>> announcer: markets are >> announcer: markets are open. this is squawk real time. onwards and upwards. is it a rational exuberance actually reacting to good fundamentals, question mark? is it because some of those issues have been delayed in the united states and we're not worried about tapering? we were underwhel ammed by payroll? whatever it is, people are buying it because they're afraid of missing out on part of the kwams. the s&p is up 23% so far this year. up 2.14% so far in the session

this week. on the euro stock the euro has turned around 1%. 69% of companies apparently in the s&p are beating expectations. just under half of companies state side have reported. we're waiting for the numbers of the likes of apple this week. apple shares, tricky, trading middle for the diddle. trading about 526. expecting some good sales ahead of the holiday season where they turn out the blockbusters. a lot to talk about including the amazon figures. the sectors, is anything in the negative territory? the answer is no. oil and gas, industrials, media is up 1%. travel and leisure, .14 up. utilities up .6. construction stocks up .7%. basic resources responding to

the fact that we have a little bit of activity in that sector, shifting assets. let's have a look at g 4 s. they've had a bid from a group called charter house capital partners for part of their operation, the cast solutions business. it was $1.6 billion bid. they've said it significantly undervalues the unit of the world's largest security company. it's had a hard time. all kinds of issues over the london limpex and the fallout. shares have done nothing. they're up 2.2% as it looks like, one of the units. let's move along and look at rbs. pretty successful partial float tagss of the government. the rush and roll back in scotland, the last i heard the

break even was 500 pence. apparently the group has now -- the government's backed off on calling a breakup of rbs between toxic and less toxic assets. talking the question now, why do we still have so many toxic assets at rbs. why haven't they sold it off or why haven't they marked it down. forced valuations at rbs and elsewhere in the banking sector. a lot of you are cynical about current valuations. shares 1.1% to the good today. i mentioned a bit of m and a. they're trading .7%. rio tinto trading up just a bit lower. they're buying claremont in australia for 1 billion u.s. dollars. >> thanks very much. we have the chief investment officer at ceo wealth. david kelly is our guest host

this morning. you all right, steve? just dropping something. interested in your notes. you make a point that perhaps investment strategy is too near end here, need to be a little bit more focused on protecting gains. does that suggest that you think we've gone too far under this central bank largess and now it might be a time to take money out or at least put some strategies in place to defend whatever you made for the year as a whole? >> exactly. this has been a very good year and what would be a shame at this particular point is to lose those gains into the year end. fed policy has probably been pushed out too far the other way. expecting imminent tightening, we've gone the way to march, april to the beginning of fed tapering. that seems to us to be a little bit too far. let's see what the fed -- the

fed's got a great opportunity in the next couple of cadays to gi us insight. i think they'll use that opportunity. i think what they don't say is expecting a slowdown. they're looking through the budget negotiations. as you say, stocks have come a long way and valuations are fully valued now. we're not saying they're too much above fair value but i think there's certainly less value. protecting gains into the year end. whilst we can, be very watchful to put in strategies to protect the gains. >> what would they be? >> it's a combination of using equities at the appropriate moment in time. you can knock in at lower levels and protect you from some of the down side.

i think in terms of trying to play this through the treasury market as an inversely correlated asset might prove to be the incorrect thing because we feel that act 250, the ten year, perhaps we're close to a floor in terms of what we're going to see in terms of a protection. >> do you see people retreating from the market as we come to increased volatility and uncertainty around fed paper strategy? >> no, i don't, really. i think it's very hard, the long term investment strategy from now and year end. i think the problem that investors face is the same problem they face all year long. what else are you going to do? if risks diminish you cannot make money in cash and you cannot make money in high quality return. therefore it's fixed to equities. that's the tide. i don't want to play the waves here. i do agree we have taken the

idea of fed tapering and pushing too far the other way. i don't think the fed is going to tell us anything this week. labor markets are tightening. they may not be strengthening off the tightening. it's coming down and pushing up average wages. that ultimately will push the fed towards tapering. by the end of january i think we will have settled the latest nonsense coming out of washington with regards to the tapering. by the end of january it's hard to decide why they shouldn't taper. they ought to get going now to get towards normal markets. >> we are coming close to saturation point as to what additional gains we can get from qe. we've had astounding amounts of unprecedented stimulus across the world and we are now at a situation where the economic momentum is waning a little bit. some of the very strong uptick that we saw if you look at the

pmi numbers in europe, look at china data and the reforms there, all of that suggests the moderation of growth and to an extent the u.s. has also shown a little bit of lacking momentum. not to say this is anything too significant to push out fed policy. that's my concern. to an extent markets run on momentum, they run on qe. but the economy is perhaps not strong enough to sustain those gains. if there is a little bit of a doubt on policy that could cause us a little bit of a worry. >> to me, my thing is being realistic about expectations. when you have the s&p 500 at 1750, it's not that cheap anymore. over the next five years i think you can make in u.s. dollar terms 5 to 6% a year out of the u.s. equity market. that's really about it. if interest rates are back up, fair value, you made 6% per year in equities, i think you end at fair market value. that's a far cry of what we've

been able to see over the past few years. it's getting to be more expensive. enough money will ruin any asset class. >> we'll be back to the conversation in a minute. steve? >> let's run through a couple more of these stories. the story behind me, roundabout 7 out of 10 stocks are up. each row represents 10% of the market. 70% of the stocks are up on the year as we speak. let's take a look at the stockholm based omx which is trading up .1 at 1292. let's look at assa abbloy. they have seen a fourth quarter target, topped third quarter earnings. earnings before interest and tax rose to 2.09 billion swedish krona up from 1.9 billion a year earlier. let's move on. take a look at the aex.

it's currently trading at .2% higher. it's a tough market out there. let me pull out a couple of lines for you. year to date adjusted revenue decreased, decreased by 2.3%, adjusted operating income down by 24%. shares in this group are down over the last 12 months. the aex, up around 18%. so some say it's struggling to get excited. the fundamentals are struggling. let's go to spain. ibex. the nine month net profit of bancia was 3.2 million our rows. let's get to stefan who can update us on the story. hi, stefan. >> hey, steve, that's a sharp

improvement. a year ago for the same period bancia if you remember reported a loss of 7 billion our rows. that was due to a massive level of provisions to cover. the improvement came from dac eleme element. if you look at the interest, it's 29% against the beginning of the year. this is because of lower interest rates and they are less because of the intermediary session. it's up 13.6% at the end of september. it's higher than the average of the span anything banking sector at 12.1. it's a modest increase if you compare to the second quarter because at the end of june we were at 13.4%. this is an increase which is much lower than the one we've seen for other banks. in spain if you remember last

week, pdda announced a sharp increase of the ratio. in that sense there was some good news from bankia this morning. we need to hear about the out group for the next coming years. we need to talk about the need for additional capital. we discussed that with the cfo of bankia on the european closing bell at 5:30. >> thank you very much, stefan. we have interesting news crossing the wires from mizuho bank. loans have been handed out to a syndicated crime group in japan. they're going to suspend pay for the president, chief executive. so a slap on the wrist of the man who is trying to steer the company bank to strength. the chairman has resigned over this scandal.

he will step down from the role of chairman. there was no cover up of the shady lending. it tried to recover from the earthquake in 2011 as they tried to get systems in place so they weren't focused on some of these loans that they were handing out through one of the operations of the business. but this is the reaction today is to remove the chairman and suspend pay for the ceo. let's move on to another story here in the u.k. travel disruptions in the u.k. as the nation braces for its worst storm in two decades. they've confirmed they're running reduced volume. the gabrick airport says they're not running. national rail has said most routes across central southern england and wales are affected. the london overground is suspended until 9:00 gmt.

euro star services will be subject to a 20 minute delay. jim asada joins us from portsmouth. how are conditions as you've seen them? we've had very mixed reports from across the u.k.? >> reporter: that's right. i'm coming to you from portsmouth on england's south coast. the storm anything named storm again hit here overnight. it's moving on very quickly northeast across brittain. the rain has died down here. the sun is even out. the winds, as you can see, are still strong. there have been gusts up to 99 miles per hour. so far one person, a teenage boy, was swept out to sea and died. some 20,000 properties have lost power. that number is rising quite quibblingly. in broader terms it does seem like they have dodged a bullet. monday morning commuters have seen that trains and ferries have stopped service until

around 9:00 our time. heathrow airport has canceled dozens of flights. fallen trees and cables have blocked an unprecedented number of roads. bring the tans are heeding the warnings. they're staying at homeworking on their laptops today mostly. the bottom line, karen, is that the british government, unlike in previous storms, warned people days in advance of this oncoming storm. they had a very good plan in place and that seems to have minimized the loss of life and damage. we'll see what happens in the next hour or two when london is hit by this storm but, again, preparations are in place. the force of the storm doesn't seem quite as bad as anticipated so it looks like brittain will have escaped massive devastation as we saw in 1987 when 15 million trees down and 18 people killed so back to you. >> we're getting a sense of just how strong the wind is there

certainly. jeff, as you can see, conditions looking like they're getting a little bit rougher. >> portsmouth, to be honest on a good day you'll get wind off the sea. you always have the white forces in portsmouth. i thought jim did an admirable job there of battling the wind and the weather to get the report across. we don't get many big stories in the u.k. this was built up to be quite bad. we'll see how it works out. david kelly is with us, chief global strategist at jpmorgan. and we have a gentleman from insignia. i want to pick up on the comments you made about valuations and central bank activity and then focus on europe for a moment here because it has become, it seems, the preferred play in the global equities base region. people point to valuation argument, but it seems to me there's also some expectation

that the ecb and mr. draghi will both be forced to respond to the strength of the euro and, secondly, to credit conditions that whilst they may be easier and looser still have a significant uptick in corporate lending -- from the banking system into european corporates. if anything, the trend is still very weak here. >> yeah. that's certainly what we see. as we do the valuations, they're very solid for europe. it's turning the corner. i think the ecb has done an admirable job in batoning down the hatches so that it's stable. europe can keep growing. it has so much room to grow. in the united states the unemployment rate is 7 point be point 2%. when it gets out to about 6% you're pretty much getting close to full blown. in the eurozone it's 12%. 12% is 6%.

that's an enormous drop. europe has been unhealthy for so long that if it ever got back to full health, there's a cyclical opportunity. there's a cyclical opportunity because of job growth and earnings. earnings are leveraged off economic growth. one of the reasons we like europe as a long term play is if it gets its act together it has a long room to run. >> i hear those arguments. the roe argument has been on all sides. cyclical. valuations are low. i think it's going to take time for that multi-year roe expansion to happen. if we look at earnings and how they're coming out in europe, they continue to be a mixed bag. i think the stress tests and the deleveraging the banking system still has to go through and really, you know, the whole situation is still, you know, a bit of a quagmire.

i think you're absolutely right. i think the risk premium related to europe has come down markedly. i think draghi has done an amazing job. i think there's a huge bond market that has gone into europe in the last seven months. they're searching yields. the story is yet to play out and we do need to see a diversion there. that might be a multi-year thing. >> i think it will be. we're hoping markets will continue to move in advance of this because, again, when you look at the united states, look at japan, look at china, all of those places there are issues about growth potentially slowing down, whereas, in europe the growth can only go up. >> we'll come back and have a conversation. let's kick it out to steve. >> jeffrey, thank you very much. very interesting. looking at corporate france and what is going on in the media center and the cac quarante.

look at the vivendi shares. lagarde, it's 3.36%. the group is set to buy lagadare. they're saying no deal has been designed. let's move onto the xetra dax. jeffrey cutmore is a fine track athlete. isn't that the case, jeffrey? >> now we're going back to school days. >> you were a fine track athlete. >> i think i was okay. >> what make of spikes did you wear? >> i cannot remember. >> nike? >> i can't remember. >> you know the 1936 olympics jesse owens wore nike spikes. i'm saying this because i'm talking about adidas whose shares are flat today, 84.2300.

are we reaching an area where niko is on its way to overtaking adidas for football shoes. he'll be turning in his bag. the german markets, the processing plant in brazil, a steel mill in the latin american country. annette joins us. >> well, actually, you probably know about this, it's located in the same city. we should one day go there and do a little bit of a package about them. turning gears now completely. looking at thyssenkrupp shares. they're "the biggest loser." they might revamp their strategy

to sell brazilian and the united states steel, that's the steel america business. ever since they started the plant to have a cme in both countries and total they have lost more than 15 billion u.s. dollars and the hopes are really high that thyssenkrupp can sell both of them from 4.5 billion to $5.5 billion. now the reports are saying according to people familiar to the matter is that they are not going to sell the brazil yanl mill because they're not finding a bidder for it. the negotiations with the brazilians have failed. they're planning on having a steel mill in brazil. that is bad news for potential

future cash flow from selling those mills but according to the reports, it looks like oslo mattel will buy the alabama steel mill. that will mean they're exiting the you states altogether and they're set to bid roughly $2 billion for the alabama mill. that's all for now. of course the company is still staying nowhere in advanced talks with one leading bidder for the sale of the whole america steel business, but it seems that it's really tough as those negotiations are now dragging on more than one year. now back to you. >> i did know that rudolph is from the same town. can you pronounce it. it's -- >> it's hedsogenaowa.

>> not bad. annette good to see you. let's move onto the ftse. bank carige, going up. milano's ceo could at a board meeting tomorrow come out as the new ceo as carige. one man's meat is another's poison. jeffrey. >> let's pick up with you. so build us a strategy then for year end from here. what asset classes do i want to own? what should i add? what should i do? >> as i said earlier, i think you look to moderate new equity going into year end. the other thing that looks quite cheap to us at the moment is the dollar. related to the fed policy and related to positioning, you know, where we've gone from

quite bullish on the dollar and i think that might be a good place also to hide in the short term where we see the dollar doing a bit better. the yen we think will weaken in due course. this huge monetary stimulus likely to see from the bank of japan continue. they may be augmented if things aren't changed. you have to lighten up on duration. just position with a relatively cautious interest rate risk added to the portfolio. where we like the fixed income is high yields base. the shorter duration. and local bonds to an extent. it's those aspects that look particularly good to us right now. >> are you comfortable with the

dollar? >> i actually think the dollar will weaken over the next few years. i think that janet yellen will be as predent as the new chairperson is even more dovish than ben bernanke. i think that will keep short rates lower for longer. the u.s. still has a significant deficit. its very easy monetary policy could push the dollar down but i wouldn't put too much money on that strategy. current sis are never where i start a strategy. it's very close to 5 50-50. the other thing i would say is we still -- i wouldn't want to reduce exposure to equities. people need to be careful and make sure they've rebalanced. a lot of investors take it for grachblted, the equity markets are 25%.

a lot of people go from underweight equities to overweight equities without doing anything. you would be disciplined about balancing, rebalanced. >> it's interesting that you make the point about reducing weight. are you then concerned that we don't see the traditional seasonality of a christmas rally? >> yes. this is a good conundrum for this year. i want to make a point, we are over equities. it's a question of reducing into strength. so, yeah, i think it's a big conundrum. i think volatility based on fed ex peck tagss, based on just the dangerousness of the position is something we have to be watchful for. >> have to let you go. thank you very much for coming in. we'll be right back.

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>> >> the markets are in positive territory 30 minutes into the trading. one of the gainers on the stock 600 is announcing further cost cutting as earnings come in ahead of expectations. bankia in the green after they report a $360 million profit. but net lending falls on the year and g4s has rejected a $1.5

million for a cash solutions business. they say they have undervalued the unit. this is "squawk real time." markets here in europe are open. we still have greater looks at these markets. it's been moving around. one of the highs for the year. there is a little bit more of a pickup in our markets after we've had record gains on wall street. let's dive into a couple of the individual sectors. it's being dealt with this morning. there is some red on the chart. industrials in a private session. pulling back where we're ceiling that. you can see how that selloff is

versus the gains. .9%. strength. .7%. some of the individual stocks to take a look at. a bunch of companies reporting. 4.4%. this is the largest supply of generators. this is a supplier for the olympics. it's to be in line with the market expectations. they're trading up. revenues and markets. the numbers came in in line with expectations. it seems to be almost a relief reaction, 3.5%. they're saying the third quarter earnings gives it a little hope for recovery in the short term. it's being hit by currency head

winds. citigroup has raised its target price on the stock. now looking at 3.2%. we've seen also assa abloy. 2.9 billion swedish crowns. waking up negative. 2.5% lower. gemalto stock is down. this is the digital security firm. it's been cut. credit suisse. >> thanks, karen, for that. let's get back to david kelly, chief strategist at jp morgan. kevin wrote in and said i appreciate david's outlook on commodities, both hard and soft.

>> overall we're relatively positive on commodities. i think in the world where you're looking for assets that are going to provide income in return, a lot of fixed income is locked out in terms of the long term returns, i think you have to have commodities in the portfolio. i'd keep precious metals apart from the rest. precious metals are not reacting the way they used to as a volatility hedge. i regard them as more risky and less connected with the global economy. the rest of it, industrial metals, will do well. the one thing that's really great is that they're a wonderful inflation edge. if you take gold out of it, it's a huge protection. i think in the long run we're going to deal with inflation.

>> these companies have traded at a discount to the underlying commodities. is it the commodities or the conditions that mine these things? >> actually, it's probably better to have a professional manager run the whole thing, whether they run it through commodities. >> a professional manager, it's moving in one direction. >> because the commodities are very heterogeneous. remember, you're making a bid on it, a copper or copper miner, you're taking your expertise against the entire accumulated expertise in the market. i'd rather have someone put together a portfolio commodity which can act like a good piece of a portfolio. >> this is the same thing. you've got a good base spread.

it's thrown in there as well. >> a materials producing? >> one of those companies. >> well, again, i like big spreadout bets. the great problem for investors, you know you need to be diversified. if you're diversified enough, can you have enough in each individual sector to do this well? the answer is, no. you hire somebody who will be looking at all the individual companies and there are plenty you can say buy an industrial. which one? can you make sure that you're always keeping track of them and ahead of the game. >> thank you very much, indeed. for that, let us move on and say that the national chief executive adam brooks begins in

london's daily. he is facing charges of phone hacking in the world news paper. kathryn is outside of it. we haven't left you out there completely in the storm. i did see you sneaking into the office with your producer. >> well, you know, cnbc is not that bad an employer. they do let me take a break from the story sometimes. as you might be able to see, the storm has faded a little bit outside the old bailey. there's a big storm brewing inside. you can see behind me, the world's press have gathered for this trial. they're all pretty excited. we're expecting the arrival of rebecca brooks, her husband andy carlson and other people. just for a recap, rebecca brooks is here on three different kinds of charges related to the phone hacking scandal. one specifically related to phone hacking, the other related to the cover upof phone hacking. the most important charges for

news corps and will be worrisome to rupert mourdock are to the potential bribery of public officials in the u.k. those are the charges that could get news corps here in trouble in the u.k. or even in the u.s. under the foreign corrupt. someone else who will be watching this nervously is prime minister david cameron who used to employ andy colson as a director of communications. there will be a lot of people watching this trial with baited breath to see how it unfolds over the coming months. >> kathryn, thank you very much indeed for that. at least you get to come inside. thanks for that. the weather seems to have faded. the sussex, it's getting better. the worst is gone. >> nothing has fallen on your

house. >> no, thanks god, but there are a few trees down the lane. >> >> and we understand some power out. it makes it appropriate for us to have this conversation. the bosses of the main suppliers face questioning by lawmakers. those announcements by the big six suppliers in brittain. price hikes averaging around 9 point be point 1%. they've blamed environmental schemes and whole sale prices as reasons for the increases. they say wholesale prices have largely remained flat over the last year. jared green is with us at alexa capitol. glad to have you with us. angela knight is with us representing the energy industry.

angela, the story's played out in the u.k. very prominently on the domestic level. >> yes. >> howls of outrage from politicians and the public and the industry has come back and said, well, look, you reep what you sew. this is a consequence of what you've done around renewable energy and it's a consequence of international wholesale prices. as we're now into this discussion for a couple of weeks, what do you think is coming clear here? who actually has the right? >> the reality is this should have taken place some time ago. things have always been added onto the energy bill and there's never been real clarity about what you were paying for. the householder or the business, the answer was it all came from the energy companies. you're exactly right. the companies were looking at

significant rises on what they refer to as the pass throughs, pass through and straight on the bill. the political elements were saying, it's all your fault. the consumer elements were saying it's all your fault. this time the energy industry instead of sitting there taking the punches have said, well, look, this is what the bill is made up of and everyone who has put out their price increases so far has accompanied it with a real breakdown of every single part of the bill, including their own profits. their profits, operating costs, vat costs, they put in the transmission and distribution and they've put in the renewables elements and they have, in fact, all pointed out that the rise in the wholesale markets was not that big. most of them absorbed that rise.

they said exactly what they're experiencing on the wholesale market and how they're absorbing it. they said to us what do you want to do? >> is the case super profits over the years and this is another example of them profit tearing, if you like, at the expense of the consumers? >> it's interesting as you look back exactly over the years, it's possible to do that. not only do they make their accounts in the normal way and in accordance with the accounting standards of their country, we only have two in the u.k., but they provide their segregated accounts, much more detailed accounts to the regulator. there you can see what's happening in generation and exactly what is happening in the supply side. generation, larger operating

margin, what they do is they've got to pay for a very, very significant investment that's taking place in this country. they meet the platform by renewables. the policy of cleaning ourselves up, looking at alternative energy, investing in renewables is wrong. nobody is saying that at all. everybody says they have a cost. the cost needs to be transparent. the policy makers need to decide how they're paying for that. >> let's bring you in. you've looked at the energy mix we have in europe. from your unbiased assessment of the mix and the way the energy company is operated, has it been a fair gain for the consumer? >> it hasn't been a fair gain for the consumer.. i think the reality is what you see in continental europe is you're seeing huge price falls across be it germany, be it france, right across the market except for the u.k. and this

divergence has only taken place in the last few years. the divergence is such that the german wholesale power prices are 50% lower than the u.k. power prices. the question we need all to ask is how can we bring british power prices in line with continental power prices? . the reality is cole prices have fallen by 50%. gas prices in the united states have fallen by 50% but power prices here have not. >> in is excessive profits by the power companies, gouging consumers? >> i think there's a few things. i think there was a strategic mistake made by some of the u.k. utilities and that is that they have -- they've concentrated on gas. if you look at what's happening in germany, what's actually happening in germany, the fuel that actually decides a power price is cole. cole is cheaper than gas and here in the u.k. we're all moving away from cole. i think the second thing is that if you look at what's happening

in continental europe is utilities are now being forced to change their business models and really to service the customers like they haven't done before. >> if you look at the environmental levys,, they're changing. the consumer is not going to wear it. there's a large outcry by the government. so when do we see the balance tip over? >> we're getting to a point where we have the balance. as far as the consumer is concerned, they're seeing prices which they're finding too high. and -- >> the answer is not putting a cap on it, which is what they propose by the opposition, cap for what energy companies can charge. that's not the answer. >> it isn't. if you cap an energy company and you still have the rising costs coming through, there's only a sernability to absorb and of course that is exactly what happened in spain where there's

now so many caps there. so they have a deficit to the energy companies in spain, it's 2 or 3 billion euros which is huge. in germany, what they did in germany is the customer was prepared to take additional costs and take the pain and they as far as the industry is concerned, they were more or less excluded from any of the additional costs. so it's not clear exactly what is happening across europe because each country has taken different steps to protect certain parts of its customer base. >> surely one of the problems that we all face is we're all trying to do something about climate change. >> yes. >> i've been doing a fair amount of work in the chinese economy. it doesn't make a whit of difference what the u.k. does in terms of energy policy. if china builds as many cole power power plants as they tend to do to keep the economy growing at 7%, then whatever happens at global warming will be determined on the other side

of the world. if that's the case, maybe a better strategy in regard to energy is to recognize global climate change needs to be tackled as a global issue. if it's not going to be tackled that way, what's the point in hamstringing any individual country by over, you know, increasing costs beyond reason to try and deal with this. >> that is the question you need to ask the policy makers both in the u.k. and in europe. we have put into law in this country binding climate change targets and europe looks like it's going to strengthen further from where we go which is a difficulty. i haven't looked at it. i have this wonderful app that shows how we're making our electricity hour by hour. on average 40% comes from cole but cole is being taken off the system. that means there's a likely rise that will take place on the wholesale market. it is very difficult. >> the sad thing is it is

pointless if nothing is done about em carbon emissions. if we don't do something about it, all of this is for not. >> let's be very honest with our u.k. viewers here and possibly our european viewers as well. the london array, the new nuclear deal agreed with the chinese and edf as well. these are locking u.k. consumers into not only current prices but higher prices for years and years, in fact, decades to come. we're going to have much higher prices built in because eventually the government will not be able to subsidize these projects, will they? >> absolutely. so when i look at the nuclear decision, i say this has never happened in the energy departments where a government signs a 35 year power contract. we're living in a time where there's never been as much technology change as now. if i go back ten years ago if somebody had said to me that the

u.s. would be energy independent, you would have said i was on drugs. >> yes. >> if you would have said the german power prices would be at 36 euros a megawatt hour, you would have said, what are you smoking? the reality is why is that happening? it's called technology change. >> peter losier mentioned to me, yes, we are getting subsidies which are not sustainable in the long term. six or seven years he reckoned to build the turbines to start on their own merits. this is a subsidy for the short term. it can't continue, can it? >> i think certainly there's got to be some reviews, big reviews of the whole policy, yes. start back at the beginning, whatever it was, five, six, seven, eight years ago, the green agenda was a strong agenda in the mid 2000s. there was a huge push to saying, we're going to do something. everybody sort of said, yes, that's absolutely the right

thing. nobody explained to the population what that meant. nobody said that if you build a wind farm you have to have a backup. that's actually where gas comes in. it is the most flexible backup. i think that lack of explanation at the start. the lack of true costing at the start. the lack of getting a proper steady transition at the start is the problem. that's why the energy companies said this is the problem. i don't pretent everybody is perfect. nobody is perfect. there will be issues in there. we know all of that. it doesn't take away from the fundamentals that there are things coming through here in the u.k. which are outside of the control. >> i have to wrap up the conversation. angela knight, chief executive of energy in the u.k. gerald reed, partner at electra

capital. let's move forward. we'll leave you with a live shot of london as we head into the commercial break. stay with us, this is "squawk box."

hello to cnbc.com. the u.s. dollar has come under increasing pressure. is the dollar's downward slide over? tell us how you're trading the green back in our online trader poll. how much higher can the s&p go. the index is up 24% year to date. one strategist says it's still going up. it's due for a sharp rally. different story for the chinese market. now they're saying it's time to take some money off the table. get more analysis online and on twitter at cnbc world.

so let's pick up with david very briefly here. david, just your thoughts on the energy space and where you might make some money from it then. would it be buying some of the utilities in europe? >> well, that's sort of a broader view of it, which is one of the things we mentioned in the previous segment is that energy costs have come down a lot in the united states and what we're seeing actually geo politically it's an interesting issue. as the u.s. becomes more energy independent and china becomes more energy dependent, we're going to see a very interesting switch geo physically in the globe where the u.s. becomes less worried about things going wrong in the middle east and maybe china becomes more worried. i think overall lower energy prices in the u.s. is a big positive. even though i like european equiti equities, one of the things helping that is lower energy costs. >> karen, out to you. >> cue the drumroll because the

results of cnbc's first quarterly global cfo council are in. the managed company worth over $8 h billi $800 billion of global economy is in. they believe the economy is showing improvement. more than half say they're expecting their work force to expand over the next few months. some cfos say they're highly worried about the lack of tall length and market slowdown and cyber attacks. in terms of their own business conditions, respondents do feel the stock market valuations and credit availability along with market stability plus some m and a deal flow are the most healthy. you can see confidence is picking up out there, zblef yeah, thanks very much, indeed.

find out more about the global cfo council on our website. that's cfo countriescouncil.cnbc. use #cfocouncil. david, let's come back here to you. in spite of some of the reservations of our previous guests, you still remain fairly constructive about accumulating prices? >> i do. i think the most important thing is for people to get invested. the biggest mistake people are making around the world is hoarding cash from the time when central banks are earning too much of it. in the long run, we'll get inflation. in the short run, you won't make any money sitting on cash. they're talking about investments being a fixed game. they're fixing it so you have to go into riskier assets in a diversified way. that's the way the rules are set

up, you should take advantage of it and invest in riskier assets. >> david kelly, chief global asset management. that was "squawk box." we'll see you tomorrow. i love having a free checked bag with my united mileageplus explorer card. i've saved $75 in checked bag fees. [ delavane ] priority boarding is really important to us. you can just get on the plane and relax. [ julian ] having a card that doesn't charge you foreign transaction fees

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hello. you're watching "worldwide exchange." i'm russ westgate. the headlines today. stocks in europe trying to stay in the green. a trade for a rally in asia. it's pushed the sx to a five-year height. asay abloy is unlocking value thanks to its cost cutting program. apple is due to report after the bell. investors pretty keen to find out if the tech retail giants'