buzzing today over blackberry, which lands a bid to go private from its biggest investor tore nearly $5 billion. and the u.s. senate kicks off its debate over a budget bill as time is running out to avoid a potential government shutdown next week. explosion eggs and gunfire reported near the nairobi shopping mall where 62 people were killed in a terrorist attack. but kenyan troops say they have control of the site. >> announcer: you're watching "worldwide exchange," bringing you business news from around the globe. all right. warm welcome to you. you're now watching "worldwide exchange." deidre is with us, as you can see for the next few days, which is great. right now, we have the latest snapshot of german economy as far as the ifo institute is

concerned. german september ifo, 100.7. the current condition is 111.4. the expectation is 104.2. so not quite as a small jump in ifo. and they said the august business climate was revised to 107.6. so not quite as big a jump as we might have expected. let's get immediate reaction to that. miles bradshaw is portfolio manager at pimco and joins us right now. miles, a small bones in ifo. what's your assessment of what that means and of the german economy? >> i think it underwrites the other data that suggests the european economy is slowly recovering. germany is leading the charge. you know, the ifo on has been stronger, the pmis have been stronger. but it's a subdued recovery and it's a recovery that isn't going to cause the ecb to be

tightening policy anytime soon. what's more important in terms of the ifo is the expectations data in terms of having an assessment about where gdp is going to be going forward. i think that was a bit more than expected. but i think the key theme is it's a very weak recovery. >> should there be any more action from the ecb? particularly if market rates have sort of gone up. >> should is a difficult question. what's -- well, it's not a difficult question. it's not for on me to say what the ecb should do. i think our job is to try and predict what they will do and try and position for that asvest investor. the grounds for them doing more i think is very strong. but there seems to be no clear consensus within the ecb to act now. as the economy is improving, i think that reduces the likelihood of any immediate action. i think for them to react, you've either got to have some sort of loss of momentum in the

economy or some sort of greater volatility in financial markets. lastly, we've got a quality review coming next year and there may be more stress in the banking system on the back of that that the ecb will react to. >> miles, deidre in london. i usually sit in the singapore office and see all this enthusiasm about the recovery. do you think those expectations are a little overblown and that investors need to scale back or at least hold on a little bit? >> i think the enthusiasm is because what are we now, almost six years into the great recession and we're just barely recovering. so i think that's why there's such enthusiasm. when you look at things like consensus forecast, no one is expecting a radical shift in the european growth outlook. it's very subdued and it's barely trend growth that we're looking at, despite having contracted for so many years and having a double dip recession. so i don't think the enthusiasm is there.

i think if you look at equities, they are quite cheap, so that might be some enthusiasm about reducing the tail risk to the eurozone economy. it means valuations and risk assets can reduce more substantially. but i don't think that's drawn but a fundamental shift in the joeth outlook. >> we'll come back to you shortly. but you've got time for a cup of coffee. so that is the latest snapshot business sentiment. and the economic outlook will flavor coalition talks as angela merkel attempts now to form a new government. most analysts will favor a grand coalition with the main opposition, the spd. he geoff and annette are still in berlin. they just can't get enough of it. this is an interesting one with the green. angela merkel clearly won this

election. she's in the driving seat. how tempting might it be to have a green coalition and ignore the spd? >> well, i think just on the ifo for a moment, ross, i think this is fascinating how this may now play into some "o" negotiations. what you've got in the greens and the spd are two parties effectively that think the rich should pay more, but also there should be at this point more public spending to help stimulate stronger growth. so on the one hand, you might argue that weaker economic indicators plays into their hands a little bit here. but on the other side of that, maybe merkel can say, you know what? look how fragile things are. we don't want to start tinkering around, raising taxes, putting in place minimum wages that could be costly for companies. so this does help guide the negotiation strategy a little

bit. >> well, actually, the social democrats are very much, as you pointed out, in favor of more spending. but at the same time, they are, as well, in favor of more spending most likely for the eurozone. so this is actually one of the critical discussion points between angela merkel's party and the social democrats because, actually, it's on that topic they probably don't get on one sheet. so it is -- we really have to watch out what happens on friday. the social democrats have a convention on friday and they will ask the party members whether they want to go into a grand coalition with angela merkel's party. because last time, they got terribly rude doing that grand coalition. so yesterday i went to the social democrats press conference. the first suggestion no one can say of what happens the night before and i asks herr steinbrueck what would be his mark in terms of changes in

eurozone crisis politics. take a listen what he had to say. >> what change would a grand coalition mean for politics in europe? >> i can't tell you this now. >> but you must have an idea. >> we've got a lot of ideas. >> so share them with us. >> translator: no. >> well, the reality is, i don't think they're going to get a whole lot of traction on an easier time for the eurozone and that was reinforced by michael fukes, who is a senior member of the cdu party who said, look, austerity is going to be here to stay in this new term for a cdu-controlled government. this is what he said. >> the soushs of it and the queen are not on our side in this particular gain because they are not as -- as we are, as

cdu is. so as a matter of fact, either we are softening it, which i don't want. and i think angela merkel doesn't want because we think austerity is the right way to go. we think it's going to be competitive in europe as a whole in each and every country and that is only possible if we do reforms. the problem is the socialists, they don't want to deal with harms as intense as we like it. so i believe it's going to be one of the very big themes in the negotiation. our input into the association is definitely a different one than the spd. >> so what is interesting, i'd say, in that run up to coalition talks is that we christian democrats are quite vocal about what they want and what they don't want whereas the social

democrats, geoff, they don't try to make a mark, probably being afraid of that they might lose their position, huh? >> well, the horse trading begins here. we know that's going to probably go on for several weeks. and just on a final thought, we just spoke at the end of "squawk box" to alexander schuman, the chief economist at the german chamber of commerce and industry. he said we are seeing a steady recovery in corporate confidence, but don't get carried away here. and i think maybe, ross, that's reflected in that ifo number that we've seen just as you came to us. back to you. >> thanks for that, geoff, annette, we'll catch you a little bit later. by the way, i want to say it's great to have you here. >> thank you. >> i've been so lonely. >> i know. you had to have someone come and defend you and sit next to you. >> are you going to stay? >> i'm not. back to singapore in a few weeks. but i have to say, loving the weather.

as long as i see sunny skies over the next two weeks in london. what are the chances of that? >> very good. i think the autumn you'll find is an amazing time to be in london. >> perfect. meanwhile, mario draghi hinted yesterday the central bank could provide another round of key loans to keep interest rates from rising. >> also, we are ready to use any instrument to see another rto to maintain the short money markets at the level it's warranted by our as emt or inflation in the medium term. >> still with us, miles bradshaw, portfolio manager at pimco. miles, i'm not sure if you heard our colleague speaking about how this ifo number may change the landscape and the coalition numbers there. do you think it's going to be affecting whether merkel's party, who they partner up with?

>> i don't think so. unfortunately, i didn't hear the bit from berlin. the economy has been stable in germany. we've got record low unemployment. i think the record building process is going be about what tradeoff the cdu can give to the spd and how does the spd distinguish itself. >> myles, i'm seeing in your notes that you are worried about some of the periphery countries and greece in particular. you don't think that debt level is sustainable. we had mario draghi saying this week that he thought it was. what's behind that? >> you look at the level of market interest rates for privately held greek debt. there's not a lot of them, but they're on the order of 10%. greek debt is on the order of 70% gdp.

so we're skeptical about that because greece is a small economy. it's going to be difficult to get growth up 2.5, 3% rate. greece is extremely volatile. for us, the valuations on greek debt are not attractive at this stage. there needs to be a second debt restructuring. >> myles, do you see any progress by the greek governments? how do you think that's looking? do they have what it takes to implement these tough reforms? how do you think it's going so far on? >> it's surprising, the data for this year has been quite good in terms of the fiscal deficit numbers. greece has hit a primary surplus. so there has been some very good progress after a very poor start. the issue, though, is not in

terms of this year or next year. it's in terms of the next few years, the next five years or so where unemployment has to come down rapidly in order to create political stability and where, really, the only way you can do that is clearly you need some significant debt restructuring. and it doesn't center to by write-do write-downs. it could be interest rates for years. but without that, i think it's going to be difficult to get private sector confidence back to sort of sustain a growth rate that can bring the unemployment level down. >> myles, thank you very much for that, myles brad show, portfolio manager at pimco. now let's get a check on my home turf. sixuan, good to see you halfway around the world that time. over to you. >> good to see you, too. i hope you're enjoying london.

hopefully i can pay a visit to london sometime soon. as for the markets, following wall street's sell-off within we saw consolidation in asia giving more uncertainty on the fed's future tapering. chinese investors booked profits after the market's recent run up. the shanghai deposity lost 0.6% today. the hang seng hong kong lost 0.8%. the nikkei, early losses in early trade. in china, banks and brokerages let the lawsuit ping an bank tumble almost 5% today. meanwhile, pudong bank lost over 3% today. but the shanghai based bank has gained nearly 20% this month so far.

citic securities took the brunt of the selling down 4%. apple's asian suppliers bucked the down trend thanks to apple's best ever sales launch with china adding to the list of launch companies. apple's major contract mistaker gained 3.4% on the hong kong bores and lg display in south korea finished higher by over 2%. on that note, back to ross in london. >> all right, sixuan, thanks for that. we're down at the session low right now. advancers and decliners evenly matching each other. but that number is a little disappointing, the headline index a little shy. it was 112. it's ticked higher. it's softer than we expected, and that's taken us down to the session low. the ftse 100 was down 40 points. pretty flat at the moment as is the xetra dax. the cac 40 and the ftse mib have very slim gains at the moment. it's hard to see, actually, in

the context of peripheral and german bunch, which are just -- yields lower by 1.9%. how we're going to get any more spread compression between italy and spain after the moves that we've had. ten-year treasury yields, back down again. 2.68%. we hit 2767% immediately after the fed. we've been trading after the yield. we are lower. gilt yields are lower, as well today. 2.87%, as well. the yield on the ten-year. on the currency markets, dollar/yen, 99. we pretty much held the gains on euro slshl dollar. sterling still holding 1.60. so, really, the context of a free trading day so far. the currency markets haven't done an awful lot, pretty much kept to the recent changes. plenty more to come on today's show. we've been talking about the german chancellor. what's coming up?

>> that's right, ross. german chancellor angela merkel gets busy trying to form a new government. some say negotiations could take weeks. we discuss with morgan stanley's chief european economist at 10:30 cet. and could boeing's loss be another firm gain as they failed to win south korea's fighter jet contract. tech experts deskrend on new york for advertising week. that's at 11:40 cet. and conflicting reports over the siege at kenya's shopping mall with militants claiming they still have hostages. we'll have the latest from nairobi in around about 30 minutes. and that's not all, ross. still to come, telephones are rise to the rescue of telecom natalia. we will discuss what it means for your m&a outlook. stay with us.

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blackberry has signed a deal to go private. fairfax stepped down from blackberry last month when it began shopping around. fairfax still needs to do due diligence. and line up financing. mrb is up 1% on monday. but traded more than 100 million shares, nearly four times its daily average. would he be asking viewers, what would it take to bring you back to blackberry? >> it would take a lot, i think. although we still use them here. >> great security. >> and i still love the keyboard. i would hope that if they could just get the apps sorted out, i think i would be willing to consider it. >> you still like the keyboard and people -- that got good

reviews. >> absolutely. >> does it accomplish anything with it? >> you can't download your apps, all the stuff. if you think of an app and you have an iphone or samsung, you think of something and it's likely already there. >> it's a good point. is apps the problem? what would it take to get you to take back blackberry? whether you're business or a consumer, right? e-mails e-mail us, worldwide@cnbc.com or tweet us, @rosswestgate or @cnbcwex or directly to deidre, @deecnbc. now, telco has agreed to under write its $300 million hike. it will give telefonica an

initial stake and months of speculation over the future of the debt lading telecom giant. telefonica's stock is up 277% today. and we were just talking about blackberry. m&a is on the rise. a new quarterly report on high volume deals has found they managed to outperformance the globe index in the third quarter by 3.7%, despite falling deal volumes. they showed the best results, outperforming the regional index by a record 10.3 percentage points. not bad returns there. european counterparts, they underperformed by 1.6% as deal volumes in the region here continue to fall. this marks the first time global acquirerers have outperformed since 2011. now, ross, i'm joined in the studio by steve allen. steve, many thanks for being with us. so this is interesting. the north americas outperforming 10.3 percentage points above.

these are companies that have acquired other companies, have gone on to do very well after that. what's behind it? >> this is a study looking at deals that are closed. having done the deal, can you start to expect value? we've seen over the last few quarters. we constantly see dealmakers do overperform. but the americans have been doing particularly well. i think this is the fourth consecutive quarter doing better and better. >> wa does that mean, are americans just better a picking up companies and doing deals? >> i think if you look at the region, they are different. americans, a lot more deals are domestic. so some extent, taking in your home country is easier. if you look at the macro picture, the issues of going cross border getting workforces to work together is a hard bit. how do you close a deal, get people to work together, get the synergies to happen?

if you go across border, people work in different ways. the americans side step all of that by staying home a lot. >> in the world we work in, it's definitely getting the people to work together. a lot of times you hear a deal falling over. we did the deal and we couldn't get the workforce to gel. grat strategies. >> does that make more of a difference? in the manufacturing business, people would think it doesn't matter, really. >> it's industries where the assets are the people. and that could be high tack, it could be researched based industries, meat and entertainment has certain issues. services businesses. things like manufacturing, where it's more like the physical assets, it's easier. >> and the russian asset. we know it has a huge amount of cash on the balance sheets at the moment. what is the primary rationale here? people are trying to buy future

growth. are they spinning off noncore businesses? what's the key issue, do you think, for m&a? >> volumes are down. so some companies are still doing it. and deals are happening. it is about long-term growth. it is about saying, how do we expand? how do we buy in the next capability? where is the business going? clearly, the dominant theme frankly is caution. we're seeing outside north america, europe in particular, a steady decline in deals. and interestingly, despite the global rise, many fewer big deals. so even despite the cautious optimism, companies are still being cautious. so i think the dominant word, i would say, is hopefully return to normality, but caution. >> and what's interesting, as you said, the report said they tended to stay in their sectors. i cover china mostly and singapore. and you see a lot of chinese companies trying to make deals in north america, sometimes unsuccessfully. do you think regulations are increasing? how does that compare

historically? >> china in is a fascinating case. there's a lot of media coverage about companies trying to do deals, but, in fact, many chinese deals are domestic. so this the ones that get the media attention are the big ones that sound exciting. most chinese companies settle for consolidation. it's easier to some extent to stay at home, to do what you know. but yes, the media would always pick on that story. >> so you see a lot of chinese deals. >> yes. >> thank you so much, steve. steve allen from towers watson. still to come, the celebrations are over and the hard work begins. can chance la angela merkel form a successful new government or will the success come with a sting in the tail? >> we will cross to berlin right after the break. we're back in two.

and here are your headlines from around the globe. german ifo rises. >> and the markets are buzzing over blackberry which lands a bid to go private for its biggest investor for nearly $5 billion.

the u.s. senate kicks off its debate over a budget deal. time is running out to avoid a potential government shutdown. explosions and gunfire reported near the nairobi shopping mall where 62 people were killed in a terrorist attack. but kenyan troops say they do have control of the site. >> and we will be talking more about nairobi later in the show. european markets, meanwhile, pretty flat. the ftse 100 off 0.2% for the xetra dax. as far as bond markets are concerned? >> a little negative today. we have the ten-year bund after that ifo reading was a little lower than expected. the yield, just under 1.9. the ten-year treasury still continuing downwards after yesterday's nontaper. we're at 2.69.

you have the ten-year guilt and the ten-year italian bonds, as well. >> yeah. we saw the dollar dip down. but we're still above 1.35. we hit 1.3560, 7 1/2 month highs. 99, just can't above borl 100 for dollar/yen. >> we had a bet in asia when it would go above 100 and now it just keeps waving in between. so chancellor merkel's continuing attempts to form a new government today. the tie up with the green party is still a possibility. plenty of favoring in this grand coalition idea. geoff and annette are still there. how long do we think these negotiations are going to run on for? >> well, this goes on for some time, potentially. i think there is a -- there is a

sort of 30-day period where the discussions are meant to take place and then we're meant to get closer to a coalition government. but my understanding is -- and help me if i'm wrong here -- is that actually that 30 days can be extended a little bit. so there's no hard and fast rule, it seems. but you were saying you think maybe november. we might not have a solid coalition for the next four years until november. >> yeah. the last time around, it took, i think, six weeks. then we'll end up in november, geoff, i'd say. >> yeah. it's going be fascinating here, ross. there are lots of issues on the table that parties will have to trade on to try and get closer to the end game here. and that's where the interest is for our audience, i think, ross. what happens to the minimum wage idea? what happens to tax hikes? what happens to ottobahn

charges? a whole slew of different fiscally sensitive ideas that will impact the direction of travel for the german economy and the future day-to-day for german people. >> yeah, that's very much it. and as they're really at the early stages here in terms of coalition forming. yesterday i attended a press conference from the christian democrats which is, of course, angela merkel's party. and i asked the deputy chairman how they like the idea, as well, of the coalition of the green. take a listen. >> i'm not optimistic, but we will have talks with the green party. and then you have to analyze. is it possible for four years or is it not possible? and i am skeptical that it's possible, but talks are important. >> so, you see, there's a little bit of skepticism around here. but we are now joined by garrett

schict who is the spokesperson greens. thank you very much for coming to us despite the rain. it's awful weather here in berlin. speaking about awful weather, awful situations, you're not in a good situation, as well, after the election. what kind of concessions would you make to go into a coalition with the cdu? >> i don't see any base for a coalition between the christian democrats and the green party. one thing is that we lost and we have now to analyze why we lost and this is our job for the future and to build up the green party and the opposition. and secondly, if you look at the party program, for christian democrats and the green party, it's very difficult to imagine a coalition agreement that fits for both parties. >> so looking at the outcome of this election, i think i've negative seen such a destruction of parties. the levels are totally off.

and you have to say it's quite a bit of losses, as well. why was that? was it external or internal? >> it was one of the toughest campaigns we had to face as the green party in the last years. there were different factors. people were sometimes frustrated of what they saw at a regional level, where we had to make difficult decisions. and then there were various factors at the federal level, too. one factor is certainly that we were honest. we told people the truth about the fate of public finance. and we said, if you want to have new projects, we need to have the money for that. and it was very difficult in a situation where everybody felt, oh, germany is fine. why changing? >> people might say it would seem remarkable to have a groan

cdu/csu coalition. but it's not unheard of for the parties to work together in regions or in cities. so there is some basis for the two sides to stick together. >> there's an important difference between a local level and the federal level. the issue that comes at the local level and the federal level are at a city structure. at the federal level, which we talk about, interest groups that stand wind the cdu and have helped the cdu gain these elections. these are the interest groups we fight against because we feel they're not very good for the public in general.

>> what do you think four more years of angela merkel and a coalition means in germany? >> i fear the structural reforms and the economy, but nothing on that was done, not even -- and i fear that could continue because merkel is very cautious. she never takes important steps that might risk her power. so i guess there could be four more lost years. >> for hour lost years. thank you so much for joining us. well, annette, we're hearing it both from the green party and the cdu. no green conservative alliance. but you know german politics.

do you think there might be a sliver of an opportunity here not prepared for the friendly negotiations? >> i don't think so. the greens have made it pretty clear already in past years that they don't want to go together with angela merkel. it's one of the big reasons, as well. not only looking at the topics, as well, that the party doesn't want to be destroyed in a coalition of angela merkel's party. the big thing is, why don't the social democrats want to do it? >> we'll wrap up for the time being, ross, but we'll see you briefly before the end of the show. back to you in london. >> thanks for that, geoff and annette. the other big focus has been the german ifo business survey. came in softer than spec'd. we picked up on the headline number. 107.7. it was 108.2. it fell from august to september. joining us for more, elgin.

slightly disappointing that ifo number, elga. but what role does the state of the economy play as we constitute a new german government. what role did it play in the election? >> well, i think it played a very important role because of the strong performance in the labor market and i think that is why the sentiment in the election was very much, you know, the last four years for most people in germany were good ones. so people voted for a continuation of the previous government or at least this cdu, a cdu led government. >> in your notes, we were just talking there with geoff about whether there would be any potential for green cdu coalition, which you think is unlikely, as well. one of the big issues facing german -- the german business economy is actually the cost of green policies. their energy costs for german business are like 60%, 75% more

than in the united states. they're at a severe competitive disadvantage. the bdi has come out and said we need a proper energy policy to get our costs down. is that going to happen? >> yeah, i do think that energy policy is a high priority for the parties. not just because of the competitiveness angle, but more importantly because of the cost for renewable energy at the moment are very much brought by individual electricity customers at the retail level and that is sort of increasing the resist ance among the broader public. >> geoff wants to ask you a question. geoff. >> what i'm interested in here is whether you think this was just a golden window of opportunity for the cdu/cfu to get back into power. because we do have this moment

for the german economy where, okay, the economic numbers are not fantastic, but they're not so bad. low interest rates. low unemployment. generally recovering economy. is it going to go wrong in the fourth quarter or the first quarter of 2014? >> i don't expect it to go wrong in the near term. but what we are seeing -- and i think this morning's eye for business climate underlines it, that the recovery, even in germany, is not particularly strong. after a very sort of nice spurt in growth in the second quarter, i would expect the third quarter to be a lot weaker in terms of growth. and if you look at some of the industrial production data, at this stage, we cannot even rule out a negative print on headline gdp, both in germany and in france. and with the two largest economy necessary europe decelerating, i think this is quite a soft back

drop from a cyclical point of view. medium term, we expect this recovery to continue and to gain some momentum. and germany will outperform the rest of the euro area in terms of growth by quite a margin. but on the whole, this is still a very sluggish growth environment for europe. >> so may i jump in here, as well. if we are heading into a grand coalition, the likelihood of more spending, i mean state spending is, as well, higher. would that be a positive for germany? >> it depends on what you spend the money on. i think what germany urgently needs to spend money on is its infrastructure, net infrastructure investment, so infrastructure investment by the public sector after the appreciation has been negative for ten years. and i think when you drive around germany, when you travel, you actually start to see some of the cracks showing in the german infrastructure and the underinvestment in the german

capital stocks, both on the public sector infrastructure side but also the private sector is one of the real issues that we need to tackle because it's essential for the rebalancing of the euro area as well as the german economy. >> okay. let me ask you, we've been focusing a lot on the domestic issues and policies. but with the coalition talks, the coalition building, do you think that this is going to change or affect germany's stance towards the euro and, you know, potential bailout for greece and help for some of the other peripheries? >> i would not expect a change in germany's stands on the euro crisis. and in actual fact, we have had a grand coalition on these issues for quite a while. because all of the bailout packages were approved by the social democrats. all of the bailout packages and wilder european decisions had to be approved by the upper house of parliament. where the social democrats have had a majority for a while. so de facto, we had a grand coalition on these issues.

and, therefore, i wouldn't expect a major shift. there might be nuances here or there. my main worry in the near term is that some of these key decision items that are on the agenda right now might be dragged into the coalition talks, which i would expect to be drawn out and so difficult. >> thanks for that, elga. thanks to geoff and annette. they'll be back, as well. airbus has been flying high after confirming a large order with lufthansa for 25 jets. stephane is looking ahead to this. we heard michael o'leary from ryan air last week when he was trying to talk about this, you know, $10 trip to the states he want to try to get in in the future. he complained he can't get the airplanes. >> yeah. well, that's a long way away.

for the time being, we'll look at the forecast for the next year. probably this is what we're expecting. airbus is going to increase to raise guidance for the next 20 years. at the time last year, airbus paid a $27,350 aircraft would be necessary over the next 20 years. and more than 28,000 to include the cargo aircraft. that's the market value of $4 trillion, or $4,000 billion. airbus believes the global fleet of aircraft across the world will more than double over the next 20 years to 32,550 over the next year. given the strong start of the year, we have reasons to believe it's going to raise its forecast for the next two decades. now, there's a question mark about the -- even if airbus and boeing have been successful with their small aircraft, which are

the 23 airbus and the boeing, we know the demand for the air jet wasn't very strong. we know airbus is struggling to get the new aircraft for the 2380. also regarding the regions, ross, last year airbus say that china, india and the middle east would drive the growth, unsurprisingly, and europe and united states being the weakest of the market in terms of the forecast. >> and it's much better now that the holding company's name is airbus. it makes things simpler for our simple journalists. well, you were okay with it, but i was -- >> are you calling me a simple journalist? >> no, no, you're okay. but i had a problem. >> that's the reason why they made it, actually, changed the name. >> makes sense. >> stephane, thanks for that. we will discuss that forecast at

12:30 cet, 6:30 eastern. developments in kenya, islamist fighters claim they are still holding hostages inside a shopping mall in nairobi. this as the kenyan interior ministry said it had to be in control of the building and freed those being held. earlier, a loud explosion was heard at the mall, which was attacked by the terrorist group al shabaab. let's get more from nairobi. what's going on now? we had heard earlier that the scene was clear and now an explosion. >> that's right. and there's a great deal of confusion about what precisely is going on inside this vast shopping mall which was taken over by a group of perhaps a dozen or so al shabaab aligned militants early on saturday. earlier, the kenyan government had been saying that its military and police forces were in control of the complex. and in the last few moments, a

spokesman said they were combing parts of the facility in order to -- in order to ensure that no one was there and that everyone is safe. but recently, we heard explosions and perhaps an exchange of gunfire, as well, which might suggest things are perhaps more precarious. and now kenyan television is reporting that perhaps six militants have now been killed. six more militants killed by the kenyan security forces. where are awaiting official word from the kenyan government here. >> thanks for that. now, let's get straight to nick anthony. now, nick, you work with companies operating in africa by forming joint ventures with them. how does this hurt confidence and hurt investment going into the region?

>> it's exactly what al shabaab want to do. they want to destroy the confidence. they want the west out. they want to destroy the economics of the country. and they do this by attacking western assets. and it shouldn't hurt confidence because there are things you can do about it. if we do allow it to do so, they will win. >> this is a high end mall. how can that not hurt confidence? you have a lot of multi national companies involved there. when you talk to companies, would on this not set back their investment plans? we would advise not. an attack like this is extremely difficult to counter or so realize it's happening. it can happen anywhere in the world. the fact that it's happening in kenya should not really put off clients. >> you were helping build up forces in your company 20 years

ago. what chavengd? why has that now failed? >> essentially, al shabaab were put on the back foot by the african union forces through 2011 .2012. they lost an issue in 2011. that has changed -- they have changed there are modus operandi. they have gone from trying to hold ground and run a country to a compare of terror, vulnerable assets in surrounding countries. all of the intelligence suggests that they are moving out of somalia into kenya as we speak. and they are reinforcing. >> what would the policy now be for the kenyan government? >> it's very difficult for me to advice the kenyan government. they are taking advice from western paris. they will continue to take advice from western powers and rightly so. it's an extremely difficult thing to counter. but i think the advice and the

support that the western government is providing them will continue to help with the problem. it needs to be an intelligence led operation. both at the government level and in corporates and act on that intelligence. >> okay. nick, thanks so much indeed for joining us. as we take a short break, futures today are indicating, well, s&p is lower than the fair value. dow jones called up 7. we'll get the latest from tokyo, as well, right after this.

welcome back. lixil is in talk toes buy germ niece's grohe for $4.8 billion. >> hi there. having set up a special company to finance the deal, it's looking for shares by ntgb capital. the japanese company is negotiating with minor shareholders to acquire 100% stake. they're looking into the option

of listing grohe shares if the lixil deal collapses. lixil has been stepping up overseas acquisitions rately. lixil president has been saying lixil plans to buy more overseas companies and he hopes overseas sales to $10 billion in the near future. back to you. >> okay. fushiko, thanks for that. still to come, we'll leave you with a heat map to see how european equity res trading right now. a little bit even stevens, really, advancers versus decl e decliners at the moment. this is after the ifo number came in slightly softer than expected. just to remind you, a small rise in the ifo, 107.7. it was expected 108.2. current conditions down 111.4. it was from 112, expected to pick up a little bit.

and that means futures this morning for the u.s. also really a little bit mixed. still to come, time is running out for u.s. congress. now just a week left too void a government shutdown. >> we will get into the budget dead lock as the debate begins. stay with us. ♪ [ agent smith ] i've found software that intrigues me. it appears it's an agent of good.

♪ [ agent smith ] ge software connects patients to nurses to the right machines while dramatically reducing waiting time. [ telephone ringing ] now a waiting room is just a room. [ static warbles ] you really love, what would you do?" ♪ [ woman ] i'd be a writer. [ man ] i'd be a baker. [ woman ] i wanna be a pie maker. [ man ] i wanna be a pilot. [ woman ] i'd be an architect. what if i told you someone could pay you and what if that person were you? ♪ when you think about it, isn't that what retirement should be, paying ourselves to do what we love? ♪

german business sentiment rises modestly. improving trend has a affiaffir economies are on a solid footing. and blackberry lands its private investor for nearly $5 billion. the u.s. senate kicks off its debate over a budget deal. time is running out to avoid a

potential shutdown next week. and explosions and gunfire are reported near the nairobi shopping mall where 62 people were killed in a terrorist attack. but kenyan troops say they have control of the is site. >> you're watching "worldwide exchange," bringing you business news from around the globe. >> okay. warm welcome to you if you've just joined us stateside. good morning. welcome to the start of your global trading day. i have the table accompaniment of deidre today who is going to be with us for the next week or so here in london. py job is to try and make her stay. as far as futures are concerned for today in the united states, the dow 50 points. the s&p down around 8 points. this is where we stand at the moment. the s&p is just a point below fair value. the dow jones industrial average just above fair value.

the nasdaq about 4 points above fair value. not really any particular indication at this moment that european equities was softer. we have picked up in that particular point. the ftse yesterday was down 0.6%. 40 points less. currently up 0.2% as is the xetra dax. we hit the session after that ifo number about an hour or so ago. the cac 40 is up 0.4%. ftse mib up 0.3%, as well. 2 other big focus has been on the german ifo survey for september, which came in slightly softer than expected. but that is the latest bit of economic news for the back drop, of course, to coalition discussions in berlin. and, geoff and annette are there, as well. so, geoff, look, what's going to be the -- clearly, angela merkel is in the box seat here. she won the election. how much can she dictate terms to the other parties?

>> well, this is the point, isn't it, ross? you know, there's mr. obama. sat there in the white house and he's thinking, i need to get on the hot line to talk to these europeans. when i pick up the phone and dial, who do i speak to in europe? clearly, as a result of the election outcome, it is still angela merkel who answers that phone at the other end. but i guess the question is when she picks it up and speaks to mr. obama, from here on in, is she going to be pedalling the same policy line on international matters on the eurozone and on u.s. european relations as we had in the last term in government? >> well, actually, geoff, there is no indication that anything will change. yesterday at that press conference, she was holding right after the election, she was really saying that nothing will change. she will stick to the policies. she has implemented during the

last four years, as well. when it comes to eurozone politics, when it comes to, as well, the decision to do war or not to do war. germans are very reluctant to go into war. so there won't be any material change. as well, if she's going together in the coalition with the social democrats, they are even less in favor of when we talk about foreign politics, into any kind of war zone and when it comes to the eurozone matters. their might be actually some changes, right? >> well, we'll wait and watch on that. it's continuity and stability. there are shades of gray on the eurozone and on some domestic policies, ross. but hey, you know what? when you make that call from the white house, it will still be angela on the other end of the line. back to you. >> you're absolute lly right. geoff, your duties are done.

thank you very much. you can come back and brief me on other parts of berlin that we didn't get to cover on air, if that's all right. >> i had a delicious curried bratwurst if that's what you're talking about. >> it could be. and annette, you'll be back on closing bell for now. thank you very much. >> and if you want to see it, it's on the twitter feed. we put the picture out there, didn't we? >> yeah, we did. >> very berlin. >> yeah. >> back to you. >> and that's@cnbcworld is the twitter handle. as far as bond markets are concerned today, ten-year bund yields, 1.88% is where we stand. we had a spanish t-bill auction today. yields on the nine-month t-bill are lower. treasury yields are lower today, 2.68%. getting back down to the level we were just after the fed

decision last week. as far as currency markets are concerned, euro/dollar took a bit of a dip. we're now back below 1.35 after being at 1.3560 last week. dollar/yen still on this 99 mark. let's recap that asian session. sixuan is in singapore with us for more on that. sixuan. >> thank you for that, ross. asian markets followed the u.s. into reverse, given more uncertainty on the fed's future tapering. with no fresh catalyst, china's investors after the recent run ups. ahead of the golden week holiday starting october the 1st. meanwhile, japan, south korea and australia all ended marginally in the red. in china, banks and brokerages led the lawsuits. ping an bank tumbled almost 5%. pudong bank lost over 3% today. but the bank has gained about 20 pergs this month so far on hopes

for a preferred shares program. meanwhile, citic securities lost 4% today. over in japan, under pressure after deutsche bank downgrades on some sector leaders. sites and worries over the domestic consumption tax in tokyo. tatemono lost 4% today. some suppliers outperformed thanks to apple's best ever sales launch with 9 million new phones sold in the first week. apple's major contractmaker fox conn listed on the hong kong bores gaining 3.4% in lg displays. in south korea, adding 2.2%. back to you. >> all right. sixuan, thanks for that. and i mentioned if you've just joined us, we have deidre with us. >> i'm on loan, right? >> you're on loan. >> and i'm still trying to figure out the time change. usually i'm in asia or north america and now europe. >> it's the center of the global

time zone. >> i'm liking that, yeah. >> my job is to try and get you persuaded to stay sfp. >> what can i do in london to persuade me to stay, then? >> lots of things. we'll talk about that. we've got airbus numbers out. not numbers, but forecasts. they're increasing their 20-year jet forecast by 20.6% to 23.7%. that's because dee is going to make a time more flights in that time period. the aviation industry needs $4.4 trillion in jet liners and freighters over the next 20 years. and they're forecast for a wide body to an engine jet will increase by 4.3%. the thing about this is all asian demand. >> that's what i was going to say. >> so that's all me, right? >> it is all you. why michael o'leary can't get his hands on a jet to bring --

if i get my own private jet, i'll come back every week. that's fine with me. on a programming photo, airbus's ceo will appear on cnbc later to discuss that forecast. catch his interview at 12:30 cet. that's 6:30 eastern. well, senate majority leader harry reid has scheduled a procedural vote on the bill to fund the u.s. government for wednesday. if it clears that hurdle, the measure goes to debate. the senate could take until sunday evening to pass the bill, giving the house just 24 hours to respond to avoid a government shutdown. >> meanwhile, u.s. equities fell monday, following a flurry of comments from fed officials in last week's decision not to taper their bond buying program. the move hurt the credibility with communications. he says he did vote to taper the fed's asset purchases by $10 billion a month arguing the program hasn't boosted job creation. meanwhile, bill dudley defends the decision saying monetary

policy is still needed. he sites the tighter market conditions and is a tepid jobs recovery. and you can hear more from the new york fed chief in that exclusive interview with steve liesman at 6:00 a.m. eastern. where does that leave us? markets ahead of fixed income. interesting note, treasury yields just heading lower again today. and we're as clear as mud, really, aren't we on the fed. >> it's clear they have pulled back from the brink because -- >> i don't think it's clear at all, is it? >> it's clear that they don't have enough clarity, in a sense. so we will wait, i will expect, not really until january at the earliest which will be

bernanke's last meeting that we will get any tapering. but really, i think the underlying message here, they aren't doing the things that they don't want to be seen to be stupid to have the debt ceiling crisis go wonky and all of a sudden they have to reverse -- >> you said they didn't do it because of the economy and now you're saying they didn't do it -- >> read through the lines. they don't have confidence in the politics. they haven't got sufficient confidence in the economics, either. >> but do they risk an each bigger -- we saw the market turmoil. do they not risk more of a sell-off and more volatility if they do ta? can the u.s. economy handle the ten-year yields at 3%? is that such a huge deal? >> it isn't a huge deal. yeah, look, it's a huge shocker for a lot of us. but they're now trying to justify it. we're seeing a lot of different fed heads coming out.

but what dudley said yesterday is more of a yellen approach. there isn't a catalyst there. >> when are they going to do it? >> i think january, possible march, but i don't think they -- they did it next month, i think that would look really, really stupid. >> but if there was a government resolution, they might say -- well, if that was one of the reasons, then they could have faith in government, why not? >> yeah. i think that would be a little bit obvious. >> how about a bounce in the jobs number? >> all these are possible. we've seen obviously the claims numbers are pretty good. >> all things are possible? >> all things are possible and eats all data dependent. but the reality is i think basically first quarter.

>> how does that nondecision affect markets? >> for the market, we're trying to work ott whether bond markets are having a bit of a reallily here. certainly peripheral market have had a very bad time of it. we want to understand what's going to happen for places like portugal. and the noises out of spain and even greece are reasonably positive. >> can you get any more compression between bundes and spreads? >> you will. i expect if mr. draghi at some point comes up with another lto. but that would be a slightly different one. i think it will be one with a rachet on it. if rates were to go lover, then people will benefit. with the rates much lower now, i

think they will have some form of guarantee for banks that they can get in and out a little bit more flexibly. >> about treasuries, what do you think is going to happen to treasury yields? i heard this last week saying now going into the treasury market is a bit like going into a motorway. >> that's one of the reasons the fed has moved from stiffer liquidity measures. but they are aware that for the primary dealers, it is a very difficult things because obviously a lot of flatteners have gone on and the market has been side swiped and obviously again last week. >> thanks. meanwhile, a recap of the headlines today. >> german business sentiment fails to meet expectations,

despite a slight rise for september. the battle to keep the u.s. government ramps up as the senate debates a fresh budget bill. and mixed reports out of kenya as terrorists claim they still have hostages at the nairobi shopping mall. syria tops the agenda as the u.n. general assembly kicks off in new york. but can the security council really find consensus on a chemical weapons deal? we're going to preview the talk right after the break. stay with us.

faulks between russia and syria aren't going smoothly. this is according to a senior russian diplomate speaking ahead of the u.n. general assembly in new york. president obama is expected to use his address to warn bashir al assad that he has a limited amount of time to rid syria of chemical weapons. joining us now is elizabeth fira. elizabeth, thanks very much, indeed, for joining us. what trajectory do you think these talks are now going to take? >> well, the talks are taking place in the security council. and what we hope is that there's

a strong message not only that assad will get rid of his chemical weapons by june 2014 because there's a strong enforcement mechanism and that seems to be the sticking point. >> yeah. and so if we have that as a sticking point, if we don't resolve it, what happens? >> well, then there's a question of whether or not there will be military intervention, if there are other means that can be used to persuade assad to go along with the deal that's been struck, try to get rid of the chemical weapons. >> elizabeth, i'm just wondering, if you don't have this, if assad is not facing the threat of force, how -- can he really be expected, can you trust him to let the u.n. in and give up they will these chemical weapons? how reeltistic is this scenario if the threat of force is taken out of the equation? >> if the threat of force is

taken out of the equation, you'll see some delays, trying to cover up the fact that the weapons aren't being destroyed. but it is in assad's interest to get rid of the weapons, to make sure there isn't a western military intervention. >> now, elizabeth, what do you think is the threat of this conflict spreading beyond syria? do you think that's a huge -- is that the huge risk at this point? >> definitely. i mean, if you look at the humanitarian situation, there are 2 million refugees that have fled in the past year to neighboring countries. this is a massive displacement. and coming into countries where there are fragile political situations, a country like lebanon is looking at having a registered 1 million refugees by the end of the year. how much more can a country like lebanon be expected to do in terms of receiving refugees? >> yeah. and how much pressure is that putting on not only lebanon, but

jordan, turkey, iraq, egypt. these are the countries being impacted by this. >> it's putting a lot of pressure on these countries both to get adequate assistance to meet the needs of the refugees to shore up their struggling economy. and most of all it's to put an end to this occasional conflict that's displacing so much people the. >> what needs to be done to help them? what international feeds to be taken to help with that situation? we've seen the impact, of course, in iraq. >> of course. i mean, you know, most fundamentally, these countries need international assistance to mobilize funds to support them. they need funds in terms of coming up with the right policies so their education and health systems aren't totally overwhelmed. there's a particular need to get access into syria in terms of delivery of humanitarian assistance. there are four or five million

people who have been displaced within the boarders of syria where it's much more difficult to get international assistance and the assad regime has made it more difficult. checkpoints and limits on importing medical goods and so forth. you know, those are the kinds of obstacles that could be dealt with quickly by the assad regime if it wanted to. >> elizabeth, thanks for that. elizabeth ferris from brookings institute from washington, d.c. ross, you know i'm canadian, right? blackberry was at one point the most expensive and valued canadian company. it has come a long way from there. we'll be talking about it. will a deal to take the company private save the smartphonemaker? we'll discuss that straight after this. just by talking to a helmet. it grabbed the patient's record before we even picked him up. it found out the doctor we needed was at st. anne's. wiggle your toes. [ driver ] and it got his okay on treatment from miles away.

it even pulled strings with the stoplights. my ambulance talks with smoke alarms and pilots and stadiums. but, of course, it's a good listener too. [ female announcer ] today cisco is connecting the internet of everything. so everything works like never before. [ agent smith ] i've found software that intrigues me. it appears it's an agent of good. ♪

[ agent smith ] ge software connects patients to nurses to the right machines while dramatically reducing waiting time. [ telephone ringing ] now a waiting room is just a room. [ static warbles ] you really love, what would you do?" ♪ [ woman ] i'd be a writer. [ man ] i'd be a baker. [ woman ] i wanna be a pie maker. [ man ] i wanna be a pilot. [ woman ] i'd be an architect. what if i told you someone could pay you

and what if that person were you? ♪ when you think about it, isn't that what retirement should be, paying ourselves to do what we love? ♪ welcome back. we are going to be talking blackberry. it has agreed to a $4.7 billion deal with fairfax financial, its largest shareholder which will take the struggling smartphone manufacturer private. fairfax still needs to do due diligence and line up financing to fund its $9 billion share buyout. last week, blackberry posted a big second quarter loss and flash its wore force.

blackberry shares rose 1% on monday, but traded nearly 100 million shares, nearly four times its daily average. james geller joins us from new york. thanks for being with us, ceo of rapid ratings. this has been a long, painful, slow death for blackberry. what do you think about this potential deal? >> well, i agree. i think it has been a very, very difficult time for them. they've been in a bit of a spiral. this is sort of saving grace news, but there's still a lot to be done. there's execution risk, financing risk as you just pointed out. even if all of that gets done, it doesn't change the actual business prospects. they have a lot to do if they're going to continue to be a viable concern because the business pressures on them have been significant. >> james within were you surprised to see this deal? we cover a lot of the chinese companies like lenovo and there's at some point some chatter that they may be interested in blackberry. and fairfax seemed to come out

of nowhere. >> fairfax is the largest individual shareholder with about 10% of blackberry shares. so thief got a defensive position that they need to take, as well. and i would look at this as putting a line in the sand that is telling the markets that at $9, there is a buyer going well through due diligence. but, you know, we saw share price yesterday close just under that $9 mark which suggests that the market doesn't actually believe that there is going to be a competing bid that will be higher than that $9. but in general, i would think other than fairfax's very committed shareholder and certainly a big canadian private equity or insurance in private equity player, i think it would be more like loy a strategic player that will come in if anyone else that does want these assets. >> they talked about how they might concentrate on the enterprise market which is a space they used to own, james.

but i wonder, if the market is the future going to be separated between consumer and enterprise or are they merging, anyway? >> i think that's a great point. historically, when blackberry had its real beach head, if you will, in the enterprise space, there was much more of a division between enterprise and consumer. but now there's this whole trend called bring your own device which is taking in consumers demand for devices like iphones and android mukts and forcing on or putting pressure on their corporations to let them use those types of products. so that's merging enterprise and consumer. so as blackberry says, it's going to drop the consumer business and essentially retreat to the enterprise. i don't think they've got that safety ground that they may once have had. and i think they're going to find it extremely hard to retrench into the enterprise business and have that be a successful strategy. i know it's faithly flawed, actually. >> james, thanks so much for

joining us this morning. >> sure. thank you. i'm wondering if you understand how the fins feel about nokia. do canadians feel the same way about blackberry? >> i think it must. blackberry is based in waterloo ontario. but it's funny, i was telling you during the break, on instagram and on facebook, a lot of my friends make a big occasion of putting their blackberrys to rest. these finally give it up and there's a lot of canadians that hold up because it's a nashistic patriotic thing. they have a ceremony, they post a picture of it under the chairs. >> are we going to need counseling in canada for blackberry, you know -- >> it's possible. >> you're okay, though? >> i'm okay. >> we'll take a short break. as we do that, futures right now

indicate seeing a mildly flat open -- no, a flat open for wall street. more to come in the next part of "worldwide exchange" after this.

this is "worldwide exchange." the u.s. senate kicks off its debate over a budget bill as

time is running out to avoid a potential government shutdown next week. >> german business sentiment rices, but falls short of expectations. the affirming trend has affirmed europe is on solid footing. and airbus's aviation industry has confirmed there will be a need for 30,000 jets as the planemaker hikes its forecasts. explosions and gunfire reported near the nairobi shopping mall in a conflicting report that hostages are, in fact, still inside. u.s. futures right now indicate ago fairly flat start

for u.s. markets a little later. remember, the dow down 50 points. the s&p currently down eight. this is where we stand on fair value. the s&p just, what, 2.5 points below. the nasdaq just about 2 points above it. european equity markets, though, a little bit from not much by much. the ftse 100 was down 40 points. currently just up 8 points. we have the ifo institute sentiment survey out earlier. and it picked up a little bit, but not by as much as expected. there is a little bit of disappointment surrounding that. the cac 40 up 0.4% and the ftse mib, as well. deidre is with us or dee is with me for the next few days and hopefully next week a little bit, as well. dee. >> that's right. and you're probably wondering how do you make money in these markets? aren't we all. here is what some of the experts have been telling us throughout the morning.

i would tell you the cartel looks to me like it's getting its act together. you take potash, the company, as an example, $40 u.s. before the cartel broke up and all of a sudden it went to 2d. it's not a bad opportunity if you can look out three years, you can look out five years. >> if, as i do believe that interest rate is coming down and i think the whole repricing of the curve in the u.s., it will drive it. and on top of this, i think there is, again, incredible signs that china is engaging in credit growth. this credit growth will make commodities overall more as we get into the final period of this year. >> you buy in october and you sell late january, early february because that's your seasonal cash flow effect coming into markets. so, yes, there might be some choppiness in october. that often happened in the past and i'm not saying that won't.

what i'm saying is once you get through to that corporate earnings season, especially within europe, that choppiness will start to dissipate. the seasonal factors will take over and there's an opportunity. >> now, eric green, small cap fund manager and director of research is with us. eric, volatility, really, since the fed last week. we just talked about how that is -- you know, what you're doing with that information at the moment. >> well, we're -- >> if anything. >> yeah. not really anything with the volatility. was expected that we would have -- we generally have volatility around this time of year. but there was a surprise that there was no taper. we don't think it affects fundamentally the companies that we're involved in. and we think that there's still a lot of opportunity in the small caps sector. >> now, people have been talking about small caps being overpriced for a very long time now. but you think that there's still room to go. how high are they going to go? >> sure. we think that there's 20%, 25%

up side over the next 12 to 18 months. we look at the credit market to predict what happens in equities. if you look over however, the credit markets have been great. long-term indicators for where the long-term equity markets are going. the high yield credit market in particular, spreads have continued to come down here and is generally that's a very good sign for small cap equities. a lot of what we call small infrastructure catalysts happening where companies refinance very high cost debt and lower levels and create a lot of free cash flow that way. >> okay. so it's nothing to do with improving fundamentals. >> there are improving fult fundamentals, as well. we see an economic recovery in the united states start to go accelerate. housing market has been stronger. >> is that coming off a bit, though? >> it's coming off a bit, as expected. some of it haas to do with the fact that there's less supply out there. there are a lot of bidders for home and there's less supply. but that will start to catch up and people will start to adjust to high mortgage rates.

we're seeing auto production strong. >> okay. let's take your orders. have you looked at, then, people in the auto supply chain? how are you playing those things? >> sure. the auto supply chain, those talks have been fantastic. we've been involved in several of the names. actually, in the dealers because lithium motors is one that we've been involved in. penske auto group, also, which has some exposure here in europe. they've been doing spectacular, much better. >> at this particular moment, do you keep running those? >> we've taken a little bit of profits, but we continue to think there's value there. we didn't build enough car necessary 2009, '10 and '11. not only getting back to a normal level, we have a lot of catch up. cars are older today in the united states than they've ever been. i believe the average car is around 111 1/2 years old. >> i know how you feel. >> come on, ross, don't sell yourself short. >> where would it be good to be right now with a lot of risk coming up? >> we look at company specific,

bottoms up. we still love the television broadcasters. we think that the affiliate companies like -- yeah. like sinclair, nextstar, lynn, great television. those are very interesting ideas here because they're getting much more -- they're getting paid for their programming for the first time. espn and discovery has been getting paid a lot for their programming. they're starting to catch up and you saw the cbs/time warner disagreement. now cbs will be getting close to $2 per subscriber per month for their content. so we like those companies, the values there. >> content is being revalued. >> contend is being revalued. very important. the other thing the broadcasters have is extremely valuable spectrum that we don't think is priced into their stocks and really is a long-term option. >> certainly not something you hear every day. >> no. but i am pleased about that. eric, stick around. more to come from you. you're going to stay with us on the set. jpmorgan reached $920 million settlement last week

over the london whale trading losses. but the bank's legal troubles may be far from over. bertha coombs is live at our cnbc headquarters with more on this. good morning to you, bertha. >> good morning. the justice department is set to sue jpmorgan as emergency room as tod early as today. reports say talks broke down last week. the case relates to a sale of mortgage bonds between 200 a and 20067. last month, jpmorgan disclosed u.s. prosecutors in california will conduct civil and criminal probes into the bank's mortga mortgaged-back securities. "the wall street journal" reports the two former traders charged in the london whale case are trying to shift the blame. as part of their defense, javier and julian will reportedly claim the so-called whale himself, bruno ixo, was the one

responsible for marking the value of their derivative positions. that could put the government in an awkward position of defending ixl's actions. yet ee reportedly cooperating with their investigation. checking jpmorgan shares. >> europe at this hour, they are off fractionally about 0.34%. if you're a lawyer working for jpmorgan, this is a gift that keeps on giving. >> absolutely. big bucks to be made there. let's take a look at today's other top stories. harry reid has scheduled a procedural vote for wednesday. if it clears that measure, it could take until sunday evening giving the house just 24 hours to respond to avoid a government shutdown. the pentagon is learning of the consequences of a shutdown which would put severe hardships on an already stressed workforce. all military personnel would keep working, regardless, but they may not be paid on time.

not good. >> no. mean wile, airbus says a surge in air travel by asian passengers will provide a massive boost to its business over the next two decades. the planemaker says at that time, they will make industries orders for nearly 30,000 new jets, worth an estimated $4.4 trillion. airbus says within 20 years, asia will replace the u.s. as the world's busiest reason for air travel. >> well, there you have it. if i stay here for two weeks, i think i'll be convinced. >> okay. move over wall street. marketing and media moguls are in focus in new york this week. we will discuss the big talking points. that's coming up next. [ woman ] if you have the audacity to believe

your financial advisor should focus on your long-term goals, not their short-term agenda. [ male announcer ] join the nearly 7 million investors who think like you do. face time and think time make a difference. at edward jones, it's how we make sense of investing. and a recap of the headlines this morning, german business sentiment fail toes meet expectations despite a slight rise for september. >> the battle to keep the u.s. government ramps up. and mixed reports out of kenya as terrorists claim they have hostages held up at the nairobi shopping mall.

>> now, new york has called brands of communication leaders. this is expected to include the rise of digital marketing. and joins us now. this year, a huge number of social networks and social network businesses there. have we worked out yet how we get brands to engage with consumers? >> great question. thanks for having me, ross. you know, it's interesting. i think there's a lot of stuff going on in social, a lot of talk about how it's going to be monetized. you know, you look at the twitter/cbs deal .that's a very interesting example of how these network res realizing that that

second is so in control. i expect we'll see media companies jump on board and want to have similar-type relationships with the social network. >> it's key because we're now getting a key report coming up. this will be a gwen. how much is the second screen going to reinvigorate traditional tv? >> i think it's going to inveg rate it a lot. twitter put out a stat a couple of weeks ago that 95% of all conversation that's happening about television is happening on twitter. so i think there's a lot of value there to be had by networks like yours. >> ryan, is it still all about mobile this year? >> mobile is a big thing, for sure. but there's a lot you'll see about video. video about all screens, all devices everywhere. that is a growing area.

>> ripe, i'm wondering, in terms of the trend line, as well, how effective is advertising on social media? is it improving the effectiveness? how do you measure it and what does it look like? >> so, to broadly say that advertising across social is effective or not is probably not the best thing for me to try to say. but rather to say advertising on social is a whole other challenge and it has to be treated like that. so you have to have print, you have television, and then, of course, you have social. >> yeah. and the interesting thing is, you talk about video, as well. is that going to drive more

sales? do you see that happening? >> absolutely. video is the sounds and sights in motion. we're going to continue to see a lot of growth in that area. >> unfortunately, the video link broke. >> how ironic. >> anyway, i think we'll probably let him go there. let's -- >> okay. let's move on. >> thanks. we'll stay in the internet space, though. microsoft is trying to scratch the surface, get it, of the tablet market again getting two new devices. cnbc's seema moody got a first hand look and filed this report. >> microsoft targeting the consumer at home as well as the business professional with this two new next generation surface tablets. the service 2 as well as the surface pro 2. now, here are a couple of

selling points for these two tablets. first, access to microsoft office suite. second, the ability to run two applications at the same time. so, for example, you can surf the web and take notes with this customized dual screen. third is the accessories, the insertable doo keyboard that acts as a battery cover. this is microsoft's latest attempt to stay competitive and relevant in the tablet market. access to 200 gigs of cloud storage and a fast microprocessor, milk row soft says this is a true replacement to your lab top. back over to you. >> thanks for that, seem ma. still to come, investors look ahead to fed speed this afternoon. we'll preview the trading day on wall street. >> coming up. stay with us. we asked people, "if you could get paid to do something you really love, what would you do?" ♪ [ woman ] i'd be a writer. [ man ] i'd be a baker. [ woman ] i wanna be a pie maker.

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welcome back. the case-shiller home index is out at 9:00 a.m. eastern. at 10:00 a.m., we get consumer september confidence which is expected to fall more than a point from august. a pair of fed officials speak today, sandra pianalto and kansas city's esther george. as for earnings, look out for results from carmax, carnival, lennar and kb home. meanwhile, fairly flat on the futures. the s&p was the low point of the show. 3.5 points below fair value. the dow jones is 1 point below fair value. eric is still with us. eric, what do you think is the key for broader sentiment right now? >> this week, there are a couple of overhandles the market have.

fed chairman potentially that would be a catalyst. there's some economic data coming out this week. this time of year is always a little more volatile. but nothing major on the horizon beyond that. >> you talked earlier about some of the stocks where you're accumulating. what are you lining up for? >> defensive stocks. we believe the u.s. economy is accelerating. even companies that have exposure to europe and to asia. we think that they have a big opportunity to outperform and their stocks are discounted at this point. the real defensive companies, the yield companies, those are the ones that have performed great. >> we think as rates start to move up, the yield stocks got

crushed. >> the fact that they're not tapering -- >> we believe that they're going to taper -- they will ultimately taper and it's because the economy is getting better. and because the economy gets better, that's going to be good for cyclical companies, both u.s. cyclicals and international cyclicals. >> you don't think the fed shot itself in the foot by not asking? >> it's probably caused a little bit more volatility in the short run. but everybody knows they are going to taper. >> examine just quickly, they were talking during the break about m&a activity. do you think we're going to see more m&a activity? >> absolute lit. the fact that the stocks are going up when they're buying other companies. cfo goes into the board room and says, look, our competitor stock went up 15% when they bought another company in the industry. tease going to get the board of directors encouraged to buy more companies. >> clearly, for the first half of the year, the market leaders were those that were handing more cash back shares either to the share buybacks or dividend payments. has the mood changed?

>> we've got from a period of extreme uncertainty to a period where companies are feeling more comfortable. investor confidence, cfo confidence, ceo confidence, all higher. it's giving them the ability to go out and take some risks. and the riskiest transaction they can make is buying another company and the market loved it. the stocks are going up. they're getting rewarded for organic and inorganic growth through acquisition. >> do you think that means there might be less share buybacks? yes. companies will start spending money, which they haven't done for five years. >> let's hope it works out. good to see you today. thanks so much for joining us. u.s. small cap fund manager and director research at penn capital. this just about brings us to the close of today. >> sometime ftime flies when you're having fun. i'll be back tomorrow. >> thank goodness for that.

"squawk box" is coming up next. otherwise -- >> we'll see you tomorrow. i'll be right here beside you. mine was earned in djibouti, africa. 2004. vietnam in 1972. [ all ] fort benning, georgia in 1999. [ male announcer ] usaa auto insurance is often handed down from generation to generation. because it offers a superior level of protection and because usaa's commitment to serve military members, veterans, and their families is without equal. begin your legacy, get an auto insurance quote. usaa. we know what it means to serve.

good morning. the markets consider the possibility of a government shutdown while washington dealmakers continue to negotiation. in corporate news, chrysler files for an ipo and a cnbc exclusive, steve liesman sits down with new york fed president bill dudley. it is tuesday, september 24th, 2013 and "squawk box" begins right now. ♪ good morning, everybody, and welcome to "squawk box" here on

cnbc. i'm becky quick along with joe kernen and andrew ross sorkin. in our headlines this morning, wall street is once again paying close attention to washington today as we move closer to the october 1st deadline for congress to pass a resolution to keep the government funded. late yesterday, senate minority leader mitch mcconnell said he would not support the tactics of three tea party backed senators threatening to fund a bill to solve our government. we have former clinton white house press secretary joe lock hart and jim nussle. president obama is going to be addressing the united nations general assembly today in new york. he can expected to speak on syria's chemical weapons, mid-east peace talks and iran's nuclear pursuits. iran's new president will speak today. traders says the oil market will be watching body language between the two men. will they say hello to each other? will they shake hands or will