a warm welcome to "worldwide exchange." i'm steve sedgwick. these are your headlines from around the world. europe and equity markets bouncing back. autos and industrials leading the way amid some signs of a breakthrough in eastern ukraine. foreign ministers meeting in berlin reach an agreement on a russian aid convoy heading for ukraine, but make no progress on talks for cease-fire. elsewhere, uk housing stocks are weak after bank of england governor mark carney tells a uk newspaper the bank of england will put rates before wages, but the ceo of bovis homes tells us he's unfazed. >> we've seen clearly a strong

housing market, interest rate rises are ultimately inevitable. as long as mark carney pulls a shoe with his commentary in a gradual, limited process, we feel the market can deal with that. >> and missouri's governor calls in the national guard after tear gas is used in ferguson to calm protests sparked by the shooting of a black teenager by police last week. >> announcer: you're watching "worldwide exchange," bringing you business news from around the globe. >> very nice to see you this morning. plenty going on on the geopolitical front, no much on the market front, but let's look at europe. every one of those rose represents a tenth of the market. 95% of stocks are in the green with only a small smattering to the down side. the net-net is that the european euro stoxx 600 is 1.1% to the up side. is that to the detriment of the

individual bond markets? we'll look in a moment, but the xetra dax, which has been so hard hit on concerns about exposure to russia is the best performing of those major intercreainte indices, up 1.5% today. let's look at the bond markets and you can see the 10-year is -- look at this, absolutely incredibly low still. the 10-year bunds trading at a yield of 4%. the 10-year french, just seems incredible, doesn't it, 1.39%. 10-year italian, i remember the datale days of berlusconi. now it seems nobody has any risk associated with the italian at 2.6% and the spanish at 2.4%. what about the euro? wonderful comments from the french finance minister today, saying we need the euro down, we need the ecb to do a little more work on this one as well to get it to a reasonable level, quote.

1.3387 is currently where the euro/dollar is trading. russia's foreign minister, sergei lavrov, says there was no positive results from the talks with french, ukrainian and german counterparts in ukraine yesterday. the foreign ministers called the meeting to discuss a cease-fire in kiev. annetta's been following that meeting from berlin. no progress, lavrov says. what have they achieved? >> reporter: that's a very good question. looking at what mr. steinmeyer, the german foreign minister, was telling us late yesterday night, that there were areas where little progress was made. so, if you deduct now what mr. lavrov is saying, that there was no progress on cease-fire and also political solution, what remains where progress might actually be made is the aid convoy or the delivery of aid goods. so, that could actually be the

area where we could see some sort of compromise coming together between the parties, because of course, that's the easiest to do, the way of getting, or actually achieving a cease-fire really remains the overall target also of mr. steinmeyer here in berlin, but he wanted to have that in focus of yesterday's meeting, but of course, that actually has tremendously failed. if you look at what the ukrainian foreign minister was saying after that meeting, it's that it was really very difficult but that didn't cross their red line, and also he was saying that they probably need a lot more of those five-hour talks to actually achieve something when it comes to the really hard topics like the cease-fire, also political solution. so, for now, i would say the markets are actually a little bit perplexed about the fact that nothing has changed quite tremendously in the region, apart from some more willingness, perhaps, to go back

to that negotiation table, steve. >> we're going to leave it there, annetta. thank you very much indeed for coverage of that meeting, which ultimately appears relatively fruitless. meanwhile, ukrainian forces raised the national flag above a police station in town, the town of luhansk, a mark of the military's protest against rebels. however, during the weekend's offensive, a ukrainian fighter jet was shot down. despite kiev claiming the separatists are on the back foot, a tank and deep-mounted machine gun was seen in the east of the country near the russian border. rebels say they have 150 vehicles, combat vehicles, in reserve. ukrainian and russian officials have agreed, though to inspect the convoy which moscow says is carrying aid for the east of ukraine. the trucks are currently parked near the border and will only be allowed to cross into the oversight of the red cross. that's a roundup of the main stories surrounding the ukraine crisis. let's get to joseph diane, managing director and head of

markets at bcs prime. just remind our viewers, bcs prime is a major broker on the russian market, isn't it? >> yes, the largest broker in terms of equity trading, futures and options trading, fx trading. >> let me ask you the obvious question, how badly is volume, is market sentiment, is confident in the russian market being affected by this? >> investors in russia are quite resilient at this point after months and months of negative headlines and a certain amount of deterioration. there's no tourists left in the russian market. there is only dedicated investors on the international front and local kind of deep-pocket institutions that are on the market. so, the situation is still kind of nervous, but it's hard to see how this deteriorates further from here. >> now, down year to date 14% in early march, plus the ruble losses as well, so it's not just down 5.3%. the fact of the matter is, it was cheap to begin with, sub 5, but it's always been that way as well. you say there are no tourists

left. where's the real value, given the fact that it stayed low for a long time? >> to say the russian market is cheap is pointless, and a on agree, and russia is down. it's been quite a dramatic underperformance versus its merging market peers, around 40% with thebrazilian, the turkish emerging market index, so these are low even for russia. even in a cheap market, these are extreme levels, but again, you shouldn't come out with a wholesale buy of the russian market at this point. kind of there's no need to be a contrarian here. there is great assets for national champion industry leaders that are priced to go at this level. >> look, we know that the hawks on capitol hill want more firm action from europe. that's easy for them to say. they don't have this enormous european/russian trade that certainly countries like germany have as well. you make the point in your notes that sanctions have been limited

so far, but you don't need sanctions to be that tough or confident, and the appetite for more business investment into europe and russia and into russia from europe to wane under the current circumstances as well, it's the implicit sanctions, the implicit meaning of what's going on at the geopolitical level, which is really hurting, isn't it? and it is hurting, despite what the kremlin is saying, isn't it some. >> well, it is to a certain extent. we've been discussing the self-imposed voluntary sanctions, as you mentioned. and to a certain extent, we have seen some of that. russia won't grow much this year. i think it will avoid recession, but nothing dramatic to write home about. we've seen some kind of reluctancy to lend to russian corporations, but yet again, yevrov, which is a large steel maker did manage to get almost $500 million of a loan from a syndicated european banks last week, barely after the europeans put the kind of, what they describe as level three sanctions, on russia. >> rex tillerson, rex caser, the

likes of carlos ghosn, people who have invested vast amounts of european and u.s. money from the likes of renault, huge investments in russia as well, they're making their next investment decision. they can't possibly afford to put money in russia rather than somewhere else. that's the problem. >> and i agree. these sanctions are in place for a significant amount of time, and if they're escalated, this will have a meaningful effect. at the moment, the investment is rather postponed, rather than canceled altogether. we do expect this to kind of sort of tell out. there is little appetite for all parties involved, russia, ukraine and the european union, to take this further. as you did point out, the united states, which conveniently, if you look from the russian perspective, only has around 3% of the percentage of trade in goods with russia, is the driving force of this kind of -- >> i'm going to sound terrible here and put in a quote from lenin, saying something along

the lines of economy is an extension of politics as well, something that mr. putin would know as well, but when does the economic reality really start affecting kremlin policy? >> putin and the administration, and this is for their kind of credit, has been a very prudent economic actor. they've been building up a very strong currency buffer, they have $500 billion of hard currency in reserve. they've been keeping debt at low levels, 15% of gdp on the public side. the central bank has been very prudent in terms of being ahead of the curve on the monetary policy, so we can in the kremlin take this extremely seriously. when they see this deteriorate further, they will act more forcibly, but it's very hard to see how the european union manages to pin down russia on the sanction front to do what they want. >> indeed. a huge disparity of interests as well. joseph, great to see you. joseph dayan, head of markets at bcs prime. the governor of missouri has now ordered the national guard

to the st. louis suburb of ferguson. more than a week of unrest following the police shooting of a black teenager, mike brown. a preliminary autopsy shows he was shot at least six times. a march on sunday in ferguson descended into chaos as police reportedly pushed back demonstrators using a cloud of smoke. missouri state highway patrol captain ron johnson said forces did a fine job protecting the people of ferguson and the protests turned violent after dark. >> tonight, starting with prayers and messages of unity, peace and justice, took a very different turn after dark. molotov cocktails were thrown, there were shootings, looting, vandalism and other acts of violence that clearly appear not to have been spontaneous, but

premeditated criminal acts designed to damage property, hurt people and provoke a response. the callus was not civil disobedience, but preplanned agitation and aggression. >> journalists are once again on the ground in the missouri town providing updates from the situation via social networks. twitter founder jack dorsey is also updating with retweets of vines and clashes with police. the square ceo traveled to his hometown of st. louis on friday. okay, coming up, london property prices have jumped 20% so far this year, but will they continue to climb? after the break, we are going to kick off our global property week live from the uk capital. stay tuned for that and much more here on "worldwide exchange." the ca♪illac summer collection is here.

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bank of england governor mark carney has told the "sunday times" he will not wait for real wages to turn positive before hiking interest rates. this follows comments made during the inflation report last week suggesting rates are destined to stay at historic lows until at least 2015, largely due to slow wage growth. andrew bovis joins us now, cio

and managing director at pimco. andrew, any clarity from anyone at the mpc or bank of england or mr. carney himself as to when we will see the rate hike? >> no, there's not a lot of clarity, i don't think. previously, the bank of england, mr. carney had gone out of his way to talk up the possibility of a hike this year. seemed to push back on that at the press conference last week. our best guess would be that they would probably go in february, but given this, i wouldn't rule out they go in november. >> and some saying what on earth are they talking about, but you have to make investment decisions based on this dialogue. how are you doing that and what's it mean for gilts? >> i think if you look at the forecast, look at the data from the last two inflation reports, there's a pretty consistent picture. and so, i think you focus on the data. i mean, obviously, you have to pay attention to the comments as well, but there is some noise around the bank of england.

to be fair, they have a one-person, one-vote model on the mpc, so it's not as easy for them to guide as it is for some of the other central banks. in terms of gilts, i'd say that you want to see more risk premium built in. in the front end around the bank of england, and then more broadly, 10-year gilt trades pretty much in line with the u.s., so i think there is a case for building in more risk premium for the uk market compared with the u.s. >> the 10-year gilt is what, buy, sell or hold? >> i think we're underweight. i think if you look at sources of global duration, given the uncertainty about the bank of england rate hike cycle, given the fact that they're going to be going first, i think there's a good case to be under way uk duration. it is unclear about when they might start in terms of rate hikes. you know, the medium-term guidance is also going to be fraught with uncertainty. i think if you are looking for a

source of duration, for example, if you're concerned about some of the geopolitical events, i think going to the u.s. is a pretty good place to go. >> all right. let's look at euroland as well. i look at 10-year spanish and 10-year italian, it's up 2.5%. i remember the big old battle days whf we used to price in risk in europe. are we wrong to think yield should be higher and they go lower because of the put still? >> i think italy and spain look reasonable. they're at low levels, about 1% bit below. so, i think the core of europe -- again, i don't find that very attractive in terms of call duration. italy and spain are sources of credit risk, spread overburdens. i think they still look reasonable. we're overweight. there are clear problems in the eurozone. growth halted again, inflation is very, very low. mr. draghi's speaking at jackson hole later in the week. it will be interesting to see if he has anything there on the

eurozone to say, but the market is building in higher probability of quantitative easing in line with what mr. draghi's guided in the past. >> you mentioned jackson hole if by magic. that was my next question. you sayelone won't want to make a splash, won't want to make any ripples at her speech i think on friday as well. what will she try to do, steady the ship and keep people opaque on the horizon when it comes? >> my best guess is she doesn't want to make too many headlines, but the market is pricing in the fed going the middle of next year and then going at a pretty gradual pace. she's probably fine with that. in the past, mr. bernanke a couple of times did make a splash at jackson hole. my best guess is that that won't happen this time. they're focused on the labor market. labor market dynamics, which is appropriate, because you know, one of the key issues, and certainly for mrs. yellen, one of the key issues is assessing the u.s. labor market. if you just look at jobs growth,

it looks okay, but some of the broader measures of labor market performance, you know, do suggest more slack, a bit like some of the discussion in the uk, and so, i think, you know, this gives yellen an opportunity to reiterate that the fed is looking at this broad set of macro labor market indicators and they're not going to be in any great rush to start raising rates. >> andrew, there's a piece by michael mckeynesies out of new york in the "ft" this weekend, says u.s. treasury bears face irresistible force, talking about the 0.4% yield on the two-year paper as well and how tough it is to be a bear on treasuries at the moment. do you agree with that? it's an irresistible force against the bears? >> so, i mean, from our point of view, u.s. duration looks reasonable. we have our view of pimco, the new neutral. we think that policy rates are going to be low in the medium-term, and then that guards against being too bearish. so, the current level, the

current stretch of interest rates looks reasonable to us. in terms of our medium-term outlook. then at the same time, you have, you know, eurozone weakness, geopolitical challenges, russia and beyond. so, i think, you know, there's a good case to see the current levels in terms of u.s. rates as pretty reasonable. so, overall, we're pretty neutral interest rate risk in the u.s. we don't have large underweight positions here. >> nice to see you today, sir. thank you for your time. andrew balls, managing director at pimco. shares in bovis, as in bovis homes, moving higher after delivering a meager 150% jump in profit. 150% jump in profit in the first six months of the year. they've got a huge back divvy increase as well compared to the same period last year. the uk homebuilder expects a significant increase in 2014 earnings after a record number of completions. i spoke to the ceo of bovis homes, mr. richie, earlier on, and i asked him why the company

doesn't build homes in london. >> we are a traditional family house-builder, and london is a very different market typically associated with certainly more high-rise apartment property, and we have not been in london since the late '80s and don't have an intention to go back in. >> a bit of color on that. we had a big price slump in the late '80s, proving too much for house-builders, so they provide the lack of oscillation, tipified by the fact that london property prices have surged almost 20% this year but some surveys indicating the house price boom in the uk may be fading. katherine boyle has hit the streets of the capital to find out what you can get for your hard-earned cash in one of the most expensive cities in the world. ♪ >> reporter: the property market has long been the hottest thing about london, a city better known for its cold weather and

gray skies. the british capital buzzes with talk of how high prices can go ahid a seemingly unending rise that's seen double-digit growth in some london boroughs this year. but neither are worrying signs of cooling. behind the headline-grabbing deals of foreign buyers paying record amounts for property, there is increasing talk of an affordability crisis in london. house prices are now more than five times the average salary for the first time since the credit crunch, and those left behind are being dubbed generation rent. our challenge was to find a home for $500,000 in london. and most estate agents we mentioned that to pretty much laughed us out of the room. this is what we came up with, a one-bedroom, one-bathroom, 400-square-foot apartment in camden, built to specifically help people in the middle income get that first step on the

housing ladder in london. >> november of last year, the large firm of estate agents did a survey in london and reckoned there was a shortage of 20,000 properties every year simply not being built. now, pocket is not huge, it's not going to add immensely to that, but we will do something like 500 properties a year within the next couple of years, and that's starting to meet the need of those people who are the squeeze middle. >> and there are now more people trying to sell you homes in london than ever before. the most popular new job in the country last year was an estate agent. not surprising, mark carney, the governor of the bank of england, has called the housing market the greatest risk to the domestic economy. but with the general election looming and the property market a key battleground for middle class votes, the question is whether policymakers on both sides will be able to take the

tough decisions necessary to solve the affordability crisis. >> well, katherine's inside with her stilettos on just now. she's put her boots on, her vest and hard hat and joins us from where, katherine, camden? >> reporter: well, it's definitely a lot riskier out here than it usually is in the studio, steve, and kind of chillier, too, but yeah, we've been talking about all things london property this morning. and joining me now, martin ratchford with the company responsible for this development in which we're now standing. martin, let's start off talking about just what does it tell us that a development like this is going up in this area of london at the minute? >> well, we feel with our 23-year history of having built 5,000 homes that, you know, london's in a great place right now. it's a global city. people are very keen to invest there. and we've invested over a quarter of a billion pounds in this alone. here we are still on the city road in a silicon round-about,

which is london's answer to silicon valley in america, and we stood here on the 18th story with fantastic views out over the city, and you know, really what we're seeing is that people want a high-quality product in their residential accommodation, in their homes, which we're building. and the confidence we have in the market, we're going to build another 2,500 homes over the next four years, that's more than one home every single day of the year. that's how confident we are about the future of the residential market in london. >> reporter: but martin, aren't developments like these all about overseas buyers coming in, buying for investment, not really living here and, you know, driving up prices, which means that ordinary londoners can't afford property? >> no, not really. i mean, in our history, we've built 5,000 houses. six out of ten of those homes have gone to people who live and work in london. and on this road alone, one in three are affordable units that go to people like firemen and

policemen, people who are working in the community. they're affordable houses that go to those people. so, it's great for the community. the other sense, you know, to take away from this is that of the 250 million pounds we spent on this road alone, every home we build creates 4 1/2 jobs, which is great for london, it's great for the community, it's great for the economy. the multiplier effect, all of the materials that we buy, it's fantastic. >> reporter: but isn't there potentially a possibility that, obviously, we've heard big construction cycles slightly lagging the economy and in many ways. isn't there a bit of a risk that when a lot of this new build comes on stream that the property market in london itself might be in quite good a place as it currently is? >> well, i think fundamental here is about supply. there's a pent-up demand that's built up over a number of years, and that demand really hasn't been met. so, we're very keen to support

boris johnson's office and the sounds they've been making about working with developers in lock supply. this is really about a supply-demand imbalance. and you know, it's a fantastic opportunity to invest in london today. >> reporter: great. thank you very much for joining us today. that's martin ratchford, group finance director of mount anvil, developer of this large site where i'm now standing. back to you, steve. >> what a lovely view as well. thank you for that, katherine. still to come on this show, the one-month countdown is under way for scotland's independence referendum. now, a new poll shows the no-vote in the lead, but the yes camp is creeping closer. find out more after this break. what if there was a credit card where the reward was that new car smell and the freedom of the open road? a card that gave you that "i'm 16 and just got my first car" feeling. presenting the buypower card from capital one.

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>> announcer: you're watching "worldwide exchange," bringing you business news from around the globe. european markets bouncing back. autos and industrials leading the way amid some signs of a breakthrough in eastern ukraine. foreign ministers meeting in berlin reach an agreement on a russian aid convoy heading for ukraine but make no progress on talks for a cease-fire. uk housing stocks weak after bank of england governor mark carney tells a uk newspaper the bank of england will put rates before wages, but the ceo of

bovis homes told me he's unfazed. >> we're seeing clearly a strong housing market. interest rate rises are ultimately inevitable. as long as mark carney follows through with his commentary in a gradual and limited process, we feel that the market can deal with that. and missouri's governor calls in the national guard after tear gas is used in ferguson to calm protests sparked by the shooting of a black teenager by police last week. nice to see you all. a look at european equity markets, on a bit of a tear. they didn't enjoy the late rally we saw in the u.s. indices on friday. the xetra dax, german blue chip index, 1.6%, trading at 9,233. the french market 1.3% to the good this morning. to the bad if you're short. let's look at the forex markets.

delicious comments from sappan of france saying it's the duty of the ecb to get the euro down to a reasonable level. okay, well, if the french economy carries on going the way it is, i guess it will get to that level he wants. 1.3384 is where that is trading. sterling a bit of a rally, 1.6732 after a couple percent decline over last week or so. the dollar versus the japanese currency 102.46, 0.13% higher. a couple of flashes. julian assange, you all know the chap. he's been stuck inside the ecuadorian embassy in swanky west london for the last two years. the ecuadorian ambassador says wikileaks and assange's human rights have been breached. what else have we got? ecuador upholds julian assange's status as a political refugee. time to free wikileaks founder julian assange says ecuadorian diplomat. of course, swedish authorities and u.s. authorities as well would argue that he's not a

political human rights activist. actually, that he needs to face very serious charges leveled against him. two very different sides of the story. of course, wikileaks' alos angeles h-- assange has been seeking refugee asylum there for a couple years now. henry dixon is with the glg undervalued asset fund and uk income fund. you put out your half-year review. how'd you get on? >> i think incredibly in the first six months. markets were up a percent and we were up 3%, 3.5%. but what we try to do is sense a record level, i think, or indecision amongst investors. we've gone back in the data right back to 1920. so, therefore, the keys to being short-term, but we definitely try to put the market into the context of absolute relative value relative to history and relative to fixed income. and i think probably what we've got to concede is that, clearly, equities are not maybe the value

they have been, just on our analysis. we think the market's been slightly overvalued since may of last year, but we think the relative attractions in the asset class are very strong and have only grown since carney's comments of last week. simply, i think the transition we need to make from relative value to absolute value can come by two mechanisms -- price falls, which we've had modestly, and also earnings growing. we feel much more constructive about earnings growth into the second half, particularly given the moves in fx, again, post comments from carney last week. >> you talk about relative valuation, what about these chaps such as robert shiller, who to be fair, i think has been making these comments for quite a long while, but a reiteration over the last couple days. saturday's "the new york times" -- now the cape, which is the cyclically adjusted pe, is above 25, and apparently, this has been surpassed since 1881 and only three previous times, '29, '99 and 2007. do you worry about cape? >> i think with that pe, taking

ten-year average earnings and dividing by the current price, i think what we have is definitely the u.s. market looks expensive. sitting in the uk, you could do the same analysis on uk equities and they definitely wouldn't be nearly as expensive as the u.s. and then going back again, back to 1920, there have been periods of time of material decoupling of uk equities to u.s. equities. so, i know we're very much integrated, but there have been periods of time when uk equities have materially out-performed u.s. equities, and it's all come from the more attractive stopping point and valuation. >> we had a nice chart up, the percentage attribution versus the index, different industrials which look very positive. the health care very negative as well. do you want to just talk us through what this means and how we can make money out of it? >> this is our first half. what we've seen is very, very strong performances from industrial holdings, specifically with postal names. portugal post and holland. and when we go into europe, our

rules are very simple, we must find materially better value than the offers in the uk. on the down side there with the health care, like most funds in the uk, we've probably got slightly wrong footed by the bid that was a relatively drag of the fund in the first six months. >> you're in good company on that astra story. the portuguese telecom company, postal operator, but anything with portugal's name on it was sold down quite heavily at one point. did this provide a nice entry point? >> yes, we had it in portfolio about six months and sold it two months ago at highs. we're very keen to revisit it and we expect a government placement due to come up in september. >> where's the big opportunity in the second half? >> i think for us, we are probably the most optimistic of all year and with the move in bond yields, then if i could highlight maybe three shares within the ftse 100, i think it's a really fluid environment for corporate or conglomerate

discounts if you'd like to realize that certain parts of their businesses have been misvalued. for example, we saw news from bill tin last week. i like a company called mutual. i think all three parts of its business would be more highly rated if split out. then actually, now i know it's sort of talk of the day, but we really do like the house builders within the 250 and we definitely like bovis. >> slow down a bit. i look to bovis, great numbers, but they haven't moved this year-to-date, but they're giving more divvy back, a big theme. >> absolutely. i think what we've seen, the market's completely on board with the house builders almost as being good news inertia and now we're worried about house price falls, which i guess we have some proclamation of overnight, but we see a slightly more stable house price environment. land banks are very much more fluid and more cash to come back to shareholders. >> apparently, because it's "worldwide exchange," you and i can't talk about cricket. if it was "squawk box," we could, but our viewers prefer the nfl or nba. anyway, nice to see you. henry dixon, manager of the glg

assets value fund and uk fund. moving on some u.s. banks have reportedly drawn up preliminary plans to move some of their london operations to ireland if britain leaves the eu. this is a very long story, isn't this? "financial times" says citigroup, morgan stanley and bank of america are considering the move. most u.s. and asian banks base their european operations in london, giving them an automatic passport to carry out services in all 28 eu countries, but the "ft" says senior u.s. banking executives believe the uk is unlikely to be granted the same status if it leaves the eu. there's one month left until scotland independence vote, and a new poll suggests the yes campaign advancing despite currency fears. 38% of voters want an independent scotland, as opposed to 47% who want to keep the union. 14% are still undecided.

this according to an icm poll in scotland on sunday. well, joining me is jeremy cliff from "the economist." i was talking to a colleague about this earlier on and just beginning to read more and more about this, and there's so many ifs. if i was a scot and was in scotland, because scots down here can't vote as well, i would be very worried about the economic plan, not that there isn't a plan now, but it's all the questions that mr. sammond has to thrash out with westminster if they get the yes vote. >> there's a huge amount of uncertainty and i think this is the no campaign, the campaign for the union's great strength, is that they can ask him these difficult questions about what currency would scotland use, how easy would it be for an independent scotland to stay in the european union and what fiscal position would they have and as of yet, nationalists don't have convincing answers. >> hold on, does westminster have convincing arguments of why

he can't have a monetary union, why he can't have the resources he wants, why he can't have the low share of national debt that he wants as well? >> the burden of proof is on the nationalists here, but i think that those in london, people like alistair darling, who's running the no campaign, they have good reasons to say we're not going to simply lie down in any sort of negotiation with alex sammond. for example, take the pound. he says it would be easy for an independent scotland and the rest of the uk to continue sharing the pound. that's all very well and there would be obvious economic benefits to having a currency union. on the other hand, scotland has a very large financial sector. does a london government want to stand behind that sector, effectively stand behind the scottish government and create the moral hazard that would entail? so, i think the london government and the unionist campaign at the moment have good reasons for saying that it wouldn't be easy going for an independent scotland. >> look, one thing i do know is the scots are pretty smart and they're smart about money as well. i mean, goodness me, they came up with some of the rules of the

wealth of nations. so, they know the rules of this as well. so, why are such a large percentage of scots, despite all those risks, in favor of independence? >> the independence campaign has a big advantage, and that's energy. and i don't think -- if you talk to senior unionist figures behind the scenes, they will accept that the independence campaign has more energy than the unionist campaign because it's about building a new nation, it's about forging a new path separate from the united kingdom. so, those activists are energized, enthusiastic, they're knocking on doors in edinboro and across scotland in the way that the pro union activists just aren't. they may not have particularly good answers to the big questions, as we discussed, but my goodness are they good at getting support for their cause. >> look, so, he wants to sort out the national bank, but they want nothing to do with the union jack so to speak. why can't they just go for the middle approach that i spoke to gordon brown about off camera, where they get massive more devolution, but confidence that

they know the rules. so, they get a lot of what they want, but still get some sort of union with the rest of the united kingdom? >> and polls suggest that's what most scots want. the funny thing about this campaign is they've been offered the status quo, offered independence, but they're not offered this ideal middle ground that most of them would vote for, as a result of which, both campaigns are effectively trying to converge on that middle ground. >> darling and the no campaign, haven't they made this point? you can have loads more devolution, but we want you to be part of the union. >> right. all three unionist parties have come forward with major proposals for new devolution. in fact, the conservative proposal is arguably the most radical, which is surprising in some ways coming from a party that's traditionally opposed devolution, but equally from the nationalist side, you see people, alex salmond, effectively paying down what it would mean. we'll keep the pound, keep the queen, stay in the european union -- >> keep the bits you want, get rid of the debt. >> exactly. elections are won and lost on the middle ground.

>> you said the conservatives, the right wing of the british establishment for international viewers who don't know the situation. why, given the fact that they do so badly in scottish polls or in national polls in terms of scottish, why would they want scotland to still be part of the union, where actually if in wasn't a part of the union, they would potentially have a greater spread of power in english and welsh elections? bear in mind most scottish votes could be discounted. >> if you ask some conservatives about this from the dark of night far from cameras, they will probably admit they would do well with scottish independence. in lots of elections over the last decade, in which we have the labor government or in the last election a hung parliament, we would have ended up with a conservative majority if not for scotland. however, they also believe in the union, they believe in britain as a political ideal, and i think they also acknowledge that if you give scotland a bit more fiscal autonomy within the union, you might get people voting for the so sort of policy than the

politician they would have liked. so, it would be a bit more autonomy within the union that might be good for the conservatives after all. >> and the world's talking about this as well from clinton to obama to tony abbott who got in trouble with salmond as well. does that sway the vote? >> not as much as they might like to think. >> thank you for joining me. i look forward to reading "the economist" views on this. still to come on "worldwide exchange," roche is reportedly picking up the remainder of a share it doesn't already own. we have more on what other names in the japanese pharma space could be ripe for taking after this short break.

all right, welcome back. we've got some flashes on reuters and dow jones. dow flashes say wikileaks's julian assange says he is leaving the embassy soon. this is julian assange. these are pictures which are prerecorded from inside of the ecuadorian embassy in london. you'll recall that he believes he is a political fugitive. his detractors say that he has very serious charges in sweden that he has to answer, but the flash says he is leaving the

embassy soon. the ecuadorian ambassador, who has been hosting him, says "we're hoping for a reaction from the international community soon" saying, "he's been here too long," says the ambassador. the international community should coordinate to ensure assange's human rights are complied with. well, we'll watch this story with interest and see whether mr. assange is actually on his way out of ecuadorian embassy and whether that will lead to his arrest and deportation. we'll be following that story. moving on, u.s. warplanes have carried out air strikes in iraq to help kurdish fighters retake the country's largest land from islamic state militants. the white house authorized the attack, saying the failure of mosul dam could threaten the lives of civilians and the u.s. embassy in baghdad. u.s. central commands says 14 strikes damaged or destroyed a number of vehicles, including humvees and armored personnel carriers. nbc's bill neely filed this report from northern iraq.

>> reporter: armed and heading for battle with the islamist militants of isis, kurdish fighters, part of a grand force driving isis back. paving the way for them, u.s. air strikes, another 14 today. american warplanes pounded isis targets close to iraq's biggest dam. the militants captured mosul dam two weeks ago, but officials say they've now been forced to retreat. beyond this line is the main battle area. u.s. warplanes flying overhead, helping targeting the heavy armor isis captured from the iraqi army, most of it originally supplied by america. the defense department released video of an air strike on an isis humvee and another on an armed vehicle, two of yesterday's nine attacks. older fighters believe victory is close, but isis holds huge

suedes of northern iraq and out-guns these likely armed men. they are appealing for heavy weapons from america, but the air strikes, they say, have been vital. >> very, very crucial. however, we do feel like it was slightly late, but better late than never, as they say. >> reporter: for those who fled in terror from isis attacks, the fightback is welcome. these refugees are yazidis, a religious minority, dozens of whom were massacred by isis two days ago after refusing to convert to islam. a baby born during their eight-day escape is to be called bewar. it means no land. they have none now. they live literally on the edge of roads, of half-finished buildings, tens of thousands of them. today's american air strikes against their tormenters, some small compensation for all they have lost.

bill neely, nbc news. thailand's economy avoided a technical recession expanding 0.9% on the quarter in the april-june period. it also beat expectations on its year-on-year growth. the pickup was attributed to increasing exports, easing political tensions and increasing consumer and business confidence. authorities have found mercedes-benz guilty of price-fixing. the case related to charges on spare parts and sale services. foreign auto companies have come under scrutiny for allegedly colluding to keep these prices high. daimler reiterates to reuters that it was assisting with the investigation, but it would not comment further. and reports that roche is looking to take full control of chugai pharmaceutical in a $10 billion deal have sent shares in the japanese company to a record

high. the swiss firm owns 60% of chugai. there is speculation a deal could come some time this week. in a statement released saturday, chugai denies talks of roche, saying it is "in no way in the process of reviewing any plan to become a wholly owned subsidiary of roche." roche has told cnbc it has no comment on these various reports. okay, let's speak to ben collins, head of japanese and asian equities at sunrise growth. ben, very nice to see you today. >> good to be here. >> look, for those of us who look at japan from the macro and see it's all about argue no, ma'am -- ergonomics and success or failure of that, the enormous gdp has put another little debt in the confidence. >> very much so, but i think the interpretation of that is where a few years ago we're looking at bad news is good news for fed policy. it's a similar sort of scenario. i think we saw over the weekend

i think a reshuffling of the cabinet, going to be announced in the second or the third. this will, hopefully, give the impetus for abe to maybe line up a few more supporters and probably reducing further any internal resistance, but there is still significant internal resistance to things like casino builds or immigration policy that's a little more leniency or putting more female workforce back to work, this sort of stuff, so there's a lot of -- >> everything's been thrown at the japanese economy. the abe, abenomics experiment is still on the page, depending on the cabinet? >> we interpret any positive shift or increase of support he's going to get on his home ground is going to enable action plans that we think are decent ones. >> what do they need to do to make money off the japanese market? look top down or specifically at certain sectors? >> that's a good question we're trying to answer. there are a couple things we like as far as from a trading point of view, we're interested

in some of the gaming names, some of these. there is a lot of m&a discussions following through on let's say the potential, potential -- again, these are low probability but high reward sorts of trades. if you look at the stocks, consolidation, that could, that's one of the reasons why japanese companies are trying to consolidate, so that stock could see some pretty decent returns. again, these are low probability and very long-term trades. we've been actually talking about holding chugai for nearly 2 1/2 years, since they shifted over the management. so, it's been in retrospect, obviously, every trade is obvious, but the writing's been on the wall for a while. these sorts of things, especially in japan, seem to be able to take a very, very long time, even after announcement. so, you still are taking on a lot of risk. we like, as far as names that we're liking, we like a cyclical recovery, which is proving decent.

some of the shipping names. and it's advantageous to buy these in a time of bad backward-looking macro data. >> what about the mobile gaming plays? why are they interesting for you? >> they're particularly interesting for us because they're incredibly volatile and make a hell of a lot of cash. i'm not a mobile gamer at all. i don't get the concept, but these companies -- >> me neither. >> do you have any favorite games? >> i always regret it. waste of time, waste of life, but -- >> for sure, but they make a lot of money. we've got a demographic in japan particularly with very affluent lots of savings and these guys don't mind spending 10, 20, 30 on the day. that could add up for games like, i don't know if you've heard of puzzles and dragons, but this is generating 10 million bucks net positive cash every day. once you've built these things, they take off. these companies can go pretty -- >> quickly, you think this could be interesting on the telco space? >> telco in japan, soft bank

part of that. we like the bid since the deal fell through. we think they're going to do something pretty special still. but you know, the market so far has proven us wrong. it's cheaper now than when we started talking a few days ago. >> that's where i diverge. when you say it's affluent and people with lots of savings do this gaming, i realize i'm not the typical user. ben collett from sunrise brokers. u.s. housing market, we all have a view on that, don't we? investors turn their eye to a flood of data this week as the jackson hole fed conference gets under way. we'll discuss this after a short break on "worldwide exchange." what if there was a credit card where the reward was that new car smell and the freedom of the open road? a card that gave you that "i'm 16 and just got my first car" feeling. presenting the buypower card from capital one. redeem earnings toward part or even all of a new chevrolet,

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welcome to "worldwide exchange." i'm steve sedgwick. headlines around the world. european markets bounce back, autos and industrials leading the way amid some signs of a breakthrough in eastern ukraine. foreign ministers meeting in berlin. they'll reach an agreement on a russian aid convoy heading for ukraine but make no progress on talks for a cease-fire. missouri's governor calls in the national guard after tear gas is used in ferguson to calm protests sparked by the shooting of a black teenager by police last week. and uk housing stocks are weak after bank of england governor mark carney tells a uk newspaper the bank of england

will put rates before wages, but the ceo of bovis homes tells us he's unfazed. >> we're seeing clearly a strong housing market. interest rate rises are ultimately inevitable. as long as mark carney follows through with his commentary in a gradual and limited process, we feel that the market can deal with that. >> announcer: you're watching "worldwide exchange," bringing you business news from around the globe. well, everyone's worried about the european trading perspective on the back of concerns of slow growth domestically and, indeed, the trade with russia and what that means for countries such as germany, which have literally thousands of companies trading with their counterpart in russia. the eurozone due in trade balance. the reuters poll had 15 billion euros and the year-ago figure was 15.7. the june unadjusted exports were up 3% year on year, imports were up 2% year on year.

on adjusted, seasonal adjusted exports down 0.5% month on month. if you're just tuning in, thank you for joining us here on the show. here's how markets are faring. ahead of the u.s. open. let's take a look at the u.s. futures. i bet they're positive, but they're positive really because the europeans are reacting to your rally stateside that you had late on friday. we didn't enjoy that in europe, so you can see there the nasdaq, the mini 100 up 16.75 points, the s&p seen higher as well, the dow up around 74 points. of course, you had the late rally, you had your geopolitical risk wobble early in the session on friday, your vix shot up, then it came off again towards the close. european indices are looking pretty smart at the moment, actually. the london ftse, a bit of a laggard. 0.6% higher. but the xetra dax -- now remember, the germans have a very high beat or a very high exposure to what's going on in

russia, and when you see an abating of tensions there, you see the germans sighing relief. 1.4% higher. the cac 1.1% to the good. the ibex is 0.7%. as we take a look at the foreign exchange rates as well, the euro/dollar 1.3385. french are at it again. they've been saying we want the ecb to get the euro down to a more appropriate rate. i wonder what that appropriate rate is. at 1.3387 is where it's trading. dollar versus the canadian, 1.0882. and cable, sterling versus u.s. dollar, is trading at 1.6727. all right, we need to check in on how those asian markets fared. who better than sri jegarajah. >> hi there, steve. the markets are doing a reasonably good job of shrugging off the geopolitics and some of the uncertainty you were talking about emanating out of ukraine and the complex in the crisis there. but let me just stress, because

it is the summer, we're not seeing real conviction buying. that said, the out-performance is coming from the indian markets. up by more than 1% for the nifty. adding on gains throughout the session, you're looking at record highs. and the catalyst for this move higher that's come from an independence day speech from the prime minister talking about how he wants to fire up the bureaucracy to clear up the policy logjam and the bureaucracy that's plagued the indian business climate. two-week highs for the s&p/asx 200. they're liking numbers, including from the banks we've been seeing over the past week or so, and the top story today from a stock perspective is chugai pharmaceutical responding to this talk that roche may increase its stake in the company and buy out the shares that it doesn't already own, taking over full control of

chugai. now, both the companies have doused the speculation in cold water. it hasn't dampened the spirits of the market, though. they sent the shares up to record highs, surpassing 4,000 yen. elsewhere, we are watching what is happening in the thai market as well, because we got some normalization on the gdp front the second quarter, so avoided recession in the second quarter, but there's still a lot of risks remaining in the entire economy coming from consumption, coming from the business climate as well, and also tourists arrivals that haven't really recovered fully since the political crisis there. so, all in all, steve, a fairly lackluster session with the exception of a few pockets of strength, namely in india and the shanghai composite. speaking of which, china is going to be important this week. wednesday we get the hsbc flash pmi, so that should give us a sense of whether we are seeing stabilization in the chinese economy. remember, property, that sector

still remains the weak link, still remains in clear and present danger broadly for china. back to you now. >> good to see you today, sri. thanks indeed for that. robert shiller thinks the u.s. stock market looks very expensive right now. the noted yale professor and economist writing in saturday's "the new york times" says the cape ratio, which is a seasonally adjusted measure of stock prices which he helped develop, is at worrisome levels. shiller says cable's seeking to keep adjusted price-to-earnings ratio is above 25, a mark that's only been surpassed three times since 1881. this was in 1929, in 1999 and 2007, which were followed by major drops in the market. let's get a view from carter worth, chief market technician at stern aegean, joining us now. thank you for joining us. is shiller right? are we at worrisome levels on the s&p? >> well, i think it actually was a very interesting article that many of us read, and what's

important about that data is, of course, that it is an important data point but not a timing tool, in the sense that markets can stay expensive, and they are in principle expensive now, and it doesn't mean you have to have some sort of epic giveback as those three other periods, in fact, is what occurred. but what is important, regardless of whether you do have a big giveback or not, is that risk-reward is asymmetri l asymmetrical. and that is to say, essentially, sure, can the market stay elevated or even eke out gains? yes, but you trade off great risk for that, and the dow side is more severe in principle than the upside potential. so, whether one uses the word wobbly, we've been a bit wobbly of late, things look dodgy of late, this is the year so far where, actually, nothing has happened. and that's a big change from the last two, three years, where we've been advancing aggressively. we're about to be september 1st and every major board in europe is essentially unchanged. down a little bit, up a little bit, and that's basically the case with the u.s. market as well.

you have places like the russell down, the s&p up a little here. but the principle is that you do have a "expensive" market, and we think it is not a good risk-reward proposition. >> so, what should our viewers be doing if they want exposure to the u.s. markets now? >> right. well, of course, now, there is elective buying and then there is mandatory buying. if you're a long only, fully invested by mandate player, professional or otherwise, of course, you have to do something. we would say if you don't have to do something, it's a time to have your cash levels higher than normal, to take a defensive posture. but in terms of doing something, we continue to like utilities here. we like energy. there are plenty of health care situations that look quite good, and we could talk about any individual names that you might like. but some of the more worrisome areas, industrials are all rolling over, at least in the u.s., but notice for instance auto manufacturers. daimler is rolling over and ford and general motors. if you look at the nasdaq global

auto index, some 35 players that make up that composite, it's effectively in the throes of a bullish-to-bearish reversal. housing's sort of stalled in the u.s. there are plenty of warning signs in places that we would avoid. >> now, if i look at the u.s. yield curve now, i see something that looks even more of a bubble than the u.s. stock markets. two-year note, you get a pathetic 0.42% of your money, five-year and then 2.4% for the ten-year yield. if i came into the year with everyone saying we would see 3% north on the ten-year, has everyone got it wrong? and what do they do now? >> that's right, and if you think about it, the most sort of consensus trade on january 1st was yields at 3% exactly on the ten-year that we were going to be about 3.75% to 3.55% at this point. and here we are, we touched a low of 2.30% on friday on the ten-year and then the 30-year is

at 3.13% low. and the principle here is that -- and there are two things, of course. there's relative and absolute. those yields on a relative basis are quite, frankly, fat compared to other things in europe with germany below 1% and sweden, norway, netherlands and so forth. but the real principle here i think is almost the recripical of the market in the sense that ultimately there isn't a lot of room for rates to move lower, we would say. and the recent flattening of the curve, about 50 basis points between the 2 and 30-year spread, about 40 basis points over the last six months in the two 10-year spread, we think that's probably run its course to some extent. so, we would, in fact, be sort of flat bonds here, if you will, flat treasuries, but it is a big question mark. if things are so good and the economy is "recovering" in the u.s. and the cost of money's not moving up, what gives? >> yeah, i'm with you on this

one as well. look at those pathetic german yields at 1%, makes the 10-year look positively fat, doesn't it? carter, we'll have another look at this in a few moments time. let's just tell everybody what's on the agenda today in the united states. we've got the national association of homebuilders putting out its monthly sentiment survey at 10:00 a.m. eastern time. later this week, we're going to get more data on the housing. housing starts, existing home prices, we'll get some cpi numbers for you as well, as well as the minutes from last month's fed meeting. everyone's looking at the fed, though, and they're looking at janet yellen, speaking at jackson hole on friday. one of our previous guests has already said she won't want to make the same kind of ripples as bernanke at previous meetings as well. so, bated breath for what she will and won't say on friday. as for the earnings, we're kind of getting there, aren't we? we've had a terrific earnings season in many ways, if you believe the fact of lowered expectations and beats is terrific. just one notable report today. this is the retailer urban outfitters.

okay, a lot of money around, including money in the sultan of brunei. he set his sights on one of the most storied hotels in the world. it is reported an investment firm has bid $2 million for new york's plaza hotel and london's grovener house and the dream hotel in lower manhattan. the sultan and the dorchester collection have come under fire for strict laws imposed in brunei, including death by stoning for homosexuals. that has sparked boycotts of dorchester properties, including the beverly hills hotel. elsewhere, tesla is boosting warranty coverage on its model s sedan, a week after influential u.s. magazine "consumer reports" highlighted problems with the electric car. the warranty on the drive frame is being extended to eight years and infinite miles, matching the battery pack. the move is retroactive to all

vehicles produced since 2012. tesla says this will have a moderately negative impact on its earnings in the short term. all right, let's tell you what's coming up on the show. we have a big focus on property on "worldwide exchange" this week. london property prices have jumped 20% this year. can they continue to rally? i don't know. after the break, we'll kick off our global property week live from the uk capital. stay tuned right here on "worldwide exchange." what if there was a credit card where the reward was that new car smell and the freedom of the open road? a card that gave you that "i'm 16 and just got my first car" feeling. presenting the buypower card from capital one. redeem earnings toward part or even all of a new chevrolet, buick, gmc or cadillac - with no limits. so every time you use it, you're not just shopping for goods. you're shopping for something great.

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these are your headlines. european equity markets rebounding from friday's losses as tensions over ukraine ease somewhat. this despite russia's foreign minister saying he sees no progress on cease-fire talks for ukraine. and the u.s. national guard is set to be deployed in ferguson, missouri, after protests escalate over the shooting of a black teenager. russia's foreign minister, sergey las veg sergey lavrov, says there was no progress from counts in berlin yesterday. speaking after the meeting, lavrov stressed that russia was allowed to show vigilance in the light of war by its border.

the foreign ministers called the meeting to discuss a cease-fire with kiev. annetta's in berlin. annetta, i've got a really basic question for you. bearing in mind, russia says it is not orchestrating events in eastern ukraine with the separatists, why do we think anything concrete that is going on internally in ukraine can be decided by ministers who say they are not responsible for the actors involved? >> reporter: well, i actually think that a lot of those foreign ministers are thinking that russia is orchestrating things in the eastern part of ukraine, at least when it comes to sending mercenaries into the country and also weapons. so, we have relentless reports that weapons are shipped, not shipped, but actually driven from russia into the eastern part of ukraine, and russia, well, at least should have a say of what is going to happen there. at least they could actually close their border. that is what ukraine wants.

they should close their borders and they should stop the shelling, which is, of course, a fair claim. but let me bring you back to what happened yesterday evening. the four guys who are sitting together. and essentially after this meeting, mr. steinmeier, the german foreign minister, said there was a little progress, but again, progress is only reached on humanitarian aid, so at least good news for the people on the ground. back to you. >> thank you indeed for that, annett annetta. updating us on the talks in berlin. wikileaks founder julian assange, says he plans to leave the ecuadorian embassy asylum soon. speaking alongside the ambassador on the two-year anniversary since taking refuge, assange gave no further details on where he would go or whether he would turn himself in. presumably, if he's going out of the embassy, he's going into the arms of the british police, that's my guess. seeing as how the swedish authorities want him. the ambassador said he hoped to speak with the uk foreign

secretary in the coming weeks to find a friendly solution. bearing in mind, there are two distinct sides to this. assange and ecuador say he is a political prisoner, he's a human rights campaigner. swedish and u.s. authorities say he has some very serious criminal charges to answer to. so, london property prices have surged almost 20% this year, but some surveys indicate the house price boom in the united kingdom may be fading. katherine joins us now from great heights. i always knew you'd get to great heights, katherine. >> reporter: yeah, but you didn't know i was going to have to wear a hard hat to get there, unfortunately. here i am on the 18th story of what's going to be a 36-floor development known as lexicon here in the center of london. this is one of a lot of really tall buildings that are springing up over london, changing the shape of the skyline, and of course, any effort to try and address the supply problem here in london, which is one of the reasons that you're seeing those prices go so

sky high this year, and of course, one of the reasons people are concerned that there may be a new property bubble building here. now, there's definitely a huge boom in construction at the minute. you can probably see from the number of cranes here behind me. there is a lot of building going on. a lot of it's residential, but some people are concerned that because a lot of that is being fueled by overseas buyers, possibly there may still be an affordability issue, possibly some of the middle classes may be priced out of inner london in particular, and that's also something very concerning to the bank of england. we've seen the governor of the bank of england, mark carney, in an interview this weekend try and suppress concerns about that housing market, but of course, the average british person still is facing quite a lot of problems in terms of low wage growth. so, if there's a change to interest rates, even a gradual one later this year, it could be something that makes mortgages even less affordable. back to you, steve. >> thank you very much for that, katherine. very fetching. i see you have a big future in yellow velcro and hard hats.

still to come on the show, kurdish and iraqi forces reportedly retake the crucial mosul dam after help from u.s. air strikes. we'll discuss what's next for washington's role in the crisis after the break. we're going to leave you now with a look at what looks like a very bullish day for european equities. xkç

kurdish and iraqi forces have secured the crucial mosul dam, pushing back islamic militants, according to state television, this after the white house authorized air strikes to assist the operation. u.s. central command said 14 strikes damaged or destroyed a number of vehicles, including humvees and personnel carriers. hadley gamble is with us now. hadley, i've got a question for you. u.s. policy in the middle east hasn't been consistent. it's oscillated. we know that the secretary of state, former secretary of state clinton admitted as much recently as well. is it a question of finding the least bad allies for the administration at the moment? because they're not naturally now allies, the kurds, are they? or indeed, the iraqi government? >> that's a big question. i think unfortunately it's often about finding the ally of the moment, not even just the least bad. it's just who's going to help

you in the moment. and we even talked about -- >> that's terrible foreign policy, don't you think? >> you would think, yeah. >> at the moment could turn into not necessarily an enemy, but antagonist in the future. haven't we learned lessons from syria, from egypt? is this the way to conduct a foreign policy? >> that's a big question for the american public, but unfortunately, with the events of missouri at the moment, nobody's paying any attention to the foreign policy. whether you're in the united states or uk, this is the same problem. what are we doing in terms of foreign policy? now they're saying they're going to be speaking to iran and perhaps the iranians are the way to combat a terrorist threat. but as we spoke about earlier, what they really have to do is get to the idea. i mean, isis, the islamic state is an idea. and unfortunately, you can take out as many terrorists as you want. you can do air strikes, you can push them back, but unfortunately, until you get to the heart of the matter, which is the idea, i'm not really sure if you can really take care of the threat. >> all right. and that's not anti-american, by the way. the british foreign policy's

equally bad as well. thank you, hadley. carter worth is chief market technician at stern ag. i'm looking at the price of oil, brent for instance, which apparently is the oil benchmark, $102.15. why haven't we seen a rally in oil on the back of these concerns? >> we came from elevated prices, brent and wti. in the case of wti, we were at a high of $108 mid-june and touched a low of $95 just mid-august. and so, the question is, were we ahead of ourselves and is this pullback maybe an opportunity? we went back and looked at something, which is, when you have a 12% to 15% decline in crude on a two to three-month basis, which is actually what we've had in the june-to-august period, how do energy stocks perform in the ensuing one, three, five and six months? if you go back to 1990 and examine that data, there have been about 200 times when crude has dropped in the order or magnitude of 12% to 15% in the

two to three-month period as we've seen now. and energy stocks in the s&p out-perform the s&p itself on a consistent basis one, three, five months out. and so, actually, there are many energy stocks here that we like for rebounds. they themselves having sold off aggressively, perhaps as some of the news has gotten a bit better. but we just heard just seconds ago that according to the russians, there are no deals made, no progress made, and the world is boiling. >> yeah. carter, really nice to speak to you today. thank you so much indeed for your time. >> thank you. >> carter worth, chief market technician at stern ag. all right, we will move on. still to come on the show, the governor of missouri orders the national guard to ferguson after more than a week of unrest. we're live in the st. louis suburb for the very latest after this break.

welcome to "worldwide exchange." i'm steve sedgwick. these are your headlines from around the world. u.s. equity markets look set to extend europe's relief rally, this despite uncertainty over ukraine, as russia's foreign minister says no progress has been made on cease-fire talks. president obama takes a time-out from his summer

vacation, returning to the white house to address several crises, including u.s. air strikes in iraq and violent protests in the midwest. this after missouri's governor calls in the national guard after tear gas is used in ferguson to calm protests sparked by the shooting of a black teenager by police last week. >> announcer: you're watchi ini "worldwide exchange," bringing you business news from around the globe. well, if you're just tuning in here, thanks for joining us! you should be thanking me, i think, for this. anyway, here's how the markets are faring ahead of the u.s. open. i don't do this for nothing, you know. futures are looking pretty good. you had a bit of a rally after the lows on friday, but that just got you stateside to the flat line, then all that flop we saw in the vix came out of the market a little bit. so, it was tempered, some of those concerns about ukraine,

about iraq and about syria as well. so, you're looking like a decent start to trading for what is a mixed week. you've got jackson hole at the tail end of the week, you've got lots of housing data, not so much on the earnings front. urban outfitters reporting within the next 24 hours. let's take a look at the european indices as well. they've done very well today, especially stocks in indices which are exposed to the russia situation. so many thousands of german companies export into the german market. very important for the likes of adidas, for the semens of this world. ftse 100 a laggard performance trading at just 6,728. right, so, how do you make money in these markets? here's what some of the experts have been telling us this morning. >> you look for cash flow generation, entrepreneurial-led businesses, medium-term, so you see a lot of stuff in the retail sector. mag neat still looks interesting

because after the approach to the sell-off it got cheaper. people always complained about the multiples being expensive and nothing's been impacted on the growth. >> you were seeing this hot money in a way move from europe back into em. i wouldn't be surprised if we see those floats come back again. i think the move is short-term and i think there are considerable structural problems in emerging market, particularly related to the weakness of china. now, we are seeing a stabilization in china, but we're not actually seeing strong growth. we're not seeing the 10% average you saw before the credit crisis, something like 7%, 7.5%. >> in terms of gilts, i would say that you want to see more risk premium built in, in the front end around the bank of england, and then more broadly, 10-year gilt trades pretty much in line with the u.s. so, i think that's the case for building in more risk premium for the uk market compared with the u.s.

president obama is taking a rare break from vacation in martha's vineyard, returning to washington today for meetings with the vice president, joe biden, and other advisers. the president is scheduled to meet with his national security council on iraq. u.s. attorney general eric holder will be briefing him into the investigation into the police shooting in ferguson missouri that sparked violent protests. the decision may be aimed at mounting criticism that the president is on vacation in the midst of several crises. tony fratto, cnbc contributor, joining us now. tony, thank you for joining us. why is the president back in washington? what that's prompted that? >> well, i think that's the key reason, steve, actually, is the imagery of the president being on vacation with really grave matters taking place, air strikes in iraq and of course the events in ferguson, missouri, as well. this is always a problem for presidents because they're never off. they're always on and have to be

dealing with these issues. and if you ask average americans whether they think the president should take a vacation, overwhe overwhelmingly, they do believe he should, but it doesn't help him to have to deal with these images, open-collared announcements from a vacation spot dealing with these very serious issues. >> and what's the biggest issue for americans? is it the social problems highlighted by what's going on in ferguson or is it concerns over foreign policy? >> well, there are a number of foreign policy challenges, but i think your question implies that maybe americans are more focused on ferguson, and i think that's right, steve. i think that the pictures coming out of ferguson, the racial issues in particular, the law enforcement issues and how it's being dealt with in a local community in the united states is capturing much more attention from americans today than what is going on with foreign policy. they are paying attention to the air strike campaign in iraq, you

know, for really important reasons or questions about how much further engagement the united states might have, whether there's a chance to be successful, and there's a lot of skepticism about american foreign policy in a number of areas right now. so, they're paying attention to it, but far more attention to events in ferguson, missouri, right now. >> tony, we'll take a look at some of those foreign policy issues in a few moments time, if we can. i want to recap on the story about missouri, because the governor has now ordered the national guard to the st. louis suburb of ferguson after more than a week of unrest following the police shooting of an unarmed black teenager. let's get the latest on the ground from nbc's jay gray in ferguson. jay, update us on what's going on. >> reporter: hey, there, steve. a very rough night overnight here, a lot of things changing. let's start with the violence on the grounds here. a lot of people were concerned about what the curfew might do for that. well, they didn't get to that point. it was 3 1/2 hours before the

curfew was instituted that the violence started here, and police are saying it was targeted, premeditated, and aimed at the command post where i'm standing right now, their main command center as they continue their work here. now, officers in riot gear moved in, tear gas and smoke canisters were deployed. they started to push the crowd back. overall, we hear that there were eight people in that crowd with guns, that at least two molotov cocktails were thrown at police near this command post. two or three people injured in shooting incidents, police not involved, we are told. and at least four businesses damaged and looted, one of those set afire. now, as all of that was unfolding, we began to get a new picture of what happened according to his family the day that michael brown was shot and killed. attorneys for the family today released information about a private autopsy, one that shows the 18-year-old was shot six

times the day he was killed. we expect to hear more from the family and the doctor who performed that autopsy a bit later this morning. steve? >> jay, thanks very much indeed for that report. let's go back to tony fratto, managing director of hamilton place strategies and cnbc contributor. we talked about how it's a difficult situation for the president, both obviously with the foreign policy and what's going on domestically. are there ramifications, as one of our contributors pointed out earlier on, from the midterm for what we're seeing in missouri? >> yeah, very much so. and the difficulty for president obama, unlike in the case of foreign policy, where the president has, you know, holds all of the authority to take action as he sees fit and the authority granted him by congress, in the american system, the president's ability to deal with the situation in ferguson are exceedingly limited. the jurisdictional authority belongs to the governor and to local law enforcement officials, so you see the president trying

to comment on the activities in ferguson but with very little control over the situation. think of the autopsy that was mentioned. the attorney general, eric holder, has ordered a third autopsy to take place, and so, that will take place, adding to the forensic evidence as to what happened in missouri. but you could see that the president has very limited ability to deal with it. and so, if events spin out of control, you know, the president is always given some of the credit or some of the blame for things, mostly blame when things go wrong, but with not great authority to actually do anything about the situation. >> because tony, i mean, just looking at some of the detractors of the president, they've been targeting him over foreign policy for a long time, saying his policies over syria, for instance, have created policies and problems elsewhere, namely in ukraine, but not drawing red lines and sticking to those as well.

always saying now domestically he's weakened by these events over something that, as you say, is literalley nothing to do with him in many ways. >> yeah. really nothing to do, but then, when you're the president, that's the position you're in. it's a particularly difficult issue for this president, though, because he is america's first black president. and you know, he has tried to deal with racial issues in limited ways and with limited success, but you can't help looking to the first black president whenever we have these really significant racial issues that come to floor. so, we look to him to comment on these issues from his particular point of view, not just as the president but as a unique president. and so, yes, you know, depending on how things play out, and maybe the president can find a way to play a mediating role and to provide assistance on the ground that could ultimately be successful, but this is a volatile situation and a very

unpredictable situation, and we don't know how the protests are going to proceed. and if it does not go well, if there's an escalating violence and what appears to be an inadequate response by the president, it could weaken him, it could weaken his position, and by extension, his party going into the midterm elections. >> i always appreciate hearing your comments. thank you very much for your time today. tony fratto, managing director hamilton place strategies and cnbc contributor. german chancellor angela merkel has been invited to kiev for political talks next saturday, this according to a government spokeswoman. this after russia's foreign minister, sergey lavrov, said talks with his ukrainian, french and german counterparts in berlin yesterday failed to produce agreement on the cease-fire. elsewhere, you remember the wikileaks founder, julian assange. well, he says he's planning to leave the ecuadorian embassy in london soon. speaking alongside the ecuadorian ambassador on the two-year anniversary since taking refuge, assange gave no

further details on where he would go or whether he would turn himself over to uk authorities. the ambassador said he was hoping to speak to the uk foreign secretary in the coming weeks to find a friendly solution. coming up, several banks with big operations in london may, may be hiring moving vans soon. why will they be leaving for the emerald isle pastures, next. we'll discuss this in a few moments time on "worldwide exchange."

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okay, here's your headlines. european equity markets rebounding from friday's losses, as tensions in ukraine just ease slightly. russia's foreign minister, though, says he sees no progress on cease-fire talks for ukraine. and the u.s. national guard is set to be deployed in ferguson, missouri, after protests escalate over the shooting of a black teenager. all right, this space for rent signs could be going up outside of the london headquarters of some big u.s. banks, if britain ultimately exits the eu. hampton pearson joins us from washington with more. hampton, they're already preparing to go? the referendum's not for ages. >> reporter: yeah. this is a banking story with

lots of, pardon the pun, moving parts, if you will. wall street banks reportedly drawing up preliminary plans to move some operations in london to ireland amid concerns the uk is drifting apart from the eu. the "financial times" says citigroup, bank of america and morgan stanley are considering such a move, preparing for the eurozone's impending banking union that threatens to isolate great britain. now, most u.s. banks and asian banks base their european operations in london, giving them an automatic passport to conduct services across all 28 eu countries, but senior executives say the uk is unlikely to be granted the same right if it left the eu. the uk hosts more than 250 foreign banks and generated financial services a trade surplus of $71 billion last year, a third of which came from the eu. ireland is attractive for u.s. banks because of its low corporate tax rate and eurozone

membership. citigroup has 2,500 people in ireland, while bank of america and jpmorgan both employ more than 500 workers there. all three have irish banking licenses. now, separately, major global banks may no longer assume they'll have access to the fed's discount row as part of their so-called living wills. the "financial times" is reporting u.s. regulators gave specific guidance in confidential letters this month on why they rejected the bank's emergency plans. banks were told they may unrealistic assumptions about how customers, counterparties and investors would behave in a crisis. the fed and fdic want banks to come up with plans that don't involve any government aid, even the discount window, which is available only to banks that are in trouble but aren't failing. banks already have submitted living wills for this year before they received a response from regulators to their 2013 plans, they must show

improvements in their 2015 plans or risk financial penalties. so, as we said, a banking story with all kinds of moving parts. >> very nice, indeed, hampton. thank you for that. okay, let's move on. pricewaterhousecooper's set to pay $25 million to settle new york regulators' claims it mishandled work for the bank of tokyo mitsubishi ufj. they will also be banned from some consulting work for two years. the new york department of financial services alleges pwc watered down an antimoney laundering report it submitted covering the bank's dealings with iran and other countries subject to u.s. sanctions. elsewhere, fund manager and activist investor david winters has sold his stake in berkshire hathaway, citing warren buffett's inequity on coke's plans. he said it was obsessive, but berkshire abstained at the shareholder meeting.

winters has been a vocal critic of coke's plan, which he says violates shareholder value. wintergreen advisors still owns 2.5 million coke shares. winters had owned 1.2 million berkshire shares. all right, coming up, u.s. markets are coming off a second straight week of gains, despite everything geopolitically, and appear poised to start monday's trading session in the green. we head to the bond pits in chicago for an outlook on what traders are closely watching, coming up next on "worldwide exchange."

the u.s. markets have had a terrific run, considering the dow was up 1.7%, the s&p up 1.2%. the problem is, european indices didn't enjoy that because the rally late on in u.s. indices on

friday missed europeans for playing catch-up, giving back a little bit of ground from the higher gains. xetra dax was up over 1.5%. now the germans are only up 1.2%. the ftse 100 in london up 0.5% and the spanish market trading 10,310. rebel leaders are denying syrian separatists were responsible for a strike on a convoy in france. there seems to be a lot of convoys going on, military convoys, aid convoys, a convoluted situation down in eastern ukraine. all right, what's the agenda for today in the united states? let's tell you. the national association of homebuilders puts out its monthly sentiment survey at 10:00 a.m. eastern time. later this week, we'll get data on housing starts, existing home prices, some cpi as well as the minutes from last month's fed meeting. and the speech from the fed chair janet yellen from jackson hole on friday. earnings, not a huge amount

today. we've got urban outfitters coming out later on. walmart, meanwhile, wants to help you get in and out of stores without a lot of frustration. "wall street journal" reports the retailer is promising to stop each register this holiday season to address long waits in line. the pledge covers peak shopping hours on weekend but can vary by store. the move comes as walmart has struggled to win back shoppers. the company hasn't posted an increase in u.s. same-store sales since 2012. they haven't had same-store sales increase since 2012. elsewhere, target is keeping the lights on later at more than half its u.s. stores, hoping to snag customers who put off shopping until well after it's dark. the "wall street journal" says the chain's 1,800 stores are typically open from 8:00 a.m. to 10:00 p.m., but now they'll stay open until 11:00 p.m. or midnight. who goes shopping at 11:00 p.m.? wow. the new hours will start this

month and run through the holidays. target is cutting prices to bring back customers after a series of missteps. all right, let's look at the u.s. futures. they look pretty positive for the equities as we speak. 70 up for the dow. ben liechtenstein, what's it going to take for the bears to be right on u.s. markets? up, up and away. >> well, it certainly is up, up and away, which is the pattern we've been seeing for the most part, even after a couple weeks ago we saw that little bit of a pullback. the s&ps did trade below that 1900 level, that infamous level, and while we were trading 1,950, there was all kinds of debate about whether we would see 2,000 first or 1,900 first. we saw 1,900 first, but clearly rejected that lower level over last week. basically, as you mentioned, up, up, up. i think the focus this week will be janet yellen. we'll hear from the fomc, the

minutes as well on wednesday, but really, the focus should be the dollar and in the treasuries. the bonds had a huge move last week to the up side. multimonth high. again, yields are lower as a result. and again, the dollar activity we've been seeing over the last couple weeks as of recent, again, a test of that 8,177 level, which has failed a few times now. the euro continues to hang right around the 1.34 level, but basically, what i'm seeing is that money is starting to move a bit and we're starting to see multiple major markets reacting accordingly and on the move as a direct result. >> yeah, but look, professor, professor robert shiller, how can the market know better than he does? he says the cape, sickically adjusted, we have to go back to 1929 to get back to similar levels. surely we should all be looking at that. >> well, there's a few things we should be looking at. one is i think it's extremely important, is that we're seeing a bit of a divergent-type play, which has been developing over

the last few months, and it's starting to become powerful and it's starting to attract attention, and that is the fact that the russell has really yet to participate in the broader-based market rally that we're seeing. you also mentioned earlier the dax. those have been really under pressure over the last few weeks. again, somewhat divergent from the other majors. the other major markets continue to seek upper level prints and value at upper levels. but again, we're having a couple outliers, if you will, which have been weighing on the markets, so we have yet to see the new year highs yet. but i think the last couple weeks were a great example of this market's characteristic type tendencies, if you will. the fact that all of the dips that we've been seeing over the last few years have been bought. again, i don't think anything's changed in terms of market sentiment or investor approach towards the market. >> mr. liechtenstein, thank you very much indeed for your time. ben liechtenstein, president of tradersaudio.com. i'm steve sedgwick. thank you very much indeed for watching "worldwide exchange" here on cnbc.

good morning. the central bank's annual meeting in jackson hole is set to dominate this week's market discussions. will janet yellen and company offer any hints to future policy moves? shop until you drop. target keeping some stores open until midnight in the fight for consumers. meantime, walmart is making a new checkout promise. plus, taking electric to a new level. the super car can go 0 to 60 in about three seconds. the price tag more than $500,000. a bargain after that ferrari that we saw last week. it's monday, august 18th, 2014, and "squawk box" begins right now.

♪ good morning and welcome to "squawk box" right here on cnbc. i'm andrew ross sorkin along with joe kernen. becky's enjoying some time off today. we do have some breaking news to start the program off, though, this morning. sources telling us that dollar general making a bid for family dollar. it is now offering $78.50 a share in cash. that's about $9.7 billion. sources telling us that that offer being made this morning. we should be hearing about it a little bit later in the day, perhaps crossing the wires in the next hour. you should remember, of course, the dollar tree made a $74.50-a-share cash and stock offer back on july 28th. a lot of people had thought dollar general was going to come in with that bid. dollar tree came in with that bid instead. we should tell you, if a