you're watching "worldwide exchange." i'm ross westgate. getting connected, microsoft buys nokia smartphone business. the ceo will join us for first on cnbc interview at the top of the hour. shares of nokia spike more than 40% as other european network providers are sharply higher. investors are also dialling into telecom stocks after vodafone finalizes its $130 billion deal with verizon.

>> the percentage might look small, but the amount of money i think is robust enough for allowing us to have a great future. the u.s. senate prepares for a hearing today on the use of force in syria while the u.n. endorses a military response. very good morning to you. microsoft is buying nokia smartphone business for $7.2 billion. the deal which includes licenses of nokia's patents. this is microsoft's second biggest acquisition behind the purchase of skype. microsoft will use some of its near $70 billion in overseas cash to pay for the deal. nokia was an early supporter of microsoft's windows phone software for its lumia

smartphones. the ceo steve balmer says the company started discussing a deal before the noble world congress in february. microsoft will bring on several nokia executives including the ceo who joins the company. he's seen as a possible candidate to replace balmer when he steps down in the next year. the nokia chairman takes over as interim ceo. as far as the stocks are concerned, clearly seening athe b as the big winner here is nokia. shooting up this morning. this is what they're doing. they're spending 7.1 billion on -- nokia stock now up 81% and a lot of analysts have come out and said, they can absolutely -- nokia could make the phone section work and therefore better to get it off to microsoft. more question marks i think about where this leaves microsoft and where it leaves nokia. don't forget microsoft ceo steve

balmer will join us at -- in about an hour's time. you won't want to miss that. jon fortt will join us as well as far as that is concerned. nokia is holding a webcast on the back of the microsoft deal. it is under way as you can see. we'll keep you updated with all the news as it happens. joining us for more analysis, analyst at danske bank on the phone from helsinki. good morning to you. got a deal done after apparently many, many discussions. nokia shareholders now believe having gotten rid of the mobile devices unit they can realize full value from networks. >> right. >> so is that how you see it? what do you think of how this has been structured? >> so i think that nokia was

about to sale their network business and then we started to see that they were -- would be investing into the network business in the spring and also that the part two would follow that, they would also complete -- and then this now happened and this would give nokia more freedom and a possibility -- with the business that is left. >> yeah. so, look, what is the business that is left. they bought out the seiemens joint venture. how do you see that developing? >> most importantly a function of the great management. they have really significantly restructure ed this. much more remains to be done, but clearly the company has been

producing a positive change in a number of passporters and i think this could be a case also going forward. >> what is microsoft getting out of this? because they were having problems getting other people to take up the lumia phone. now that all the windows -- now that they have owned their own phones, it is going to be even less likely, isn't it, that people want to take windows phones? >> i think if you look across the producers in the world, the director made it quite clear it was only one business model where they have all of them -- they have their own hardware. then software. and the marketplace for applications and so form. so in that i see microsoft following apple.

so that's maybe the one aspect. also i think that microsoft would be now better able to control their own destiny with windows phone. >> okay. ilkka, thank you very much. >> thanks. >> thank you very much, indeed, for joining us. let's just link into that webcast that is currently on the way. and just hear a little bit more about what they're saying. >> -- engage in a discussion regarding the transaction. nokia board and its subcommittees have convened almost 50 times since the beginning of this year. most of that extra effort has been focused on understanding how to maximize value creation for nokia shareholders around our devices business. during the months of exhaustive review and analysis, we gain a clear understanding of the different alternatives and more importantly of the expected economic value to nokia

shareholders. with this, we decided on the right path forward. nokia's board of directors decided to enter into a transaction where by nokia will sell substantially all of our devices and services business. and we will license patents to microsoft. the nokia board of directors believes that this transaction creates significant economic value of our shareholders. we expected it will be significantly creative to earnings. it will clearly strengthen our financial position. and it will provide the solid basis for future investment in nokia's continuing businesses. for our employees and devices and services, it will transfer to microsoft. they will have a stronger financial backing to be successful in the mobile marketplace. and finland becomes the core base for microsoft and europe. it is worth stressing that as a result of the agreement today,

instead of one nokia, there will be two global technology companies in finland, both financially stronger, and capable to invest in the future. this can be an important accelerator in the broader finnish economy. for all these reasons we came to the conclusion that this transaction creates more value for nokia and could otherwise be realized. the nokia team has established a third smartphone ecosystem and demonstrated a pattern of growth in lumia devices. the uniques designs and colors, leading location based services and the amazing imaging technologies have all differentiated lumia and made it stand out. nokia's mobile phones serve hundreds of millions of customers worldwide. teams will continue this work creating great lower price

mobile products. and this remarkable work of which we are all very proud will gain new momentum as it moves to microsoft. over the last several months i have come to know one of the microsoft leaders who has shaped microsoft to what it is today. he will be closely following and supporting the would, in smart devices and mobile phones and spending much more time here in finland. i'd like to ask him to join me on stage. >> thanks very much. >> thank you. >> well, thanks very much. it has been a great honor and privilege for me over the last several months to get to know risto and the other nokia leaders so much better. we're very excited to bring the

best mobile device efforts of microsoft and nokia together. our windows phone partnership over the last two and a half years has yielded incredible work. the stunning lummia 1020 is perhaps the best example of that work. our partnership has also yielded incredible growth. in fact, windows phone has grown over 78% in the last year. and is now clearly the number three offering in the marketplace. and sales of nokia windows phones have gone from literally 0 two years ago to 7.4 million units in the most recently reported quarter. now's the time to build on this momentum and accelerate it further. later today, during our press and investor call, i'll join other microsoft leaders and discuss how this transaction

will just do that, accelerate phone share. we'll discuss how greater success with phones will strengthen the overall opportunity for us, and for our partners to create a family of devices and services for individuals and businesses that empower people around the globe, at home, at work and on the go, for the activities that they value most. in the months ahead, there is a lot of work in planning to do as we await for final approval. first and foremost, we will continue to build and ship phenomenal phones together that delight our shared customers around the globe. we'll also begin integration planning worldwide. microsoft has always valued the diversity that comes from having a major presence in many different countries.

today in europe alone, we have more than 12,000 employees serving customers and doing groundbreaking research and development. we so look forward to welcoming the strong contingent that will join us here in finland and in many other countries around the world. finland will become the hub and the center for our phone r&d and we're counting very much on incredible talent of nokia employees to be a key part of driving and propelling microsoft forward. we have meetings scheduled in the next days and months to really review this with the employee base and teams here in finland, in san diego, in china, and elsewhere. we have no significant plans to ship -- to shift around the world where work is done. we want it done where it is done

today. that approach has been very successful for us with acquisitions such as skype, which has a large r&d footprint in estonia, navision, which is concentrated in denmark, and fast, which remains concentrated in oslo. we're certainly deeply committed to finland. finland will be, as i said, the center of our phone device research and development work. we are beyond excited to have a strong and talented team join us in finland with the expertise and hardware, supply chain management, operations and more. we'll be very good corporate citizens here in finland. and we will make new investments. specifically today, we're announcing that we have selected finland as the home of a new data center for microsoft that

will serve consumers throughout europe. that will represent an investment of over $250 million in capital and operations over the next few years. today's announcement is a bold step into the future. for microsoft, it is also a signature event, a signature event in our transformation. we think this is win-win for employees, win-win for shareholders, and win-win for customers of both companies. through our partnership, we have already accomplished so much. and yet clearly the opportunity ahead is remarkable and i'm incredibly optimistic about what we can achieve together. microsoft, nokia devices and services, we're after it, we're energized, and we're excited to pursue our common dream of success and innovation in

smartphones. thank you. >> all right. you've been listening to steve ballmer and nokia chairman from the press conference. mr. ballmer saying no significant plans to shift nokia locations, but now is the time to build momentum to accelerate the lumia growth. we will be speaking to steve ballmer, microsoft ceo in a first on interview . that's coming up at 11:00 cet. 45 minutes from now. we got plenty more on our website as well, on the developing story from microsoft and nokia, cnbc.com. and follow us on twitt twitter @cnbcworld. it has become official last night vodafone and verizon communications signed the third biggest ever corporate deal. the u.s. telecoms group taking the 45% of the verizon wireless joint venture it didn't already own and paying up for it, $130

billion. confirmed vodafone will return 71% or $84 billion of the proceeds to shareholders. it will retain 21%, around $30 billion which will be used to fund what is called project spring. a three-year program will see vodafone accelerate and the rest goes on to the balance sheet which will help the net debt still at $39 billion when it last reported on june 30th. helia has been speaking to the group ceo and started by asking them why they decided to return so much, 70% of the proceeds back to shareholders. >> let me say this is a very large deal. and we are fortunate enough that the size of the deal itself allows us to return a large percentage, 31% as you said to shareholders. even the remaining 31% is large enough to strengthen the company and allow us to accelerate our strategy. the percentage might look small,

percentage retained, but the amount of money, i think, is robust enough for allow ing vodafone to have a great future. >> you've been criticized in the past for your tax affairs. you're paying no tax in the uk. do you think the defenses that the dividends given to shareholders will become a huge boost to the uk economy? >> we apply the rules, the tax rules and tax laws which are standard in any of the jurisdictions. we pay tax in the u.s. because our taxes -- tax liability is generated there. we are not going -- not going to be taxable income in the netherlands because there is tax exemption. if the transaction happened in the uk, there would be no tax liability here as well, because there are exactly -- for many years there have been exactly the same provisions. important thing is, 54 billion pounds, going back to shareholders. those who want to sell, they

will are to pay their own taxes, but it will be a great benefit to all. >> and what is the next day or week or month for you in terms of what you're going to do for the company? >> well, we have continued to do, as i said, our vodafone 2015 strategy. there is a lot of work to do. we have 4g, which is exciting. we just started here in london and it is an impressive experience. we have more unified communications. we have to integrate our own recent acquisition in germany and we have to push ahead to spring ahead with our strategy. so a lot of work. >> and what is your response to suggestions that you're now going to be a big target for players like at&t? your shareholders are clearly happy about that, but are you happy? >> i would not speculate about situations that are not present. i have to remind everybody that we have a great company, a great strategy, and this strategy will generate good returns to

shareholders. this company, this brand has chapter three of its history to write. >> all right. global equities are a little firmer today, strong gains yesterday, emphasis on the u.s. markets, around 6 to 4 now, advancers outpacing decliners. the ftse up 1.5%. it is a little firmer today, up nine points, more cautious session today. we'll wait to see how the u.s. gets going after the labor day holiday. sectors, we should see technology outperforming and, indeed, we have. that's the nokia impact up 3% at the moment. banks firmer. financial resources, basic resources fairly flat at the moment as well. real estate, autos, a little bit weaker. show those stocks again, recap some other stocks. nokia up 37%. microfost flat in frankfurt. samsung a little weaker today,

down around 1%. so interesting to see how the new microsoft deal sort of -- if they can eat any of the pie that apple and samsung share. steve ballmer interview first on cnbc coming up at 11:00 cet, 5:00 eastern. so bond markets, we have seen a tick higher in yields in the u.s. two-year yields, up to 4.2%, the highest since july 2011. gilt yield s firmer, lower on spain and italy. on the currency markets, euro dollar down to 1.5 month low, 131.69 where we stand. aussie dollar getting a bounce today. rba fairly neutral. they have cut 25 basis points in the last two years. we seen the aussie down 50% since april, a bounce up higher this morning, more neutral term from the australian central bank. dollar/yen, 99.64.

sterling/dollar firmer, 1.5569. sixuan joins us for first time in september with a recap of the asian markets. hi, sixuan. >> thank you, ross. positive european manufacturing data boosted asian shares. the nikkei 225 let the gains closing higher, but almost 3%. latest p my data from china showed more stabilization. australia's asx 200 added a modest .2% after the rba kept rates steady as expected. let me show you some top gainers in japan. power utilities as you can see from the first row here, they surged after japan's finance minister says the government will take the lead in dealing with contaminated water leaks at the fukushima nuclear power plant. meanwhile, japanese exporter stocks also broadly higher, this helped by positive global data

and also the weaker currency. in china, banking shares let the gains after decent earnings. according to local media, 16 listed bank reported a combine ed 13.5% rise in revenue and income. smaller players like minsheng bank jumped over 2%. a lot happening in the tech space. the stock pulled back 1%. in fact, head of the launch of its much anticipated smart watch, the galaxy gear. after smartphones and tablets, maybe smart watches will become the new battlefield in the tech space. ross? >> sixuan yeah. a lot going on in the telecom space as you rightly say. thanks for that. catch you a little bit later. nokia still holding that webcast in the back of the microsoft deal. we'll bring you any news coming from that press conference. also, other things on today's show, institutional

investors jumped back in european equities but tab group joins us to explain why. could the retail market overtake the u.s.? we'll be joined by the author of a new report that says it will by the end of the year. as there are fears of possible overbuilding, we'll be in dallas to study the situation. also, german election is very close. what economic challenges will face the victor? the chairman of the german council of experts is in berlin before 11:00 cet. plenty more to come on "worldwide exchange." ♪

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institutional investors are returning to european equities. that's from the latest tab group review. institutional market share rose 19% last year to 21% the first two months of 2013, which reverses the last four years of decline. the research firm felt traders are increasingly executing trades in the dark as the result of further european regulation. dark order volumes risen 10% for

first time. rebecca healy is author of this report. nice to see you. good news is not only are investors coming back in, but you're finding it increasingly hard to execute. is that because of regulation? >> regulation plays a part. the good news is as we said institutional investors are returning to the market. that's a positive step that, you know, we have been looking forward to for a number of years. now, in talking to institutional investors, the typical order size they have is far larger than retail shares. so going to lit markets can be problematic for them in terms of the actual execution performance. and a time when your performance really counts, particularly for pension fund performance, being scrutinized on the overall trade performance and they're seeing better performance in the dark versus lit trades which is an interesting development. >> yes, explain why. >> so essentially as soon as you go to a lit market and you put

up your order, then you have basically exposed what your trading intentions are and this can be damaging for institutional investors who are looking to trade a large order and particularly over a longer period of time. so, if they maybe don't trade every week or every month and they want to trade very surreptitiously to make sure they can get the best price for the underlying pension. so for them, you know, trading on lit markets can be particularly problematic. >> you expect people talk about trading in the dark, uninitiated how that works. >> so, one of the big debates is there is actually dark trading tends to get lum ped together ad its name doesn't help. dark trading insinuates it is something surreptitious when -- >> lord voldemort of stock trading. >> that's not the case. it is about being executing

institutional order flow and alternative liquidity pools. the bottom line is stock markets, european stock markets have radically changed and where you have one primary market, you now have multiple venue s and it is stock markets were a utility function. now that operating for profit throws up a number of particular difficulties in how they can attract liquidity and throws up a dilemma. >> just very quickly, we have seen, you know, regulation in italy and france -- italy now, sort of transaction taxes. what kind of impact is that having? >> that's also an interesting development because where as we see volumes coming back to the market, we're seeing them sort of congregate in uk and german markets in terms of the actual recovery story. versus france and italy are still in relative decline from market shares down 25% in terms of turnover and italy is also

impacted very heavily. >> rebecca, we'll leave it there. thank you very much. rebecca healy from the tab group. still to come, the r benchba ke rates on hold and sends the aussie dollar higher.

headlines from around the

globe, getting connected, microsoft buys nokia smartphone business. speaking moments ago, the microsoft ceo said the deal benefits all parties involved. >> we think this is win-win for employees, win-win for shareholders, and win-win for customers of both companies. >> mr. ballmer joins us for a first on cnbc interview at the top of the next hour. 30 minutes. shares of nokia spike up more than 40% also dragging other european network providers. and investors dialling into telecom stocks after vodafone finalizes its $130 billion deal with verizon. the ceo told cnbc he's keeping enough cash to strengthen the company, despite returning the bulk of proceeds back to shareholders. >> percentage might look small, but the amount of money i think is robust enough for allowing

vodafone to have a great future. and u.s. senate prepares for a hearing today on the use of force on syria while the u.n. endorses a military response. plenty going on. construction pmis continue out of the uk, continue to surge. highest level since september of 2007, about the strongest construction activity in the uk for nearly six years. 59.1. 57 in july. sterling dollar to the highest levels, did reach 156 a short while ago, just another bit of data following yesterday's very strong manufacturing pmi as well where we saw the biggest increase in orders. the market really pressing bank of england, mr. carney on their forecast rates stay where they for the next three years. european equities, good gains

yesterday, pretty flat today, ftse 100 is flat. xetra dax and cac quarante down. that will push gilt yields higher, another bit of data as well. 2.87% the yield, keep our highs on treasuries, inching higher once again, 2.84% is the syrian safe haven flow seemed to have dried up, so pushing yields back up to the 2.9 area. currency markets, pound is stronger than the euro and dollar. dollar/yen, 99.63, getting near the 99.95 we were beginning of august. and euro/dollar, down 1.3176, a 1 1/2 month low. nokia is holding a webcast in the back of the microsoft deal. we'll continue to bring you any news coming from the press conference. here is a recap of what has been said so far. mr. ballmer, this morning,

talking about we're going to keep the bulk of the operating systems in finland. the deal will help accelerate nokia's momentum with bigger financial backing as well. and the microsoft does expect it to close. this is -- we haven't heard this, close in the first quarter of 2014. steve ballmer will join us in 25 minutes. meanwhile, any thoughts or comments, e-mail us, worldwide@cnbc.com. that would be the e-mail address. away from that, australia's central bank electing not to rock the boat today. said past cuts were doing their work. inflation was in check and further drops in the aussie dollar might help exporters. wasn't dovish enough for currency trade. the aussie dollar jumped more than half a cent after the move.

we moved away from the 88.48 level which we hit the three-year low a bit earlier in the summer. do you think the rba was being more neutral because there is an election coming up or do they actually mean it? >> i seriously think one of the factors is also the upcoming elections on saturday, on the 7th of september. besides that, also i think the situation out of aussie front, the numbers coming out of china seems to be supportive in terms of australia. i agree one of the main reasons could be to make sure volatility around the elections doesn't get too high. >> the thing is, just about every man and his dog has been short the aussie. everybody has been short the aussie.

is there a bomb fpotential for snapback for people to say i'll take the trade off? >> i think one of the interesting things that is missing from the statement is the removal of the easing sort of bias of -- i think the reaction will be moving up towards the .90 level and hitting a resistance level around there. i think what you'remerging mark region providing some demand and support to aussie exports, for example, if you see emerging markets starting to get a bit weaker going forward, i think you got to get some resistance for the aussie dollar moving higher above .91. i think it will be down again toward .90 if things worsen out of the emerging market. >> that .8850, is that low going to hold for a while? >> i think it is going to hold for a while, around that range, .90 to.885.

>> stock about you mentioned emerging markets, let's talk about the indonesian rupiah. they're trying to stem the weakness in the currency. what chance do they have to succeed? >> my view is i think the bank -- the central bank has done quite a bit. it is sort of facing now essentially a tsunami coming from the u.s. fed tapering sort of effect, effecting emerging markets in general. as you see today, some currencies introduced measures overnight or indonesia, there was a slight move strengthening of the emerging market currencies, but then eventually retreating during the european

session because of this continued -- factoring in as well. the measures have been significant on the monetary side, and the fiscal side. could be a bit more coming from the fiscal side out of indonesia, but i think they still have considerable issues from the deficit front which they need to address going forward. i think improvements in a global economy, i think it should actually go and improve the current account deficit over the few months ahead. >> good. thanks very much for that. joining us from maybank. the senate foreign relations committee is holding a hearing today to debate authorization for the use of u.s. military force in syria. john kerry and chuck hagel will testify. president obama met with republican senators john mccain and lindsey graham at the white house on monday, both -- some

expressed concern about the u.s. being dragged into a new conflict in the middle east. let's get more. ayman mohyeldin is on the ground in beirut. i wonder how the comments are going down from senator mccain in the middle east, that seems to be talking broader than just a strategic air strike. >> reporter: that's one of the points that the syrian government has been making in the past several months. they have been saying this isn't about terrorism or rebels, this is about the united states and western led aggression to try and topple the syrian regeimreg.

the comments is going to feed that argument or syrian narrative, which is based on the fact that they believe they're coming under attack, to be taken out of power. the other point of that is the u.s. has always been very reluctant to deal with all of the syrian opposition rebels because they know some of them are extremists, some of them are linked or driven by al qaeda ideology. they have been very reluctant to empower them, so on one hand, weakening the regime, but not necessarily embracing the opposition rebels on the ground has been somewhat of the reason why the u.s. has been reluctant to at least pursue a policy of arming the rebels, more persistently. without a doubt, there are those in the region including iran, syria, hezbollah, that have been making the argument that the u.s. and its allies are bent on trying to topple the syrian regime, not punishing them for chemical weapons and that's why they look at this as an existential fight for their survival right now. >> ayman, thanks for that, the latest from beirut. also with me now in the studio is hadley gamble.

>> what we're seeing, ross, secretary kerry is now characterizing this as america's munich moment. but what you're really seeing is the president, he's allowed himself to roll back this power. he's given that power to congress and now he's leading from behind, but leading from behind congress. so he's not really very clear on how quick he's going to actually be able to take action in syria because he's waiting for congress to decide. >> just changing. >> absolutely it is changing every day. we have seen the senate foreign relations committee, they have thrown out the plan from the white house, which was much broader in scope, they want something that has a narrower scope. so we'll have to wait and see what actually ends up being voted on next week. >> yeah. and we don't know as much, right? >> exactly, exactly. >> okay, hadley, for now, thanks very much. over to japan, where the government will spend half a billion dollars to clean up the crippled fukushima nuclear power

plant. >> the japanese government decided to use about $470 million for the next two years to tackle the fukushima nuclear power plant crisis. the plant is leaking massive amount of radioactive water every day and the plant operator tokyo electric power known as tepco can't seem to handle the crisis alone. this emergency spending will use 200million in reserve funds under the fiscal 2013 budget and try something never been done before. it calls for a frozen underground wall of soil running around the crippled reactor building. it is expected to block ground water from entering the buildings and mixing with radioactive water. the prime minister shinzo abe said he's well aware of global sensitivities when it comes to nuclear pollution. >> translator: the world is closely watching whether we can dismantle the plant, including the issue of contaminated water.

the government is determined to work hard to resolve that issue. >> the decision this weekend and the government is keen to remove any lingering doubts about the nuclear hazards. abe will make the final presentation at the ioc meeting on saturday. back to you, ross. >> good stuff. thank you. that's the latest from tokyo. on the agenda in asia tomorrow, in australia, second quarter gdp might provide politicians with fresh ammunition ahead of the election on sunday. central bank action, the bank of japan kicks off its two-day meeting and the final day on the job for rbi governor subbaro. sony launches the latest ex-peeria smartphone and samsung is set to unveil its wearable device. still to come here, china set to leapfrog the u.s. as the biggest retail online market. find out what the sea change means in the world's retailers right after this.

beijing's anti-corruption campaign is picking up speed. the xinhua news agency says the top state regulator has been fired under suspicion of serious

discipline violations. the announcement comes on the same week that china's communist party launched a new website to tackle the problem. normally working in secret, the central commission for discipline inspection now will publish news and solicit whistle-blower tips. china services sector looking to expand in august. the official services pmi came in at 53.9, below the july rate, but still a healthy pace. beijing's made it a key economy. the same time, it is set to overtake the united states as well as the biggest online retail market at the end of the year. this is from bane and co., which expects the total e-commerce spending to hit half a trillion dollars by 2015.

it has grown 71% from 2009 to 2012 and that's 13% of growth in the u.s. over the same period. it comes as nearly one of half of china's people have direct access to the internet. thank you for joining us. look, it is a huge number of people now shopping online in china. how is that going to dictate sort of global retailing? how does it feed back? >> good morning to you, ross, in london. indeed, the chinese market has crossed a milestone you're referring to, in other words, it has reached the sheer size of 2 10 roughly billion in u.s. in 2012 and that's a huge number. just to get a sense of perspective, that's the size of the gdp of ireland or 30 times

what microsoft just put on the table to acquire nokia. this is a stunning number. and the growth you're referring to, 32% a year for next three coming years is making the chinese market the biggest e-commerce market in the world as we speak, overpassing what is currently president in the u.s. that's the first insight that the report established in china. >> and, look -- >> the second -- >> i was going to ask how much is done on smart phones and mobile devices. >> yeah. that's a good question. and we touched upon the specificities of the chinese market and one of the specificities has a lot to do with clients and the way they go about the e-commerce and success to internet and we look at the industry, what we have seen in

china, e-commerce leapfrogged into some extent the pch and now consumers do actually access their internet and their e-commerce sites on their smartphones. or tablets, in china, as we speak. 66% of consumers do actually have a smartphone. and use it to either browse or transact on the favorite e-commerce site. and that's a tremendous opportunity. and an opportunity of a very different nature to the one we have seen in europe or in the u.s. in the last decade. >> who is winning out? is it the pure e-tailors or bricks and mortar guys, are they fighting back? who is doing the best out of this? >> that's the $1 million question. and as we look at the bain report, we come to the conclusion that both models can win, whether it is pure plays,

the e-commerce players, and the bricks and mortars retailers that embrace e-commerce as an additional channel. and this is what bain, we call omni channel. and some of these retailers are actually massively investing and growing their e-commerce distribution to access the customer in a more effective way, more quick way, and more cost effective with a i. >> at the end of the day, what drives a purchase decision. if you're a chinese consumer, is it service, is it brand, or does it just come down to price? >> yeah, we did that piece of research, ross. we talked to 1300 consumers in china. and the first criteria is price. and this has to do with the chinese being bargain hunters, which is another insight of the

survey. bargain hunter, that's not new. but in the context of the digital space, with the tools, the smartphones, the price comparison engines, et cetera, this makes this criteria even more prevalent. and so this is a trigger for the ultimate choice of retailer. and just before the product genuineness and availability of the product that is one of the key strengths that bricks and mortar retailers can strongly build on. >> thanks for that. thank you. we'll take a short break. still to come, more microsoft latest telecom tie-up. they're bringing their mobile partner into the fold by buying nokia. we'll hear from the man who made the deal, steve ballmer. he'll join us coming up right after this.

you're watching "worldwide exchange." i'm ross westgate. a recap of the headlines today. getting connected, microsoft buys nokia smartphone business for $7.2 billion. moments ago, the ceo said the deal benefits all parties involved. >> we think this is win-win for employees, win-win for shareholders, and win-win for customers of both companies. >> mr. ballmer will join us for

a first on cnbc interview in a few moments. shares of nokia spiked up as a result, more than 40%. this dragged other european network providers sharply higher. investors dialing into telecom stocks after vodafone finalizes its $130 billion deal with verizon. the ceo told cnbc he's keeping enough cash to strengthen the company. the bulk of it is returned to shareholders. >> the percentage might look small, the percentage retained, but the amount of money, i think, is robust enough for allowing vodafone to have a great future. the u.s. senate prepares for a hearing today on the use of force in syria. once the u.n. endorses a military response. all right, if you're just

joining us state side, welcome, good morning to you. hope you had a good long weekend. we wake up to another deal, vodafone confirmed last night. and now this morning itconfirm ed microsoft is buying nokia's smartphone business including nokia as patents. the second biggest acquisition behind the purchase of skype. microsoft will use some of the near $70 billion in overseas cash to pay for the deal. nokia was an early supporter of microsoft's window phone software for its lumia smartphones. microsoft will bring on several nokia executives including the ceo stephen elop who rejoins the company. nokia chairman will take over as interim ceo. pretty early or pretty late depending where you are in silicon valley. that hasn't stopped jon fortt joining us, 2:00 in the morning there, jon. good morning to you. you have a special guest first

on cnbc. >> i do indeed. we are a global network, mr. westgate. i have steve ballmer joining us from finland for his first broadcast interview after the announcement that microsoft is planning to purchase nokia. first question, why now? we talked a few months ago. you mentioned nokia as being one of several important partners on windows phone. now you're buying the whole business. it was 25% cheaper roughly a few months ago and we talked. why buy it now? >> well, thanks, jon, it is a pleasure to have a chance to be here on what is a very exciting day for microsoft as we go through our transformation to focus in on devices and services that are centered on the high value activities in our

customers' lives. we really kick this journey off two and a half years ago with a partnership with nokia to do windows phones. and that partnership has yielded some very good results from literally nothing two years ago to 7.4 million windows phones in the last quarter alone. we have been growing 78%. but we know we have a lot to do. and earlier this year i kicked off a dialogue with the nokia chairman about ways to amp up that partnership including the possibility of an acquisition. and after many months of thinking through all the possibilities on both company sides, we're here today. >> steve, nokia is by far the dominant player in the windows phone ecosystem. i forget the exact percentage, but somewhere near 80 plus percent of phones coming from

nokia. what do you say to people who say it looks like there is no more room in the ecosystem for anyone else if microsoft is buying nokia devices business? >> we're certainly very focussed in on driving and accelerating windows phone momentum and we think the way to do that with the greatest innovation, agility, the clearest message to the market, one brand, one voice behind windows phone, and really being agile from a sales and marketing perspective is to acquire nokia. we think our acquisition of nokia will actually create interesting opportunities for other windows devicemakers, not just on the phone side, but particularly on the tablet and pc side, where companies like dell and lenovo and hp and many, many others have been fundamental to our success. what is good for windows phone, we think will be good for the overall windows ecosystem. and i certainly had a number of discussions with our partners

who seem enthused by this announcement. >> when did you have the discussions? give me a sense of how long these conversations have been taking place of you getting your ecosystem ready for the big change that you're embarking on right now. >> well, obviously, you know, we have been hard at work on windows phone for a while. we have been talking about the importance of windows phones, to tablets and pcs, with our partners, obviously not talking about the specific possibilities with nokia, and just here this morning, and in helsinki, i had a chance to talk to a number of our oem partners and i think everybody is convinced that driving windows phone momentum will be generally healthy for the overall windows ecosystem. >> great, now, stephen elop left microsoft almost exactly three years ago, during nokia in september of 2010, before he

joined nokia as its ceo he was one of the division chiefs at microsoft, running the business division. hugely profitable, very important to microsoft. what is microsoft getting with stephen elop coming back in terms of talent, in terms of executive firepower? >> well, you know, i think very highly of stephen. obviously knew him during his time at microsoft, and in some senses as part of this nokia partnership we have gotten to know each other in new and expanded ways. the key here is we need to make sure that the nokia microsoft acquisition goes flawlessly, that we not only sustain momentum, but we accelerate. we know how to work together through our partnership, we're glad to have stephen come to microsoft, back to microsoft, much of the nokia executive team, most of the nokia executive team on devices and services will join us.

and that will form the core of a variety of things that we're going to do in devices, includi includi including xbox and surface and more. we know stephen well and we work very, very well together. >> i believe you said your plan is for him to run the devices business including all of those hardware components that you mentioned when this deal closes. and you're hoping it closes before april 2014. i know that this isn't your call, but would you expect stephen elop to be a candidate for ceo of microsoft, that the board will consider? >> our board is running an open process to consider all potential candidates, internal and external to microsoft. it obviously will go through that process, confidentially. and will be very thorough in its

examination of all candidates who are qualified and interested. >> a politic answer as i would expect. mr. ballmer, thanks for joining us, a big deal, the biggest brand i would argue that microsoft has ever linked itself with, microsoft buying nokia for $7.2 billion. thank you for joining us. >> great interview, jon. i want to get your thoughts, because the interesting thing is the analysts looked at that ecosystem question, which you put together, and steve was saying, look, for the tablet guys, it will work. how much doubt do you have about, you know, whether this does anything for the microsoft ecosystem? >> well, you know, it is a challenge. you look at what google did with motorola, they have managed to hold the android ecosystem

together pretty well despite the fact they have taken on that hardware group, so that sort of speaks in the favor of microsoft doing this with nokia. on the other hand, android has a lot of momentum, and microsoft windows phone has no momentum outside of nokia right now. it is going to be a challenge for them to get other phone o ems to really understand this, buy this. i'm talking about samsung, htc, to really get them to invest more in windows phone now. of course, windows 8, windows rt, a different issue. but particularly windows phone will be interesting to see how this plays out. >> great stuff, great interview. thanks, jon, thanks for joining us earlier this morning. i don't know, do you go back to bed now? have you not been -- i don't know. how does that work when it is 2:00 in the morning? >> no way, no way. nonstop from here on out through the rest of the day. >> good stuff. thanks, jon. hope you went to bed earlier last night. right, so that's the latest

from steve ballmer, plenty more, of course, on the channel all day as well. plenty more online as well at cnbc.com. nokia shares up. they can focus on the network division. interesting to note two years ago, nokia considering selling the networks division and that's what the company has now become. microsoft stock as you can see down session lows at the moment, down 1.5%. not the only deal, of course. it is official, last night vodafone and verizon communications signed and gave us the details. officially taken 45% of the verizon wireless joint venture didn't already own and is paying $130 billion to vodafone for it. vodafone will return 71% of that or $84 billion back to shareholders. the london listed operator will retain 21%, around $30 billion, which will be used to fund what it is calling project spring.

the three-year program will see vodafone accelerate its rollout of high speed wireless and fixed line networks. the rest goes on to the balance sheet, which will help produce net debt that stood at $39 billion when last reported on june 30th. plenty of m&a. our next guest says now is the time to look at debt as long as you avoid the gangster republics. we'll talk about that when we come back. building animatronics

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just joining us this morning, welcome. couple of items to keep your eyes on, we have a number of agencies saying an early warning system they have suggests some missiles moving east in the mediterranean. so we'll keep our eyes on that. this is after, of course, we're waiting for congress to essentially vote on what may happen with syria. as a result, we have seen a pullback in oil. nymex down, brent at 115. as far as u.s. futures are concerned, yesterday was labor day holiday. right now we're called higher. the dow is 78 point bos above f

value. the s&p up 11 after a pretty poor august. we had good gains yesterday for european equities. the ftse up 1.5% today. we're down off half a percent. on the bond markets, we have seen treasury yields climbing higher, on the two year yields up to 4.2%, the highest since july. and gilt yields higher, strong construction pmi data activity, the highest for nearly six years. on the currency markets, dollar yen firmer, 99.35, not far away from the august 2nd high. sterling is up across the board against the dollar. the euro dollar currently down 1 1/2 month lows on the 131.66 level. that's where we stand in europe ahead of the u.s. open. let's recap the asian session for you, sixuan has that for us in singapore.

sixuan? >> thank you, ross. a very positive session in asia today thanks to the upbeat european data. the nikkei 225 surged up 3% to a three-week high, not far from the key 14,000 level. meantime, latest pmi data from china showed more signs of stabilization. the shanghai composite gained 1.2% today. australia also finished marginally in the green after the rba kept rates steady as expected. let me show you some top gainers in japan. power utilities as you can see from the first row here, they surged after japan's finance minister says the government will take the lead in dealing with contaminated water leaks at the fukushima nuclear power plant. meanwhile, exporter stocks also in demand on the back of the weaker currency. in china, banking shares let the gains after decent earnings. according to local media, 16 listed banks reported a combined 13.5% rise in both first half revenue and net income. meantime, as you can see from the second row here, quite a few

agriculture stocks surged up by 10% on hopes of land reforms meaning farmers may be allowed to rent out rural land for not real estate developments. in strength and mainland shares helped the four-day winning streak. chinese railway stocks enjoyed a rally today on the hopes of more supportive tallies. back to you. >> okay, sixuan, thanks very much indeed for that. just to recap, big news this morning, corporate world, microsoft buying parts of nokia including licenses on nokia's patented. follows the confirmation of the vodafone selling its stake in verizon wireless for $130

billion yesterday. joining us is richard windsor. good to see you this morning. thank you for joining us. from radio free mobile. >> thank you very much. >> we heard from steve ballmer, on microsoft, clearly this is a great -- nokia shareholders seem to be -- stock up 40%. >> for quite a long period of time, what has been happening is people had a negative view of the hand set business. you do your typical sum of the parts, it has been polluting the value of the other assets. youvalue. you end up with a much higher share price. >> the thing that has been polluting nokia is now owned by microsoft. >> yes. >> is it going to pollute microsoft or can they do a lot more with it in. >> that's the big question, isn't it? the problem that nokia has and what they have realized is, you know, they talk about we have 7.4 million smartphones. given how good the ecosystem is,

those numbers are way too low. what needs to happen is they need to invest massively in marketing and nokia can't afford it. i think that's how they have come to the conclusion we need to get together with microsoft so we can really invest. >> so they have -- the lumia phone is good, right? a good product? >> i've got one. i think it is very good. >> but not enough people buying it. so so is it just a marketing issue? >> the first issue is no up won knows why the window phone is quite good. you don't realize that until you had it for a week or two. the other problem is applications. the app store drives apple and drives android. and the biggest single return factor on lumia going back to a store is because the app store is not giving you enough applications. again, that could be -- >> how do you change that? >> two ways of doing it. first, you pay the application developers to write lots of applications for your platform, which is what microsoft is doing

now and presumably will step up. the second way is to implement some kind of software that would allow android apps to run on a windows phone. >> jon fortt, you saw the interview, asked about the ecosystem. you wrote about that as well this morning, why would other oems develop for microsoft when they own their own phone business? is that going to be a problem? he answered it by saying, look, what is good for the likes of dell and lenovo, who is building tablets, it is good for them, he avoided it in terms of -- >> of course he did. we have seen it time and time again. microsoft was trying to put itself through the as an independent licensor of hand set software. and now that he's basically also a hand set company, everyone else is going to go, well, why would i implement the software because i don't know if i'm getting fairly treated. everyone else committed at the moment to the windows phone is very low.

they do it very small volume and very small numbers of devices. i would expect that commitment to decrease. if this is really about microsoft and what will become nokia. >> yeah. so, what do they have to do to make it -- is it going to work? are you -- do you think it is the right thing for microsoft to do and what do they have to do to make it the right thing? >> well, microsoft history in this area is extremely checkered. you can dial back and look through a number of acquisitions they made of hardware businesses that have been incredibly poor. there needs to be a change inside microsoft, they need to change the way they send out their message. that needs to be massively changed and they need to tell users, not just here is windows eight, but this is why you should buy it and today they haven't done that. >> right. you got to give reason for people to buy. what happens now for nokia and the networks? they bought out the siemens joint venture.

here they are, now nokia -- >> look at the extraordinary turn around you had in profitability and cash flow of the business and the perceived value of the business now increased substantially because they have done a good job of turning it around. personally i think what is going to happen now is once this deal closes, you probably seat other assets of nokia go up on the block and what shareholders are going to be left with at the end of the day, nokia seamless networks and a pot of cash. >> the vodafone deal, which got confirmed yesterday, $130 billion, most of the cash going back to shareholders, is that the right strategy? they have the spring investment. >> they weren't really going anywhere. that investment hasn't been going anywhere for them for a long time. the question you rise right now would be, okay, fine, they sold the u.s. asset, redidn't really have control of anyway, what is their global plan? they have virtually nothing in the entire america, this is one of the big operators, that's the

question it raises. >> thank you, richard. more on the web on the microsoft and nokia deal and vodafone and verizon. we're keeping our eyes on geopolitics in the middle east. we had news out from various agencies out of russia suggesting the russian defense ministry saying they detected two ballistic objects fired toward the eastern mediterranean. that's the rra news agency out of russia. brent spiking higher. we hit 115 just a moment ago. we'll keep our eyes on that. and also, the russian embassy saying there is no sign of attack after the launches were detected. confusing. we'll get into equity strategies and the u.s. is back in play today. "worldwide exchange" continues right after this.

we just had some news about potential launch of missiles in the eastern mediterranean from russia. and now the russian embassy says they see no sign of the missiles and they're not aware of any missile launches in the mediterranean either.

did just make brent spike up a little bit, got up to 115. we're currently 114.78. and spot gold also a bit higher, currently still below 1400 level at 1392. martin eclick at barrack yard advisers and he joins us now. let's talk about your u.s. stock strategy, but first of all, the last part of august has been affected by political risk of middle east and syria as well. how do you see that playing out? >> well, this has been a textbook example of the stock market rally climbing the wall of worry. political risk is just another thing to add on to that wall. we have the political risk, of course, here in the u.s. with the debt ceiling next month, and beyond the german elections in europe, the europeans will have to continue the dialogue and what it means to be a eurozone citizen. and this is just another example

for the investors that have to wake up to in terms of the risks out there. one has to be mindful of the great philip fisher who was an investor and wrote books back about 50 years ago, warren buffett cited him many times and he has ten don'ts. one don't is don't be afraid of talk of war. so the -- so this is just another head wind that investors have to consider in dealing with what is essentially particularly in the united states an overvalued stock market. >> yeah. meanwhile, u.s. futures after the close yesterday pointing to a higher start. global equities were higher yesterday. but you think -- you're cautious on american stocks. why? is that because where they're priced at the moment? >> well, valuation is the most important determinant in future rates of return. that's what we look at.

the u.s. market is up something, you know, 20% or so over the past year, 40% or so the last couple of years. corporate earnings as measured by the s&p haven't really advanced. and we -- so we are always mindful of valuations and particularly in the muddle through economy, where corporate earnings don't seem to be going anywhere. now, the good news is unlike 2007, 2008, there are segments of the market which are not overvalued. so we do have great swaths of the market that are overvalued, but still some value to be found, even in the u.s. market, though we tend to be looking more overseas right now. >> yeah, and, look, what sectors are more attractively priced for the long-term investor? >> big i.t. for certain. we're big fans of big blue. we believe that, you know, major

global newspapers have said that ibm is a no growth business, but we don't believe that it is. we love the way they manage their finances. but also the -- they are well positioned to participate in the era of big data. cisco, we think, is very attractive at these levels. it has come off its highs and it is selling at a free cash flow yield and low teens. a decent dividend yield has net cash. and they're very much involved in the infrastructure of i.t. long product cycles, while we think it is both those names are very attractive at these levels. >> we just had this deal mentioned at microsoft. are you go to ing go and look a that and see if it is a reason to own the stock? >> the problem with the deal, i

guess, is that we tend to focus on long product cycle companies, and what microsoft has just done is they have bought a short product cycle company. so we're not -- what it does, it elevates the risk of owning that business, i think, but so we don't have a real strong conviction one way or the other. >> okay. martin, thanks for that. good to see you this morning. appreciate you joining us. martin la clerk joining us from barrack yard advisers. futures are calling higher right now for u.s. equities. the dow is currently, what, 97 points above fair value. the nasdaq is 23 points. the s&p 500 40 points. we're in september. "worldwide exchange" continues after this. [ male announcer ] i've seen incredible things. otherworldly things. but there are some things i've never seen before. this ge jet engine can understand

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you're watching "worldwide exchange." i'm ross westgate. a recap of the headlines. oil spikes temporarily after russia says it detected two missile launches in the mediterranean region according to reports. the russian embassy in syria says there is no sign of missile attack or explosion. getting connected, microsoft buys nokia smartphone business for $7.2 billion. speaking first on cnbc moments ago, the microsoft ceo steve ballmer welcomed the return of stephen elop and sounded

confident about the deal. >> we need to make sure the nokia microsoft acquisition goes flawlessly, that we not only sustain momentum, but accelerate. we're glad to have stephen come to microsoft, back to microsoft. >> shares of nokia spiked substantially higher. dragged other european network providers with it. all right, just joining us state side, warm welcome to you. news of the microsoft nokia deal we heard from steve ballmer recapping that fairly shortly. and wrapping up the vodafone verizon deal confirmed last night. we keep our eyes on geopolitics and intentions in the middle east. there was a report from russia and russian wireless saying they detected two missile launches in the eastern mediterranean.

that has been suggested by the -- they haven't seen anything. and the nbc team in moscow say they have spoken to military experts and said the syrian regime missiles can reach altitudes that would activate the russian missile alert system and the fact they refer to as ballistic means they could possibly be scud missiles. that's just a report we have got from the moscow team. brent spiked just up to 115, currently 114 spot 81. hadley gamble is with us as well. what do you make of these reports? i'm unclear if anything happened at all. >> this would be a ratcheting up of the situation. what we do know is the uss nimitz left the indian ocean and headed to the western mediterranean. an within that group there are four destroyers and 300 marines as well.

there is no indication on the part of the u.s. government that anything like this was planned or anything like this would -- >> and the way they're viewing is in moscow, if there were missiles, it is heading from syria to the eastern mediterranean, right? at the u.s. group. this is all total pure speculation. >> absolutely. and we're working to confirm it. this is russian media quoting the defense ministry in russia saying they had alerted him there were possible ballistic missile strikes but nothing more than that so far. >> if anyone would detect it, generally you would assume the israelis would see it. >> you would have thought so. hadley, thank you. if you're just joining us this morning, hope you had a great long labor day weekend. right now, u.s. futures pay something of catch-up with global equities which were firmer yesterday. wasn't the best of august for u.s. equities, dow down. now called higher. dow futures about the highest level this morning so far, 92

points. nasdaq up 22. s&p currently up 14. european equities, well after the gains yesterday, slightly softer. the ftse down a quarter percent. up 1.5 during monday's sessions. xetra dax up half of 1%. the closely watched german election campaign entered its final stages and though chancellor merkel continues to lead in the poll, it is game on after steinbrook's debate exceeded expectations on sunday. annette is in berlin with the latest on the campaign. hi, annette. >> hey, ross. there was just another parliamentary debate, the last big debate here in parliament between steinbrook and angela merkel and the other party leaders. angela merkel again stressed that she was the chancellor during four years where people

really gained in wealth. she wants to stay the chancellor for another four years to make people even more happy by 2017. whether this is realistic or not, i'll discuss now with my guest who is christophe smith from the institute, from the rwi institute, i should say. thank you very much for coming to us here to berlin. so my first question would of course be is that realistic that people can be even more wealthy after another four years of angela merkel? >> actually all things in life are relative. and if germany looks at last four years, it will probably realize that other countries in the european union have fared much worse. our labor market has been very stable and we have been something like the growth anker in europe, which is saying something. but in all fairness, of course, the strength in this robustness is due to the reforms that we started in the beginning of the century, under the former

government. so good things sometimes take long-term to work. >> and steinbrook is criticizing the government. what kind of mark would you have for the government? >> most of the opposition and the government basically saying the same things regarding the euro crisis. nobody is questioning it was correct to try to save the euro from faltering from collapsing. and the major discontent is with domestic issues not at the forefront in the moment. going through this very critical period through the harsh crisis is an achievement that cannot be discussed away very easily. >> looking ahead to the challenges as well, for germany, one of the major challenges is undoubtedly the state of the eurozone. how would you rate the state right now? what is the situation like? >> if we put ourselves in the shoes of one year ago, it is the

case we're fearing that eurozone might collapse. then the ecb stepped in with the announcement it would do anything, what it takes to save the eurozone from faltering. and since then we have entered a period of calm. but the underlying problems, the imbalances, low competitiveness of some of the european union can countries, they're not resolved and that has to be the task for the next year. >> talking about central banks, a lot of people in the united states are thinking that the fed's tapering as well will have a debt effect here on the eurozone and as well germany. do you think it comes across the big pond? >> i think the most important issue is what happens in europe itself, and the eurozone itself. of course central banking is always a tight balancing act, delicate balancing act. and the loose policy, monetary policy, quantitative easing policy we have seen in the world in the last years has certainly saved the day, but it takes the world in new risks and for that

reason, the european central bank has to be resolved from -- relieved from its role as lender of last resort because monetary policy cannot save the fiscal problems that lie underneath the european crisis. >> talking about monetary policy, well, thank you very much, and just hearing that we're running out of time, but thanks so much for having us here in berlin. well, right now the parliamentary debate is still ongoing here in berlin and everyone from the political side will go again on the election campaign. with that, back to you. >> all right, annette, thank you very much for that. we're now getting news again from russia to say that the two ballistic objects that they say were launched was the eastern mediterranean from central part of the sea have landed in the sea, detected and fell into the sea. more on that when we come back. "worldwide exchange" continues right after this. with the spark miles card from capital one,

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part of the sea. this is the russian news agency quoting the defense ministry. the launch detected 10:16 a.m. moscow time, 6:16 gmt. we now know they're now saying apparently those missiles landed, ballistic objects landed in the -- in the water, without any impact. the israeli army says it is not familiar with this mediterranean missile launch. it is rather confusing. russi joining us from beirut is ayman mohyeldin. what do you make of the records of the ballistic launches in the sea? >> reporter: well, right now a lot of mixed reports coming in. you started off with the initial report made by the russian news agency that it detected two

possible ballistic objects somewhere over the mediterranean. a short while after that, the russian embassy in damascus came out saying there were no ballistic objects in the vi vicinity of the mediterranean and that was substantiated by the israeli military which came out saying its radar and its defense system did not detect any type of ballistic objects in the mediterranean sea. a short while ago, though, however, the russian news agency once again put out a statement saying in fact the two ballistic objects may have landed now somewhere in the eastern part of the coast here in lebanon, perhaps in the mediterranean sea somewhere. it gives you a sense of the heightened tensions. a russian security expert said it is possible the russian defense system detected these ballistic missiles or ballistic objects rather in some capacity over syrian air space, given the fact that the syrian military does have scud missiles that would activate the russian

defense systems or the russian detection systems that are present. this is a very now militarized area, the eastern coast of the mediterranean is militarized, given the fact there are so many naval vessels from the americans and now additional ones from the russians and israelis. it would be very unlikely that something like this could happen without more confirmation in the coming hours once the respective militaries identify what if anything happened at all. >> very unclear. we'll have to wait for further verification. as we now wait as well, ayman, for a vote in congress and what the u.s. may or may not do, how would you describe tensions at the moment in the region? >> reporter: well, right now the tensions are starting to build back up again after 48 hours when the situation began to defuse following president obama's comments he wants to get congressional authorization. but since that, the syrian government has been positioning this as a victory, a retreat.

however, yesterday, syria's president bashar al assad in an exclusive interview came out and said a possible strike would only lead to fullout war across the region. the momentum is starting to build again as some of the comments come out of u.s. congressional leaders, as we heard yesterday, from senators john mccain and lindsey graham. as the hearings are -- the testimony gets under way on capitol hill, in washington, you can start to see the tension build again across the region for a possible military strike. >> ayman, thank you very much indeed for that. a recap of the headlines as we say crude spikes after russia says it detected two missile launches from the mediterranean region. the russian embassy says no sign of attack in damascus. microsoft boys nokia smartphone business. speaking first on cnbc, steve ballmer says the deal is a win-win for all. and investors dialling into telecom stocks after vodafone

finalizes its $130 billion deal with verizon.

okay. if vodafone and verizon wasn't enough, they announced their deal last night, this morning we woke up to the news that microsoft is buying nokia smartphone business, a deal which includes licenses on nokia's patents, the second biggest acquisition behind the purchase of skype. microsoft will use some of its near 70 billion overseas cash to pay for the deal. nokia an early supporter of microsoft's windows phone software for its lumia smartphones. microsoft will then bring on several nokia executives including stephen elop who will rejoin the company. he's seen as a possible candidate to replace ballmer when he steps down next year.

nokia chairman will take over as interim ceo of nokia. speaking earlier in a first on cnbc interview, the ceo of microsoft steve ballmer says the deal would help boost the company's broad product portfolio behind the smartphone market. >> we think our acquisition of nokia will create interesting opportunities for other windows devicemakers, not just on the phone side, but particularly on the tablet and pc side, where companies like dell and lenovo and hp and many, many others have been fundamental to our success. what is good for windows phone, we think will be good for the overall windows ecosystem. >> steve ballmer speaking earlier to jon fortt who is up bright and early in silicon valley. u.s. futures, did well yesterday, playing catch-up

today. the dow is 88 points above fair value, 21 points above fair value for the nasdaq. the s&p 500 above 12 points after poor august for u.s. equities when the dow was down 4.4%, the s&p down 3.1%. some of those falls were precipitated by geopolitical risks coming out of syria and this morning. we have had those warnings from russia, what they are calling ballistic launches in the mediterranean. and the syrian security source is now -- the early warning radar doesn't detect missiles landing. it is a confusing picture. hadley gamble is our middle east correspondent. i don't know if we can clear anything up at this particular -- what do we know? >> ross, certainly a mixed picture and shows you when nations decide to start playing war games how quickly these can get ratcheted out of control. and what we do know is the --

neither the israelis, they're saying they have no detection of this, the russians, in damascus, saying they haven't detected any explosions. we're not seeing anything on the ground in terms of having -- >> the russian -- where this originally came from, the russian defense ministers. >> they said they dropped into the sea. >> yeah. >> what we have is the russian defense ministry saying they detected two ballistic objects flying from the center of the mediterranean to the eastern coast. >> correct. >> and landed in water. >> and landing in water. what we do know is -- >> no one else can confirm this? >> we know there are several naval assets from other countries in the mediterranean now, the uss nimitz and the french have naval assets in the mediterranean as well. the russians have naval assets and so do the turks. and the israelis. you have a bunch of naval assets up in the mediterranean.

>> i thought the comment was quoted, the word they used was we are not familiar with -- that's a strange way to say -- >> certainly vague. >> right? >> yes. >> strange way to say it. >> indeed. >> yeah. as you say. oil did spike up a little bit earlier. up to 115. this comes as we still wait for developments in the united states. where are we now? we heard from senators mccain yesterday. >> the president chose to lead from behind, but now leading from behind congress and it will take a little longer than he probably anticipated. he pulled out the big guns when it comes to the republicans, they sent out john mccain. he can't be sure even of getting the 50 votes out of 54 of the democrats in the senate at this point because they're so divided in terms of what they want to do on syria and whether an attack is warranted. >> yeah. and now the debate seem to be centered around, should we have any attack, should we just have a targeted attack for the

chemical weapons attack or should we do something broader to help the rebels. that's a pretty wide pallet. >> exactly. we have the senate foreign relations committee trying to work out their own version of a resolution. they're trying to work out something much more narrow in focus than the one that the white house had originally proposed. so we'll have to see if they can get this resolution to the floor for a debate next week. >> yeah. so we'll have to see what happens. do we have -- we don't have any ind craig indications on how the vote might go. >> harry weirry reid will have job. he needs 60 votes to overcome opposition to a resolution in terms of doing anything on syria. a tough haul. >> okay. hadley, thank you very much for that. middle east correspondent hadley gamble joins the set with some analysis. we have to keep our eyes on any reaction to that. we did see, as i say, a spike up in brent as a result. getting towards the $115 a

barrel mark. currently $114.82. up near $116 last week. these prices still actually elevated. gold, not above 1400. currently at 1349, but spiked a little higher as well on those reports. just reminder, u.s. futures now after the -- for first trading day of september, are pointing higher. nasdaq caught up 19. s&p caught up 11. agenda today, state side, the manufacturing index out 10:00 eastern. lo also at 10:00, july construction spending, forecast to rise .4%. san francisco fed president john williams speaks at 12:30. one notable earnings report today, h&r block, which comes after the closing bell. otherwise, that's it from "worldwide exchange." "squawk box" up next. plenty more on the deals from microsoft, nokia, vodafone and verizon. whatever happens, we hope you have a profitable day.

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good morning. today's top stories, nokia is selling its hand set business to microsoft for $7.2 billion. verizon agreeing to pay $130 billion to vodafone to buy out its u.s. wireless business. and after a month long blackout, cbs and time warner cable reached a content carriage deal. it is tuesday, september 3nd, 2013. and "squawk box" begins right now. ♪ do you remember when it was september ♪ ♪ love was changing our mind ♪ >> good morning, everybody. welcome to "squawk box" on cnbc. i'm becky quick with joe kernen

and andrew ross sorkin. september is starting off strong. we have a flurry of headlines this morning. let's get right down to business. welcome back, everybody. it is time to go. nokia, first of all, is selling its hand set business to microsoft for $7.2 billion. when this deal closes, nokia's ceo stephen elop will rejoin microsoft as head of the mobile services business. he had been rumored to be a possible replacement for microsoft's retiring ceo steve ballmer. more from jon fortt on that in a moment, including his interview from earlier this morning with ballmer himself. in other deal news, verizon agreed to pay $130 billion to buy vodafone out of its u.s. wireless business. kayla tashe will join us with more. cbs and time warner cable reached a deal to end a month long blackout. the terms of the deal were not disclosed, but the two sides, as you probably know, have been at