orders the National Guard<\/a> to ferguson after more than a week of unrest. Were live in the st. Louis suburb for the very latest after this break. Welcome to Worldwide Exchange<\/a>. Im steve sedgwick. These are your headlines from around the world. U. S. Equity markets look set to extend europes relief rally, this despite uncertainty over ukraine, as russias foreign minister says no progress has been made on ceasefire talks. President obama takes a timeout from his summer vacation, returning to the white house to address several crises, including u. S. Air strikes in iraq and violent protests in the midwest. This after missouris governor calls in the National Guard<\/a> after tear gas is used in ferguson to calm protests sparked by the shooting of a black teenager by police last week. Announcer youre watchi ini Worldwide Exchange<\/a>, bringing you Business News<\/a> from around the globe. Well, if youre just tuning in here, thanks for joining us you should be thanking me, i think, for this. Anyway, heres how the markets are faring ahead of the u. S. Open. I dont do this for nothing, you know. Futures are looking pretty good. You had a bit of a rally after the lows on friday, but that just got you stateside to the flat line, then all that flop we saw in the vix came out of the market a little bit. So, it was tempered, some of those concerns about ukraine, about iraq and about syria as well. So, youre looking like a decent start to trading for what is a mixed week. Youve got jackson hole at the tail end of the week, youve got lots of housing data, not so much on the earnings front. Urban outfitters reporting within the next 24 hours. Lets take a look at the european indices as well. Theyve done very well today, especially stocks in indices which are exposed to the russia situation. So many thousands of German Companies<\/a> export into the german market. Very important for the likes of adidas, for the semens of this world. Ftse 100 a laggard performance trading at just 6,728. Right, so, how do you make money in these markets . Heres what some of the experts have been telling us this morning. You look for cash flow generation, entrepreneurialled businesses, mediumterm, so you see a lot of stuff in the retail sector. Mag neat still looks interesting because after the approach to the selloff it got cheaper. People always complained about the multiples being expensive and nothings been impacted on the growth. You were seeing this hot money in a way move from europe back into em. I wouldnt be surprised if we see those floats come back again. I think the move is shortterm and i think there are considerable structural problems in emerging market, particularly related to the weakness of china. Now, we are seeing a stabilization in china, but were not actually seeing strong growth. Were not seeing the 10 average you saw before the credit crisis, Something Like<\/a> 7 , 7. 5 . In terms of gilts, i would say that you want to see more risk premium built in, in the front end around the bank of england, and then more broadly, 10year gilt trades pretty much in line with the u. S. So, i think thats the case for building in more risk premium for the uk market compared with the u. S. President obama is taking a rare break from vacation in marthas vineyard, returning to washington today for meetings with the Vice President<\/a> , joe biden, and other advisers. The president is scheduled to meet with his National Security<\/a> council on iraq. U. S. Attorney general eric holder will be briefing him into the investigation into the Police Shooting<\/a> in ferguson missouri that sparked violent protests. The decision may be aimed at mounting criticism that the president is on vacation in the midst of several crises. Tony fratto, cnbc contributor, joining us now. Tony, thank you for joining us. Why is the president back in washington . What thats prompted that . Well, i think thats the key reason, steve, actually, is the imagery of the president being on vacation with really grave matters taking place, air strikes in iraq and of course the events in ferguson, missouri, as well. This is always a problem for president s because theyre never off. Theyre always on and have to be dealing with these issues. And if you ask average americans whether they think the president should take a vacation, overwhe overwhelmingly, they do believe he should, but it doesnt help him to have to deal with these images, opencollared announcements from a vacation spot dealing with these very serious issues. And whats the Biggest Issue<\/a> for americans . Is it the social problems highlighted by whats going on in ferguson or is it concerns over Foreign Policy<\/a> . Well, there are a number of Foreign Policy<\/a> challenges, but i think your question implies that maybe americans are more focused on ferguson, and i think thats right, steve. I think that the pictures coming out of ferguson, the racial issues in particular, the Law Enforcement<\/a> issues and how its being dealt with in a local community in the United States<\/a> is capturing much more attention from americans today than what is going on with Foreign Policy<\/a>. They are paying attention to the air Strike Campaign<\/a> in iraq, you know, for really Important Reasons<\/a> or questions about how much further engagement the United States<\/a> might have, whether theres a chance to be successful, and theres a lot of skepticism about american Foreign Policy<\/a> in a number of areas right now. So, theyre paying attention to it, but far more attention to events in ferguson, missouri, right now. Tony, well take a look at some of those Foreign Policy<\/a> issues in a few moments time, if we can. I want to recap on the story about missouri, because the governor has now ordered the National Guard<\/a> to the st. Louis suburb of ferguson after more than a week of unrest following the Police Shooting<\/a> of an unarmed black teenager. Lets get the latest on the ground from Nbcs Jay Gray<\/a> in ferguson. Jay, update us on whats going on. Reporter hey, there, steve. A very rough night overnight here, a lot of things changing. Lets start with the violence on the grounds here. A lot of people were concerned about what the curfew might do for that. Well, they didnt get to that point. It was 3 1 2 hours before the curfew was instituted that the violence started here, and police are saying it was targeted, premeditated, and aimed at the command post where im standing right now, their Main Command Center<\/a> as they continue their work here. Now, officers in riot gear moved in, tear gas and smoke canisters were deployed. They started to push the crowd back. Overall, we hear that there were eight people in that crowd with guns, that at least two molotov cocktails were thrown at police near this command post. Two or three people injured in shooting incidents, police not involved, we are told. And at least four businesses damaged and looted, one of those set afire. Now, as all of that was unfolding, we began to get a new picture of what happened according to his family the day that Michael Brown<\/a> was shot and killed. Attorneys for the family today released information about a private autopsy, one that shows the 18yearold was shot six times the day he was killed. We expect to hear more from the family and the doctor who performed that autopsy a bit later this morning. Steve . Jay, thanks very much indeed for that report. Lets go back to tony fratto, managing director of Hamilton Place<\/a> strategies and cnbc contributor. We talked about how its a difficult situation for the president , both obviously with the Foreign Policy<\/a> and whats going on domestically. Are there ramifications, as one of our contributors pointed out earlier on, from the midterm for what were seeing in missouri . Yeah, very much so. And the difficulty for president obama, unlike in the case of Foreign Policy<\/a>, where the president has, you know, holds all of the authority to take action as he sees fit and the authority granted him by congress, in the american system, the president s ability to deal with the situation in ferguson are exceedingly limited. The Jurisdictional Authority<\/a> belongs to the governor and to local Law Enforcement<\/a> officials, so you see the president trying to comment on the activities in ferguson but with very little control over the situation. Think of the autopsy that was mentioned. The attorney general, eric holder, has ordered a third autopsy to take place, and so, that will take place, adding to the forensic evidence as to what happened in missouri. But you could see that the president has very limited ability to deal with it. And so, if events spin out of control, you know, the president is always given some of the credit or some of the blame for things, mostly blame when things go wrong, but with not Great Authority<\/a> to actually do anything about the situation. Because tony, i mean, just looking at some of the detractors of the president , theyve been targeting him over Foreign Policy<\/a> for a long time, saying his policies over syria, for instance, have created policies and problems elsewhere, namely in ukraine, but not drawing red lines and sticking to those as well. Always saying now domestically hes weakened by these events over something that, as you say, is literalley nothing to do with him in many ways. Yeah. Really nothing to do, but then, when youre the president , thats the position youre in. Its a particularly difficult issue for this president , though, because he is americas first black president. And you know, he has tried to deal with racial issues in limited ways and with limited success, but you cant help looking to the first black president whenever we have these really significant racial issues that come to floor. So, we look to him to comment on these issues from his particular point of view, not just as the president but as a unique president. And so, yes, you know, depending on how things play out, and maybe the president can find a way to play a mediating role and to provide assistance on the ground that could ultimately be successful, but this is a volatile situation and a very unpredictable situation, and we dont know how the protests are going to proceed. And if it does not go well, if theres an escalating violence and what appears to be an inadequate response by the president , it could weaken him, it could weaken his position, and by extension, his party going into the midterm elections. I always appreciate hearing your comments. Thank you very much for your time today. Tony fratto, managing director Hamilton Place<\/a> strategies and cnbc contributor. German chancellor Angela Merkel<\/a> has been invited to kiev for political talks next saturday, this according to a government spokeswoman. This after russias foreign minister, sergey lavrov, said talks with his ukrainian, french and german counterparts in berlin yesterday failed to produce agreement on the ceasefire. Elsewhere, you remember the wikileaks founder, Julian Assange<\/a>. Well, he says hes planning to leave the Ecuadorian Embassy<\/a> in london soon. Speaking alongside the ecuadorian ambassador on the twoyear anniversary since taking refuge, assange gave no further details on where he would go or whether he would turn himself over to uk authorities. The ambassador said he was hoping to speak to the uk foreign secretary in the coming weeks to find a friendly solution. Coming up, several banks with big operations in london may, may be hiring moving vans soon. Why will they be leaving for the emerald isle pastures, next. Well discuss this in a few moments time on Worldwide Exchange<\/a>. Where the reward was that what if tnew car smelledit card and the freedom of the open road . A card that gave you that im 16 and just got my first car feeling. Presenting the buypower card from capital one. Redeem earnings toward part or even all of a new chevrolet, buick, gmc or cadillac with no limits. So every time you use it, youre not just shopping for goods. Youre shopping for something great. Learn more at buypowercard. Com okay, heres your headlines. European equity markets rebounding from fridays losses, as tensions in ukraine just ease slightly. Russias foreign minister, though, says he sees no progress on ceasefire talks for ukraine. And the u. S. National guard is set to be deployed in ferguson, missouri, after protests escalate over the shooting of a black teenager. All right, this space for rent signs could be going up outside of the london headquarters of some big u. S. Banks, if britain ultimately exits the eu. Hampton pearson joins us from washington with more. Hampton, theyre already preparing to go . The referendums not for ages. Reporter yeah. This is a banking story with lots of, pardon the pun, moving parts, if you will. Wall street banks reportedly drawing up preliminary plans to move some operations in london to ireland amid concerns the uk is drifting apart from the eu. The Financial Times<\/a> says citigroup, bank of america and Morgan Stanley<\/a> are considering such a move, preparing for the eurozones impending Banking Union<\/a> that threatens to isolate great britain. Now, most u. S. Banks and asian banks base their european operations in london, giving them an automatic passport to conduct services across all 28 eu countries, but Senior Executives<\/a> say the uk is unlikely to be granted the same right if it left the eu. The uk hosts more than 250 foreign banks and generated Financial Services<\/a> a trade surplus of 71 billion last year, a third of which came from the eu. Ireland is attractive for u. S. Banks because of its low Corporate Tax<\/a> rate and eurozone membership. Citigroup has 2,500 people in ireland, while bank of america and jpmorgan both employ more than 500 workers there. All three have irish banking licenses. Now, separately, major global banks may no longer assume theyll have access to the feds discount row as part of their socalled living wills. The Financial Times<\/a> is reporting u. S. Regulators gave specific guidance in confidential letters this month on why they rejected the banks emergency plans. Banks were told they may unrealistic assumptions about how customers, counterparties and investors would behave in a crisis. The fed and fdic want banks to come up with plans that dont involve any government aid, even the discount window, which is available only to banks that are in trouble but arent failing. Banks already have submitted living wills for this year before they received a response from regulators to their 2013 plans, they must show improvements in their 2015 plans or risk financial penalties. So, as we said, a banking story with all kinds of moving parts. Very nice, indeed, hampton. Thank you for that. Okay, lets move on. Pricewaterhousecoopers set to pay 25 million to settle new york regulators claims it mishandled work for the bank of tokyo mitsubishi ufj. They will also be banned from some consulting work for two years. The new York Department<\/a> of Financial Services<\/a> alleges pwc watered down an antimoney laundering report it submitted covering the banks dealings with iran and other countries subject to u. S. Sanctions. Elsewhere, fund manager and activist investor David Winters<\/a> has sold his stake in berkshire hathaway, citing Warren Buffetts<\/a> inequity on cokes plans. He said it was obsessive, but berkshire abstained at the shareholder meeting. Winters has been a vocal critic of cokes plan, which he says violates shareholder value. Wintergreen advisors still owns 2. 5 million coke shares. Winters had owned 1. 2 million berkshire shares. All right, coming up, u. S. Markets are coming off a second straight week of gains, despite everything geopolitically, and appear poised to start mondays trading session in the green. We head to the bond pits in chicago for an outlook on what traders are closely watching, coming up next on Worldwide Exchange<\/a>. The u. S. Markets have had a terrific run, considering the dow was up 1. 7 , the s p up 1. 2 . The problem is, european indices didnt enjoy that because the rally late on in u. S. Indices on friday missed europeans for playing catchup, giving back a little bit of ground from the higher gains. Xetra dax was up over 1. 5 . Now the germans are only up 1. 2 . The ftse 100 in london up 0. 5 and the spanish market trading 10,310. Rebel leaders are denying syrian separatists were responsible for a strike on a convoy in france. There seems to be a lot of convoys going on, military convoys, aid convoys, a convoluted situation down in Eastern Ukraine<\/a>. All right, whats the agenda for today in the United States<\/a> . Lets tell you. The National Association<\/a> of homebuilders puts out its monthly Sentiment Survey<\/a> at 10 00 a. M. Eastern time. Later this week, well get data on housing starts, existing home prices, some cpi as well as the minutes from last months fed meeting. And the speech from the fed chair janet yellen from jackson hole on friday. Earnings, not a huge amount today. Weve got Urban Outfitters<\/a> coming out later on. Walmart, meanwhile, wants to help you get in and out of stores without a lot of frustration. Wall street journal reports the retailer is promising to stop each register this Holiday Season<\/a> to address long waits in line. The pledge covers peak shopping hours on weekend but can vary by store. The move comes as walmart has struggled to win back shoppers. The company hasnt posted an increase in u. S. Samestore sales since 2012. They havent had samestore sales increase since 2012. Elsewhere, target is keeping the lights on later at more than half its u. S. Stores, hoping to snag customers who put off shopping until well after its dark. The wall street journal says the chains 1,800 stores are typically open from 8 00 a. M. To 10 00 p. M. , but now theyll stay open until 11 00 p. M. Or midnight. Who goes shopping at 11 00 p. M. . Wow. The new hours will start this month and run through the holidays. Target is cutting prices to bring back customers after a series of missteps. All right, lets look at the u. S. Futures. They look pretty positive for the equities as we speak. 70 up for the dow. Ben liechtenstein, whats it going to take for the bears to be right on u. S. Markets . Up, up and away. Well, it certainly is up, up and away, which is the pattern weve been seeing for the most part, even after a couple weeks ago we saw that little bit of a pullback. The s ps did trade below that 1900 level, that infamous level, and while we were trading 1,950, there was all kinds of debate about whether we would see 2,000 first or 1,900 first. We saw 1,900 first, but clearly rejected that lower level over last week. Basically, as you mentioned, up, up, up. I think the focus this week will be janet yellen. Well hear from the fomc, the minutes as well on wednesday, but really, the focus should be the dollar and in the treasuries. The bonds had a huge move last week to the up side. Multimonth high. Again, yields are lower as a result. And again, the dollar activity weve been seeing over the last couple weeks as of recent, again, a test of that 8,177 level, which has failed a few times now. The euro continues to hang right around the 1. 34 level, but basically, what im seeing is that money is starting to move a bit and were starting to see multiple major markets reacting accordingly and on the move as a direct result. Yeah, but look, professor, Professor Robert<\/a> shiller, how can the market know better than he does . He says the cape, sickically adjusted, we have to go back to 1929 to get back to similar levels. Surely we should all be looking at that. Well, theres a few things we should be looking at. One is i think its extremely important, is that were seeing a bit of a divergenttype play, which has been developing over the last few months, and its starting to become powerful and its starting to attract attention, and that is the fact that the russell has really yet to participate in the broaderbased market rally that were seeing. You also mentioned earlier the dax. Those have been really under pressure over the last few weeks. Again, somewhat divergent from the other majors. The other major markets continue to seek upper level prints and value at upper levels. But again, were having a couple outliers, if you will, which have been weighing on the markets, so we have yet to see the new year highs yet. But i think the last couple weeks were a great example of this markets characteristic type tendencies, if you will. The fact that all of the dips that weve been seeing over the last few years have been bought. Again, i dont think anythings changed in terms of Market Sentiment<\/a> or investor approach towards the market. Mr. Liechtenstein, thank you very much indeed for your time. Ben liechtenstein, president of tradersaudio. Com. Im steve sedgwick. Thank you very much indeed for watching Worldwide Exchange<\/a> here on cnbc. Good morning. The Central Banks<\/a> annual meeting in jackson hole is set to dominate this weeks market discussions. Will janet yellen and Company Offer<\/a> any hints to future policy moves . Shop until you drop. Target keeping some stores open until midnight in the fight for consumers. Meantime, walmart is making a new checkout promise. Plus, taking electric to a new level. The super car can go 0 to 60 in about three seconds. The price tag more than 500,000. A bargain after that ferrari that we saw last week. Its monday, august 18th, 2014, and squawk box begins right now. Good morning and welcome to squawk box right here on cnbc. Im Andrew Ross Sorkin<\/a> along with joe kernen. Beckys enjoying some time off today. We do have some breaking news to start the program off, though, this morning. Sources telling us that Dollar General<\/a> making a bid for family dollar. It is now offering 78. 50 a share in cash. Thats about 9. 7 billion. Sources telling us that that offer being made this morning. We should be hearing about it a little bit later in the day, perhaps crossing the wires in the next hour. You should remember, of course, the dollar tree made a 74. 50ashare cash and stock offer back on july 28th. A lot of people had thought Dollar General<\/a> was going to come in with that bid. Dollar tree came in with that bid instead. 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