welcome to "worldwide exchange." i'm carolin roth. investors eyeing germany. telefonica raises the stakes in the battle for vivendi's brazilant unit. bp says the situation at whiting is under control after an

explosion overnight impacted operations out of the biggest u.s. refinery. ukraine accuses moscow of fresh incursions after russia may have had a major u.s. bank in retaliation for sanctions. >> announcer: you're watching "worldwide exchange," bringing you business news from around the globe. good morning, everyone. yes, welcome to "worldwide exchange." at the top of the show, i want to bring you some breaking news regarding the eurozone. some interesting economic data points. the eurozone july annual growth, 1.8% versus a reuters poll of 1.5 %, according to the ecb. that seems to be ticking up. again, up 0.1% on year versus the four count, over 1.5%.

we also have annual growth loans to the private sector. it is -- but that was to be expect theed, negative 1.6% versus a reuters poll of 1.5 %. so that number is a little bit worse than forecast. again, this is the data coming from the ecb this morning. let's get some instant reaction to these numbers. david marsh is director and co-founder of the financial institution reform and richard is with us, as well. gentlemen, good morning to you. >> good morning. >> david, let me kick things off with you. what do you make of the data? it's a little contradictory in terms of the avenue and dire directory we're taking. how worried are you? >> i don't think it's contradictory at all. we are head towards a japanese style deflation.

>> but at least it's improving data. >> don't throw your hats up in the air too much on this. this is a one-month slumber. to me, the big picture is europe is slacking in the difficult place and pity, the growth in the credits, it's not growth at all. it's a contraction. that's been going on for a number of years. clearly, at the center of all this is germany. germany is being hit on two sides. global uncertainty in the east, sanctions, while some of its biggest trading partners, france, which has traditionally been number one is in a terrible mess. germany is headed for a crunch period. and i would imagine that she will be reaching into her glove box or her hat box and bringing out some tax cuts. spending increases in areas like infrastructure. i know for a fact that is something that they are seriously considering. >> it's interesting you

mentioned domestic demand. what you didn't mention is qe. even if we do get qe from the ecb which at this point is by no means certain it wouldn't help the german economy. >> we did get some qe, which is more of a structure move to improve the environment, for the whole of europe because less dependent on the banks and more dependent on the capital markets. the ecb has been kicking it around for a year, and they will do something about that, without a doubt. believe me, this will not make much difference. the big scale qe, buying up masses and euros, that's a long, long way down the line. they may acquiesce in that and he will not resign over this, but it will not make a great deal of difference because it won't by shock and awe. >> richard, are you as much of a pessimist this morning? >> long-term for europe, i would

entirely agree with david. the government finance position is generally very weak, although not that it happens in germany itself. certainly i think the longer term aspect is troubling, without a doubt. >> you still want to be invested in equities. we're going to talk much more about that call later on in the show. richard sampson, champion private investments. plenty more key data due on both sides of the atlantic. the u.s. reports include weekly unemployment claims and the second reading of second quarter gdp. pending home sales round up at 15:00 cet. the battle for vivendi's brazilian unit is heating up. the first one, telecom italia, its cash and share offer values the broadband company at 7 billion euros and gives the

french firm a 15% stake in itself and a broader stake in tim brasil. meanwhile, telefonica values it at 7.45 billion euros. vivendi gets a 12% stake in the new group with the option to buy sake in telecom italia. why is the unit so important to european players? >> the need to have a real deep presence. and so if you can't get it in brazil, it strengths their presence for the future. that would suddenly unlock growth for them. it is preparing them to be sure out their presence in that market so that in the future, if this becomes more converged, they wouldn't suddenly be out

there on a lead struggling. >> richard, what do we make of the telecom sector right now? we've seeing a huge wave of consolidation. is it a sign of desperation or a sign of growth 12347. >> it's a sign of standard industry consolidation based on the lack of growth, if you like, in general. if you're a company, you have a stronger balance street or strong cash flows in the case of the telcos. you need to find way toes boost your shareholders over time and one of those ways is to provide -- we've seen a lot of that already in verizon wireless and a lot of talk about at&t and vodafone, for example. these kind of moves are what you would expect at this stage of the cycle. >> corporate balance sheets do remain strong. to what extent can this

continue, though? >> it's been extending for quite a while. this year really is the first time we've seen good evidence of that, based on successful or unsuccessful, of course. corporate balance sheets are strong and at the moment, kms are not investing that in cap ex. >> david, quick comment? >> i think m&a particularly in the banking industry will be a big thing next year. you have the aqr at the end of this year. you have a very good set of pretty well ordered balance sheets. this is going be -- and i think cross border m&a is going to be a big thing. i'm waiting, though, for the really big german cross border banking.. i'm not sure we're going to be seeing that. >> this is just one story that's

not going to happen, i think. >> coming up on the show, we speak to one analyst who says the world may be at the door of the s&p 500 after a year and a half of solid accuracies. and apple syncs their watches on reports it will unveil the i watch on september 9th, the same day as the iphone 6. and what should madure do as a gracing system is put on the plate? and a cyber attack on jpmorg jpmorgan, a company that spends $400 million a year protecting its i.t. infrastructure. let's get back to some of the data points we had out this morning. want to take a look at the german jobless numbers. it actually ticked up slightly in the month of august. the rate was steady at 6.7%. german unemployment posting a small but unexpected increase in august. we were expecting a job of

around 5,000. so the news isn't great for germany at this point in time as david has pointed out before. we have spanish cpi this morning. spanish deflation down by 0.5%. but we were expecting a reading of 0.6% on negative 0 of 6%. so maybe that was a slight improvement in terms of deflationary trends. let's get some commentary on this. they're going to be kooep key for the ecb. wait a second, maybe not. the ecb is looking at the medium term forecast, aren't they? they're not looking at today's number. >> if you're german, you're right right to have a low inflation rate. to say they should be having

inflation above the european monetary unit average, i.e., above 2% if that's what we're trying to get to as the evening as a whole. that would cause some unrest. they need to get it up a bit. that is the task facing the german constituency at the bundes bank. he knows of his heart of heart they have to be 4 had%. to get at that impossible dead lock at the moment. it has to be that their inflation rate has to be lower than they would like it to be.

they won't call it quantitative easing in europe because they don't like to upset the germans. but the key is that they are flooding liquidity and they're going to do so for a long time. let's face it, this is a position we've never been in before in terms of an experimental policy which has been going on for a very long period of time the. i know we're looking at some ways of exiting that policy in one or two parts of the anglo-saxon world particularly. but this is going to continue for a long time in europe and in japan. >> what exactly does that mean for equity in bonds?

equities. we had an extraordinarily good year last year for equities. going forward, we can see some positive flow eks. >> all right. david, richard, thank you so much. you're going to stick around a little bit longer. one hour into the trading session, lower on the stoxx europe 600 by 0.5%. there is uncertainty as to whether we'll get further steps from the ecb as has been speculating about them the last couple of trading sessions. these are the pictures across the markets. down by 0.8%. the ftse 100 sdoun by 0.25%.

a lot of focus still on the telco sector as we just discussed. the ftse mib is down by 1%. in the bond markets, more of the same, essentially. we saw treasuries rallying yesterday and that is driven by the rally that we see in eurozone debt markets. the ten-year bund yield, cpi numbers will be absolutely key. the ten-year treasury yield at 2.34%. volumes still pretty low in the treasury markets and we saw some month-end positioning, too, as a longer end of the curve. the ten-year italian yield -- oh, it just went away. i can't tell you the yield right now. forex markets, we are seeing a bump high he in the euro exchange rate. essentially, the u.s. dollar has been rising steadily over the last six weeks or so. so we're seeing some temporary

weakness akos cording to some out there. cable is at 1.6595. let's get to corporate news. kwountace has posted its steepest loss as a company today. the struggling australian airline reported a statutory loss after tax for 2014. the stock rose on a surprisingly positive outlook as qantas revealed a restructuring program earlier this year including plans for 5,000 job cuts. speaking in sydney, the ceo was optimistic about the road ahead. >> you still have more to do, but we have come through the worst and we have a clear evidence of a brighter future. as i said, we anticipate a rapid improvement in the group's financial performance in financial year 2015.

and subject to control, we expect to deliver a number of profits before tax in the first half of this year. >> and still ahead on the show, we'll have more on the earnings with an analyst that says qantas could be the worst in australia's history. in the second sector, nearly 6,000 jobs could be hanging in the balance here in second quarter earnings. they're due to be released at 111:30 cet this morning. adam has more. >> the recent tragedies of growth, the mysterious disappearance of mh-270 and the mh-17 being shot down has brought another government-led rescue plan. but the flights cannot alone be blamed on these recent disasters alone. the chart bhield me speaks for itself demonstrating the

malaysian airlines history, at least from a financial standpoint, tends to be very turbulent. but after years of mismanagement, it's taken a huge financial toss and now its shares are worth significantly less than it used to be. a look back all the way until 1994 when the malaysian government decided it might be a great idea to bring in a strategic private investors who was politically collected. he bought a 32% stake in the carrier. now, back in 1994, it was trading around 350 to 4 ringet. and he took a loss. years of mismanagement, equipping asian financial crisis when we saw stock markets in the region and share prices crash, that led to another engineered government rescue plan to save the airlines. they brought back the stake at

exactly the same price. 8 ringets per share. at the time, shares were trading around 3768. since then, mas has gone through a number of restructuring plan. the vehicle controlled by the ministry, the carrier continued to lose money. this is how much it's lost over the course of the last three years. the recent twin disasters has amplified its financial difficulties. the latest quarterly result illustrated after mh-370 in the first quarter, its losses more than doubled compared to a year ago. so it looks like today we get these numbers, they're going to be facing a record loss. but all the analyst that's i manage to contact said it's

going to be very hard to pinpoint an exact number. back to you. and still to come on the show, is bigger better for the new iphone model? we look at rumors about what the much awaited iphone 6 will actually look like. stay tuned. [ woman ] the cadillac summer collection is here. ♪ ♪ [ male announcer ] during the cadillac summer's best event, lease this 2014 ats for around $299 a month. hurry in -- this exceptional offer ends soon. ♪

welcome back to the show. we've had numbers breaking from c nook. 211.6 million versus 1/98.1 a year ago. half year oil and gas sales, 117.6 billion, up 5.7%. i also want to bring you the latest. 68.1 billion yuan versus the net profit of 33.1 billion yuan. this is according to the reuters. it felt slightly for petrochina in terms of second quarter profit.

the judge ruling apple's reputation as an innovator has proven extremely robust despite the patent infringement. apple is set to unveil the iwatch on september 9th the same day it's expected to reveal the iphone 6. it would be thought the company would show off the watch at a separate event. this will likely include apple's health kit and fitness platform. what can we expect from iphone 6? josh hit the streets to find out. >> we've all read the rumors by now about what's going to be in that new iphone. one rumor, of course, is size. but do shoppers and consumers really want a bigger phone? >> not too big, but a bit bigger. >> i don't want a tablet on my ear. >> i want to be able to fit it in my pocket.

it might be a bit too big. >> a bigger iphone could mean a bigger price tag, so we asked shoppers are they willing to pay more for a new iphone. >> no, i'm not willing to take pore more. they need to take the prices down that they already have. >> i wouldn't mind paying more up front if i didn't have to pay too much up front. >> 299. i don't want to spend too much. i really don't. >> we'll see if appear california make all those consumers happy. it's important the company does. remember, the iphone still does generate over 50% of apple's revenue. josh lipton, cnbc, pal alto, california. so i guess the big question is, which are you looking more forward to, the iphone or i watch? is bigger really better? join the conversation here on "worldwide exchange."

worldwide@cnbc.com,@@cnbc white sox. french president hollande says inflation is too high. this after the country's unemployment hit a new record yesterday. we've been asking business leaders their views on the french economy and what reforms are needed following the government reshuffle. >> we are glowing spain, 21%. we are growth nearly 18%. we are growing 10% all over europe. we are growing 5% in the u.s. but we are not growing france. in france, we are flat. so if we get ahead 9 to 12 months for the economy, it is good news for france. >> it is to increase the freedom to the country. so this freedom is too much centralized. so we have to stop so giving -- so this is the roots for all the company. so one size doesn't fit all. and everything which can help the companies find their own ways and especially they will force in something for -- lows

and regulations sometimes is a bit too strict. but we have to address this. we are talking about structural. this has been addressed yesterday. this is in certain all flavor rigid regulations. so we have to address those. we have to mistake it easier. >> stephane is at the meadow conference just outside of paris and has been speaking to those executives. stephane, it's the message that i'm getting from all of these executives is that there is still a very long road ahead for france, isn't there? >> but at the same time, carolin, the government is working hard to reveal its relationship with the business community as this confronts the prime minister insisted on the upcoming production for companies. 40 billion euros in tax reduction, but not only it paves the way for future reforms, including reforms of the labor market. and these comments have been echoed this morning by an interview from the new economy

minister. in the french news magazine, the new economic minister says that the government would be ready to make the labor market more flexible in terms of working time, which means that they could change or even cancel the 55-hour working scheme in france that was implemented in the year 2000 by a socialist government. this is something business leaders have been asking for for a lot of years. almost since the beginning. the problem is that unions are not ready to -- the government scrapping this emblem attic loan from the specialist government the. and they have announced this morning that they would offer such a position for the government. it shows in france, if you have an initiative to reform the labor market, the economy, it's extremely difficult to implement it because as soon as you talk about changing reduce, unions, others option that decision. >> good point, stephane. thank you so much for that.

still to come on the show, turkish leader adawan gets sworn in today. we discuss after this short break. don't go away.

>> announcer: you're watching "worldwide exchange," bringing you business news from around the globe. >> welcome to "worldwide exchange." i'm carolin roth and these are your headlines from around the

world. an incentive for action falls further into deflation in august. investors now eyeing germany's reading for a hint on whether the ecb will add next week. >> telefonica raises the stakes in the battle for vivendi. deepening its offer for gdp. bp says the situation at whiting is under control after an explosion last night impacted operations at its biggest u.s. refinery. the fbi saying russia may have had major u.s. banks in retaleation for sanctiones. let's have a look at the urman market. once again, we are just a tad lower. the ftse 100 off by 0.3%. the xetra dax off by 0.75% and

the cac 40 off by around 0.6%. a little bit of profit taking as we approach the end of the month. keep in mind we had quite a rally over the last 2, 2 1/2 weeks or so, especially in anticipation of further measures coming from the ecb. who knows whether we'll get those. certainly the speculation has been fueling the bond markets where we've seen record low yield for german bunch. 0.91% for the ten-year treasury yield, 2.35% and the ten-year italian yield at 2.39%. in the for ex markets, the euro is getting a little bit of a reprieve against the dollar. it has been falling steadily against the dollar. again, this is all about draghi and anticipation expectation of further easing. but take a look at the euro/dollar right now. it is higher above that 1.32 level at 1.3214. dollar/yen is falling against the yen, 103.72. very lackluster day yesterday in the absence of any macroeconomic

data points. we're going to get the second reading of second quarter gdp. maybe that will bring some direction to the dollar. let's get back to our panel, david marsh is director and co-founder of the financial institution reform and richard from private investments. richard, how do you navigate these markets? is it driven by equity highs, low volatility? it's a tough one, isn't it? >> it is tough. all assets look a little bit on the expensive side, quite frankly. in fixed income, japan, 10 or 15 years ago, you would have recognized that. our uk bonds good value at 2.3%, 2.4% on the ten-year. i don't particularly feel so. and in the states, the valuation on the s&p looks pretty elevated, quite frankly, according to history.

but for us, this is exactly the kind of point you want expensive ratings in equities because you have got economic growth. you have got companies which have got strong balance sheets which allows them to do the m&a we talked about earlier on, but potentially to invest in cap ex. and it's not that bad a scenario to have quite a rate because you can work through that. but we've got to be aware that the markets have had a very, very strong run and you would expect less stellar growth going forward than we've had in the last 12 months. >> what about buffers? you say you. to have surgery to uncorrelated alternative assets. what exactly do you mean by that? because gold isn't necessarily uncorrelated, is it? >> for us, when we describe alternatives, we're looking for things which are nominal assets, so correlated with cash effectively, but with a marginal top 06 cash. so we're looking for something which provides uncorrelated to equities, certainly, with fixed income returns. and we're prepared to take a

lower return apart from those assets of this stage. if we could get more from cash we might have an allocation to cash. in europe, cash is derived in terms of -- and the uk pretty much, as well. it doesn't seem like an option for our clients. >> what about the disconnect between the markets? the dismal economic data points, specifically out of the eurozone that we're seeing right now. the u.s. certainly looking better. do you feel that disconnect could be closing anytime soon? >> the stock markets are telling us something separate from the macroeconomic data, which as you say is not very good. they are talking about hope. there are lots of companies are strong balance sheets, as richard just said. there are a number of companies still undervalued. don't forget the german euro is still significantly undervalued. if we didn't have the euro and if we had the mark, that rate would be more like about 1.90 or two. there are other companies in germany would do very well on the export side.

by definition, it's a worldwide rating. the proker progress fob gublt knew would colt if we had a strong severe domestic outcome. i still think that they've benefited hugely for a rejuvenation that we haven't seen in politics. this is why it's a hole, new to people less than 40 years old with a banking background which i know is not always a wonderful thing to have. but you've got some talented people around him if we can hold, if he can shrug off his mystic image that he's had, never really knows what he wants to do, never knows who he wants on his team. if he can, i'll be relatively optimistic about france. that's a big if, though, isn't it? to what extent, richard, do you think that france is going to underperform germany?

>> from here, we've had a long period where economically it's underperformed massively, in part because of a very french solution, which is -- if you're a socialist in france, you get elected by something pretty tough in terms of regulation on companies. and then after that, two years, you realize that mr. market gets in the way and starts to do things to the economy which are pretty unpleasant. we saw this in the early '80s. he complemented a very rest wing platform. them had to reverse course. oddly enough, from a market perspective, once you get that, then you can see some good things happening to domestic equities in france. >> why is it that french yields are so incredibly low? why isn't there a higher risk -- >> well, i think the french state is still very well run, it's still very centralized and still very bold. the gap is much larger now in

terms of economic performance. the french state is still very remarkable in terms of the way it runs things. that's why the business people are so frustrated because the french state doesn't want to slam everything. they've got the yields pretty much under control. remember, the yields gaps gets too large with germany. germany still feels that french politics are more than german xlits. despite litigation, despite the fact that the gdp and unemployment figures are so much better in germany than they are in france. the german political class still feels that the french should be and are in charmg. that's a residue of the war and 150 years of german history, which we will not get over in the future years. >> all right. thank you so much for your time this morning. appreciate it. we're not as gloomy as i would

expect. david marsh, co-founder of the official monetary financial institution forum and richard champion. ukraine's prime minister is calling on g-7 nations to freeze russian assets as kiev again accused moscow of sending troops across the border. it dampened hopes of a peaceful meeting. the german chancellor has called vladimir putin for an explanation for the latest reports. meanwhile, t a fresh aid convoy could be headed for eastern ukraine as early as today. and the fci is investigating reports of a wave of hackers, jpmorgan and at least four on other u.s. banks. the loss happened earlier this month. the fbi is reportedly looking into whether russian hackers

were involved. a jpmorgan spokesman has declined to comment. and let's focus in on turkey, the turkey president has heralded the birth of a new turkey in his last speech today. erdogan raised speculation. hadley, you covered the presidential elections. what kind of a turkey are we looking at in the next five years? >> certainly one that's trending toward being more conservative, but that's certainly no surprise. what mr. erdogan has done is making sure his political allies are going to be a part of this government going forward. and the prime minister, the prime minister is now going to be -- who has been the foreign minutester from the start. essential willy what you're going to see is a continuation of the policies that we've seen in over the last ten years.

we're going to see both policies. but in terms of foreign policy, that's why it gets a bit more tricky. as we know, though, the foreign policy from turkey and for the last few years has been one of repeated failures. they keep backing the wrong horse. that's going the be interesting going forward. what is quite fun, the coronation leaders have been invited. but no one from the west is continuing. you have the president of ukraine and the leaders of ethiopia, from sudan, as well. but in terms of western leaders, no one is showing up. >> that was very interesting given that turkey, because of its location in the world, is of high strategic importance. >> all right, hadley, that you

can so much for that. still to come on "worldwide exchange," it could be the worst statutory loss in australia's history. more on qantas results after this short break. [ woman ] the cadillac summer collection is here. ♪ ♪

[ male announcer ] during the cadillac summer's best event, lease this 2014 ats for around $299 a month. hurry in -- this exceptional offer ends soon. ♪

qantas reported a 2.6 billion australian dollar statutory loss after tax for 2014. speaking earlier, the ceo was optimistic about the road ahead. >> still have more to do, but we have come through the worst. and we have a clear evidence of a brighter future. as i said, we anticipate a rapid improvement in the group's financial performance if financial year 2015. and subject to the side of the control, expect to deliver a number of line profits, the fourth acts in the first half of this year. >> let's talk a little more about qantas and whether it's actually turning a corner. joining us now on the line from sydney is tony webber, a former

chief economist at qantas. the message from qantas this morning is blue skies ahead. investors like the new shares up 8.4%. do you believe in that turn around? >> i believe it partially for the domestic business. the domestic business has historically been a strong part of the qantas group. and i see that potentially turning around. i have -- i'm less optimistic about the international business. the international business earnings has been in decline or has been poor forever a decade. i can see blue skies ahead for that part of the business. >> this is essentially a self-help story. but to what extent is the future of the company beyond its own control? because it is all about overcapacity in the asian and in the international airline market. and we see much of that. it's not just qantas that is struggling. >> no, that's right. we're seeing a lot of carriers in southeast asia under significant pressure at the

moment because of these excess issues. so they're not isolated to australia in the qantas group and indeed one of the significant problems with the domestic market at the moment is that it's a significant amount of capacity. and since qantas contributes 65% to that market, it certainly has a role to play in adjusting that capacity and delivering that capacity. >> but what it really needs to do is think need to back away from that capacity in virgin australia. do you think they'll actually do that? >> they're starting to do that now. we've seen virgin australia pull back on capacity or reduce capacity over the past six months and we're seeing qantas

group significantly slow its -- over the same period. new zealand's profits are up about 48%. its strategy is going to be very, very conservative with capacity growth to try to get its yields up. so i think that qantas can earn quite a considerable amount from its partner. >> it seems as though qantas is pinning its hopes on the change in the law allowing 49% foreign ownership stake. it seems as though not even emirates wants to take that 49% safe. are there any others out there that would want to get involved? >> qantas has quite a share of arrangements. they're recently signed a cochair agreement with china airlines. i suspect if there is going to be any airline interest in the qantas group, it will likely come from china or north asia. >> all right, tony, thank you so

much for that assessment. appreciate it. tony webber, managing director at webber quantitative consulting and former chief economist at qantas. tomorrow, more earnings from airlines. virgin australia and china southern reporting. a data deluge with cpi, retail sales, q2 cpi data out of taiwan and first quarter gdp data out of india, although markets in india are closed for a holiday. french president hollande said the euro is too high and inflation too low. this after the country's unemployment hit a new record. stephane is at the conference just outside of paris. all the comments certainly very interesting, calling for a growth initiative in europe. the trouble is, we look at spain this morning with gdp up 0.6%. some countries are certainly fairing better than others.

>> if you look at the latest in france, the government has no other option in implementing reform. it's basically what the prime minister said in his opening speech at the at the university. he explained that the companies would benefit from a significant tax reduction plan, 40 billion euros and paved the way for reform, structural reform from the french labor market. he also made comments on the european central bank which he believes should change its policy to tackle the low level of inflation and because he thinks that the euro is still overvalued. it's echoing these comments this morning, the new economic minister gave an interview to the french magazine and says it would be open to more flexibility on the french labor market, including some significant change for the -- at 35 hours a week. that was implemented by a sociologist government about 15

years ago in france. and that is something really significant for french business leaders. they've been asking for more flexibility in terms of working time for more than a decade. however, unions are really to -- as soon as these new comments from the economic minister have been published. once again, it shows that even as the french government is working hard to improve its relationship with the business community and would be ready to implement some significant structural reforms in france, it's always difficult to reform this country because unions are not ready to accept it. >> all right, stephane, thank you so much for that and all the sound bites that you've been getting for us out of paris. let's move on. brazilian president continues to lead election polls ahead of the

october 5 vote. but her margin has narrowed to just 6%. according to a survey by, silva would defeat the incumbent in the face of a runoff. but the brazilant market rallying in recent weeks. meanwhile, the venezuelan president has come under renewed pressure as the country's economic crisis rises. he announce d the super markets would use fingerprint scanners to prevent shortages. his track record isn't that great. >> there's been no change whatsoever from hugo chavez's rule. >> to what extent do you think that he can still turn this around? because there ever very high hopes for him to actually make a break to actually start a new beginning for the venezuelan

economy. >> i feel there's very little chance at the moment, to be honest. so far, economic policy has concentrated on short-term fixes and chavez always used, which might work for a couple of months and might not work at all. then they just had exacerbating problems. he's stuck to that and showed no signs of radical reforms that are needed. >> what exactly do you want to see? >> a whole host of -- >> long losses. >> on the demand side, you've got to get rid of these subsidies on oil, on food, which has triggered all this. on the supply side, they need to completely rebuild the supplies, nationalization over the last 10, 15 years, leading to attract foreign investment to foreign currency. >> what about the socialist party conference at the end of last month? that was a pretty encouraging conference in terms of uniting the party, which saw a lot of tensions from within. do you think that actually could

set the scene for bolder economic reform? >> it's possible. since then, policymakers have been talking about unifying the broken exchange system for a number of months now. but they obviously can't garner enough support within the government to actually push that through. so it's presented in quite a strong -- if you like. which suggested too much support. >> you would think that the state of economic problems hitting venezuela, the opposition parties, they should actually flourish under these conditions. but the problem is that the opposition itself, it's still broken, isn't it? what is the main problem here? why isn't there an alternative candidate or party? >> the opposition is fragmented, but it's being cracked down on heavily by the government. you've got control of the media. you've got serp members of the opposition in jail, potentially going to be locked up for a long time. so, you know, the government is making it as difficult as possible for the opposition to

capitalize on a complete mess. >> venezuela has long been relying on its exports to oil this morning. i've seen the headlines. this is pretty bad news for the economy. >> it is crazy. you've got the country at the largest oil reserves in the world and can't get enough of it out of the ground to satisfy domestic demand and to export and generate enough money. it goes back to the ridiculous water and oil in venezuela which shows you how ridiculous it is. >> at what price would oil still support the economy? what is it falls below 100? how much of a problem is ta? >> it barely supports the economy now. you've had record high oil prices for a long time and the economy is really on the verge of bankruptcy. oil has been dropping below 1100 for a long time, talking about balance payments, crisis, default, massive recession. >> i know you're an emerging market economist, but i wonder

to what extent there is any money to be made in the venezuelan market and the economy. >> it's very difficult. the bond yields are very low. they're the highest in the emerging world, but they're very low compared to what they should be. so i think they're going to rise a long way. i think really it's a bond rate. >> i can't believe that oil is actually cheaper than water in venezuela. i actually can't believe that. david, thank you so much. alibaba group is getting investors excited ahead of its upcoming ipo, reporting a jump in revenue. the chinese revenue unit increased 46% on the year to $2.54 billion. the total transaction rich knew came from mobile. alibaba is the largest in history. it acts for about 80% of all online retail signs in china.

american may be more optimistic about the economy now than they were in 20309. a new survey found 71% said the recession exerted a permanent drag on the economy versus 49% to five years ago. we've been asking, if you're more pessimistic now, jeff tweets there's still too much long-term unemployed people out there and we need everyone back to work literally and at leaving wages, too. join the conversation here on "worldwide exchange." worldwide@cnbc.com. @cnbcwex or tweet me, @carolincnbc. still to come, have u.s. markets been too quick to shrug off geopolitical risks? we'll discuss it after the break.

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. welcome to "worldwide exchange." i'm carolin roth. german inflation reading could give the clearest of -- on ecb about ask again next year. bp says operations in whiting are under control after an explosion at its biggest u.s. refinery. the fbi says russia may have attacked major u.s. banks in

retaliation for sanctions. telefonica raises stakes in its battle for vivendvivendi, sweetening its offer just minutes after a bid from italia. >> you're watching "worldwide exchange," bringing you business news from around the globe. hello and good morning. if you're just tuning in, thank you so much for joining us on the show. take a look at u.s. futures. we are expect ago slightly lower start to the trading session, taking fair value into account. the nasdaq seen off by around 5 points, the s&p lower by 3 points and the dow down by 10 points. volumes very clowe despite that bell. the s&p rising to yet another record high above that 2000 level, up by less than 0.1% today.

obviously, a lot of foep focus on the gdp numbers and jobless. let's have a look at the european markets. not looking much better. we are seeing some modest declines across the board. the xetra dax off by roughly 0.5%. we're waiting for the cpi numbers, the cac 40 off by 0.1%. by and large, we are off one-month highs, maybe a little bit of profit taking as we head into the end of the month. the dollar is seeing a bit ooh a pullback. it could be positioning ahead of the end of the month. let's have a look at the euro/dollar rate. we're seeing a little reprieve in that pain. 1 1.3205. dollar seeing some slight decline against the japanese yen at 103.76. let's give you a look at what's on today's agenda in the united states. weekly jobless claims are out at 8:30 eastern, forecast to rise by 2000 to a total of 300,000.

at 8:30, we get the second estimate of second quarter gdp. growth is expected to beery vised downward at 4.38%. at 10:00 a.m., july pending home sales are out expected to rise 10.6%. as for earnings, look for earnings from abercrombie & fitch and dollar jrl. german inflation data due in the next couple of hours. a reading from spain earlier this morning shows the company slipping further into deflation coming in at on minus 0.5%. we were expecting a number of minus 0.6%. let's now talk to tina, former political analyst at citi. tina, good morning to you. we're seeing a discontest between what the market is showing and what the economy is telling us.

>> it's pretty clear by any of the measures that we might look at or even the headlines that we reviewed that geopolitical risks are on the rise and on the rise significantly. what's more, according to our take, this is a structure change in trends. the last 25 years have been on balance, extraordinarily peaceful and prosperous. we're now looking at shifts in the middle east and western ukraine that don't necessarily take us back to the cold war era, but signal a lot of realignment and a lot of risks going forward. markets, however region are looking at other indicators for the s&p, getting close to 20000. the u.s. economy and extent to which the european recovery can move forward and, of course, and the ecb. those are the main drivers of sentiment. so i think investors are probably right for the time being to disregard the geopolitics because there's no transition mechanism.

but what i think is that we are heading into a very different environment that's going to last a long time. >> but practice about the transition mechanism called oil? >> it is lower than what you would expect. >> oil prices close to nine-month lows. why is that? >> supply is the main factor here to consider. looking at developments in iraq, you would be attempted to think that is what matters the most when it comes to oil supply, but libya is probably the country to watch for. then, of course, there is the u.s. shale gas phenomenon and you've got change in the dynamics when it comes to the oil markets, as well. >> there's so many hot spots in the world, we've seen iraq, russia and ukraine, israel, it

seems as though we're on a path to a size fire. which of these hot spots worries you the most at this point in time? >> well, i think that the -- the change in trend is between russia and the west. it's probably the most significant shift because, as discussed, although it's not in the cold war, there's no idealogical component there, the motion of sanctions on a country like russia which has a seat on the u.n. security council and has had unbalanced good relations from the west since the collapse of the soviet union, moving to a different posture, troops being stationed in some baltic countries, this is important stuff and it suggests that tensions are going to be high for a time. remember when george w. bush talked about the premier, that saw a flare up in tensions. >> the problem is, though, that we have various little

visibility on these geopolitical risks. specifically with regards to what's coming out of russia. there's no way you can second-guess what mr. putin is going to do next. once again, how do you navigate through the plethora of comments, the plethora of news events coming out of these countries as an investors? >> one of the most obvious things that you can do is focus on the scientist, right? these are the known knowns. october 26th, you have elections in ukraine. a new parliament will be formed that president poroshenko hopes to give political legitimacy. a lack of political will get masy, over-shadowed by the news that it looks like a third front is opening, so looking at what we know is going to happen is important. but also just understanding the

balance of power. the fact that when it comes to ukraine, it is more in russia's perceived national interests than in the west interests, right? so there you have this incremental kind of move towards sanctions, gradually, whereas russia is willing to take more risks. >> finally, i want to get your take on iraq. it seems as though the u.s. saw no need to be active maybe two or three weeks ago. but these air strikes and these air drops are no instant fix. how do you solve the problem of isis in the longer run? >> that's not an easy question, right? because there is the question of what do we do about isis, and then there's the question of what do we do about committing, again, to what has been called go forth free in the public appetite for getting involved in a war in the middle east. president obama is expecting the

u.s. to authorize air strikes in iraq. so the balance is going to be between trying to roll back the isis threat into syria without getting boots on the ground. the execution has been a tipping point in public opinion, however, with more support from the u.s. in terms of doing something about isis. >> appreciate your time this morning. thank you so much for joining us, tina, political analyst from citi. ukraine's prime minister is calling on g-7 nations to freeze russian assets as kiev again accused moss cue of sending troops across the border. german chancellor merkel has reportedly called putin for an explanation of the reports.

a french air convoy could be ready for ukraine as early as today. >> the kword neated this attack earlier this month resulted in the lose of sensitive data. the fbi is reportedly looking into whether russian hackers are involved. a jpmorgan spokesperson declined to comment. according to a reuters flash just out now, it's saying the rebels can defeat the ukrainian army without russia. still coming up on this show, the battle for brazilian unit gdt after the break, we look at the offers on the table. stay with us. this is a burrito made with chocolate, soybeans, and apricots. what kind of chef comes up with this? a chef working with ibm watson, on the cloud.

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bp gives the all clear after a large explosion rocks u.s. operation necessary whiting. and the fbi says there's been a wave of cyber attacks on

the u.s. fed. the battle for vivendi's brazilian unit is heating up. two bids have come through, the first from telecom italian valuing the company at 7 billion euros, giving the french firm a 16% stakes in itself and smaller stake in t.i.m. brazil. meanwhile, telefonica has increased its bid valuing the unit at 7.45 billion euros, just over 4.5 billion of that is in cash. they also give a 12% stake in tell conka brazil. with the option of an 8.3% stake in telecom italia. manuella, who has the better bid? >> well, it's actually very hard to establish. some analysts thought telefonica's bid was better because it's a higher valuation

for the gdp the brazilian assets that everyone wants, apparently. but other people think telecom has some cards to play because they have some assets. it should be interesting to vivendi, which owns gdp. so it's hard bet. and we hear that all the gains are still open and that there's no preference at the moment for one or the other. offers. >> manuella, the trouble is telecom italia can't even afford that deal. it wouldn't be val enhancing for shareholders, would it? >> well, it's a hard -- it's surely telecom italian has cash problems and they have a huge debt that they have to keep that in mind, of course. and that is why they want a

capital increase and that will be reserve for vivendi in order for vivendi to get a stake in the company. they are trying to get other ways to become interesting in vivendi. >> do you think there is a chance that neither of the bids could bear fruit? >> there are some good options. some people were suggesting that this opened the gains and some more bids could even arrive and this could become even a hotter game with a better and high yield data to come. vivendi now just has to weigh and see what happens and then decide what to do. but they definitely are looking into these options which is

interesting. that goes without saying, even though vivendi has quite a lot of cash. so they're now in a position in which they need cash. but still, good offers are, you know, to be considered, anyway. >> all right. thank you so much for breaking down the details, manuela mesco reporter at the "wall street journal" talking to us about those bids. it certainly makes sense from a strategic perspective. because that's where the growth is in broadband and bra zim. still to come on the show, what the much awaited iphone 6 looks like. and the stocks you should be eyeing for your port foeo. look at the heat maps. we are off the session lows. down by around 0.5%. xkç

welcome back to the show. a judge ruled apple has proved extremely robust despite samsung's patent infringement. september 9th, apple is expected to launch the iphone 6 and the i

watch. it was thought the company would show off the watch at a separate event possibly in october. but what can we expect from apple's iphone 6? josh lipton hit the streets to find out the. >> we've all read the rumors by now about what's going to be in that new iphone. one rumor, of course, is size. but do shoppers and consumers really want a bigger phone? >> not too big, but a bit bigger. >> i don't want a tag let on my ear. >> so much bigger i think is going to be pushing it. >> no, it wouldn't fit in my purse and my pocket and it wouldn't be too big. >> a bigger iphone could mean a bigger price tag. so we asked shoppers are they willing to pay more for a new iphone? >> i'm nog willing to pay more. they need to take the prices down that they already have. >> i wouldn't mind paying more up front if i didn't have to pay so much up front. >> 299.

i don't want to pay too much. i really don't. >> we'll see if apple can make all those consumers happy. it's important the company does. remember, the iphone still does generate over 50% of apple's revenue. josh lipton, cnbc, palo alto, california. >> we've been asking you, which are you looking forward to, the iphone or the i watch? join the conversation here on "worldwide exchange." get in touch with us by e-mail, worldwide@cnbc.com. twitter at cnbc wex or tweet me @carolincnbc. shares in the world's largest social network are still trading close to all-time high. i want to talk more about social media and investing into the spa is with bill coo of global equities funds. thank you so much for joining us.

>> incredible volatility were about 10% off the highs. these are probably despite the valuations in the running segments, tremendous growth, but growth has accelerated for these companies this year. and i think one of the most interesting things about this company is that pretty misunderstood is that they're defensible business models. it's very, very difficult to get after, say, a facebook or a twitter once these build these networks, very difficult to displace them once you have, again, millions, hundreds of millions, billions, in the case of facebook of users into your network. >> but what we've seen happening, specifically with facebook and google has really just been throwing money out the window. thiefb baug all these companies, essentially building a mote

around them to make sure that, yes, they are pretty defensive companies. but only the bigger companies can afford to do that because of the cash piles that they're sitting on. does that in turn mean that you want to go with the bigger companies like diversify? >> yeah. i think we've seen within the social media space, you want to go with who is the biggest company inside each one of the niches. so who is the biggest company inside of social friend, network like a facebook, what's the bigger company inside a professional network like linked in. those are the companies you want to go after. again, when you look at the acquisitions that some of these companies have been making, some

of them seem like very, very high price tags, but they have a massive network to try to monetize those acquisitions. so the jury is still on out as to how those are going to play out. clearly, they're going to play the larger the company. snapchat reports yesterday talking about a 10 billion valuation. these are dizzying numbers, aren't they? do you think these companies are overvalued? >> well, i think -- you know, i think that it's a reasonable question to ask is the fair value particularly when, you know, a lot of those multiples are way above what you see for other industries. and very clearly, some of those companies who are overvalued and are going to succeed, but in our opinion as a whole at the larger, more established companies that have value networks are growing very, very

quickly. primarily facebook is the prime example. are not overvalued and are going to generate a lot of value add for shareholders. but, again, these businesses are growing very quickly when you are working with businesses that, you know, are growing so fast, you know, small exchanges in the rates of growth have a lot of impact on the valuation. so these are volatile companies. so when you invest in social media, you're going to see a lot of volatility. but we do believe the larger winning companies are actually pretty attractive investment propositions at this time. >> one of your funds actually replicates what the top hedge fund managers are out there doing at the moment. that fund has returned a whooping 60% over the last two years. how are hedge funds doing right now? >> yeah. interesting that the last quarterly rebalance, we're seeing a significant change over the last couple of years. the hedge fund have been making high beta plays, really a lever

player, the -- sort of the companies that go up more when the market goes up more. that's been a play that's worked really well for hedge funds over the last couple of years. we've seen a retrench mth of that with a lot of these hedge funds going into lower beta stocks. it's an indication that hedge fund managers are thinking, hey, i want to be more market mutual given the valuations of where the markets are. at this point in the u.s., the s&p 500 at all-time highs. >> bruno, appreciate your time this morning. and after the break, we're going to be talking a lot more about bp. all clear was given after a blast rocks bp's largest oil refinery. what will the impact be on its brand? we discuss after the break.

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welcome to "worldwide exchange." german inflation reading in 30 minutes could give the clearest hint yet on whether the ecb will act next week. bp says the what it at whiting is under control after an explosion overnight impacted operations at its biggest u.s. refinery. the fbi investigates a string of cyber attacks at major u.s. banks amid reports russia

may be behind the hacking and retaliation for sanctions. and telefonica raises the stakes in the battle for vivendi just minutes after a bid from telecom italian. >> your watching "worldwide exchange," bringing you business news from around the globe. good morning, everyone. it is 5:30 on the east coast. it is around 10:30 here in london and eye time for a look at the future. this morning, we're looking at the slightly softer start in the trading session. hitting another record high, up by less than 0.1%. not a lot of conviction in these markets certainly. i guess we'll have to wait until september to see those volumes coming back to the markets.

i want to show you what's going on in europe, as well. we're seeing a little bit of weakness across the board here, as well. the xetra dax is down by 0.8el%. weir still waiting for the cpi numbers later on today. the ftse 100 is off by around 0.25% and the ftse mib down by 1%, as well. maybe a little bit of profit taking across the board after heading into the end of the month some position squaring going on. so big question, how do you make money in these markets? here is what some of the experts have been telling us this morning. >> developed market activities is an interesting place. i think probably within that u.s. and europe, uk remain the best places. >> typically, paid in excess of 100 to 150 basis points more for being in a similar place in assets versus the markets. >> yes, you should be paid a premium for being invested in emerging markets.

there are geopolitical risks in certain of these markets. we believe that has spread is compensating you. >> the problem for germany and their stock market would come if we had a strong domestic downturn. when i don't see happening. i think they're benefiting from a rejuvenation that we haven't seen in politics. bp says the situation is under control after a fire broke out at its largest u.s. refinery in whiting, indiana. the oil giant reports operations were minimally impacted. tom has been covering bp for a long time. tom, thank you so much joining us on short notice. you're not worried about the impact of this, the are you?

>> i think the short-term impact of this, it probably won't be that great. the refinery is producing at the moment, so that's positive. but i think that we shouldn't open up the long-term impacts. bp is down playing the issues around whiting, but it is it's been operating for quite some time. it spent $4 billion on this refinery in the last several years. so this good operations in full production at this refinery is very much baked into the company's cash flows as the analysts are predicting. those cash flows don't even meet the dividend payment the company might make. even the small dimution might

affect how this company is perceived. the minute anybody hears bp, refinery and explosion, they're going to think back to one of the worst industrial accidents in the u.s. in the past decade. so it is certainly not good news for the company. >> so you think it could impact the company's ability to impact staff? >> i don't know if you remember, people remember back to the beyond petroleum campaign in the early 1990s and 2000. i remember speaking to the director of the companies in that period. they were skeptical about this rebranding. but they said it raised the perception of bp externally. the best graduates started to want to work for bp. by the end of the 1990s, simply because it looked like a good company to work for. the more we have bp in the press around the industrial accidents, tr r that doesn't help position bp as an sxloir of choice for

the brightest in america. according to reports from morgan stanley, they have an underweight rating for the stock. how bad is the free cash flow situation out there? you're certainly not the only one complaining about that. >> bp has paired back the capital expenditures. so in terms of the company's ability to positively impact the cash flow by cutting back on what it spends out is quite limited now. then if we look in terms of getting cash in, the company doesn't have a lot of big projects slated over the next year or so to start up. we look at the 2015 period, one of the points morgan stanley notes this morning, they don't see a lot to excite investors. the current situation is not

ideal. as i said, there's a gap between what they're taking in and what they have to pay out. and in the immediate future, that doesn't look too healthy. one of the things that's baked in, it's operating pretty well. even something that creates doubt around this in the mind of investors, about the cash flow going forward. >> tom, appreciate your time this morning. and we've got more breaking news. this time around, deutsche bank is fined 4.7 million pounds by the uk's financial conduct authority for failing to properly report transactions. the news flashes don't indicate what kind of transactions are concerned, but the it's being said that the transactions were between november 2007 and april 2013. once again, not even a 5 million

pound fine. it is very, very small for the size of deutsche bank, certainly another reputational hit for the company. what's on today's agenda in the united states? jobless claims are out at 8:30 eastern, forecast to rise by a total of 2000 to a total of 300,000. at 8:30, we get the second estimate of second quarter gdp. growth is expected to rerise downward. at 10:00 a.m., july pending home sales are up, expected to rise 0.6%. as for earnings, numbers today from retailers dollar general and abercrombie & fitch. we're now joined by jane brown. i want to talk to you, jane, about the expectations for the second reading gdp number. do you think we're back to viewers being good for the market and if we see a number of 3.6%, 3.7%, the markets could actually rise? >> well, i doubt that that would

be the case. i think the focus is going to be inside the number and that will be on personal spending. i think that will tell a lot of investors how strong and how consistent the consumer has been. we have lr received information that business investment is strong and seems to be improving. so the focal point i think is going to be to make sure that personal spending is not falling off. that's been an inconsistent number since the beginning of the year. >> the strength of the dollar is coming off somewhat in today's trading session. do you think overall that is a positive for the u.s. economy or do you think it could even be a negative? obviously, it's exports. >> well, certainly it does weigh on exports. so from that factor, when you look at evaluating international companies, that is a slight negative. but at the same time, it helps out enormously in terms of inflation and to the extent that we import much more than what we

export from a gdp perspective and from the perspective of allowing the fed more time to keep rates low wrb which is going to help out the stock market. that's a clear winning factor. so i think on balance, if we end up with continued strength in the dollar, that's going to help the economy. it will help inflation. and it will allow the fed to continue its current policy. >> what about treasuries in this environment where, really, the main drum beat is given by the ecb, not so much by the fed. it will be a follow through? >> certainly the lower interest rates not only in germany, but in spain and italy, as well, which are now both lower than what you can get in the united states have an important factor. but i think supply and demand have helped keep interest rates

low in the united states. by that, i mean everybody expected as quantitative easing came to an end, we saw a decline in treshy issuance than greater magnitude compared to the purchasing. as the fed enters october and no longer buys, all of a sudden we'll get more treasuries and i think the supply/demand imbalance that kept rates low in the fist part of the year is going to reverse and you're likely to see upward yield pressure on ten-year treasuries over the balance of the year. >> how much higher are they going to go? 2.35% is the level we're seeing now. at the start of the year, everybody said we're going to 3.25%. where are we going? >> i think it's difficult to get

to $3.25 by did end of the year, but between now and december, we'll see if that's the case. and we'll got more flashes concerning ukraine. ukraine's security and defend california californias in a twitter post and russian forces and separatists, are continuing the -- for more worrying/s coming out of ow crane a few days ago we were talking about the possibility of a cease-fire between russia and ewe crepe. but that doesn't seem likely right now against the back drop of all these headlines coming out in the region. americans may be more pessimistic about the economy right now than when the

recession ended in 2009. a new poll out from rutgers university reported that there is a permanent drag on the economy. despite a rising stock market and falling unemployment. so we've been asking if you're more pessimistic now. tony tweets, food and energy have pretty much doubled since the crisis. the government ignore these component of inflation. why be positive? well, join the conversation here on "worldwide exchange" to tell us whether you agree or disagree with tony been get in touch with us. heighter have set their sights on a new u.s. market. e cadillac summer collection is here. ♪

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investors readying for u.s. jobless numbers and gdp data. whether the ecb will act next week. bp gives the all clear after an explosion rocks its largest u.s. refinery in whiting, indiana. telecom italia and

telefonica battle it out for its brazilian unit. u.s. authorities are investigating reports of possible psychiatric cyber attacks on several banks in recent weeks. morgan, what a fascinating story. what have you got? >> it certainly is , carolin. attacks against jpmorgan and at least four other u.s. banks. authorities are looking into whether recent attacks on european banks. resulting in the loss of sensitive sensitive data. several firms have been hired to conduct an independent review of the networks. jpmorgan is doing its own investigation to determine just what happened. a spokesman declined to comment

on this except to say the company is often hit by multiple attacks and it monitories potential fraud pivot the. dairy queen is investigating the possible customers credit and debit card data apparently caused by the same bug that affected target and other retailers. the fast food chain was recently notified it may be victim of the quick backoff hardware. more than 1,000 u.s. companies have likely been affected by this virus. dairy queen as more than 6,000 locations in the u.s., canada and 18 others countries. they'll be keeping a close eye on that, carolin. back to you. >> thank you so much for that. coming up on "worldwide exchange," is this the market? we speak to one analyst who says the wolf may finally give the

door of the s&p 500 after a year and a half of solid gains.

welcome back to the show. the ukrainian president mr. poroshenko says a russian military invasion has taken place in ukraine, this is according to the presidential west side. ukraine withdrew its forces to save their lives. ukraine forces are now reinforcing the defense of umarakol. poroshenko calls an urgent meeting of the country's certainly and defense council to

decide the best -- in a crisis. the ukrainian president poroshenko says a russian military invasion has taken place in ukraine. let's see how markets are responding to this with the news coming. just a few seconds ago, the xetra dax is close to session lows, down by 079%. the ftse 100 off by 0.3%. the cac 40 off by 0.6%. i want to show you what the russian market is doing right now. we've got the micex board up for you. the micex is down by 1.9% and you're seeing a bit of a decline just in the last few seconds or so. over the last 14 days, the micex is study, up by 1.6%. let's have a look at u.s. futures pap slightly softer start to the trading session this morning, taking fair value into account for the s&p. the dow could fall by 33 points and the nasdaq seen off by eight points. since i've been speaking,

futures have deteriorated. this is probably in response to the headlines coming out of ukraine just now. ukraine poroshenko cancels his working trip to turkey due to the, quote, russian invasion. let's talk more about the market levels. the s&p 500 settled at a record high for the 31st time this year at just over the 2000 mark. three prominent bears have been on our air in the last 24 hours expressing concern about current levels. are even the fed's distortion of the market would lead to a very unhappy ending. >> we see that gyration around the trend. typically, it suggests that you're going to see severe volatility. and i think, you know, as scary as it is, i think we could see possibly a 50% correction, an equal and opposite reaction. >> central banks right now have the confidence. this is just a confidence game. and so once confidence is lost

in the central banks, it could be a pick up in velocity where inflation picks up and, therefore, the fed has to increase rates. it's where the fed starts to lose control. >> the fed is the problem, it's not the solution. but if you're going to make money as a short seller, as a dedicated short seller as i did in the past and i intend to do it again and the time is right, you really need a certain back drop to allow the fundamentals to matter. quite frankly, even though the fed has been reducing the amount of money it's printing, it's still splitting enough money that the stock market continues to go up. one man who has done a fair amount of number crunching, he joins me now from new york. jonathan, put these levels into context for us. >> yes. it's pretty remarkable. if we go back, it's been about 4 46 trading days since the s&p below its 200-day moving average. that's the fifth longest streak in the history of the s&p going

back to 1928. if we finish this quarter at the end of the september, that's a conequity issive quarter against the s&p, that's the longest streak since the late '90s. and then if we look at the three-year rolling return, assuming we finish the year out around current levels, it's the biggest trend since the late '90s. if you take out that period, you have to go back to 1986 to find a better three-year rolling return. >> at the start of the month, though, you put out a note saying that the world -- at that point, we didn't know that or is going to go to 2000. you think the world isn't knocking on the door of the s&p 500 at all. we haven't seen a 10% correction. but every time we get a 3%, 4%, 5% pullback, the calls start

come out, we're going to get that 10% correction. really, who that we would like to take a look at. if it if didn't make a new hey within twe haven't seen that yet. >> jonathan krinski, thank you so much for that. just want to recap the latest flashes around ukraine. ukraine poroshenko has called an emergency meeting. he says the russian military invasion has taken place in ukraine. we're seeing gold prices moving higher on the back of ukraine tensions. if i look at the german market, it is down by a little bit more than 1% and the micex is down 2%. we're seeing the bund.

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good morning and welcome to "squawk box." a developing story. the fbi investigating a massive cyber attack on several financial giants, including jpmorgan. the culprit? well, the russian hackers. a new front in the crisis in ukraine. ukrainian military says that russian forces are involved in a stealth invasion in a new region in the east. and microsoft's chief nadella is headed to china as the country conducts an anti-trust israel. it is thursday, august 28th,

2014, and "squawk box" begins right now. i'm andrew ross sorkin along with joe kernen. becky is off this week. we talked about beach goers on both coasts, storms kicking up massive waves at 900 miles off the coast of baha, california. it has spectators and surfers flocking to the beach to see some of the biggest waves to hit the area in 25 years. we're going to have more on the storms coming up later this half an hour. let's talk about the banks and the fbi investigate. the fbi and secret service are investigating reports that