was conducted by nonstate -- that were provided incredibly powerful weapons by the russian government. >> sky europe, the media group offers rupert murdoch nearly $5 billion for pay tv assets in italy and germany. a weekend treat for rbs investors, up nearly 10% as first half profits jumped to 2.7 billion pounds. and poor earnings from lvmh dragged down the luxury over concerns about falling behind.

>> announcer: you're watching "worldwide exchange," bringing you business news from around the globe. >> we're waiting on ifo data from germany business survey data. it's come out significantly weaker than expected. the overall index coming in at 1.08 versus 109.4. significantly weaker on the overall index. the current conditions is coming in at 112.9 versus a reuters consensus of 124.5. weaker than expected on the current conditions. looking at the expectations, much weaker than expected at 104.5. let's get straight out to our guest. we were expecting to see a bit of a pullback to these numbers, but significantly weaker than expected here, too. >> yeah. that's a disappointment. i think especially after yesterday's pmi, it's surprising on the upside.

here we are now for the fifth consecutive month. clearly, the data in general and the hard data are slowing down. >> you mentioned the survey data as of yesterday. why the divergence here? >> yeah. i think that is part why i think in general data, both server data and hard data are coming down somewhat. i think we have seen a direct mainly from global growth and from the euro appreciation we saw last year. and especially having an impact on industrial sector. i think that explains to a large extent why we have seen particular weakness there. >> and what about political risk has been hitting survey sentiment data right now. what's your sentiment there?

earlier this week, he believes the eurozone is one knock away from deflation. how much of a concern is this for you, too? >> i think it's a major concern. it's a very fluid situation. we're not sure yet what kind of sanctions we are taking. certainly the eurozone will be more affected by what happens in russia. at the moment, it's still a bit difficult to say that that will have a significant negative impact on the eurozone economy. i think already the very low level inflation and with still a lot of weak economic growth. you're not that far away from deflation and that's, of course, a situation you don't want to end up in. >> absolutely. and the problem is it's something we can't really quantify because it's still outstanding.

jack, great to get your thoughts here. a u.s. defense officials have accused russia of direct g directing -- across the border and engaging the ukrainian military. this after neighbors said it had evidence that russia was supplying arms to ukraine separatists. ukraine's prime minister has left his position. two parties left the coalition forcing new elections. he will continue in his role until someone else is found. we were expecting this, so i think it's more of a timing thing here in particular. but barack obama sat down with cnbc's steve liesman for an exclusive interview and reflected on the conflict in ukraine. >> the good news is is that despite some of those commercial concerns, we've seen europe move with us. not always as fast as we would like, but they get there. and sadly, tragically, the

shooting down of this malaysian airlines airliner and the recognition that it is likely it was shot down and it is also likely that it was conducted by nonstate actors that were provided incredibly powerful weapons by the russian government, all that may stiffen the spine of our european partners moving forward. >> on today's show, we'll bring you an exclusive interview with one of the world's hedge fund managers. he says high frequency trading hurts -- but not necessarily the public. we'll be asking and as amazon posts wider than expected second quarter losses, we'll find out if the new fire phone can re-ignite investors' hearts.

well, a number of earnings announcements still for investors to invest and digest in the trading session. right now, the stoxx 600 down by 0.1%. concerns about the u.s. now suggesting that moscow at least sees firearms from moscow or at least the russian side of the border into ukraine, too. that's something concerning investors. right now, the ftse 100 relatively unchanged. the german markets lower by 0.2%. the expectations and the current climate all coming in lower than expectations right now. we've got the french market lower by 0.7%. perhaps concerns about artillery fire between russia into ukraine. the russian market down right now between 0.9%. let's have a look at some of the individual stocks.

bskyb announcing a deal worth nearly $5 billion pounds to buy rupert murdoch's pay tv assets in italy and germany. this comes on the same day the british forecaster announced results. a surprise, though, from rbs. the bank profits jumping 3.7 billion pounds ending shares 11% higher. they jumped immediately on the open as a result of those results. balfour beatty jumping by 11.4%. the company is in talks with carillion with a possible merger. carillion shares also higher by just over 10%. what about the luxury sector? we've heard from lvmh after they reported profits fell in the second quarter below analyst estimates.

the luxury group posted lower sales numbers in hong kong. the drag down move is dragging on the wider luxury space. you can see it could ensure down by 5.5%. richemont down by 2.4%. we have the dollar index slipping around a six-month high. euro/dollar, 1.3440. as i mentioned, weaker on all the levels, the current conditions and the expectations from the german business sentiment survey. but it does follow what we got from the zew, so it ties in with the data that we've been getting. cable, 1.6967 right now the level. now, we have to take a quick break. coming up after the break, we'll talk more about this. we'll be asking a deutschland

shareholder if he thinks the numbers add up. we needed 30 new hires for our call center. i'm spending too much time hiring and not enough time in my kitchen. [ female announcer ] need to hire fast? go to ziprecruiter.com and post your job to over 30 of the web's leading job boards with a single click; then simply select the best candidates from one easy to review list. you put up one post and the next day you have all these candidates. makes my job a lot easier. [ female announcer ] over 100,000 businesses have already used zip recruiter and now you can use zip recruiter for free at a special site for tv viewers; go to ziprecruiter.com/offer2.

welcome back to the show. the ecb has announced some lending data this morning. they're saying lending in spain has fallen by 9%. >> june. similar stories lending to 8.8% in june, too. ukraine, russia and the situation there, seeing some of the weakness seeping into the german data in particular and now hearing lending in the likes of ireland and spain weaker also reports again about deflation in the eurozone. air france klm has confirmed revenue for the year up 1.7% in the second quarter on a like for like basis. the airline says it will outline a new strategic plan in september. stephane is in paris and has been speaking to them. stephane, we know he wants to be part of the consolidation on the low cost end of the sector.

what does it look like and what does it mean for the company? >> we don't know so much about the plan yet. it will be officially announced in september. but this morning, they agreed to give us the broad lines of this new strategic plan for klm. air france wants to be in the leading group of european locals, the carriers, and could make some acquisitions to reach this target. this is what they told us. air france confirmed it's a recovery with profit of 258 million euros for the second quarter and most importantly, it shall improve the margin in the second quarter to nearly 10% and that's to compare with 7.8% in the second quarter a year ago. they are confidence about the outlook for the rest of the year despite the challenging economic

environment. >> it's true that during the second half of the year we are negative. we expect for the full year to grow by more than 400 million from 1.85 to between 2.2 and 2.3. this will be mainly -- measure that will help us to get there. we expect to be between 1.52%, which is with the plan. so we are confident that our results will xwrf again in 2014. >> are you planning to adjust the capital? >> no. we have been very disciplined in our capital city growth. this is -- including the increase in the long haul which has nothing to do with the

overall capacity and the roots are quite satisfactory compared to what has been done by the competitors. >> this plan is a midterm plan. it's a plan which is balanced between growth and -- one cannot grow without the other one. we are trying to build a group which will be -- which is a strong network, it's a network of audiences. it's a group that will clearly control the markets. that will be the first. we are building -- which is a

growing profitable margins. and also some operation. >> are you planning to cut -- >> the plan will include the competitive improvement. it will be a plan as we have in the past stepped down with large plan of -- like we've done or through that year. the plan, we have a passion which are not competitive. so we expect there will be some adjustment, not groupwise, but focused on we need an adjustment. that business need there may be some -- >> well, reaction are very positive on the stock. air france klm, one of the top gainers today in paris up nearly 5%. the cfo is clearly concerned

about the geopolitical situation in the middle east and in eastern europe, although he doesn't believe he's going to destabilize the air transport industry which is said has been through other crisis in the past and regarding the new strategy plan, we'll have to wait until september to know precisely what air france is going to do. it comes after a soft savings plan over the last three years. >> and wait with anticipation we shall. thank you for that. it's going to continue its share buyback for 2015. details of the new share buyback will come next month. now, the uk's bskyb is set to pay around $4.9 billion pounds for 21st fox's pay tv asset necessitily and germany.

2.9 billion pounds for fox's 57% stake in sky deutschland. the fund manager at ths partners is one of sky deutschland's top five shareholders. thank you for joining us. you said these guys need to pay for future opportunities as far as sky deutschland is concerned. >> i think the division between the future prospects of bskyb and those poem who have taken the risks and bskyb itself. and we feel that the first level of the valuation which is lower than bskyb's own valuation, even though the great prospects in germany and the uk is not quite the division that we would like. >> the bid right now, 6 euros,

75 cents. it has been suggested 7 euros and 60 cents. is that more like it? >> the long-term prospects in germany are excellent. brian sullivan is here. we've done a fantastic job. there is no reason this is any different. >> really? if you look at the penetration, buying pay tv isn't happening in germany. you're talking about fundamentally changing the scene. >> i think they have the product. but in the last few years, it's been as fast as anything the uk ever managed. obviously, it will take a number of years to get up to the level the penetration the uk has. they offer one of the best pay tv products in the world which germans are flocking to. i don't think there's a really great difference in appetite for

the product in germany. >> let's go back to the price. bskyb, how long have you owned it and what's your -- >> the sky do you haveland -- >> sorry, i meant -- >> we've slightly more than doubled our money at risk price. but we did start that a long time ago. obviously, there were some dark days when we see to support rights issues and at one stage it was below 1 euro. so you're actually on both sides of the trade because you own bskyb, too. >> yes. we agree with bskyb, but being the main pay tv provider is 200 million people in germany, in europe, and the next thing is the long-term growth story. it's a matter of how much they

should pay those people would take a slightly more risk and a discount to the valuation subscribers of that which is a bskyb price is perhaps a little mean. >> bskyb says they're not going to pay above the market price. >> they always say that, but you would expect them to open negotiations. >> how much more do you want here? is it something they're willing to negotiate on? >> you'll have to ask them that. i think the ceo of vodafone said he thought sky europe would be a very good potential partner. so i think there are very clear signs that there are some economies of scale. and i think some of those benefit -- not all of them, but some of those benefits should approve the current shareholders some of the best growth opportunities there in germany. >> does it make sense for bskyb

to be paying for do you haveland at a price that's near the high of the stock? >> i think so. otherwise, we wouldn't own the shares. so, yes, we think to get out there and it's a matter of getting a fair and reasonable return for the additional risks and shareholders -- >> you are one of the biggest shareholders. who are other shareholders saying to you? is the general agreement here about the future value of sky do you haveland? >> well, i think analysts have become a lot more positive. they have spoken to other shareholde shareholders. but i think the opportunity is very good and we're very happy. >> but at this stage, your response will be i want more? >> well, yes.

a little oliver twist. the other thing is the german take of the provisions are fairley clear. the majority of shareholders remain within the company. for those people who don't want to accept the bid, they can easily remain shareholders. so it would have to be a matter of persuasion and mutual agreement. >> great to chat with you. now, amazon posted a wider than expected loss. the fire phone goes on sale in the u.s. today. revenues rose 23% in line with forecasts. amazon is projecting the first quarter operating loss and plans to spend more than $100 million on original videos, substantially more than previous

quarters. amazon fell in after hours trade by 10%. . starbucks' thursday quarter profit rose 23% beating forecasts. revenues rose 11% in line with estimates. sar bucks posted its 18th straight quarter, same sales growth above 5%. the company is raising the low end of its full year guidance and expects guidance at the low range due to higher coffee prices. starbucks trading in the german session lower by 1.5%. on the back of stronger global payment volume and transactions, visa profit rose 11%. visa says its business in russia is being affected by a drop in cross border transportations, but not by the impact of u.s. and european sanctions.

visa is trading in the german market session today, lower by 3.5%. now, you're looking at pictures of the dutch parliament holding a hearing on the shooting down of malaysian airliner over ukraine. we'll bring you any comments that get made. for now, we have to take a quick break. next on "worldwide exchange," second quarter gdp for the uk will be out. we'll break down that data. coming up, is the market rigged? i spoke exclusively to david harding and asked him whether or not he agreed with michael lewis. >> i even agree to a limited stance. we've had this nokia is rigged. but i think it's rigged because of the capital by high frequency traders. ♪

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in an exclusive interview with cnbc, u.s. president barack obama says the shooting down of the malaysian airlines mh-17 could push european nations towards tougher sanctions. >> it is also likely that it was conducted by nonstate actors that were provided incredibly powerful weapons by the russian government. all that i think may stiffen the spine of our partners moving

forward. >> ghee your political tensions weigh on german business sentiment. the ifo index falls to a third straight month, sending the euro to a session low. bskyb slaps down the cash to create sky europe. the group offers rupert murdoch nearly $5 billion pounds. one of the top shareholders says the company is under valued. >> we feel the level of presence by valuation, which is lower than bskyb's own valuation, even though the prospects in germany and the potential growth in the uk is not quite what we would like. share prices up over 11% since the first half pretax profits jump to 2.7 billion pounds. and poor ownerings from lvmh dragged down the luxury sector as concerns resurface about falling chinese demand.

>> let's take a look at the trading session. the ftse 100, just higher by a touch. we just had that weaker than expected ifo data, the current conditions, expectations, all weaker than expecteded. right now, we have the cac 40 lower by 0.5%. we've also been waiting for the flash estimates of uk q2 gdp, forecast to come in at 0.8% on the quarter and it's conin on an annualized basis at 3.2%. on the quarter itself, coming in more than expected, 8%. joining us now is mark oswald. good morning, mark. >> good morning.

we would like a little bit of information on this. it has come in as expected. but this only captures around 40%, doesn't it, the activity we saw in this quarter. >> indeed. what we do know is they've made an assumption about industrial production jumping back. that wouldn't really fit with the april and may data, so the june data must be quite strong. i think in terms of what people are most concerned about, when does the bank of england serve -- they will be looking much more at the q3 data simply because their assumption was that this is -- the economy would grow around this pace in this quarter -- in that quarter. so does this make a lot of difference to the outlook for rates? no, it doesn't. next month, we've got the annual revisions to uk gdp, which we know will add 5% thanks to all those changes in benchmarking.

and we'll also have a bet more detail overall. so it really doesn't actually show a lot new, though i'm sure that people will have a run of data in the uk which has been slightly on the weak side relative to people's expectations. they'll be relieved that this is coming as expected and it should give a bit of support to sterling. >> anything new this week when he was asked about the pace of rate hikes once we start. and he drew in a number of significant factors, including the appreciation that we saw in sterling. he also talked about the weakness of export partners, too. citi has pointed out it's the best time he's i wouldn't tell used those things in one sentence in around a year's time. are we looking too deeply into this? >> i think we need to take in more that the bank of england is looking at sterling. thus there's a significant headwind to the economy. and having just had that ifo

survey, there are concerns about growth if not coming to a stalling in the eurozone is very important because, frankly, we still export, may not export a portion of exports to the eu may not be as high as it was, but it's still very, is he significant. if you are going to rely on the export sector and investment related to the export sector in the economy particularly as we go into the second half of the year in consumer spending is likely to be a little he less simply because we've been spending a lot of savings here in the uk and probably after the big boosts that we've had from ppi payment, that's probably coming to a bit of an end. we can't eternally go on particularly if we're looking at a narrow where mortgage rates are going to rise, at a scenario where consumer spend sg going to hold the economy up. let's talk about consumer spending in terms of wages. another point that was made is as far as inflation was concerned, surprised with the 1.9%. and what we're not seeing as far

as wage growth is concerned. how confident are you that we get this pick up in wages? it does feel like this could be a sticking point for q4 hike. i have any doubts that we'll see a significant pick up or at least one in which the bank of england should be worried about. the fact of the matter is, a lot of job creation we've had has been at the lower end of the scale. and that will keep a lid on wage growth. secondly -- >> so what you are saying is if we don't see wage growth much higher than the 1% growth year on year that we're seeing right now, it's not going to be a problem for the bank of england raising rates and moving forward? >> well, yes. they are probably looking more at q1 than q4 had, i would suggest. i think markets are probably a little bit ahead of themselves because wage growth won't be as significant. >> so sterling is ahead of itself, as well, then? >> to some extent. though if the fed goes early, the bank of england will go

earlier. there's no doubt about that. >> great point. marc, great to chat with you. during president obama's exclusive interview on cnbc, the president was asked if u.s. stock markets are overvalued. >> my estimation is that, you happen, we have a lot of savvy investors out there. you've got people who recognize that what goes up can come down, as well. i'll leave it up to them to make determinations about whether valuations and stock price res too high. i'm more concerned about the day-to-day fundamentals and if we get those fundamentals right, then i'm pretty confident that we can do very well in the next decade. >> economic fundamentals, and i'm sure some managers would agree that's in part what they use to gain their edge. i spoke to europe's largest hedge fund and providing the

edge in a distant way. those follow trade signals provided by models developed using mathematical analysis of price data. traditionally, they invest in futures. and i asked if this was about diversification, about accessing a wider pool of investor, but actually those who may not have looked previously. >> well, about five years ago, the lack of acceptance of what we do and the continual den gragz of black boxes and, you know, sort of got to me. are at some point, i said i can't believe people don't believe in trading systems babb the s&p 500 is a trading system. it's set up for buying and selling stocks. it's a trading system. by the way, it's not a very good

one. that was my sort of point. we've gain a lot of experience in trading systems over 30 years and running them. i came out with a couple of ideas for running a trading system in the s&p 500. the idea is based on choosing stocks at random. you choose stocks randomly and weight them equally. if you have the same specations -- it turns out if you choose stocks at random and combine them, you'll always been in the s&p 500 or in 95.5% of cases and that's consistent with my understanding of investment mathematics. so that experiment was interesting. that's so simple. that's what we call a one parameter model. the theory was it did beat the

markets. this is easy this is, you know? you would never start, would you? so, of course, you have to be the kind of person who leaps before he looks, as it were. anyway, five years later, our long only equity system has outperformed the market by $1 billion, which is not very big in the space, but it's a calling card. >> during a small part of the interview, we talked about whether or not investors, given the returns they got back in 2008, more than 20% see this fund as an insurance policy. we also talked about the industry of high frequency trading. you can watch the full exclusive interview on investing edge, on tonight at 11:00 cet or catch it many times over the weekend. the bank of japan seems to have its work cut out with

inflation slowing slightly in june. core cpi, 3.3% last month compared to 2.4% in june. core cpi rose just 1.3% in the year to june as expected. meanwhile, thailand's exports rose 2.3% in june from the year earlier. it would help to improve demand and government measures to boost trade. it's trading around an eight-month high to the u.s. dollar. stocks, too, have been rallying on the signs following two months of political instalt. but the optimism has been stopped by increased government spending including on infrastructure products and payments for farmers under a rice subsidy scheme. and the loser in indonesia's presidential elections is refusing to go down without a fight. probowa's team filed a complaint with the country's top board

today alleging cheating. the court can order a revote. probowa's team says they have proved 21 million debated votes. we have some breaking news on the latest as far as the aircraft crash yesterday. france apparently sending troops to the crash site. french top officials are ruling out a missile as the cause of the air crash. that came earlier. we just heard that the french military has secured the aircraft site according to officials. no sign of survivors at the crash site so far. we'll keep you updated as that news develops. now, russia has reportedly issued a threat to seize the assets of british companies including shell and bp in retaliation for the uk's call for tougher sanctions.

it claimed moscow would, quote, fight back against eu sanctions. the quote said russia will go along as far as it can and then it will retaliate. we've been asking some of europe's leading ceos about the potential impact on their businesses. >> the whole year has had some impact from a number of these geopolitical issues. i think they'll continue to have some impact on the overall level of activity. so far, we think that conditions are pretty similar to what we saw in the first half. it's important territory for us and it's got some good crops from a leadership position and a number of those crops. and we're calling for stability there, actually, if not political, certainly in terms of agriculture. >> it is an important market. and we are actually confident that the demand for our life saving continue irrespective of the political turbulence we see.

>> you've seen the big jump in the crimes that we had and we are not immune to this environment, of course. so we have some worries about what's going on in ukraine. >> we'll come back to the ukraine/russia situation right now. some further developments from french officials, they're saying helicopters and troops are involved in the air algerie crash recovery. they're saying the site is not in a particularly dangerous part of mali. so they are now at the crash site and working. they've said earlier this morning, no signs of any survivors at that site. now, let's get back to you at ukraine/russia. the european practice ahead of eurasian joins us now on set. we heard from the u.s. state department last night that there have been artillery fired between russia and ukraine overnight. a further escalation of the situation and yet from a european side, it seems that we're still not talking about

more stringent sanctions. >> i mean, i think these two developments are downing the airline as well as allegations by the u.s. last night are changing the nature of the debate within europe with regard to sanctions. and i think it's very possible we will see something next week that could -- for us at the heads of state meeting. i think if that happens, it's a very clear signal to putin, to the market, that europe is willing to contemplate meaningful level three sectoral sangs. >> really? so you think a calling mow for heads of state could actually mean sectoral sanctions rather than just the technology of the sector, because a suggestion from berlin, it seemed, yesterday, as far as sources were concerned in brussels is that they were considering energy sector sanctions and yet we heard yesterday that we didn't get that. >> right. so there's a lot of mixed signaling depending on who you're talking to in europe. i think the base problem is the triple lock out problem, the germans don't want to do energy, the french don't want to do arms, the french don't want to

do -- >> exactly. all levels. >> exactly. so generally set forward, sanctions are a constraint given where the big three have fallen. i think what we will see is elements of each set captured so that the pain is spread equally across the countries. >> let's talk about ukraine specifically. my understanding was at some point very soon the prime minister of ukraine was going to resign, anyway. we were going to go for a fresh government to try and implement the kind of reforms needed by the imf and eu. >> exactly. so i think this was very much expected. i don't think it will change president poroshenko's military offensive in the east. if anything, it may provide further momentum behind that offensive. the base problem again is russia and you auto crane find it difficult to agree on substance, things such as degree of federalzation, nato membership, trait patterns between eastern ukraine, europe and russia.

as long as there's disagreement among those substantive elements, it's going to be difficult for them to agree. >> i'm glad that you mentioned the association agreement with the eu. what does that mean as far as signing off on the association agreement with the eu and also implementing even just this smaller conditionality attached to the imf deal between now and when we get a new government? >> right. to keep the association agreement, i think the critical piece here is the deep and comprehensive trade agreement. that's the piece the president has not yet signed and europe is willing to sign, but i think the russians are very, very concerned about that, about what that would do to trade patterns between eastern ukraine and russia as a critical piece. but i think we will ultimately see movement from the imf program. clearly the numbers are funny, the debt sustainability is going to be knocked out completely. but i think there is some state within the funds, but also at

the board to give ukrainian government a little bit of -- a little bit of breathing room here. there are a lot of things driving lack of reform. >> it also can't be very light in this period. there was no kind of reform expected between now and when we get the next government, so they were obviously making a contingency plan for this change in particular. what about the next government, though? is the next government going to have the same kind of eu lean that we've seen from this one? i think there was a risk factor here, too. >> i think so. ultimately they are looking for a degree of integration. they want a very, very deep level of stabilization. economic policy autonomy and no government in kiev i think is going to be able to support that degree of federalzation. i imagine it will mirror fairley consistently because the

government was previously -- very difficult for these guys to come back to a substantial agreement. >> let me get back to where we started in this artillery fire that the state department has accused russia of engaging in. as far as the conditionality that was set for the europeans and the ukrainians, in a accepts, this is about as far across the red line as you can ever assume. as you mentioned, too, the triple lockout situation, this is desperately lost credibility as a european nation? >> i don't think that's right. uncertainty around sanctions, policy, is the most corrosive corruptive driver of potential growth or capital frozen in or out of russia. and i think there's a pervasive sense that the policy is having an effect o russian economy. you've got to remember the europeans are far more independent of the russians, so a much more marginal incremental move by the europeans can have a much more impact on the russian economy than the americans. >> there's always going to be a

two-pronged approach. they're they're concerned about making threats, drawing red lines and not following up. >> ultimately, the germans are looking for a diplomatic and political resolution. that's the only way this thing becomes sustainable. and level three sanctions are the type europeans are thinking about at some point to be mutually exclusive with diplomacy. >> as we heard even yesterday, doing it for a short period of time. i'll be joined by andre kesmenko, the acting ambassador to the uk. that's coming up at 11:40 cet. still to come on the show, we find out how to trade the benchmark index when it allows further foreign investment next year. stay with us. we needed 30 new hires for our call center.

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saudi arabia plans to

announce foreign money inflows to reduce its dependency on oil revenues. the benchmark index is up 19% this year. joining us now is hutan yutari, head of equity research at bank of america merrill lynch and hadley gamble joins us on set. it's been great to have you on here. we've heard this before from the saudi government, but i guess this is the first time we've had a time horizon. so this is the real deal now as far as foreign investors are concerned. >> yes. in items of the statement made by the capital markets authority, we've finally seen a time horizon given as you were rightly pointing out there. this goes further than what we've seen in the past and as a result we have a lot more comfortable and we believe there's more credibility in the markets. this is huge game changer for the region. suddenly you've got a market the size almost of russia opening up

to foreign investors, currently ownership is very low, so you're seeing huge, huge amount of excitement out there. >> define opening up here. there's still going to be limit. surely they're going to cap the amount of foreign investment that you see. >> yes. at the moment, we need a lot more clarity given by the capital markets authority in terms of what the ownership limits will be. but as a result, you know, we could see it ending up somewhere in the region of 30%, 40%, but that's just an estimatation. nevertheless, as we've seen a lot of other markets opening up to foreign investors, we have seen those foreign ownership limits being in place, but easing up over time. so this is a very positive first step. it's going to be a slow transition. it's not going to open up overnight, but nevertheless, finally we're going to see investors taking direct positions in the market. >> so it's kind of a sense of laying the groundwork for recognition or addition to the markets, we look at the case of

uae, of qatar in the past, and we look at the performance of those markets in particular. i guess i understand on some level why you're excited. compare it to those. >> absolutely. we recently saw qatar getting moved up to the emerging market status. we now expect saudi wanting to recommendly indicate that. hence, they're going after. now, we believe that it's about two years away. this is two or three years away. we won't see msti specialists until at least around the 2017 mark. but nevertheless, with that opening up and suddenly saudi arabia being roughly about 4% of the mspi global emerging markets index, currently funds are in a position and up, you can see the 3%. so there's a huge, huge gap

towards that. >> are you talking tens of billions of dollars worth, i guess. >> exactly. we're looking at inflows from 27 to 30 billion. that number will depend hugely on what the capital markets authority tells us within a few months time. >> i'm just curious in terms of what we're seeing in dubai and we've seen over the last couple of months with serious fluctuation, rather dramatic in terms of the stocks. how is that going to be different? obviously, the saudis are careful about the framework. they're looking at institutional investors in first is what we're hearing. how is that going to be different from what we've seen in qatar and dubai? >> i think that's a very good question, a very interesting question, and i think it harkens to how the cma is going to start implementing this in the country. so if you look at the tebtive

guidelines, there are large funds with the oil style bias, i.e. trying to keep the money out of the market, they will limit the licenses for trading given out there and then in an effort to keep that under control, they really, really want this to work very slowly. they will move gradually, issuing -- only to the biggest and sort of more long-term bias institutional investors and they'll monitor it and change their regulation accordingly. but we think this is a very sensible move if they want to keep that out of the market. >> great to have you on. we'll give you a look at what's on the agenda in asia on monday. nissan will post quarterly

results as will china's sohu.com and chamgyou.com. still to come on the show, president obama tells cnbc he will support anti- -- regulation. >> this is basically taking advantage of tax provisions that are technically legal. but i think most people would say if you're doing business here, if you're basically still an american company, but you're simply changing your mailing address to avoid paying taxes, we're really not doing right by the country and by the american people. chocolate is very individual. white chocolate lovers don't like dark chocolate. milk chocolate lovers don't necessarily like dark or white. before we couldn't really allow the consumer to customize their chocolate. we needed a scalable cloud solution allowing them to

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welcome to "worldwide exchange." i'm julia chatterley. u.s. president barack obama blast companies which carried out so-called tax inversions. >> we're saying we're now magically an irish company, despite the fact we may have 100 employees there and we've got 10,000 employees in the united states, we're just gaming the system. geopolitical events weigh on german business sentiment. the tensions heighten as russ n

russians is accused of firing directly across the ukrainian border. amazon has worse than expected losses in the second quarter. bskyb slaps doin' the cash to create sky europe. sky plans top shareholders tells the company the undervalued. >> we feel the purchase by the valuation, which is lower than bskyb valuations, even though it's probably substantial growth in the uk is not quite the fair division that we would like. preference president hollande is giving a press

caverns regarding the situation in the al algerie crash, saying there is no survivors right now, the french troops have recovered one black box at the crash site. they're sending thoughts and prayers to the victims families. they made comments this morning saying it's not in a particularly dangerous area of mili, according to french officials, too. in an exclusive interview on cnbc, president obama discussed the case of so-called tax inversion deals. he says he's eager to begin a longer term effort to tax reform to chose these loopholes. >> what i'm saying is that companies come to the united states in part because they benefit from the best university system in the world, the best infrastructure, although i'd like to see it do better on

infrastructure, you know, there are a whole range of benefits that have helped to build companies, create value, create profits. for you to continue to benefit from that entire architecture that helps you thrive, but move your technical address simply to avoid paying tax sess neither fair nor is it something that's good for the country over the long-term. and this is basically taking advantage of tax provisions that are technically legal, but i think most people would say if you're doing business here, if you're basically still an american company, that you're simply changing your mailing address in order to avoid paying taxes, then you're really not doing right by the country and by the american people. >> some people would respond, you know what? these guys were hired to maximize profits. they're doing basically what they were hired to do and it's plenty of american for them to

make as much profit as they can and hire as many people as they can as a result. >> keep in mind what we're trying to do is to say if you simply acquire a small company in ireland or some other country to take advantage of the low tax rates, you start saying we're now magically an irish company, despite the fact that you may only have 100 employees there and you've got 10,000 employees in the united states, you're gaming the system. you are an american company. you continue to benefit in all kinds of ways from being an american company. >> what can you tell all those american viewers about the outlook for the economy? your former economic adviser larry summers says we may be in for lower growth for a protracted period of time. do you believe in that forecast? and are you concerned that that means we're not going to be able to meet the entitlement promises we made without cutting those entitlements and/or raising taxes? >> you know, i am always bullish about america over the long-t m

long-term. if you think about where we were when we came into office and where we are now, it's pretty hard to find an economic measure where we're not significantly better off. i don't have to tell but the stock market and where that's gone, corporate profits, the highs. but also unemployment now lower than it was. we've seen the housing market recover, although not as fast as we would like. the auto industry recovering. we remain the most dynamic innovative economy in the world. we have this huge comparable advantage when it comes to energy without producing more oil than we import, the first time in a couple of decades, even as we're massively increasing clean energy and when it comes to deficits, we've cut bit more than half and when it comes to health care, we're slowing the growth of health care inflation. so there are a lot of things there that give me confidence or poise to take office, but there are some things holding us back.

the main thing that's holding us back is inaction by our federal government on things like infrastructure, on raising the minimum wage, on doing some things that would help middle class families feel a little bit of relief. if we do those things, then we're going to be in pretty good shape. >> greg valliho joins us now. greg, he's got negative chance of getting this done before the midterms, has he, and he's not going to get it past the house until we see more broad and fundamental tax reform. >> i think you're absolutely right, julia, good morning. but at the same time, i do think there's a chance the senate could act. the senate, after a long vacation, a five-week break, will come back in september and i think they could pass a bill curving inversions. then the house, i think, will refuse to act. >> they're talking about limiting interest rate deductions on debt, too, the firms hold. and this gets around this concern from some of these companies that we could see a

retroactive tax on deals that have been done if it gets passed in the future. >> yeah. there's several ideas out there. but, again, almost all of them in the senate. and in the house, post of the republicans are saying we don't want a stand alone bill. we might control sider it, but e context of fundamental tax reform, there's no chance for fundamental tax reform this year the. >> so what does it mean, then? all eyes on paul ryan because he has his eyes firmly on the 2016 potential election bid, doesn't he? do we have to watch him and what he tries to do. >> yeah. yesterday we proposed consolidating all federal poverty programs. i think we'll get a tax reform bill passed in the house, but

the senate may not. but paul ryan is going to begin moving on tax reform. i think the outlook for these inversions could get cloudy early in 2015, but i think right now the window is wide open. i think these deals will go through. i don't see any chance for a retroactive effective date going back to the spring, which is what the senate wants. so despite all the hot air from the politicians, i think these deals will still go through. >> greg, great to chat with you. chief political strategist. >> a look at the u.s. futures in and out. taking a queue from what we see in the european session, too. unchanged from yesterday. on the whole, 27 record high on the s&p 500. we're still several points still away right now from that 2000 level in the s&p 500.

we'll have a bit of data out today. also a number of earnings reports still to digest, of course. let's have a look, in and out of positive and negative territory today, ftse 100 relatively unchanged. the xetra dax lower by 0.4%. we've had that ifo business survey sentiment data this morning, weaker across the board. specation sentiment, what we're seeing in ukraine continuing to see into this data. that services pmi data we got in yesterday's session, too, the cac 40 off 0.7%. we're seeing the russian market continue to go progress into negative territory, right now down by 1.4%. let's look at the foreign exchange markets, too. we're seeing the dollar index sitting at a six-month high. we're seeing the euro under a bit of pressure this morning as a result of that business survey sentiment out of germany. 1.3450 right now the level there, too. as i mentioned, durable goods

stacked today. citi expected to come 4 in 0.5% missouri. anything above 1% will be positive they think for the dollar. we've had gdp from the second quarter in the uk. coming in bang in line. right now, sterling a little softer here. 1.6974. dollar/yen, 101.90. amazon posted a wider than expected second quarter loss 80s continued to invest heavily in consumer electronics. amazon plans to spend more than $100 million on original -- substantially more than previous quarters. josh lipton has all the details. investors have been frustrated with amazon all year long. and after the e-commerce giant reported, they sent the shares even lower. amazon's q2 revenue did just 23% to 19.3 billion, smack in line with what wall street expected. but amazon reported a loss of 27

cents a share. that was far worse than analyst forecast. they predicted a loss of 15 cents. looking ahead, amazon is expecting q3 revenue between 19.7 and 21.5. financial analyst stocks had expected 20.8 billion. but amazon is vying for an operating loss between 410 an$4 $810 million. the street has thought basically a break even performance there. amazon spent a lot of money, of course, on everything from warehouses to cloud computing, which does pressure profit necessary q2. the company's total operating expenses jumped nearly 20% to $19.4 billion. now, amazon bulls argued there will be returns on all that investment, but some investors clearly aren't willing to wait around. josh lipton, cnbc, silicone valley. now, coming up after the break, is the market rigged? i speak exclusively to capital management founder david harding

by asking for him views on the impact, too, of high frequency trading. >> and i even agree to a limited extent. we've said that, you know, the market is rigged. but i do think it's rigged against winston capital by the high frequency traders.

firing back against allegeses the bank lied to its client hes, barclay's has filed a dismissal of a new york lawsuit. they said the very marketing documents and e-mails from which the complaint selectively quotes, along with the complaint's other fatal flaws, are sufficient to require dismissal of this fraud action. i spoke with david harding, the founder of one of the world's largest hedge funds in a cnbc interview and i asked him about the high frequently trading industry. >> i enjoyed it. i found myself as i'm sure many others have been quite carried along by it. it tells a good story. i even agree to a limited extent that, you know, the market is rigged. but unfortunately the people against who the market is rigged

is not the american public. i don't think generally it's -- i think there's a little bit of hyperbole, saying it is rigged against the american public. but i think it's rigged against winton capital by the high frequency traders. it means that we can't make a fortune from high frequency trading. so if they could all be shut down, then we could probably make that, you know? >> is it somewhere your skill set could be applied? >> it definitely is, yes, if they did a rather mythical thing of making a level playing field, we would be in good shape. i think it would be overkill for the united states congress and the authorities to level the playing field just to help my company. >> or the u.s. consumer. >> i think it's probably pretty minimal. but milliseconds. this is the point i'm making. you know, if there is -- >> do you think we get regulation, though, to level the

playing field in some way? >> i expect to see that with the exchanges. the exchanges have provided over proliferation of older types b, much of the volume is coming from the deflators. so the counterpart is of the exchanges. the exchanges might have moved too much in looking after their immediate customers, who are the higher frequency traders and neglecting the interests slightly more distance who are the institutional investors. >> i want to give you a bit of context there. he says high frequently trading happened nearly years ago on the exchanges. he said if you look at the outfit captured by the industry, it was as much as 8 billion euros. so i think the point he was making is that transaction cost right now is significantly lower than they were. but he's also saying he has a strong suspicion that exchanges will compete for a halo in that they're carrying more about the

interests of investors. it's a fascinating situation. if you want to watch the full exclusive interview, that's on tonight at 11:00 cet or catch it a number of times over the weekend. so check that out. let's take a look at the headlines today. president obama tells cnbc he can tackle funds that settle overseas to try and avoid tax. u.s. defense officials accuse russia of directly firing across the ukraine border. and coming up, amazon's fire phone goes on sale, investors react negatively to a wider than expected q2 loss. still to come on the show, protests in the west bank turn violent. we're live in tel aviv for the latest right after the break. spokesperson: you can get a $1,000 turbocharged reward card with a new volkswagen turbo. so why are we so obsessed with turbo? because there's nothing more exhilarating than a powerful ride. and you can get that in places you might not expect. like the passat. and also in the fun-to-drive jetta. in fact, volkswagen has sold more turbos than any other brand over the last ten years.

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some breaking news from the israeli palestinian crisis right now. we're seeing reports on the associated foreign press that hamas has launched several rockets in the last 25 minutes or so towards the airport. right now, not confirmed, but we'll bring you any further details on that. the protests in the west bank lead to the death of two palestinians last night after reports avenue mahmoud abbas's march to the border with jet stream.

richard engle filed this report from gaza. witnesses say five explosions tore through this u.n.-run school in northern gaza. the playground took a direct hit. an outdoor class was soaked in blood. at a nearby hospital, ambulance after ambulance brought in the injured, mostly children, before going back for more. six-month old akhmed had shah rap natural in his back. doctors removed the sharp metal without anesthetics. nearby, his father described the moment when his six children were blown away, he says, like scraps of paper. the hospital was overwhelmed by the flow of injured. none of them exceaccept israel' claim that it does its best to spare the innocent.

>> the children ask what? what -- >> robert turner is the director of the u.n. agency that operates the school in gaza. >> do you know who instruct this facility? >> no, we can't say with certainty. the initial indication would be that it came from israeli forces. >> nbc's kate snow spoke with the israeli military officials spokesman. >> indeed, there is a possibility that there was a loose mortar than dropped. >> if you knew that there were women and children staying in this shelter, why not just avoid that area? >> were militants operating inside this school? >> no. we are very, very strict about the knew tallty of installations. >> schools, like the one hit today, have become a refuge for civilians. they believe the u.n. logo will protect them. but this is the fourth attack on

a u.n. school in four days. for the wounded and the dead today, there was no protection at all. >> joining us now from tel aviv is martin fletcher. martin, it seems that the body count is rising. the u.s. in particular is stepping up the rhetoric and the urgency here. but are we any closer to reaching any kinds of cease-fire agreement? what are you hearing? >> well, julia, it's a bit of a make or break day in attempts to reach a cease-fire. secretary of state john kerry is in cairo. he's scheduled to head back to washington this arch. he's leaving a proposal on the table and the bottom line of that proposal is a five-day humanitarian cease-fire beginning on sunday. this is what we believe from our sources. and now it's up to the palestinian leader to make the first statement about whether he

accepts or rejects it according to the israelis. they're going to discuss this proposal that kerry is leaving behind. they were hoping to get a response from that meeting and on the basis of whatever the decision is of hamas, israel will then, it appears, make a decision whether to accept the cease-fire or whether it is not accepted previously by hamas, then israel will have to decide what it does. the most likely thing will be to go into what they call stage three of the ground operations which is to deepen it. it soox like there is no cease-fire proposal accepted by both sides, this fighting is going to intensify and it is intensifying every day, julia. >> thanks so much, martin fletcher from nbc. hadley gamble joins us now in the studio. >> unfortunately, looking at this on the face of it, everyone keeps saying, how is it possible that we've come this far and we have no agreement from either of the two parties involved?

unfortunately it's such a bigger picture, really. you have hamas backed by hezbollah. they didn't agree with what was happening in syria, the conflict, but iran is very much supportive of the militant section or -- faction within hamas. they're the ones firing the rockets towards the airport. then you have what's happening in the broader gulf region, the saudis, the king meeting earlier in the week. that's something that's very interesting because obviously the saudis were back in the egyptian plan, they're reaching out to the countries now and saying something has to be done. the major involvement in all different countries. >> something does need to be done because if those reports are true of those rocket fighters aiming towards the tel aviv airport, that's a message from hamas about what they're hearing as far as the

conditionality and as far as a cease-fire is concerned, how concerned are you that we see a further escalation from the israeli side here? >> unfortunately, we have the news that we had overnight, palestinians in the west marching in anger and two people dead as a result of that kind of chaos. then you have what happened with the u.n. and there's no sense in putting any blanket on this. quite frankly, we're going to see more angry people on the streets. you're going to continue to see more violence. >> hadley, great to chat with you. now, we have to take a quick break. still to come on the show, show me the profits. amazon posts another quarterly loss. we've live in new york to discuss after the break.

welcome to "worldwide exchange." in an exclusive interviews with cnbc, u.s. president barack obama blasts companies which carry out so-called tax inversi inversions. >> you start saying we're now an irish company despite the fact you may have 100 employees there .you've got 10,000 employees in the united states, you're gaming the system. >> reports filter through that rockets have been fired at israel's ben gurion airport.

amazon posts a much bigger than expected loss in the second quarter as they continue to prioritize long-term investment. bskyb slaps down the cash to create sky europe. the media group offers rupert murdoch 5 million pounds. the top shareholders tells the program the company is undervalued. >> we feel that at this level of presence for the valuations, which is lower than bsky b's valuations, even though it's probably substantially greater in the uk that it is not the fair division that we would like. >> you're watching "worldwide exchange," bringing you business news from around the globe. the politically charged data over blocking u.s. companies from reincorporating overseas to taxpayoffs continues. in an exclusive interview on

cnbc, the president pressed -- against the so-called tax inversion deals. he says he's seeking a long-term reform that would lower the tax rate and close those loopholes. >> this is basically taking advantage of tax provisions that are technically legal, but i think most people would say if you're doing business here, if you're basically still an american company, that you're simply changing your mailing address in order to avoid paying taxes, then you're really not doing right by the country and by the american people. >> president obama also addressed the improving u.s. economy, citing the lower deficit and the dramatic increase in domestic energy production. he says the fed is doing the right thing by focusing on higher employment. the president acknowledged that the record high stock market is being partly driven by low interest rates, willing investors to look for higher yielding assets. >> my estimation is that, you

know, you've got a lot of savvy investors out there. you've got people who recognize that what goes up can come down, as well. i'll leave it up to them to make determinations about whether valuations and stock prices are too high. i'm more concerned about the day-to-day fundamentals. and if we get those fundamentals, then i'm pretty confident that we can do very well in the next decade. >> addressing issues, president obama says there are still issues holding the country back. he reiterated his calls for a higher minimum wage and investing in infrastructure. let's take a look at the european market trading session, relatively unchanged for the ftse 100. we have seen these markets slipping up and down. right now, the xetra dax higher by 0.3%. we had ifo business sentiment data earlier this morning, lower than expected on the current conditions and the expectations sectors also geopolitical risk from ukraine and russia continue

to seep into these survey data out of germany. the government services pmi data, a mixed bag as far as the data performance is concerned. q2 weaker than expected. french market 0.6% lower. let's have a look at the u.s. futures now, too, following the momentum that it seems we're searing as far as the european markets are concerned. right now, lower by around 34 points for the dow, a couple of points for the s&p 500 and the nasdaq, too, lower by around 15 points. amazon posted a wider than expected second quarter loss as it continues to invest heavily in digital content and consumer electronics. amazon's new fire phone goes on sale in the u.s. today. revenues rose in line with forecasts. amazon reporting a quarterly

loss. amazon sales fell 10% in after hours trade yesterday. in the german market session, lower by 10.3%. a writer at tech crunch jones us now from new york. jordan, we get the amazon model that they plow cash back into this business for investment purposes. should we take this stock move yesterday as a sign investors are losing patience here? >> that absolutely seems to be the case. which is curious to me. investors for a long time have been patient with amazon because this has traditionally been the go-to strategy. they've continuously posted double digit revenue growth quarter over quarter for maybe 50 quarters straight. it's not to say customers are not loving amazon, it's just investors are maybe getting antsy. but sometimes making a land grab, it has to invest in order to yield later. so in my opinion, shareholders should stay patient, but we'll see. >> e-commerce and it's about

logistics, you say you want to see more focus on hardware and a focus on media. i know it's a nice comparison in a sense because they're different animals. but it's interesting to see amazon's market cap overtaken by facebook in the last couple of hours. >> it's incredibly interesting. amazon is investing 100 million in original content, right? that's incredibly expensive. at the same time, b they're making hardware which is something that's relatively new for them, as well. they make very, very low margins on their hardware. the fire phone is not following the same kind of trajectory as other hardware before it. it's normally been very, very low cost hardware. they sell it for a low margin. this is around a $300 phone. this is a more premium device. that might signal shifts in the way that amazon is approaching their hardware business. but that's something we're going to have to see next quarter. >> right now, the techkies

really are impressed by that phone. as you were pointing out, they have moore to do as far as streaming is concerned, as far as media is concerned. if i look at fire tv, though, they're secured towards themtz and their own products. is that going to ultimately be a limitation going forward, too >> i don't think that's something that customers necessarily pay attention to unless you're doing their homework. the fire tv is actually, in terms of laughed ware, it is probably the best media streamer on the planet. it's faster and snappier. it has great integration and it comes with amazing features. amazon took time to make sure that it was premium device. at the same time, if you want to watch hbo, if you want to watch netflix, it's skewed towards amazon content and some of those features won't come into play if you're more of an hbo or netflix person. amazon is going to do everything it can to push you towards amazon. that's whied build aes media streamer, tablets and a smartphone, right? so it all kind of makes sense.

>> it does, jordan brooke, thanks for your thoughts. starbuck's profits rose. higher transactions and customer checks. >> another quarter filled with records for starbucks, even though shares went down after hours initially perhaps narrowed full year guidance on the earnings side, the company beat on the top and bottom lines with record $4.2 billion in third quarter sales. that's up 11%. and it had 22% earnings per share growth at much cents. that's a penny better than estimates. comp store sales around the world grew 6%. but in the u.s. and china, they grow 7% and operating margins hit a record 18.5% in large part because starbucks raised coffee prices during the quarter, while at the same time it had hedged lower coffee costs for the entire year. the company is rolling out new initiatives like carbon ated

drinks and it lower its full year earnings per share guidance between 265 and 267 a share. at the same time, it is initiating fiscal year guidance saying revenue will grow between 15% and 20%. in los angeles, i'm jane wells, cnbc business news. see va expects quarter profits to grow 11% features forecasts from the back of strong payment volume and processed transactions. the company is trimming it's projections due to a number of nagging issues in the global economy. the business in russia is being affected by a drop in cross border transactions, but not by the impact of u.s. and european sanctions. visa rite right now trading in the german session lower by 1. %. coming up, it's a top run for casual dining in the u.s. will investors be chickingen? we check the appetite for the latest market menu. stay with us. ♪

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welcome back to "worldwide exchange." the russian central bank have raised their key interest rate by 50 basis points, taking it to 8% before it was at 7.5%. they're saying inflation risks have increased due to geopolitical tensions and policy and they're saying inflation expectations remained

heightened. it was a planned meeting. i do want to point that out. the relative strength that we're seeing in the pullback from march of this year given the ongoing tensions. we have seen the weakening in the currency. you can see the spike up versus the dollar there, too. still seeing pressure as far as the geopolitical tensions are concerned and heightening inflation risks. ipo will test investors appetite today in what's been a mostly hot u.s. market this year. seema mody joins us from the cnbc hq with all the details. >> julia, that's right. el polialoco is best known for its mexican dishes. they reported last night at the high end of the expected range. valuing the chain at a little more than $500 million. it will trade under the ticker

symbol loco. if you're not from the west coast, you may not have heard of the restaurant. most locations are in california. it again rated 80% of its revenue from the los angeles area last year. the company compete wes chipotle. it could branch nationwide benefiting from a growing hispanic population and increased demand for healthier food. the fenls aren't quite as healthy. while sales are growing, it's been unprofitable for the past three years and markets and restaurants have been mixed in recent months. shares nearly doubled on their debut. but since then, the stock is down about 62%. can and earlier this month, the company warranted weak second quarter sales. zoe's kitchen shot up 635% on its fist day. shares are still up about 24% before its ipo price. noodles and company doubled on its first day last june, but

is down 22% since then. it was a busy spring for ipos in general at 89 companies went public in the second quarter, julia, the hottest quarters for new listings since 2007. keep an eye out today on loco. president obama tells cnbc we'll tackle firms that settle overseas to try and avoid tax. u.s. officials accuse russia of directly firing across the ukraine border. and as amazon's fire phone goes on sale, investors react negatively to a wider than expected q2 loss. we have to take a quick break. coming up, u.s. officials accuse russia of firing missiles over the border into ukraine. i'll be joined by the acting ukrainian ambassador to the uk to get his take on developments. coming up next, stay with us. developers are all about speeds and feeds. it's all about latency. it's all about how fast does it run.

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welcome to "worldwide exchange." breaking news this morning out of israel, a number of news agencies are reporting hamas has fired a number of rockets at ben garion in tel aviv. on the unofficial twitter page there, saying they have indeed fired three m-75 rockets, right now unsubstantiated is the twitter page. we will continue to bring you any further developments on that front. u.s. defense officials have accused russia of directly firing across the border, engaging the ukraine military. this after nato says it had evidence russia supplied armses to pro russian separatists. the u.s. president sat down with steve liesman and reflected on the conflict in ukraine. >> the good news is that despite some of those commercial concerns, we've seen europe move

with us. not always as fast as we would like, but they get there. and sadly, tragically, the shooting down of this malaysian airlines airliner and the recognition that it is likely it was shot down and it is also likely that it was conducted by nonstate actors that were provided incredibly powerful weapons by the russian government, all that, i think, may stiffen the spine of our european partners moving forward. joining us now is the acting ukrainian ambassador to the uk. good morning. >> good morning. >> so reports now from the u.s. state department that we're seeing direct military engagement from russia into ukraine. if you had to further step up at a time when we're talking about tougher sanctions in europe, what is happening here? russia really not getting the message. >> we can really admit that this

firing across the border, this is the real act of aggression in accordance with the international law. first of all, we have to cope with the terrorist necessary our territories. we would like to respond to the provocations which could provide the ground for the kremlin for full fledged invasion to ukraine. as far as the arresting position, we are happy to see the change of the position towards more active, more tough, more comprehensive soft sanctions. and the sanctions for us, it's to moscow. this is a means to stop the aggression. >> how concerned are you about precipitating a reaction from russia that involves a direct invasion, as you just described? how big a concern is that here? >> i think this is something which couldn't be tolerated in

the 21st century. and our sense, they understand that the direct invasion -- possible direct invasion from russia, if it will take place, will expose the role. we just talk about the fact that russia right now seems to have the ability, the desire to throw rocket fire across the border right now. they're not afraid. is it -- that you're not seeing action as what you described from your friend's international community? >> we have the information that brussels have taken their respective decisions. of course, we would like toughening sanctions, but we will see how at this stage the sanctions will work. >> would you like to see iran start sanctions imposed on russia at this stage? >> well, iran, it's -- they have very tough sanctions. of course, it will be greater for us to have as comp hence ifr as it could be, included all the

sectoral economic sanctions. >> so yes is the answer? >> yes. >> can i ask you about what happened in the government yesterday, the prime minister's resignation. we were expecting to see a new government formed at some point very soon is in the future. is this more of a timing thing rather than what appeared to be a disagreement right now with parliament? >> first and foremost, i would like to -- any panic assessment. what do we witness this assumption which is absolutely within the constitutional field of ukraine. this is democracy and very well -- very well -- in our ukrainian constitution. nothing to be worried about and more over, i don't understand the action of russia duma, which met the -- which met the information about the resignation of the prime

minister with applause. it's disgusting. but this combination -- >> so it comes back to the idea of propaganda, i guess, on that point in particular, too. but very quickly, is this going to make any difference to the signing of the association agreement with the eu and endurance to the imf program? because i think that's what they are concerned about here. >> no, it will have no difference since the government is in place. the resignation hasn't been approved and i have doubt it will be approved by the government. >> so he might remain? >> yes. >> you heard it here first. sir, thank you so much. let's have a look at what's out on the agenda today. durable goods are out at 8:30 a.m. earnses rb reported for abbvie,

aon and moody's. the dow, relatively unchanged at the finish. right now, 34 points lower for the dow. the s&p 500 indicating lower by 3 points and the nasdaq lower right now by 15 points. ted horwitz joins us now. good morning. stocks having a mixed performance this week. the dow down, mass dak and the s&p 500 managing to close into positive territory. what do you think we do by the enof the session today? can we break 2k in the s&p? >> you know, we could break 2000. i think that is the target. i think we probably hit it maybe today, maybe monday. but i think really all eyes are probably not on today's durable goods, but on next week's look at gdp. the markets have been stalled up here, although at all-time new highs. we've been stalled on light action, no volatility, no

volume. you're just kind of working our way back and forth with all the geopolitical problems. nothing is going on. we still hang here. so i think all eyes are looking towards next week's gdp. >> we've got, as you mentioned, a number of data points today. as we look at the housing data in particular, it reminds us that there are still issues out there, concerns about future rate rises. circle back from what we're seeing in the equity markets to what we're seeing in the rate markets. looking overextended as far as prices are concerned there? do you expect to see europe pushing higher over the next few sessions to a week? >> you know, i do expect yields to go higher here. i think part of what you've seen is the -- a little bit of a fear that's played out through the bond market. you know, buying bonds, pushing rates down for the safety trade. i do expect yields to rise and i expect them to start heading up towards the end of the year, as well. so i think we're down here at a bottom of rates and i think we're going to start to turn around, start to go higher.

and i think eventually it will be better for the market, but i think the initial shock might cause a little bit of tesch ewe lens. >> it is a friday, but what should top the trade for today? >> my top trade for today is to observe and watch the market because with all the inner mixed data points, with the no volatility, i think the best trade is no trade set on the sidelines and enjoy the weekend. >> so sit on your hands is the strategy. thanks for that, todd. great to chat to you. that's it for today's show. i'm julia chatterley. thanks for watching "worldwide exchange." i wish you a great weekend. "squawk box" coming up in a few minutes' time.

good morning. welcome back welcome to "squawk box." amazon has a larger than expected quarterly loss. ruiner murdoch makes a deal to raise some cash. this means a second bid for time warner could be in the cards. plus, president obama makes his case for going after what he's calling a tax loophole in an exclusive cnbc interview. >> i think most people would say if you're doing business here, if you're basically still an american company, that you're simply changing your mailing

address in order to avoid paying taxes, then you really are not doing right by the country and by the merp people. >> it is friday, july 25th, 2014, and "squawk box" begins right now. good morning, everybody. welcome to "squawk box" here on cnbc. i'm becky quick along with joe kernen and andrew ross sorkin. after a busy week of earnings news, it is a relatively quiet morning on the corporate calendar. but there is one key economic report of note here. we have june durable goods. economist res looking for the headline number to increase by 0.5%. check out the futures. you'll see right now they look like they're indicated to open dow. dow futures down by 40 points below fair value, s&p down about 4 points. it has been a strong week for the markets, but we'll see what happens as we get closero