welcome to "worldwide exchange." united in the battle against terror, president obama and -- promise tough action on isis as world leaders arrive at the nato summit in wales. will the ecb launch any fresh stimulus? standard life lifts the ftse 1 hup as investors share a special dividend after a 3.7

billion sales of its canadian operation. coming up, the sony of ceo tells us why it's taking so long to turn around the business. >> announcer: you're watching "worldwide exchange," bringing you business news from around the globe. nato is poised to bolster its european defenses and increase its support for ukraine. president obama landed yesterday after a turbulent day which started with hopes that russia and kiev started with a cease-fire and ended with vladimir putin outlining a road plan for peace. president obama dismissed the plan as, quote, deception. >> meanwhile, the french

president francois hollande says despite the prospect for a cease-fire, the conditions for paris to make the first delivery are in place. ahead of the summit, hadley gamble said to the head of the center for strategic studies asked him whether the fears about russia's expansion were justified. >> far too many countries aren't even spending 2% of their economy on military and defense. the united states spends around 4%. the pledge is 2%. even countries like sweden and france have cut their spending to the point that despite all our spending cuts, we have a much larger percentage of total nato spending than we did in 2008. if you don't put your money where your mouth is, if you

don't actually take steps that are concrete to boost defenses and help the most -- states, the best nato ministerial statement in the world is just hollow, empty rhetoric. >> let's get out to hadley gamble who joins us live at the nato summit in new port, wales. spending is one of the challenges facing nato right now. the other one is whether it's too big, too unwieldy. can it reinvent itself at this summit? >> that's what they're attempting to do. we've seen a lot of momentum over the last couple of weeks to try to redefine nato in this new world that we're living in and certainly with the threat of islamic militants, isis, the dutch, the british and the americans are very interested in what nato plans to do. i think we may end up seeing some intelligence shares amongst the nato members, not particularly nato joining in the air strikes, as we mentioned the

defense spending. you heard him putting your money where your mouth is. we do have to pay to play. if you want the security that nato can provide, the security of that alliance, you have to pony up when it comes to military spending. that's going to be on the agenda. hard questions being asked there. also this idea of a rapid response for us. 5,000 nato troops. they want them ready to go at a moment's notice. the polls have suggested we want a permanent nato force. that's on the table, but highly doubtful that you'll see any of these european leaders buy into that. that's a bigger commitment than they really want to make. >> hadley, thank you so much for that. let's talk more about the role of nato. joining us is kathleen mcginnis from the chatham house. thank you so much for joining us this morning. is nato still relevant? >> i think a better question is when will nato be irrelevant?

during the cold war, it played a key role. after the cold war, it played a critical war with afghanistan, the baltics, now there's a number of challenges before it. trying to figure out how to deter russian agregsz, while simultaneously figuring out how to respond to crisis on the middle east and north avenue ga should they arrive. >> nato is meant to promote security and peace. with this particular sfut between ukraine and russia, it seems the international involvement antagonized putin further. what exactly can they do today and tomorrow to bring about a cease-fire in ukraine? >> they realize what they're trying to do right now and this is why we're seeing policy decisions that are about rotational forces, rapid response forces. they want to make sure that they have a presence in europe that is going to be light and not

necessarily provocative for russia. but, again, the summit is about the ukraine president and it's not the only challenge nato faces. there's significant challenges on the agenda that need to be addressed. >> you are talking about the rapid response. whether or not this will be agreed upon in the next two days, at this point in time, if russia were to invade ukraine right now, tomorrow or the day after, nato wouldn't be ready. that's a fact, isn't it? >> they have the capable to respond if it chass to do is so. but that said, it's important to recognize that ukraine is not a nato member. it is a partner and they're looking at expanding that

partnership further, but at this, i think what we're going to see is nato allies trying to bolster their own defenses and trying to adapt to any threat. >> i want to get your take on what the french government has announced overnight. readering their delivery, it's not canceled. that's not an encouraging move, is it? >> actually, it is. i think it's a welcome move. >> it's a promising development. with this summit, this is one event on the calendar. what's really going to matter is six months from now, are the allies going to put their money where their mouth is? is it going to be implemented effectively? >> that's a really good point. we're going to have to wait a couple on of months to see whether thisser bas any fruit. catherine, thank you so much for that.

let's have a look. it's a cautious day husband far, having had a strong day thus far. the stoxx 600 down about 10 basis points so far. let's have a look at individual markets. as you can see, fairley mixed. the ft. if it is 100 up about 9 bifs points. this is more strength following yesterday's gains where it touched the 14-month high without staying at that point. 14-year high without staying at that point. but in general, cautious day in europe kwan markets ahead of the monetary policy bonanza that we have coming up for the day. as we dive into some individual stocks, in the ftse 100, standard life is up almost 9%.

that's rallied to the top of the ftse after the insurer agreed to sell its canadian operations in ads 7 billion cash deal. the deal will allow standard life to give 1.7 billion to shareholders. on the down side, bilfinger down 10% after the construction group issued its third profit warning since the end of june. it expects third year profit to be down from the 120 million euros forecast last month. asian markets, similarly cautious today. the nikkei off 33 basis points, pausing after a strong rally. seven-month high hit yesterday after the bank of japan kept rates on hold as expected. china leading the charge up 80 basis points. that's led by the real estate sector. now, bonds continue to point to the expectation of easing. we'll be discussing what our expectations are from super mario on our next discussions

with guests. as you can see, ten-year german bund yield, significantly lower than the uk and the u.s. on the expectation of more easing. forex is jumping around a bit yesterday. the euro/dollar depending on what the news coming out of ukraine was. i wonder whether more political news will lead the forex market to move around. ecb president mario draghi is under pressure to take policy action at today's central bank meeting following his speech at jackson hole where he promised to use all available instruments to combat falling inflation. annette, has he boxed himself into a corner at that speech in jackson hole? >> actually, mario draghi doesn't have a history of doing something which he didn't want to do, so i think he went clearly off script in jackson

hole and gave us that message. every time he went off script, there is something big he wants to announce. so probably he will be having a hard time today during the press conference to elaborate on that message. why has he done that? what does it mean? but when it comes to firm action, qe, it's only on the table next year, according to the majority of analysts. perhaps we get more details on ads. that's the permanent tone across the analyst notes and what i was hearing, as well, that we might get a final commitment, but we are getting an adf program. also, because last week the ecb was announcing that they have hired a consultant, blackrock,

to get them up to speed with that program. we can get some positive news on that. when it comes to more economic data, there is this very important staff projection in september coming out. most likely we'll see a downward revision of gdp growth and perhaps also inflation which would give mario draghi more room to actually move in the meetings ahead.with that, back to you. >> thank you so much for that. and joining us now, the head of european fx strategy at citi and marian bell, economist and former monetary policy committee member. jonathan, what are you hoping mario draghi will say in his speech today? >> we want more clarity, really. we want to see what he signaled in jackson hole. we think it is a shift in the governing condition's risk on qe. we know down side risk on medium

term expectations is important for ecb qe. president draghi did allude to that two weeks ago. we want to know what his colleagues think about that. they highlight in the segment for down side risk. >> the trouble i have is with the expectations on the market, marian, is the fact that it seems like these are all like kids waiting for christmas. they're waiting for more present toes be put under the christmas tree because last year's presents simply weren't good enough. are we too impatient in terms of what we're expecting from the ecb? >> the indicators don't look too awful. core inflation teams to have stabilized a bit.

draghi does have an expectation of delivering. i think what we see is a massive shift because inflation target hasn't changed. and we are being a little bit impatient, but i do think there will be a little by more -- >> if they do do more, how exactly do you think they will get it? >> our call is that nothing comes out today in terms of details, but the qe outright purchases may come on the back of further growth, underperformance, and potential delayed response in the economies. the easing we've been seeing for so long in the eurozone. if anything, the program itself will be dipped between public and private assets and show 60% public assets versus private

assets, but more details are to be announced down the road. i think what matters is the comments the president made two weeks ago in the governing california and there is always a risk that he may be running a bit ahead of his colleagues. your colleague did mention the famous remarks from july 2012. we will do what it takes to save the euro. and in this meeting, nothing really happens. everyone was key to know what are they going to do? it was a bout of disappointment which lasted a couple of hours. the euro did dip. but them, that was 3 below. from then on, euro kept going higher and higher and higher. the price may be similar, even if it does not confirm those expectations. they will likely continue to linger and continue to weigh on the euro. >> how much more can the euro go against the dollar? if you look at positioning, it's

the most bearish in two years. we're looking at a short -- aren't we? yes. i think so. there is longer term, especially on the back of qe. potentially lower still. the u.s. economy from here, if anything, the risk of a squeeze is there. that said, the squeeze we would continue to debate more downside longer term. >> thank you very much. both, stay with us. stay tuned throughout the show. we'll bring you live coverage of today's central bank action today. on a new show called decision team hosted by helia and carolin at 12:00 cet. the bank of decision is up at 1:00 cet and the bank will speak exclusive exclusively to car low messina.

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apple shares are taking a beating after falling more than 4%, its worst drop since january. it could downgrade the company if profits didn't improve. this comes days ahead of the release of the latest iphone model. samsung shares, meanwhile, trading higher as investors cheer the launch of two new products. the tech firm released its new galaxy note 4 and a virtual reality headset. it's seen as a counter move ahead of apple's launch of the iphone six which is rumored to be similar in size. and tony has unveiled a new

smart watch and fitness tracker. the japanese electronic is giant revealed souped up tablets and phones with longer battery life and the ability to stream ps4 video games in better lip. louisa caught up with the tech giant ceo earlier. >> yeah. i think right now the entire industry, including sony, was still coming out and can't really understand where the sweet spot is. there's a balance between features and functionality, battery life, and, you know, we can back a little into functionality, but perhaps battery life is too short. was the right balance? so we're coming up with a very different product to understand what the consumer feedback is. >> in 2013, sony had 2.1% of the

smartphone market share. this is a far cry from where we want apple and samsung, as well. how do you think sony is interacting with the other players? >> obviously, market share is important. for us, it's important to be in the smartphone business, not necessariesly just for market share but, in fact, because i fundamentally believe that as we move from feature phones to smartphones, there will come a time when the market is moving to smartphones, perhaps wearables or some other way to use it as we would like to communicate. we believe in order for us to move into that next generation, we need to be in the smartphone business to be a player. that's why it's so important for us to be in the smartphone business today.

>> yeah. thank you very much. as you just heard there, it does seem like sony is talking about how to get back on track. they've had a number of profit warnings over the last year to year and a half time. they've seen a number of divisions struggling and suffering. the consumer electronics division, as we know, made it best. that's the one they're trying to grapple with and get out of the red. they've had success with the ps4. they continue to see a lot of traction there. they've been venturing into other divisions, as well. they've been focusing on the core of what the business is all about and not concentrate autoing some of these other areas. with regard to where i am, i have been i am at one of the electronics home appliance shows globally. it's not quite as big as e43 in

l.a. but at the same time, it is in berlin and many say it's exactly the pinpoint of where it should be in bringing together appliances and show case everything from the east and from the west, too. there's a lot of talk about how the future is going to look, not just with regards to your mobile device, and a lot of focus still on hand sets, a lot of focus on on still more of the traditional things seeming to become untraditional, like the smart watches, the home bands. but home appliance and the internet of things, that is huge. your house will be able to talk to itself. rooms will be able to communicate between themselves. that is the thinking of the future. i'll be speaking to paul brody, one of the execs, from ibm in approximately, what, 20 minutes time or so? so i'll be speaking to him here on the show a little later on. anecdotally we might be a step away from all of these things

happening. do you know anybody would actually wears a smartwatch as of now or a smartband that communicates directly to their phone or others through watch mechanism? >> i don't yet, but i can see how it can catch on as soon as they start making it easy to use. >> i don't, either, but maybe it's because we're not cool enough or our friends aren't cool enough. >> that could easily be it, for me, anyway. >> louisa, thank you very much. >> that might be it. they're changing the design. they're making the design more snazzy, round interfaces. >> thank you, louisa. we'll be back out for the ibm interview in a few minutes. and we want to hear from you. who do you think is winning the smartphone wars? apple or samsung, google, you can have a shot. if you want to join the conversation here on "worldwide exchang exchange", get in touch with us. twitter, @cnbcwex or worldwide@cnbc.com. and sony has a 2.1% share of

the global smartphone market in 2014. do you know what the number is for samsung? >> i would guess 30%. >> yep. you saw that number. >> i did not see that. it was a good guess. >> apple, 13%. >> 13%. let's get to breaking news. the head of the euro group says the eurozone recovery remains fragile and uneven. no surprise, really, given the very divergent data points we've seen from the core versus the last couple of weeks and months. he's saying i see a risk of long-term low inflation in the eurozone, but no deflation. very important comment ahead of the ecb's decision later on in the show. and still to come on the show, the case for ragz rates. former bank of england policymaker marian bell is still with us and we'll be asking her whether it's time for -- in the uk.

united in the battle on terror. president obama and the uk prime minister from its tough action on isis to ukraine as world leaders arrive at the nato summit in wales. the ecb will launch fresh

stimulus following combatting inflation at jackson hole. coming up on the show, the ceo of sony tells us why it's taken so long to turn around the business as the japanese tech giant unveils a range to intat smartphone sales. the ecb and boe day, everyone. ahead of that, european markets are looking like this. we are pulling back for the most part. the xetra defendant's exhibit off 0.6 of%. maybe a bit of a pullback, give back after yesterday's stellar gains. this was in response to the potential cease-fire coming up between russia and ukraine. the ftse 100 is up 0.17%.

yesterday, we did see yields going up as a response to the potential cease-fire. what we're seeing today is a bit of a mixed picture. in fact, yields have gone down just a little bit for the ten-year german. 0 of 95%. the 10-year gilt yields, 2.47%. and the ten-year treasury is close to those two-week highs at 2.41%. the forex market, a little movement today. the euro/dollar did rise as much as 20 basis points at one point and it settled back down again as geopolitical concerns moving things around. we'll keep an eye on nato today to see if they have further effects. the bank of england's monetary policy committee meets today. interest rates expected to remain at their record low at 0.15%. policymakers were divided at the last meeting. helia joins us on set now. 2 out of 9 voted for a rate rise

last time. will that increase this time? >> i think there's a greater probability. there's two dissenters that we saw last month. they descended after a long, long of voting in line with the governor. that looks to be out of step for the economists in the wider economy, looking at the uk and people commending on it. yesterday we had these massive -- that essentially showed the uk me had recovered from the great depression faster and stronger than thought before. and that is quite key because essentially, the requirements that we had for this emergency level rates, 0.5%, the uk economy, seems to have moved on leaps and bounds. >> and marian bell, former mpc member is also with us. marian, with the economic data coming from the uk, does that mean rates should go up sooner rather than later?

>> it should be going up sooper because the emergency level is no longer appropriate in the economy has quite a lot of momentum. i think that the data that we saw reinforces that. we talk about the supply and the economy. but it's very easy monetary conditions that we have. i think it could take the bank some time to analyze it. and remember when there are major gdp revisions on the committee. and the initial reaction is that it means that the lines are stronger. the supply is stronger and it took some time for that to be -- to the analysis. of course, we've got more revisions to come at the end of the month so you don't know the full picture yet. but it may be that they pause

some some lenders attempted to pause while the data comes in and it's properly analyzed. >> you reflected on on the wages and on the xhs others will be saying, well, that's all very well. we've got slightly higher growth and those gdp numbers are higher. but essentially, the wage inflation remains the same. the productive is changed very slightly. those are the big issues. they are the stumbling blocks. >> i'm sorry, i have to interrupt quickly. we're going to cross live to wales where the nato secretary is speaking to journalists. let's listen in. >> we will strengthen our transatlantic bond as the bedrock of security in europe and north america. and i am ready to take your questions. >> good morning, secretary general, ukrainian news agency.

do you really think that it can help at the ground to find finally cease-fire? do you really think that these two, poroshenko and putin, ever can find a solution and can they expect that during this summit nato nations will go further with assistance for ukraine? thank you. >> first, on the so-called peaces, let me stress that we welcome all efforts to find a peaceful solution to the crisis in ukraine. having said that, i also have to say that what counts is what is actually happening on the ground. and we are still witnessing,

unfortunately, russian involvement in destabilizing the situation in eastern ukraine. so we continue to call on russia to pull back its troops from the ukrainian borders, stop the flow open weapons and fight eers int ukraine, strop the support for armed militants in ukraine and engage in a constructive political process. that would be a genuine effort to facilitate a peaceful solution to the crisis in ukraine. regarding our corporation with e ukraine, we will have a meeting with president poroshenko today and outline our attempts to step

up cooperation with ukraine. >> president obama and prime minister cameron have made it clear today that they and possibly other members of the alliance are ready to increase the military pressure on the islamic state, the so-called islamic state militias. what role do you see for nato to support some allies in this endeavor or do you think that this should be a coalition of the willing only? >> first of all, i welcome that individual allies have taken steps to help iraq. i welcome the american military action to stop the advance of the terrorist organization islamic state. i welcome that other allies have

contributed in different ways. i do believe international community as a whole has an obligation to stop the islamic state from advancing further. as regard to nato, we haven't received any requests for nato engagement. i'm sewer that if the iraqi government were to forward a request for nato assistance, that would be considered seri s seriously by nato allies. in that respect, let me remind you that nato has assisted iraq in the past. we had a training mission in iraq in 2011. if the iraqi government were to request resumption of such training activities, i am sure

nato allies would consider such a request seriously. >> inspector general, how much more time can you give afghanistan right now? >> well, no reason to -- that time is of the essence. we need to know very soon whether the necessary security arrangements will be signed by the afghan government because it is a prerequisite for our continued presence in afghanistan beyond 2014 that we have a nato state of supporters agreement in place and that would also imply a signature on the bilateral security agreement between the united states and afghanistan.

i am encouraged by the fact that both presidential candidates have declared that they are ready to sign the security agreement soon after taking office. so, still, i am hopeful that the necessary security arrangements will be signed in due time so that we can deploy a nato training mission resolute support, one of the first of january 2015. but, of course, we are approaching the date when that decision will have to be made. so i encourage the president dwral candidates to complete the electoral process as soon as possible in a way that can be agreed by both candidates. >> thank you. >> all right. that was the nato secretary general, mr. rasmussen speaking

to reporters there on the sidelines of the nato summit in wales. he said that a putin peace plan would welcome efforts to find a peaceful solution, but what counts is what's happening on the ground in ukraine. some quick reaction to this, the ecb has acknowledged the actions of russia and ukraine. do you think others in the world are doing so sufficiently? >> over time, those geopolitical risks should fall into macroeconomic risks. the uk won't be able to decouple from a slowdown or sustained slowdown in europe. it may be too early for that. a risk needless to say in the uk have this referendum which may be playing into the fx markets. if anything, any changes of the mpc only after those risks have

cleared. >> and i was just actually going to go back to marian because before we broke into the program, i was asking about wages. obviously, over the revised growth output, but really, the issue with wages staying stagnant, really, and declining in the recent meeting hasn't changed much. is that the biggest hurdle to a rate rise, do you think? >> i think there was a danger of taking a cost push approach to inflation saying that we start up with wages and react and if wages are week, then you can't have any inflation. actually, i believe inflation is a monetary phenomenon. what we are seeing is profit margins in the economy, it will show up somewhere else. so i think if that is an argument, and that shouldn't be. the other lesson from wages is

it tells us -- jonathan said earlier how much their capacity is in the labor market. and that's true for the government, their capacity in the economy. but the big issues is the supply/demand imbalance and they've got this whole world data and more data to come, which they will need to analyze. and it's pushing up productiv y productivity. to some extent, the answers we see answers the productivity issues and suggests as well as the slack shown by wages that could be even more surprising because of higher productivity. that doesn't change my mind that we still need to move away from the emergency sector. but it might hold back. >> marian, thank you very much. also, that was marian bell, economist and former monetary

policy committee members at bank of england from swiss bank. from one central bank to the next, the bank of japan kept its monetary policy unchanged. makiko has the story live. >> the central bank upheld its open mystic assessment of the economy from the previous meeting saying it continues to slowly recovery. it added more cautious comments such as real estate investments were still suffering from the aftermath of last-minute buying before the consumer tax hike in april. boj governor said in a following press conference that the economy will continue on its ghejts recovery path in the coming months and that the effects of the consumer tax hikes will faed with team. although he was hopeful that it will pick up with help from the weaker yen. one of the focal points which involve the boj's assessment of

the economy is whether the government will go forward with plans to raise the consumer tax further, up to 10% in october next year. the boj governor is known to be an advocate for restoring fiscal health. today he reiterated its view that it is important for the government to make -- in those terms. that's all from the nikkei. back to you. all right. makiko, that you can so much for that. delivering on the internet of things is becoming imperative for tech companies. analysts suggest some 20 billion to 30 billion things could be -- by 2020. what is it and how much does it cost the industry? louisa has been finding out in berlin. >> yeah, hi again, wilfred and carolin. look, a lot going on here these days. i have to tell you, though, mind me, it looks empty right now

because we're in the press data today. we're gearing up to the full day happening tomorrow. with me right now, i have none other than paul brody. welcome, paul. how does the home of stoem look and what is ibm's role here? >> the home of tomorrow has to be smarter than today. we are starting to get smart devices, smart applians. but just because we're connecting them up doesn't mean they're actually better. it's nice to get a message that my laundry is done on my tv set, but does that make my laundry cleaning or my cooking better? so i think the emphasis going forward is going to be on making the main function of the product much, much better and moving it away from this message of its better just because it's connected to the internet. >> and a lot of people saying that it doesn't really matter if you have devices that are intelligent. if they can't communicate with each other and if you can't hook them up on a room by room basis,

the rooms can communicate. >> i think that's true. but i think what we see with some of the early big successes in this market is that the people want a smart diagnose that does something really, really well in and of itself. it's night to have a room of things that all connect to each other. but devices like the net have been hugely successful because it works great just by itself. so when looking at some of the bigger issues at the moment, security is massive and hacking is something that a lot of tech companies and a lot of companies in general have to deal with. many are saying that with the internet they're saying this is the biggest item on the agenda, the biggest security risk the. absolutely. this is the number one issue in the internet of things right now. one is security and privacy and the other is cost. on the security and privacy front, i think the most critical is that these systems have been designed for convenience on old technology instead of from the ground occupy with new technology. and one of the things that ibm

is working on right now, and we're launching here in paper next week is an open source platform for the internet of things and it's designed to be very secure and very scalable. and you're talking about one of them being based on bitcoin, as well. >> that's right. we're using the technology called the block chain which is the underlying technology of bitcoin. the genius of this is it is first and foremost entirely distributed at a very, very low cost. secondly, it's very secure. it uses large amounts of encryption. lastly, it has a tremendous amount of momentum behind it. technology companies, developers are subjecting it to enormous scrutiny. we see this technology as being foundational for the future of the internet and especially the internet of things. >> really, really interesting as we continue the debate about the availability of bitcoin. paul, thank you very much for joining us from ibm. i'll be back in around 20 minutes time, 25 minutes with more. guys. >> thank you very much for that,

louisa. coming up after the break, we cross back to the nato summit in wales. stay tuned. location. location.

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and welcome back.

i79 to recap those comments we heard from the nato secretary general just before the break. he said nato welcomes all efforts to find a peaceful solution in ukraine. he also said that nato would seriously consider any requests from the iraqi government for help. hadley joins us from the nato summit in new port, wales, now. what do you make of those comments? >> not a thing is unexpected. certainly the leaders here that i've been speaking to are very concerned about the threat from the islamic state. they're concerned about what nato can do as an alliance. the intelligence sharing or military help. also, of course, we have to remember this russian aggression that the baltic in particular are very worried about. i want to bring in my guess, norway's prime minister. obviously, you support a more active role for nato.

>> i have to expect to see a united nation towards russia, towards showing that nato still has a force to deter, to have a military capacity that makes russia less aggressive. but i think all the political solutions are the ones that we should look for. i think the most important thing is to see that we can reassure the baltic states are our commitments of the nato membership, that it's the political solutions in ukraine that's more simple. >> you talk about political solutions. we also are talking there about sanctions. what kind of sanctions? obviously, you're not a member of the eu, but what kind of sanctions do you expect to see going forward? >> we have followed eu line on sanctions. and we are going to continue doing that. we think the most important part is to try to hit the leadership, the leadership that can make the changes in russia, but also for

the larger economic feeling. i think it's difficult standing outside and being sure what type of sanction will be -- that you've seen b more russian aggression, we've seen there are russian troops underground. wove seen the pictures. we know that they are there. so we know that it's -- this should be a step up and russia should be told that we don't fall for the rhetoric, we see what they doing. >> and will the defense spending, the united states, for example, they've been left holding the bag for european securities for far too long. i believe you spend about 1.4% to gdp on military spending for nato. are we going to see that number possibly increase? and in terms of other nato states, do you expect them to be paying more going forward? >> well, we have had a large defense reform. we have some defense.

we have had a very increase on gross national product. next year, we are going to increase our defense budget. we are modernizing our home there. we have large investments from new fighter planes. that means they're just extending to go up. i think those potential -- are relative with reform, and a lot of nato countries and also to increase defense spending and make sure that we can work together in a better way between the different nato countries. one of the initiatives before this meeting has been the readiness action plan. it also means that we have to have forces that can easily work together. >> i really want to ask you about the threat of the islamic state. what can nato do to combat this problem? >> i think it is important that they become nato, islamic state

conflict. this is a conflict on the minorities in iraq, it's about the destabilization of the whole region. it's -- of what type of warfare they're in. but i think it's important that we don't end up in a conflict between the west and radical islamics. so to mobilize, not to -- to help the forces in the area, but also to mobilize the countries around is the most important thing we can do. >> thank you so much for joining cnbc. so wil and carolin, some very tough questions facing these leaders, 60 world leaders gathered here in wales trying to tackle the tough questions. >> thank you very much for that, hadley.

we'll have a quick update on markets, they've all turned a little lower in the last couple of minutes. no specific reason for that. germany down about 830 basis points. carolin, what do you think, do you care that's the cause of these geopolitical concerns, perhaps? >> it's very hard to say. it's not a huge move, as you pointed out. we've seen a spectacular run up, maybe some positions ahead of the ecb and the boe and of course the adp and the reports tomorrow. >> exactly. so much more after the break. stay with us here on "worldwide exchange."

welcome to "worldwide exchange." nato leaders united on terror. president obama pledges tough action as rasmussen steps up pressure on moscow. >> we continue to call on russia to pull back its troops from ukraine borders, stop the flow of weapons and fighters into ukraine, stop the support for armed militants. >> european markets edging lower as investors wait to see if the

ecb will launch fresh stimulus while wall street looks ahead to job data. nerves around apple's iphone launch. samsung shares rally after it unveils two new products. meet the new boss, same as the old boss, former new york city mayor michael bloomberg is back in the spotlight, returning to take the helm of his financial media empire. >> announcer: you're watching "worldwide exchange," bricking you business news from around the globe. >> if you're just tuning in, thank you very much for joining us on the show. the s&p yesterday had its second day in a row of down trading, but that was in general a mixed day across the u.s. we've had poor markets in both europe and asia so far. it looks like the u.s. will be more of the same.

the dow expected to open down about 15 points, the s&p down about 2 points and the nasdaq down about 8 points. we look at european markets now. you can see that they are in the red. this has worked slightly in the last 20 minutes or so. general nerves ahead of the various monetary policy decisions coming up today. the cac down about 40%, germany down 80 basis points, the ftse 100 just outperforming, staying out flat. >> would you want to hold major positions? probably not. >> that's for sure. in bond markets, you are seeing the ten-year bund yield approaching the 1 2.5% level. 2.405% is the yield we're seeing there. the ten-year treasury, 2.4%, slightly lower on the day. on the back of a cease-fire for

ukraine and russia, and the ten-year gilt year, 2.46% ahead of the ecb meeting. we just saw an auction in spain, the yield dropping to record lows at that auction. quick look at the currency markets, as well, once again, little movement ahead of those ecb and boe decisions. euro/dollar, 1.3145. off the one-year lows that we saw earlier this week. dollar/yen is back below the 105 level. that's a really didn't react strongly to monetary policy unchanged at the boe meeting today and cable is at 1.6458. thank you, carolin. nato secretary general rasmussen has stepped up on haas cow to ease the conflict in eastern ukraine. speaking at the start, he said there were a few signs of russian intervention in the

region. >> we welcome all efforts to -- to the crisis. i have to say that what counts is what is actually happening on the ground. >> and joining us now is tony fratta, managing director at hamilton place. tony, both obama and cameron have said this morning that nato can adapt to deal with the pressures it faces today. do you agree with them? >> well, i think, you know, the words have been really good. president obama's speech yesterday was, you know, fairley strong and prime minister cameron has been fairley strong. but i think it still remains to be seen whether nato has the energy and the resources and the political will to really do much on the ground. as teddy roosevelt said, speak

softly and carrying carry a big stick. what's happening with nato speaks strongly and we're all searching for sticks that we can't use. there is an open question as to whether nato can exist, take that fight into syria and chase them out of iraq. so these are really difficult problems, they're complex problems for nato. we need to see what in erms the of real actions will come out of this. they've done a lot to reassure the baltic states that that didn't bring great comfort to ukraine. waiting for a strong assistance and strong response to the west. >> great to speak with you, as always. i seriously wonder what mr. putin is thinking right now. do you think there's anything that can come out of this nato summit in wales over the next two days that could seriously worry him? >> i don't think so, carolin.

it's disappointing for me to say. i wish i could say yes, there's something that would come out that would set him back punish but, you know, the lead verse stood so much that military support is not forthcoming for the ukraine. vladimir putin was one of the more bizarre events in the ukraine that we've seen where he literally wrote down a peace plan on the back of an envelope on a flight back to moscow, released it in the middle of a press conference. it cass another distraction for the west. it's hard to see what nato is going to do. we have these really, really strong self-economic sanctions. so i think, you know, putin has not been deterred yet. the actions that he's taken

before, he's continuing. and very quickly. his whole plan has always been to create a de facto situation on the ground that we then have to negotiate over. >> this conference was originally scheduled to coinsight with the conclusion of events in afghanistan. do you think nato will consider that given what's happened in iraq? >> there are peace steps. rasmussen stepped on this earlier. it's really important that they have that and they that comfort to even consider whether they can go beyond the current date that they have set forward. i don't know whether the energy is there to go much longer.

it's real -- there's a real risk of -- in afghanistan and the back up the gains that have been made in recent years. i would like to see them look at that question of extending beyond the current data or at least a signal that way. we've always had this problem when we set exit dates for the military. we could see that happening in afghanistan. and that's really dangerous. we would like to see -- try to establish better institution necessary afghanistan so that they can hold on to those gains themselves. >> thanks for that. we'll be back out with you again shortly. >> ecb president mario draghi is under pressure to act at today's central bank meeting following his speech at jackson hole where

he promised to use all available instruments to combat inflation. you and i as germans, we think there's huge political resistance to any form of full below qe. >> yes, that's very much the case. i think his hands are tied when it comes to full blown qe. looking at the economic deterioration in germany, a weakening of the german economy could help him to win support for unconventional measures, also in berlin. but for now, one has to say the resistance is very hard when it comes in qe. remember, the constitutional court didn't want to rule on it. they referred it to the european court of justice saying that the

german constitution on the omt program. mr. draghi could be cautious to win support from a potential qe program which analyst says probably will not come before 2015 at the earliest. back to you. >> annette, thank you so much for that. stay tuned. we'll bring you live coverage of the central bank action on a new show called "decision time." you can watch that here in the uk and in europe from 12:00 cet to 1400 cet today. we will be speaking exclusively to the ceo of san paolo. don't want to miss that. >> indeed. on the agenda in the united states, trio reports at 8:30,

weekly jobless claims, revised second quarter productivity examine labor costs. now, tony fratto from hamilton placed strategies is still with us. we've been talking about which data points will sway mario draghi and mark carney. in the u.s., what data points are at issue? >> i think it is going to be looking at wages. i know there was a discussion of wages earlier. the great mystery, where wages are, why we're not seeing any action on wages. but especially in the united states. we've seen steady sustained growth for a period of time now. and some suspicion that it may be picking up. as we look at the nd of the period of zero interest rate policy, wage pressure is what i think we're going tv our eyes traened on. the unemployment -- it could easily talk about the

unemployment rate in the united states with a five handle which puts up into really normal territory. whether we're seeing that pressure on the monetary policy committee at the bank of england and draghi is dealing with different issues right now where you have to answer. you see rates rising and what that means. the risk is do you allow inflation early or do you choke off what is a steady but consistent growth that we're seeing right now. looking ahead to tomorrow's crucial jobs report, obviously,

we want a number that's not too hot, not too cloeld. somewhere in the run of 150 and 70 within i think. is this evidence of wamg pressure? >> yeah, i think so. we're going to look for revisions, also. appear ek totally and what we're seeing in the dow is very, very positive for employment growth and we do expect to see the data this week to, you know, hit the middle of the bull's eye again, somewhere in that 225 to 275 range which is still bringing down the unemployment rate, still attracting long turm unemployed. some of those who are part-time workers or who have left the labor force to re-enter.

those are good signs. i don't know when we'll see that as too hot or too cold. to get much higher, we are going to start seeing increased speculation about what the fed might do and in order to possibly speed up rate hikes. we are looking at the first quarter of next year for the first moves on rates. >> no outlier expectation from you, then? >> i'm going to revise my outlook. with the 300,000 handle in the united states. >> all right, tony, thank you so much for that. that's verchb, tony. >> now, michael bloomberg is preparing his company since stepping down as mary of new york city. in a statement, bloomberg says

he never intended to come back to the company he founded in 1981. but he says as he spent more time getting reacquainted with the firm, the more you found he was enjoying himself. next up, the conflict in ukraine is top of the agenda for nato leaders gathering in wales. we'll krop cross out to the summit after a short break.

welcome back to the headlines. nato sets up pressure on moscow to end the conflict in ukraine as world leaders gather in wales. plus, apple takes a beating ahead of its crucial iphone launch as samsung threatens to destroy the show with its new galaxy. world leaders are gathering in wales for the nato summit which comes at a crucial moment for the organization. 12 of the 28 members are now forming soviet or eastern block territories and have been calling for a tougher stance against russia. let's get out to hadley joining us on the ground to wales. we were talking to our previous guests, tony, about all the challenges nato is fating right

now. it seems as though ukraine is stealing the show, isn't it? >> it absolutely is. i have been surprised by the level of comment on isis. that's coming off the back of the news that we've seen over the last couple of days. journalists being be headed put that on the front burner. they've talked about possibly sharing more intelligence, within the alliance and talking to each of them about what more they can do. this is a serious threat, we all are taking this seriously. russian aggression, the main talking point over the next couple of days and we could expect to see more in terms of spending, of course, in the united states.

many in the u.s. now questioning and have been questioning, frankly, for several years now, how long are we going to hold the bag for european defense? they are spending around 1.4%. she said there's more contribution for a time gdp with a little less. certainly we're going to be seeing more from these countries in terms of what they want to do going forward, do they support this rapid response force. i think that would be an overwhelming yes. i think they're going to be hesitant to go that far. >> still to come on the show, louisa is live at the conference in berlin where she's been speaking to the ceo of sony and honing her football skills. louisa?

>> just a little bit. i met ian here and as sony is juggling so much issues at the moment, we will be back just after the break to figure out what the strategy is for the company. we needed 30 new hires for our call center. i'm spending too much time hiring and not enough time in my kitchen. [ female announcer ] need to hire fast? go to ziprecruiter.com and post your job to over 30 of the web's leading job boards with a single click; then simply select the best candidates from one easy to review list. you put up one post and the next day you have all these candidates. makes my job a lot easier. [ female announcer ] over 100,000 businesses have already used zip recruiter and now you can use zip recruiter for free at a special site for tv viewers; go to ziprecruiter.com/offer2. fornot a finish line. starting for tgate,wers; for you, the ats isn't just a trophy. it's a sleek, chiseled instrument of your ambition.

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sony has unveiled a in hand set. louisa has been talking to the tech giant and joins us now. >> yeah. that three series is being unveiled, larger screens for those who like the slightly larger screen. a smaller screen for those who want something more compact. they unveiled a new projector-type device. you hook it on to your kitchen counter and you can project the recipe so you don't have to deal with books on your counter top, for example. i did speak to the ceo of sony. i asked him where it is it's taken such a long time to turn the company around, given that they still are struggling with profits. >> i think that especially with the electrics business, this is

a large organization. we are in very much businesses and it is a japanese company. and sometimes things perhaps taking a little longer than one is expecting. however, we have now exited the pc business. we have exited a lot of the smaller businesses, for example, our small lcd panels business. and, of course, we took the tv business and made it into a fully owned subsidiary with frequent turn arounds and etcetera. so we're moving the bar in a lot of different fronts and we're making some progress. >> on that point, how would you respond to people that say sony has lost investor confidence, it's lost consumer confidence. who is sony? is it a consumer electronics group, is it a hand set devicemaker, an entertainment group? i saw you ventured into real estate in japan, as well.. who is sony? >> sony is all of what you just

mentioned. and what ties everything together fundamentally is the sony dna of wanting to provide what we call the -- so emotionally moving people, whether it's through our hardware products, software titles, music, video gaming and even our financial services and real estate business. we're trying to make a business. >> and it is very much all about lifestyle. i was speaking to the ceo of electrolux about how your house can become even more intelligent, so something to look forward to. guys. >> all right, louisa, thank you so much for that. >> still to come on the show, are investors hanging up on apple ahead of the highly anticipated iphone 6 launch? we discuss this after the

company sheds 26 billion in market share. and we give you a look at how the futures are heading on wall street. we'll see you after the break.

welcome to "worldwide exchange." i'm wilfred frost. >> and i'm carolin roth. rasmussen steps up pressure on moscow. >> we continue to call on russia to pull back its troops from ukraine borders, stop the flow of weapons and fighters into ukraine, stop the support for armed militants. in the meantime, european markets edging lower as investors wait to see if the ecb will launch fresh stimulus as investors look ahead to jobs data. >> the tech giant spedz $26 billion in market cap in its worst day in seven months, but shares in samsung rally after unveiling two new product. meet the news boss, same as the old boss, former new york

city mayor michael bloomberg returns to take the head of his media empire. display you're watching "worldwide exchange," bringing you business in from you around the globe. if you're just tuning in, have a look at the u.s. markets faring on the open. yesterday posted back to back losses for the first time in a month and is looking like it might bounce back today. the entire open is basically flat. the dow roughly flat. let's have a look at european markets. they've struggled so far today. that, of course, because of the uncertainty that we've got ahead of both the uk monetary policy committee announcement and the ecb announcement. italy is basically flat. france down about 25 basis points. germany struggling 60 basis points down. the ftse 100, the relative

leader of the pack, 11 basis points. back to you, carolin. back to one of our top stories, nato secretary general rasmussen has stepped up pressure on moscow to ease the conflict in eastern ukraine. at the start of the nato summit in wales, he said there are still signs of russian intervention in the region. >> we welcome all efforts to find a peaceful solution to the crisis in ukraine. having said that, i also have to say is that what counts is what is actually happening on the ground. >> let's get back out to hadley who is joining us from the nato summit in wales. hadley, what can we realistically expect to come out of this nato summit? >> well, certainly a european leaders have been a bit foggy

when they've described to me what they see as coming out of the summit. obviously, eu members are talking about ratcheting up sanctions that are already in place. but president barack obama, he's traveling here, he's hear from estonia, essentially. in estonia, he had that press conference where he siemd to articulate some kind of strategy, but didn't really give a plan. certainly, he's going to want to confer with his eu partnerses on the threat of terrorism. he wants to know essentially how long europe expects the united states to hold the bag in items of how long are we going to continue to pay for european security. so the united states at this point does meet that military benchmark, the 2% of gdp that nato alliance members are required to contribute. so does the uk. no other members do so. i think he's certainly going to be asking the question, when can you guys contribute more to your own security? >> hadley, thank you so much for that. moving on, apple shares

trading lower in frankfurt after taking a beating yesterday, falling over 4%, its worst drop since january. pacific crust securities warning it could downgrade the profits if things don't improve. apple has been under pressure over the security of its icloud service after nude photograph celebrities where it leaked online. and youtube could potentially be worth up to $40 billion, more than twitter, according to an analyst report by jeffries. online video ads would be at least ads 17 billion market in the u.s. by 2017 and youtube would generate nearly 9 billion by 2016. google flips about half the ad revenue. youtube's share will be up 48% from last year. we were looking at the shares there about 3.3% after pretrade in frankfurt. google bought youtube for 1.65 billion in 2006. at the time there were questions about whether google overpaid. now, joining us now is the

managing director and principal for douglas c. lane and associates. i wanted to start on apple and sam understanding sung. how do you think these will be priced? so far those two companies have been able to keep a price premium to the rest of the market. >> is appearing going to keep the gross margin up? it's not the sales number, it's the gross margin number. i think what's going to happen as they ramp up production, margin will come down, obviously, because of the capacity. but longer term with the iphone six, the wearable devices, the ilife keeps on work, they could be longer term value in apple. but shorter term, stock has a great run, it's inevitable that stocks take money off the table. it's coming forward. how will these products are

received and really what the take is. that's going to be really important. i think the next couple of weeks is going to be a lot of noise about people projecting what is going to happen. >> so we've seen profit taking right now. now should be a great time to get back into the shares. why are you not owning apple? we do own apple for our clients. it's not widely held. but i think the time to buy apple is when it gets pulled down hard. that's what we did in the last downturn. we're favorably inclined on google. google is a multi pronged strategy. they've got android and search and they're in other products. they're innovation and they're a growing company with great cash flow and good growth margins which continue to grow. talk about smartphones, who is it people are loyal to? is it the quality of the hardware, the quality of the software or the brands on the box? >> you're having now an ecosystem. so it's not just a smartphone.

it's does this connect with my tablet, does this connect with my computer, does this connect with all the devices i have at home? it's becoming hardware transferring into software. that's where android has part of a problem, but android is being sold to the lower end and you can see apple on the higher end. >> .smartphone growth as we've seen in the last five years has been huge. so far, the companies that make the most money of of it has been the hardware manufacturers and the software manufacturers and the content owners, of course. moving forward, is it possible to recover more grouped, increase their margins? >> the telecoms are cash machines, considered more like utilities. it's the makers like qualcomm. qualcomm is in every smoep and it keeps on growing.

>> we will be coming back a bit later. earlier, we asked who do you think is winning the smartphone wars? apple or samsung? how a shot just tweeted in to say the winner of the smartphone wars will be the first to make a -- for cap. we want to hear from you. join the conversation here on "worldwide exchange." >> i wonder whether that is with geoff cutmore. >> i'm not sure. they say imitation is the sincerest form of flattery. ikea is taking that to the extreme poking fun at apple's famous product commercials. here is a small taste.

>> introducing the 2015 -- it's not a digital -- oots a -- right to left to move forward. left to right to move backwards. another special feature is password protection, which is voit activated. skoout excuse me, not mine. >> that's a great idea. i haven't seen that before. >> ikea's parody includes several more, it doesn't require any cables, comes fully charged with a battery life that is etern eternal. >> and ikea is much more pricey in terms of its products. >> it is so incredibly busy. let's take a look at today's other top stories. new data from security blogger suggests nearly all of home depot's u.s. stores may have been hit by a breach.

evidence shows that the breach first surfaced on an underground website where customer credit cards were leadership listed in terms of store location. it's leading with i.t. firms to investigate. the retailer is assuring customers saying they won't be held responsible for any n nonlegitimate charges. the current ceo dr. daniel lavrop drmd he never intended to come back, but the more time he spent with the business, the more he found he was enjoying himself. >> will the electric carmaker hit the jackpot? details after the break. xkç

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back to business returning to the top dog on his financial media company. >> tesla motors is expected to announce today it's moving ahead with plans to build a massive battery factory in nevada, placing a big bet on bringing its cars to the mass market in the next few years. hampton pearson has more. >> hell loy, wilfred. cnbc has confirmed tesla is expected to choose a sight in nevada for its proposed $5 million lithium ion battery factory. there's a press conference scheduled for 7:00 p.m. eastern time. choosing nevada gives tesla a site close to its assembly plant in fremont, california. the so-called giga factory is expected to produce more than all the world's current lithium ion batteries combined. tesla has said it plans to

employ up to 6,500 workers and produce 35 giga watt hours of battery cell per year. yearly this year, tesla began developing a site near reno, nevada. the company offers choices among solar, geothermal and wind energy. nevada, no state income or corporate taxes. in june, tesla's ceo elon musk talked to cnbc about how several states were competing for that plant. >> a lot of people think we're trying to put the screw toes various states to get as much as pbl. that's actually not our goal. really, our main concern is to make sure that the giga factory, the strained battery factory is ready when the third generation car is ready. because if we go in, design the car and wait, we tool up to produce the rest of the car which is also a big expense, but

then there are no factories to supply it, it will be a terrible outcome for tesla. we might fail as a company. so that has to be paramount in our decision making. >> now, tesla is aiming to finish construction on the gig da factory by 2017. that's when it plans to roll out its third vehicle, the model three, which has a 200 mile driving range. he hopes to reduce battery costs by 30% by bringing in production partners. panasonic is already committed to help the battery cell optimization. some analysts are skeptical. the giga factory will have 57% overcapacity by 2020 according to some and sales of tesla cars will be less than half what the company is forecasting. a big, big move for tesla in getting that plant announcing where it's going to be located and built. back to you guys.

>> a very good move. thank you so much for that. do you think tesla stock is overvalued? find out how one trader thinks it is five times overvalued. stay with us. our managing director, is tess sa too hot on to handle? >> tesla is a great company at a very rich valuation. >> you would not buy it right now? >> i would not buy it right now. it is discounting very good things ahead which might happen. i think if you get a road bump, you might get an opportunity to buy a stock and at that time you have to re-evaluate the fundamentals to see if there are any barriers to entry. >> auto sales have been picking up in recent weeks and months. >> we like the auto parts suppliers, as well. if you look at the rebound we've had since 2009, globally, auto sales are done very well. the consumers have come back. cars are 11 years old and people

are start to go buy cars again. but i think one of the parts that we like as the supplier, companies like adelphi, ford, gm, toyota, those are the companies that i think after the consolidation that we had back in '09, those are the companies to own. even if car sales temper down, they're still going to make the products that go into these cars. >> what about the likes of bmw, daimler, mary say december, in europe, it's been incredibly strong in recent years. does that have more to go? >> i think so. as the consumer gets more confidence and the ability for them to get more jobs, whether from the u.s. and i think europe we have to kind of see where things go, those are the operation cars that the consumers want to buy. i think, again, it goes back to the point i made before, while outside, the people putting all the parts in there because you're still going to make money as these cars get better and better. >> thank you.

stay with us. now, a sneak peek of the u.s. jobs report out tomorrow with a private sector data from adp. we'll be on that after the break.

welcome back. europe is mixed today. the italian market down 20 bafrs points. germany down 50 basis points and the ftse 100 just up. the ecb meeting is coming up in just under two hours. all eyes on mario. will he or won't he ease? let's look at what is happening in u.s. futures. just about a positive open. that's changed in the last half an hour or so. we're expecting the s&p to open up about 2 points and the dow to open up about auto 15 points.

so gained a bit of strength in the last hour or so. i'm not quite sure where, but we'll be analyzing various details like that. >> let's give you a look at what's on today's agenda in the united states. the august adp employment report is out at 8:00 a.m. eastern. followed by reports, the trade deficit, productive numbers. at 10:00, we get the ism services index. the next fomc meeting is on september 16th and 17th. home builders hovnanian and el pollo loco. what do you make of the market levels right now? the s&p is about 15, 16, it's not too expensive, is it? >> not too expensive on a whole. we're looking at different sectors within the s&p. i think if you look at consumer staples and utilities, they are

the classic dividend substitution. investors who can't buy bonds. i think those are fairley overvalued. but if you look at the story, maybe consumer discretionary, we've talked about autos, look at some of the airlines, look at the industrials. those are some of the places we think is good to start adding money to. >> the fed is tapering and they're looking at tightingen probably next year. it seems as though everything is driven by qe and that lists all the boats at the tide. is it stopped because of the markets or not? >> i think going forward, it will be much more because if the fed does raise rates, if the employment numbers keep coming out strong, what you're going to see if we're going to train on fundamentals, we're not going to train just on liquidity. those are companies that can grow top line and not just use financial engineering because debt is cheap, we can buy back shares. it's going to be how do i get more earnings, more cash flow as

opposed to just putting, you know, sugar on top? >> and looking at your sector allocation dhart, which we had um a moment ago, you were massively underweight for the sector. >> if you look globally, the amount of oil we discovered, oil, if you look in the u.s., wti is still in the 90s. brent is in the low 100. you think think old would be at 121.30. what that is telling su there's a massive supply of oil out there given the fracking we've done in the u.s. and to the rest of the world. that to us is look where you can refine, where you can export out of the u.s. the cost of producing oil keeps on going up, but the revenues keep on coming down. i would rather invest in companies that benefit through lower imports from oil, because the consumer has a less tax on them. our view is oil will stay at

these prices if not lower which will benefit as a tax production. >> is that why you like the air lines, as well? >> we do. what they've done is the classic combination of consolidation, cut capacity, and really you haven't seen any new capital come into the market. you're talking about people complaining about their seats. all that is because there are no seats next to them. and you want to buy water, you want to charge -- you know, you want to put a bag through, airlines are making money. delta is putting down debt. even at these prices for the next couple of years, they're good additions to add to your portfolios. >> what do you think of financials? these banks are going to benefit because of the widening in that interest margin. more loans are given out. the consumer is healthier than ever, you would think. >> if we were talking about the prior cycle, i would completely

agree with you. but i think what's happened with banks is they've become such utilities, not just in the uk, but you see in the u.s., all the banks are paying fines. they don't know what the next fine is going to be. investors don't like uncertainty. what's that has done is compressed the multiples. dividends are going the rise. but i don't see earnings growth. multiples are expanding. maybe insurance companies can play higher interest rates. but overall, you have to find the right area in financial services. it's fought going to be an easy trade like it was in the prior decade. >> all right. it was fantastic to have you on the phone. appreciate it. very quickly ahead of the ecb and the boe decision rate later on today, i want to show you what the european markets are doing. >> and u.s. futures have taken a bit of strength in the last half an hour. the s&p and dow both up, the

nasdaq roughly flat. >> that's it for today's show. i'm carolin roth. >> and i'm wilfred frost. see you tomorrow.

good morning. welcome back to "squawk box." we're awaiting the adp report and we're standing by for the ecb's big rate decision this morning. that usually is unchanged, but we'll wait for it, anyway. goldman wins a key role in the ipe of alibaba. and a new report claims that almost every home depot store in the u.s. may have been hit by a security breach.

it's thursday, september 4th, 2015, and "squawk box" begins right now. good morning, everybody. welcome to "squawk box" here on cnbc. i'm becky quick along with joe kernen and andrew ross sorkin. we are coming to you live from new york city. by the way, that music there, that's the theme to boardwalk empire this morning. that's the day after joe and andrew painted the town red last night. >> pink. >> we'll talk about that. we spent some time together. andrew, you know, that is a big story. >> we had a lot to do last night. >> we did. here we are. >> this was fun. >> this is the premier of boardwalk empire. it's hbo's hit show going into its final soap. plenty of selfies from you guys