welcome to "worldwide exchange." i'm carolin roth. >> and i'm wilfred frost. >> apple shares fall after the introduction of a number of new products, including a smartwatch that won't be available until next year. the central bank will raise rates sooner than expected. >> the stl gets into the driving seat as ferrari shares move higher an the chairman will be

replaced. santander announces the death of its chairman, sending shares in the spanish lender lower in early trade. good morning, everyone. you're watching "worldwide exchange" and it's ail about apple. the day after the postmortem. shares are down by 6%. you have to wonder why that is. is it because the it was the usual buy the rumor sell the fact story or is this the tietdenning story sending ripples across the global markets? >> 6%, a huge amount in frankfurt, particularly given shares in apple were up for most of the day. and it was only after the markets as a whole sold off that they finished the day down.

when the u.s. markets open a bit later and before that, of course, we'll continue to explore all the benefits and new products. there's a picture there of the iwatch which, when that was announced, saw shares sell off. part of the reason people suggested that was it won't in fact be available until the new year so it won't make the most of the christmas spending spree. >> no, you're right. but apart from that, the analyst opinions were really, really positive. they say it was the potential for big volume and big margins, talking about at this phone. also, they're saying apple is reshaping the payment industry. these are strong and bullish words coming from some of the analysts. barclay's pointing out like you did, the iwatch is going to miss a very important shopping spree. >> and the iwatch -- i'm not sure why they called it apple watch.

it can only synch with iphone 5s and later. and the other thing of course, with apple pay, is you were saying are people really ready to start using technology devices as their wallet, as their payment system. >> you're absolutely right. if you can steal a credit card, steal a pin, you should be able to steal an iphone, right? why would you trust that one more than your credit card? >> absolutely. and i think the other area of interest yesterday was the pricing of the new iphone. as we've said so far the iphone 6 entry level price is $199. that's with a two-year contract or it is $100 more if you go to the iphone 6 plus. so that price level will be where people expected and, of course, the pricing of apple's biggest product is still important to their margin. now, it was a volatile

session for apple stock in a broadly lower market yesterday. it jumped as much as 4.8% after tim cook unveiled apple pay but eventually dropped 4% lower. we got the iphone 6 plus an apple payment service. josh lipton has all the details from that launch. >> fans lined up for apple's mystery days ago. see what apple's ceo tim cook would reveal. >> today, we have some amazing products to share with you. and we think at the end of the day that you will agree that this, too, is a very key day for apple. >> and they got it all, a new and improved iphone. this new version is thinner, has a longer battery life and will be supported by more carriers. it will be available on september 19th, $199 for the

iphone 6 and $299 for the larger iphone 6 plus. cook introduced a new mobile payment system, as well, called apple pay which turns your iphone into a one-touch payment system. finally, the much anticipated apple watch. the company's first wearable features dozens of apps to manage time, health and weather on a thin screen with personalized band. eats slated to be available early next year for $349. >> it's much about personal technology as it is style and taste. >> the nearly two-hour presentation was capped off with an appearance by u2 while the band offers their new release free to customers by mid october. the crowds were disappointed. >> i thought it was neat where team is ushering in a new era and giving them a chance to present. i thought that was cool.

>> analysts do have new concerns because apple's new watch requires a user to have an i pone. >> we saw the fall off just as people were talking about the iwatch and people were getting excited and guess what? you need the iphone to use the i watch. that limits the market opportunity, at least over the near term, we think. >> today's event was critical for investors and it was tim cook's first big launch since becoming coo in 2007. for cnbc, i'm josh lipton. >> joining us now is george o'connor and george hedrick. george, throughout the day yesterday, it seemed analysts liked the release of iphone 6, it liked the release of the apple pay but were more

disappointed with the iwatch. right. apple is very much as a follower in a pretty established market. for me, the big positive surprise was apple pay. mobile payment as a huge market are the addressable market for apple. >> apple pay, though, is not exactly ground breaking. it's still baits based on people's existing itunes account. it's nothing ground breaking. >> right. the mobile payments were established. we have a key piece of data underpinning ifc, and that has been awaiting this endorsement. we have been promising investors we will see it for the last three launches. the key thing is really the use case. it's not the size of the phone any more. it is what people do with the phone that is key. they're creating a mobile payments platform i think is an

excellent idea. >> george, since tim cook has come in, the company has lost the ability to innovate. did they prove us wrong yesterday? >> so, again, i didn't like the whole u2 thing. that was poor. the products are follower products. they're not leader products. what we've all fallen in love with is go pro. take an established marketplace, throw something clunky at it and you get the most exciting use on it back of it. quite frankly, yesterday, we didn't see that compelling case come out of those products. >> paul, what do you think? do you agree or disagree? >> i agree with george. i was looking down at the headlines and seeing this is the first new product launch in four years from apple and it's actually following another -- it's following on from what samsung has done. so i mean, maybe they hope by linking it with the iphone 5 that actually it will drive further sales of iphone 5 and

they'll want this watch and everything like that. maybe they're hoping by linking iphone 5 those people will move away from samsung. there has been a pick up in the use of samsung phones. >> it wasn't on the products side, but it was on the positioning side. that goes back to the appointment of angela erhart. the watch is a fashion piece. there's been far too many products which basically favor the feature set over the form. if this is apples with wearables, what do people want to wear? my watch is a redundant piece left over from a bygone age >> george, you said apple is a follower. shouldn't samsung and the other companies who are working on wearables be benefiting from

that? essentially what apple is doing, they're establishing credibility for wearables and everyone should benefit. >> absolutely. and this goes back to the nfc point. you are endorsing a market. it's highly competitive. yesterday amazon dropped the price of its phone down to 99 cents. what apple said is relevant for the industry, absolutely. >> george o'connor, thank you so many. paul sedgwick stays with us. we also want to hear from you. are you ready to start using tech to pay for products or still concerned about cyber security? join the conversation history on "worldwide exchange." worldwide@cnbc.com or @cnbcwex. a host of those who jumped on apple's bandwagon using twitter to coincide with the launch some more successfully

than others. we sass employ thw more than 2. tweets about apple yesterday. pretty impressive. let's have a look at european markets so far in the trade today, about an hour into the day. a lot of red wind me, as you can see. the stoxx 600 is down almost 0.5%. that's the uncertainty we had coming out of yesterday that the u.s. might be raising rates sooner than expected. only last thursday could we have significant easing within europe which mernt the markets shot higher. now with the threat of tightening the markets are losing steam. does that mean qe or loose policy can't work? we'll find out. markets today lacking enthusiasm off the back of that possibility

of rising rates in the u.s. the ftse 100 off 40 basis points, france off 0.3%, italy off 8%. if we dive into some individual stocks, kingfisher is off 2.7%. the ceo said he'll step down at the end of january. the long standing chief stepped down. apple plier arm is off 2.5%. fiat is up 1.9% after the italian automaker said ferrari chairman would resign. he will be repleased by sergio marconi. we will be joined with the latest news on that from milan in just about two minutes.

santander is off almost 2% after its ceo passed away at the age of 79 due to a heart attack. moving on to fixed interests, if we look at the bond markets, quite interesting move yesterday, particularly in the u.s. the ten-year treasury will tick above 2.5% on thoughts the fed might be raising rates higher. this is now a six-week high for the ten-year yield. we've got a three-year high in the u.s. to both two and three-year yields. so all eyes now on the fed meeting next wednesday. it's very much a sign of the time that's we move from one central bank meeting last week to another next week and everyone is focused on that. that is the main aspect driving markets. gilt across the board have moved off the back of that move in the u.s. we're at 2.5%, italy 2.426%.

german bonds, 1.022%. forex rates, that move pushed the dollar higher across the board. against the euro, it's about flat today. the same goes for the pound, why it's flat. the u.s. dollar weakening 0.8%, following a 1% fall on monday.. so the carry trade that we've seen of a relatively strong currency, the aussie/dollar with high interest rates in the u.s. unwinding at the moment. let's get a check in on markets in asia. sri jag rej raj ya is in singapore for us. sri. >> good to see you. the hang seng and h shares, the loss leaders today. let me talk about apple and the apple component suppliers here in asia. the ones listed on the nikkei as a guide, they were lower today largely because the investment community here was pretty much

underwhelmed by the debut of the iphone 6. now, elsewhere, i wanted to talk about the sip asx/200. we saw the biggest one-day loss in a month. the miners were under pressure today. that's because iadron ore and steel futures were at a low. now, very quickly, i do want to talk about the nikkei 225. the only market that is in positive territory and that is because of the weakness in the japanese yen. the exporters, the only bright spot in an otherwise grim session out here in asia. >> thank you very much, sri. coming up, it's game on for microsoft. we look at why the tech giant could be about to pay $200 billion for the swedish firm behind minecraft.

prince harry explains to us his vision for the international sporting event. >> we're live at the economic forum in china where we'll be asking the cfo of shell about plans to diversify from oil. and as sterling continues to struggle ahead of the scottish independent vote, we see desperate measures from the no camp will be enough to keep the uk together.

cnbc has learn the fed to could make an important change to its policy next week. the change being debated is whether to drop the term considerable period after asset buying and something indicating a hike in the next few months. considerable time has generally been interpreted to mean at least six months. log on to cnbc.com to read the full story ahead of next week's key fomc meeting. paul, even if we see a rate hike lower than expected, y is the

market so worried? >> the market is always going to get jittery at the first signs of any move in interest rates. they've filled a lot of equity valuations have been supported by these extraordinary low interest rates. you remember in 1994 when you got that sharp move in the interest rates. and i think with the -- all the talk about how this extended run that we've had without a 10% correction and how people -- some people consider the markets very overbought particularly in the u.s. and this sort of thing that any signs that a change in interest rate policy is bound to cause a few jitters. i mean, our personal view is that we may well be at the low point or the high point, whichever way you care to look at it in the liquidity cycle that's -- that we've had for the last five years. you're probably going to get interest rates tightening in the u.s. at some stage in probably the next six months.

th uk some stage, probably the next six months. personally, we don't believe that qe will -- everybody assumes qe will happen in europe. our personal view is that it probably won't for two main reasons. one, mario draghi made the point on more than one occasion how difficult it is to do qe in europe compared to the u.s. it seems to be opposition from that policy in germany. so the recent strength from the dollar against the yen had probably come from the president of whether he introduce he qe. >> it was obviously going to create nerves while people adjust to a loose monetary policy to a slightly tighter

one. >> paul, it seems to me there's a big disconnect from the bond coming from the equity markets to the bond market. surely as that is withdrawn, one of those two asset classes faces a major correction. >> i don't know if it faces a major correction, but it does face a correction. if you look at the fundamentals -- i was thinking about this yesterday before i came on.. if you -- there's a lot of talk about people looking at the charts and looking at we haven't had this so% correction. but if you look at the fundamentals for the two asset classes and you took somebody out of a ten-year sleep and said here are the fundamentals, don't look at any charts, don't look at any sentiment stuff, and you say you've got equities yielding, you've got ten year bunch yielding, you've got german equities yielding at over 3%, signs of improving economic global growth, you've probably got the global growth at something like 3.5% this year.

you've got earnings revision ratios improving. you've got liquidity is going to remain a constant. and you've got earnings pretty much in line with historic averages. >> if you look at the bond markets, yields relative to history are pretty low. my personal view is what you don't want to see is a sharp spike in profits. that should be what -- that should be to continue to support equities. >> paul, booefl, what do you do in europe, do you buy or sell the ftse, do you buy the ftse because the pound has weakened or do you sell it because there's so much political certainty?

>> my personal view or our personal view is that ultimately they will both know. i think that the -- the bookies seem pretty on the side know. i think fear will take over. i see this as an opportunity, not a threat. >> paul, thank you so much for that. paul sedgwick, head of investment at frank investments. >> the racing brand ferrari has ended in the resignation of the group's chairman. >> don't build up stuff that's not real and don't make up crap that doesn't exist, right? life goes on for everybody, for him, and everybody else.

>> any chairman that works in an environment like ours is that we are serving at the pleasure of the board. nobody is indispensable and nobody should ever get it tloo through their heads that you can move or threaten or that the house is going to be in deep trouble if you don't. i have a lot of respect for everybody and i will protect everybody. there's a limit to this, right? >> good morning. we just heard what happened this weekend which made this whole event spectacular. it has sort of been in the works for several months. the comments we just heard

implied that he was ready to stay on another three years. this is thee years were not going to happen for him and maybe he knew it. there was a question on the timing, really. they have done an incredible job there. this is a very important brand for the fiat group. he put himself as chairman in order to when they do list in the united states, the group, the newly formed group, the automobiles, he can make decisions. it's a very exclusive brand. no more than 7,000 ferraris are produced each year. really been what is the note today as this resignation comes out is that ferrari, 7,000 autos

sold, 3% of revenues from fiat come from ferrari, but 15% of ibit. certainly a very strong brand. we'll see whether they spin it off or keep it on with maserati. it will be in the news in the coming weeks, indeed. >> claudia, thank you so much for that. still to come on the show, could the eu's fresh penalties against europe cross the largest penalty? we cross the world economic forum to speak with the cfo about the impact of sanctions on its business. that's up first on cnbc. it's the barbarian queen. wait, wait, wait, wait, wait, wait...whoa, does she have special powers when she has the shroud? no. guys? it's the woven one the woven one. oh, oh that gives her invincibility. guys? no, no, no... the scarlet king is lord victor's son!! no don't. i told you! you guys are gonna be so surprised when you watch the finale!!! you're so lucky your car has wi-fi. yeah...i am.

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apple shares fall after releasing a host of new products. >> cnbc learns the fed could be about to make a key change to its policy statement next week, indicating the central bank will raise rates sooner than expected. fiat's ceo gets into the driving seat as shares move higher. >> santander announces the death

of its chairman sending shares in the spanish lender lower. >> all right. let's have a quick look at how european markets are faring. we are moving lower an kro ts board, tracking shares we saw on asia and wall street on tightening shares. the xetra dax losing 0.6%. keep in mind santander is under pressure on the news that we just heard in the headlines. the chairman has died of a heart attack. keep in mind that some of apple suppliers are losing ground, as we well. the threat of the new apple watch. on bonds, we've seen yields the tick higher across the board as u.s. treasury yields ticked up above 2.5% for the first time in around ten months yesterday. that put yields across the board higher. germany, the uk and italy all included their german yields above 1%.

>> and in the currency markets, the dollar relentlessly moving higher. this is, of course, on the back of high treasury yields. dollar/yen at a six-year high. 106.72 up 0.5%. interesting reaction is what we're seeing on some of the carry trades rather. the australian dollar is down by 0.9%. >> moving on, the russian prime minister has told cnbc nobody wants sanctions as they are detrimental to the economy. looking at the world economic forum in china, they also said president vladimir putin was wavents the cease-fire to hold, but it's in ukraine's hands to solve the crisis. >> the key thing now is to put

voins, the cease-fire in ukraine. now it's time to -- including dialogue, sign a compromise. but the it's up to the ukrainian people to do this. he will have a hard time dealing with problems in the ukraine economy. you'll find rates to symbolize. >> the company maine -- exposure to oil products. they expect the refining business to continue to be a

headwind. joining us now is simon henry. the cfo of shell. simon, good afternoon to you there. increasing a focus on financial discipline and captain efficiency in recent months, how important is that in a world where the cost of extracting energy are rising in the face of a declining oil price? >> good afternoon, wilfred. clearly, the challenge of balancing growth in our industry with delivering acceptable returns to shareholders is the key challenge that we all face. and recently, the rising costs across the board really in many of our activities has been one of the key factors we've had to deal with, both in terms of the choices we make around the portfolio, which assets do we keep in the portfolio and continue to invest in, which ones we choose to divest and driving down the costs of those

activities. >> simon, we just heard from the russian deputy prime minister there about sanctions in russia. have you spoken directly to your joint venture partner roznet about the impact of sanctions and their impact moving forward? >> geopolitical risk has been factor in our industrial for well over a hundred years. so it's something we have to manage probably through the diversity in the portfolio. but also through maintaining good relationships. our primary partner is gazprom, not roznet. we produce oil with gazprom in western siberia. we've not -- i personally have not had direct conversations with gazprom yet or gazprom about the impact of sanctions on their business. to date, the impact on our business that we do with them has been minimal because the sanctions don't include the type

of activity we're currently operating. it is possible if we were to choose to look to make new investments, but that could be impacted. that's something we would have to work on with the respective government and our partners, of course. >> simon, there's been endless discussion about the eu's reliability on russian gas and on russian oil and some people have argued over the last couple of months the u.s. should be filling the gap in terms of crude exports. i'm wondering how much discussion is there about that very topic at the world economic forum in china right now? and i know your company, you're in favorite of crude exports from the u.s. so to what extent have you been able to lobby for that? >> generally, we're in favor of free markets around the world. we think crude exports from the u.s. is in everybody's interest, particularly the u.s. economy because essentially they'll be exporting a value sweet crude and importing heavy sour crudes

for which the u.s. system is designed. actually, the u.s. system will create more value from exports. it could also potentially reduce prices, of course. the balance between russian exports and what the u.s. chooses to do. it's not a big factor in terms of what the u.s. decides to do relative to the russian position on oil exports. the position on gas exports is more challenging because it's more difficult to bring gas into, say, europe. >> talking at the world economic forum, we're seeing a very worrying ebola outbreak, we're seeing uncertainty, the violence in the middle east. how are we dealing with these

factors? are you cutting back operations there? do you still want to take that long-term view? >> a good question at the moment. again, operational risk, it is part of what we do and something we face every day. but at this particular point in time, these risks do seem both more acute and more widespread. the ebola risk is primarily an issue for us in nigeria. we had 6,000 employees there, over 90% are nigerian. we have had some restriction owes travel within and to and from the country. it's not had a major impact in terms of an operational impact. but it is something that we're watching very closely with the safety and the health of our employees and our suppliers and the country very much foremost in our decision making. so there have been some restrictions but not yet impacted operations. the middle east is slightly different.

clearly a difficult situation. in syria two or three years ago we had to stop. we produce in iraq, we produce in egypt and qatar, abu dhabi and oman. our operations had not yet been a factor. they're proceed very well in a calm environment. how do we deal with that? we have to first and foremost ensure the safety and security of our people and of our operations. we have quite dangerous operations inherently the temperatures flammable product and we need to ensure that we are not operating in an unsafe environment. but so far, we have not been significantly impacted. >> simon, you're one of the

biggest overseas investors. you're on the ground in china at the moment. what's on the agenda for shell in china at the moment? as a follow-up to that, have you been surprised about the increasing level of discussion between the chinese companies and the energy companies in the recent weeks? >> thank you, yes, indeed. we are i believe the largest foreign investors in the chinese energy sector, in fact, in any sector, a multibillion dollar investment, production, chemicals and dance stream retail marketing. we built all of our activities here in partnerships with chinese partners, particularly in the upstream with the state owned enterprises, with petrochina and with china national offshore operations. we are seeking to invest more, our focus here in china is investing in shale gas opportunities in sixuan

province, in addition to gas we produce further north and exploring either for gas or oil with fenoc offshore in the pearl river delta. but actually, that's only part of our business with china. we see the emergence of the chinese companies on a global scale. and we're exploring for oil and gas in west africa and elsewhere together. for us, strategically, china is extremely important both as the market itself but working with chinese partners to develop resources, some of which would come back here in china but will operate in world markets.

i know you worked in that era before. do you believe that the company's restructuring, the capital efficiency is now fairley priced in by investors? that's a great question. we're with investors in the u.s. last week. my personal opinion is you get credit for delivering expectations. i think we've done that. we're very clear. we're only in the beginning of that journey. there is more to come. we expect some challenges. we've discussed some of them. but the strength of the portfolio we think will deliver more and we think and we hope that investors will see that as we deliver over the next year or so. >> all right, simon, fantastic. thank you so much for that. appreciate your time today.

simon hendry, the cfo of shell. we're getting flashes from ukraine saying that russian troops have pulled back and that increases the hopes of a peace, that coming from poroshenko, the ukrainian president saying the majority of russian troops have pulled away from the border. as i say, that increases hopes that the cease-fire will hold. no significant move in the market off the back of that, but none of that is positive development there. let's move on to perhaps. the company admits the country needs until 2017 to bring the level down to 3% of gdp. stephane, no one should be surprised about this. >> no, it's not a big surprise. we were expecting this announcement. the economy was flat in the first and also in the second quarter of this year.

the 1% growth product was out of year for this year. the government is targeting a 4% growth of 1% and targeting 1 is% instead of 1.7%. the deficit is not estimated at 1.4% of gdp for this year, which is higher than the general target, but it's higher than the deficit we had last year. and that probably will generate some strong criticism at the european level and the deficit will be almost the same next year. 4.3%. that's the new target. the 3% target has been postponed until 2017. the french finance minister says they're not asking to change the

rules in europe. >> stephane, thank you so much for that. santander's chairman has passed away at the age of 79 due to a heart attack. the billionaire is the patriarch. his daughter is ceo of the santander uk arm. the bank said lit hold a special meeting later today to decide on a new chairman. the stock is off slightly today. japan's machinery orders were up for the second straight month of july, rising 3.5% from august. the nikkei has the story live from tokyo. >> although the increase was sliekly weaker than forecast, the upward trend was reassuring. the government explained that since orders in july included a large scale dealers over $100 million, it didn't change its investment that market

conditions are seesawing. monthly orders from manufacturers soared over 20%. others have fought aircraft and machinery toss. others from nonmanufacturers, oep, were down 4.3%. and economists seem to degree, noting that even though current demand is weak, capital spending should pick up as the economy gradually recovers. that's all from the nikkei. back to you. still to come on the show, with the details of all the new apple products out in the open, how are customers reacting? we find out. >> it's intl in their wearables. so if i go for a run or a hike or a bike ride, i can track whatever success or lack of success i have. >> these are any phones. >> ready for annup date. >> same.

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. tonight is the opening ceremony as the 400 wounded and service men and wounded from six

different nations compete across different disciplines. the uk's prince harry who attended the games after attending the warrior games last year explains his vision for this. >> we're going to have hopefully 100 uk competitors, a hundred from america and the rest of the 180 will be made up from those over various nations. it's not about winning or losing. it's about the guys that have got to this stage to be able to take part in these events. they've already won in my mind. >> the man prince harry picked to organize the event is sergese milt. he spoke exclusively to cnbc and explained how he sees the invictus games going forward. >> we've dood decided they will continue. over the next couple of years, we will be looking for other cities.

we hope it will be a frequent event, perhaps every couple of years. these guys have to live with their injuries forever. and so -- and god forbid we have more conflicts. i'm sure the games will be successful. if it has impact, and i hope it has on the hundred us of thousands injured around the world, we will have established something very specializing. >> and tone ya briar joins us now. he said there that he felt that they've created something extremely special. would you agree with that? >> absolutely, wil. the opening ceremony is tonight. they kick off with chris martin from cold play. you've got 400 injured service men and women from 13 companies competing in these games. i think the atmosphere is going to be extraordinary. prince harry really fought hard to bring it over to the uk and

he said he couldn't have done it without the key. >> and they have brought things together brilliantly and elevated the state. it must be a wonderful moment for those had 00 service men. >> absolutely, will. and we know keith is more than just the organizer of the invictus games. he introduced air miles and he had a public battle with the queen's bank insisting it misled him, keeping over 17 million pounds investing in aig bonds at the height of the financial cry sits. here is what he had to say. >> i think that the issue at that time bank got themselves into was that they had, over many years, made recommendations to clients without thinking about the consequences. and in the case they had recommended something like a billion pounds worth of client money should be put into aig

bonds. but they were slow in explaining to their customers that they should be taking their money out of the aig bonds because aig was progressively getting into trouble. and so i got very upset alarge with a large number of other customers and i took action against them. >> of course, in 2012, you did sell out of court. was that a win for you? >> listen, i can't recommend anyone taking a bank through the court. it's a long and extensive and painful process. but two weeks before we got to trial, they admitted liability and then during the case itself, we settled out of court. and that fact helped a lot of other customers that were waiting to see whether coutts were going to settle or not. hopefully tht got good settlements, too. >> can you say how much you settled for?

>> no. that's part of the settlement. >> you can join the exclusive cnbc conversation with keith mills tonight at 2030 cet. and david cameron has canceled his weekly prime minister questions to travel to ed inburrow in a event to persuade the scotts not to vote for independence. ahead of his trip, he call the uk a, quote, precious and special country. he told scotland the rest of the country was desperate for them to stay. mr. carney saying once again there won't be a currency union with scotland. so if we do get a yes vote and we will have to see a new currency, what exactly would it look like? would it be derived as a commodity currency? >> indeed.

i think the nationalists may not be using the pound. if anything, there has to away compromise at least for the period of negotiations between the independence and the rest of the uk. beyond that, presumably, our best guest may try to join a different currency. such a currency union is the eurozone the. however, the focals here will loom ahead if indeed they want to adopt the euro before long. two years of erm2, they have to adopt their own national currency, the scottish pound. more balance in the weakness in sterling this week is not so much related to what will happen to sterling in the instance of a yes vote.

it's the general political uncertainty that surrounds what will happen if part of the uk separates. >> yeah, it is. and there are concerns that preliminary upheaval that comes on the back of that yes vote, indian certainty, maybe only part of the problem facing the economy as a whole. indeed, uncertainty about the political outlook could force businesses to delay investment decisions, could delay their employment consideration. and both cups, really, if you wish. what will happen is all the scottish pension funds, scottish fans, the bank of england of last resort will cover those banks if scottland were to do that. it's likely to have a significant impact as it goes

beyond the em mications. that is the significance. >> brief, is the carry trade dead with the rise of the dollar? >> not necessarily. we had the euro funded trades out to see the upcoming meeting and indeed set price as dealing a blow to a carry trade. we have really a plethora of funding currencies out there and investors will be keen to use them before lock. >> thank you so much for that. still to come on the show, don't get tongue twisted over the fed changing language could be just around the corner. we get into that debate after the break. xkç

welcome to "worldwide exchange." i'm wilfred frost. >> and i'm carolin roth. apple falls amid a host of new products including a smart watch that won't be available until next year. >> the fed could be about to make a key change to its policy statement next week, indicating that st central bank will raise rates sooner than expected. fiat's ceo get into the driving seat. sergio marcoioni will replace

the ceo. microsoft is in talk toes buy the maker behind minecraft, around $2 billion. >> announcer: you're watching "worldwide exchange," bringing you business news around the globe. >> and if you're just tuning in, thank you very much for joining us here on "worldwide exchange." let's have a look at the market ahead of the u.s. open. yesterday, the three main indices had the biggest drop in more than a month and the dow had its first back to back decline in august. expected to have a bit more weakness today. the nasdaq expected to open about flat. the s&p expected to open up about a point and the dow expected to open up about 15 points at the open. moving on to european markets, italy is down about 34 basis points.

germany down about 0.3% and the ftse down about 0.1%. all of this, really, on the expectation that the fed might tighten sooner rather than later. i think it's interesting that that comes just four days after a significant loosening from the ecb last week. and it raises the question where does loose policy only in one region in the ecb can work while other regions are tightening. >> i think that's ae have good point. overall, what we're seeing on global markets over these last few trading days is a huge repricing of the risk that we will get a hawkish fed next week. there's a lot of talk about them potentially dropping the language in terms of the considerable time until we see a rate hike. whether we actually see that, of course, that remain toes be seen. we'll have to wait until next week. let's see how this is affecting the bonds markets. 2.15%. the biggest impact was seen in terms of the three-year yields.

they were close to a three-year high yesterday. the ten-year bund yield back above that 1% level. yeah, you're seeing yields rising across the board and i want to point out to you that the ten-year guilty year, 2el 84% despite hawkish talk coming from mr. carney yesterday. in terms of the currency markets, we're seeing the dollar rising across the board. that really is the story of this week, isn't it? we're seeing a six-year high against the japanese yen, 168, up 0.5%. the euro, 1.2945. once again, i want to come back to sterling. it is all about the scottish referendum, isn't it? and we're seeing the cable rated down by another 0.3%. 1.6054. keep in mind the euro has just risen to a three-month high against the pound and we're seeing a ten-month low for the sterling against the u.s. dollar. let's check in on how markets are faring in asia.

sri jegarajah is in singapore. we have one stand out performer, don't we? >> yes. and that's because of the currency markets. the yen at multi year lows against the greenbacks. that's helping the export sector. so the only bright spot in an otherwise rough session across asia. and it's really down to those fed rate hike fierce that are really sending these markets lower. the greater concentration of selling is really, as you can see on the great china market, the hang seng closing down by 2%. h-shares down by more than 2.5% there. and you've got to bear in mind a rough day was had by the miners in australia because iron ore and steel futures, they plumbed new record lows. but if you look at that market as a proxy for the broader chinese economy, clearly, all is not well in terms of economic activity despite the stabilization that we have been seeing with the economic

indicators. and remember, s&p/asx 200 and the australian economy in terms of trade are so hard wired into china that there is going to be some ramifications here and that is why the market is down by 0.6%. but broadly, it's coming down to this resurgence dollar environment. yes, it's sending the yen lower. that's good news for the exporters. elsewhere, the markets are really not taking the possibility of a more hawkish fed very well. certainly not taking it in their stride right now. there's room for more volatility especially next week with the fomc. as you said, carolin and wilfred if there is more hawkish words in that statement. cnbc has learned the fed could make an important change to its policy statement at its meeting next week. the change being debated is

whether to drop the term considerable period after asset buying ends, ud isly indicating a hike in the next few months. considerable time has generally been interpreted to mean at least six months. log on to cnbc.com to read the full story ahead of next week's fomc meeting. now, carter worth joins us now. it seems like the only way is up for the u.s. dollar. has it got further to go? sglts quite incredible. if there is a concept of latent potential and then the follow-up concept of exploitation of potential, the ricochet, the huge move in the dollar, it's quite exploitative. it's going to be fallow. so after a powerful three, four-month move like this, the presumption is that you have a backing and filling, a normal consolidation after a powerful

move like that. you would say at this point, having plunged from what 1-6 down here to 1.29 as that also affects the other way, the euro will likely start to stabilize here. it doesn't make it a constructive situation, but it means it's quite overdone in one direction. therefore, the resumption is that you get fallow, quiet, nonmovement after this dynamic proceeding in two to four months. >> especially you were just making the case for exiting the euro shorts. did you want to put on shorts for any other currencies? certainly the yen would be a good candidate along with sterling. >> well, that's right. sterling -- i mean, i think there's probably a bit more to go in the sterling move. we are ourselves are looking for 1.5, 1.52, that kind of thing, 1.6. a bit more. there, too, the principals are the same in that you have intermediate moves that have

then reactions where their countertrend rallies are declined in the opposite direction. we look at a picture of the pound and you look at it on a one-year basis. very orderly ascent. now an important intermediate decline that was a little bit more. we're getting about 1.5. we'll set up the next throw back or consolidation period. so the principals of this, and it's for stocks, for currency wes b for rates, anything are the same after an important advance or decline that has a certain amount of maturity to it, two to three, two to four months. you get to a point where all the potential is exploited. we think we're in that kind of zone for both the u.s. dollar, the euro, and soon in principal, the pound. >> carter, with all the moves that you were just discussing, and maybe this was slightly less feel, but does positioning reflect this or is the market bhien the curve in terms of the short positioning on sterling, the short positioning on yen and long the dollar?

is there still some catch up potential? >> that's just it. so if there's wisdom in price and the price moves before the facts come out, yeah, and that is the case here. the pound has been weakening for now the third and fourth month. the pricing was first, then the facts come out and now you get to a point where you discounted all that can be discounted. on an intermedian basis, yes. longer term, the preassumption is further weakness for the euro and pruktively for cable, as well. it's all what your time frames are. our time frames are intermediate. we say exploitation is at a near end. >> carter, we've seen european markets off today on the back of the possibility of sooner rather than later rate rises in the u.s.

how do you think u.s. markets are going to responds in the short-term today and as we get closer to the fed next week? >> well, i think that's really it in the sense that there is a divergence here now at this point. one can look at any chart of an overlay of, let's say, the msci index versus the s&p. europe is struggling. we know that xkly but also in terms of the bourses, whether it's the ftse, unchanged on the year, the dax barely up, italy and so forth. and so the s&p has been perfect, near perfect. it's angle of dissent, not too hot, not too cold. but perfection while it exists, it's -- and everybody knows it. we're guessing what you're seeing in europe and some of the sort of softness is coming to equity markets in the u.s. and that the risk/reward here is not favorable. ultimately, rates moving up, we've got from 2.30 on the

ten-year to 257 quickly. probably 2, 6, 8, 2.7 is what's in store and s&p sideways do town. >> carter, thank you very much, carter worth chief market technician at sterne agee's. >> the s&p has been perfect, a perfect move to the upside as he expected another 8% move to the outside by now. i want to bring you some flashes, some comments from angela merkel, the german chancellor, of course. she says the eurozone must continue reform toes support economic recovery. she says the biggest risk to the european recovery is back sliding on a stretch of reforms and she says debt finance growth is over in germany. this is the right course for future generations. so once again, driving home the message of fiscal responsibility and a continue aegz of reforms. let's take a look at today's other top stories.

president obama will outline plans to discuss isis. a new nbc "wall street journal" poll finds 64% of voters support military action against isis and a third say combat troops should be included as well as air strikes. in the wake of the video showing isis killing two journalists, 42% think the u.s. is less safe now than before the 9/11 attacks. tune in to see president obama's address to the nation tonight at 9:00 p.m. eastern. the house of representatives will reauthorize the export import bank as part of the government wide funding bill to avoid a shutdown this month. the xim bank charter was set to expire this september. critics say it effectively subsidizes foreign competitores. dollar general is reportedly set to go hostile with its bid to buy rival family dollar which

was rejected by the company's board. reports say the discount retailer will launch a tender offer going directly to family dollar shareholders with a cash offer of $80 a share. the move is an attempt to persuade shareholders to reject family dollar aes deal for $8.5 billion. let's have a look at how these stocks are trading in general trade. family dollar and dollar tree are unchanged to slightly higher and dollar general is down 0.28%. apple may be the word on the street, but microsoft gives investors something to talk about. we'll tell you more after the break. big day? ah, the usual. moved some new cars. hauled a bunch of steel. kept the supermarket shelves stocked. made sure everyone got their latest gadgets. what's up for the next shift? ah, nothing much. just keeping the lights on. (laugh) nice.

doing the big things that move an economy. see you tomorrow, mac. see you tomorrow, sam. just another day at norfolk southern.

welcome back to "worldwide exchange." growing fears that a fed rate hike could come sooner than expected weighs on u.s. markets. and microsoft is reportedly set to shell out $2 billion for the swedish video gamemaker of minecraft. >> let's get back to our top story. apple stock was all over the map on tuesday as it unveiled a host of product, up about 2.5%. it did trade lower, ending down

about 0..4% on nearly three times its normal daily volume. today, in frankfurt, it is actually trading sharply lower. currently off by 5.3%. other stocks related to e-commerce watch as tech stocks not faring too well, either. fossill off, ebay off 2.5%. pixelworks dropping 6% in yesterday's trading session. and if we look at the german -- the german moves now, we're seeing ebay down 3.7%. arm holdings, an important apple supplier is down heavily, as well. >> indeed. analyst reaction to apple's new products appears to be mostly positive. ubs is reiterating its buy offering saying apple's solid announcement paves the way for accelerated growth. barclay's is keeping its overweight rating for $110 price target.

jeffrey's says apple pay could be post for the card networks and terminalmakers and negative for ebay and paypal. with apple unveiling all these products, are consumers impressed? julia boorstin tracks the reaction. >> apple immediate its big announcement in california, the rest of the wireless industry gathered here in las vegas for north america's biggest wireless event of the year, ctia, and the folks here were paying very close toengz to what apple had to announce. the reaction was positive. industry experts giving tim cook a thumbs up for his first big product announcement. wireless analysts and consultants honing in on how the gadgets and operating systems together launch an unprecedented health tracking system and raise the bar for the rest of the

industry. attendees impressed by the fact that am has signed up 200,000 retailers, from starbucks bloomingdale's and macy's. it's a departure to offer so many different options for that apple watch. as tim cook establishes his own style in apple's ecosystem. >> and we've been asking you for your thought on apple's picks. are you ready to join tech for paying for products? word would worldwide@cnbc.com or @cnbcwex. now, you can lose your credit card so why couldn't you lose your phone with payment?

>> you have to have your fingerprint on there, as well. but there will be security issues such as we've heard about in weeks and months. moving on, microsoft is in the works to buy minecraft. "the wall street journal," says the deal would get worth more than $2 billion. it could add to mike roar soe m. let's have a look at how microsoft is trading today, down just about 0.5% in frankfurt trade. al by baba has received enough orders to cover its ipo. after just two days of meetings win vesters, reuters says there's no indication of where that demand is in the price range for the ipo. $60 to $66 a share.

at the top end, alibaba would raise $21 million making it the largest ever ipo. the offering could price on september the 18th. i guess no surprise here, really. in a way, you would have expected that this would be covered on day one, not just two days. >> in fact, probably even 90% covered by institutional investors, as well. retail investors not getting much of a look, i bet. still to come on the show, more than 400 competitors in 13 nations are ready for the opening night of the invictus games. how did print harry come up with the idea? we'll show you. before we go, let's take a look at how the markets are trading radio it now. xkç

that of davos, the host forges ahead together with a new global champions, keeps abreast with economic developments and as quickened its pace of becoming a global city. hereby i would like the to thank particularly professor shrub and

the executive board of the forum for your -- >> that's coming from the world economic forum in china. we'll bring you more on the content of that speech as we go through the show. let's have a look at u.s. futures. we're speccing a slightly higher start to the trading session. if you take fair value into account, the s&p 500 seen up modestly by less than 1 points. the nasdaq could open higher to the tune of 3.7 points. sliding by the most in almost one month falling to a two-week low. it's all about earlier than expected pricing. >> indeed. expecting a slight bounceback today. tonight t opening ceremonies of the invictus games. several compete against disciplines. the uk's prince harry who conceived the games after attending the warrior games in

the u.s. last year explained his desire to have competitors. >> it's not about winning or losing. it's the fact that the guys have got to this stage to be able to take part in these events. they've already won, in my mind. >> the man prince harry picked to organize the event is keith mills, the millionaire would is best known for inventing air miles. he spoke scloous exclusively to cnbc. >> we've decided the games will not be a one off event. it will continue. and over the next couple of years, we'll be looking for other host cities, other host organizations. we hope it will be a frequent event. these guys have got to live with their injuries forever. and so -- and god forbid we have more conflicts.

the games will continue and i'm sure the games in london will be successful. and if it has the impact that i hope it has on the hundreds of thousands of individuals around the world, we will have made a -- i think a -- we will have established something very special, i think. >> and tonya briar, who spoke sxloes exclusively there with the head of the invictus games, is joining us now. >> they've witnessed something called the war your games in america last year. and he was so inspired by what he saw, he was determined to do it here in the uk. and to invite service men and women injured from 13 different companies to compete alongside service men and women. he said the only person that he wanted to organize it with him, who could get et done in the short amount of time was sir keith mills who i talked to about it. sir keith said it was a huge

challenge with him. come have coffee with me. can we organize this in eight months? i think they just about got everything done for the opening ceremonies tonight. very inspiring. >> prince harry said this is not about winning, it's about taking part. i don't get that. if they're traveling this far, they want want to win, too, right? >> absolutely. i've spoken to two service men who said of course they want to win medals, but more than that, it's about the community because, of course, they're isolated from their colleagues. they're not in the army any more. they're injured and they feel isolated. so the inspiration for them is to be back within the community, to be alongside their fellow service men. >> all right, tone yya, thank y so much for that. and apple's new smartwatch makes waves, but could it create a headache for the likes of swatch and others? we take a closer look at apple after the break.

welcome to "worldwide exchange." i'm carolin roth. >> and i'm wilfred frost. these are your headlines from around the world. >> apple shares falling after a mixed reaction to a host of new products. including a applewatch that won't be available until early

next year. >> cnbc learns that the fed could raise rates sooner than expected. >> shares in fiat move higher after it announces the chairman will be replaced. and microsoft looks to give boosts after looking at buying minecraft for around $2 billion. >> announcer: you're watching "worldwide exchange," bringing you business news from around the globe. good morning, everyone. it is 5:30 a.m. on the east coast. if you're just tuning in, thank you so much for joining us on the show. let's have a look at how futures are faring around the world. respecting a slight bounceback, the dow, s&p 500 and the nasdaq have all seen just modestly higher at the start of the trading session. this obviously follows the big

decline in yesterday's trading session where markets in the u.s. fell to a two-week low falling by the most in about one month. and it is all about tightening fears, isn't it? there is a lot of talk from the fed potentially about tightening next week. the ftse 100 is down this morning by a third of -- 0.1%. and the ftse mib off by 0.4%. >> apple stock dropped as much as 4.8% after tim cook unveiled apple pay, but eventually closed down 0.4%. josh lipton has all the details from that launch. >> crowds lined up for apple's

event days ago in new york city. all to see what tim cook would reveal. >> today, we had some amazing product to share with you. and we think at the end of the day, that you will agree that this, too, is a very key day for apple. >> and they got it all. a new and improved iphone, its new version is thinner, has a longer battery life, and will be supported by more carriers. the iphone 6, $199, and $29 9 for the larger iphone 6 plus. cook introduced a mobile payment system, as well, called apple pay. finally, the much anticipated apple watch, the company's first wearable dozens features of apps

manage time, health, weather auto on a personalized band. it's going to be available early next year for $349. >> it's much about personal technology as it is style and taste. >> the nearly two-hour presentation was capped off with an appearance by u2 when the band offered their new release free to iphones customers through mid october. the crowds weren't disappointed. >> i thought it was neat where tim is ushering in a new era and giving them a chance to present. i thought that was cool. >> analysts do have concerns because apple's new watch requires the user to have an iphone. >> really, we saw the falloff just as apple started to watch the i watch and people were getting excited. guess what? you need the iphone to use the iwatch. more details to come. that limits the market opportunity at least over the near term, we think.

the focus will now be on those new products and customers and developers wait for the release. >> we're going to have a quick look at this again. do you think that's a fair accusation? >> totally. totally not. maybe the song wasn't that good. i didn't listen to it. did you listen to it? >> i didn't, actually. but the apple line marks and i don't think it was the watch itself was a disappointment. one, it won't be out until after christmas and two, it needs to have an iphone 5s or later to have the ability to work.

>> and we will be delving deep er. and we wanteded to know for you. we've been asking about your thoughts on apple pay. are you ready to use peg to pay for products or are you concerned about security? >> john tweets, 1 00%, it's the enof the pocket bulge. robert tweets, i like the idea. just hang on to your smartphone. netflix, reddit and others plan to stage an online --

today. the s.e.c. is considering rules to let service providers, such as comcast, to charge content providers for using high speed networks. they want to cover the webb with spinning eye cops that appear when the connect starts to slow. and the impact to school season is over. retailers are now focusing their energy on holiday shopping. walmart has released its second annual chosen by kids top 20 toys list today. licensed products such as those tied for disney's "frozen," scooters, walmart will promote the toys as chosen by kids and says it won't waiver on offering

the lowest price. alibaba has two days of road show meetings. reuters says there's no indication where most of that demand was in. at the top end, alibaba would raise $211 billion making it the largest ever ipo. the offering could reportedly price on september the 18th. and your option could be as high at $24 billion, i believe. dollar general is reportedly set to go hostile with its bid to rival family dollar which was rejected by the family's board. reports say the retailer less launch an offer to buy their shares for $80 each in cash. the move is an attempt to persuade shareholders to reject the deal. family dollar is up by 0.7%. and dollar tree is pretty much

unchange sdmroop f. ferrari's chairman will step down. this comes days after he criticized formula one's performance. fiat shares moved higher on the news. they're up around 2% trading today and up 6% over the last week. now, apple may be the word on the street today, but microsoft gives investors something to talk about. we'll tell you more after the break. 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;

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for as low as $7.50. apple shares fall in frankfurt after the big product reveal as -- supplier arm dips in london. and microsoft is reportedly set to pay $2 billion for swedish gamemaker minecraft. indeed, as we said this, microsoft in the news today as well as apple and it's looking to make a big acquisition. it seeks to boost the ibox video game business. morgan brennan.

>> microsoft is reportedly in talks by the swedishmaker of the popular video game minecraft. "the wall street journal" says the deal could be worth more than $2 billion. mikecraft is a game where players build structures and block that's protect against monsters. mine craft, which was created in 2009, has become a cool pick. it sold more than 50 million copies and has generated more than $100 million in profit just last year from the game and merchandise. it's available on the xbox, playstation 4, and smartphones. now, a deal would be a surprising turn for the company which is private and only has about 40 employees. founder marcus pearson has long shunned outside investment and has publicly railed against big corporations notably criticizing microsoft two years ago on twitter for killing the pc. adding minecraft could be a big boost for xbox which has been

lagging behind on sales to the play station 4. in april, microsoft says it shipped $5 billion xbox units since its launch. this would be microsoft's biggest acquisition since nadella became ceo in february. checking shares of microsoft in europe right now, those are down a little less than 1%. back to you. >> morgan, thank you so much for that. near the end of the presentation, it did trade lower ending down about 0.4% on nearly three times its normal daily volume. today in frankfurt, it is trading sharply lower.

other stocks related to e-commerce, display screens didn't fair too well, either. pixelworks dropping 6%, sonus up 1%, ebay down 3.5%. arm is down currently by 2%. >> just the latest note through from pacific crest securities, they have cut apple to a accelerating just because they don't see significant new profit drivers. they were impressed by the iphone 6 and the 6 plus. the potential from these devices is largely priced in already and they were disappointed by the other announcements. apple pay they say is likely not a driver and the apple watch something that will only have a limited market, they say. so an interesting negative take on that. >> pacific crest warned about two weeks ago that they were going to do that. remember, this is what apple shares lower by almost 4%.

the biggest one-day percentage drop i believe since the month of january about two weeks ago. so, really, this note this morning should not be as surprised at all. having said that, though, there are other analysts who are a lot more positive about what has been announced yet yesterday and about some of the earnings potential. finding out that there is big volume and big margins. and that's very important because pricing and margins absolutely key. >> absolutely. and then the other thing, of course, that we were discussing yesterday, is that apple has massively outperformed over the last several months leading up to this. people have expected a significant announcement. the most significant in the short-term continues to be the iphone. it's a large fountain of their profit. >> all right. let's get more reaction to this. we just saw that downgrade coming from pacific crest. do you agree with that?

>> well, just a correction. it's a research analyst, just for the record. but coming to the pacific crest, you know, commentary, i'm not aware of what the gentleman wrote so i can't comment. but i wanted to highlight from my perspective a couple of key take aways. i had the fortune of being there in the auditorium yesterday. being an engineer in my previous life, let me tell you what apple is doing is very impressive. three key things here. first, apple is getting into large addressable markets. the mobile payment and the wearables. these are multiple tens of billions of addressable markets that are going to redefine our life. on the mobile front, apple, in my opinion, is finally cracked the -- of solving a very vexing issue of customer ownership. mobile payments has been around for almost a decade.

but we've had sympathy card providers, hand set providers and even the google and apples of the world trying to own the customer. what apple has been able to do is in a very secure fashion, without disrupting the business model of credit card companies and fblg institutions have been able to snert themselves and redefine how mobile is going to take place. the second key thing is that after attending yesterday's event, i believe the innovation gap between apple and the rest of the industry, samsung including, is only expanding. apple has more financial bandwidth, those two flavors of the phone with 64 bit processorses, this is, again, back in the back room engines, they are able to do things no one can do. i would argue -- and i would be maybe bold enough to argue that samsung has issues. and finally, i think tim cook is proving that apple can innovate for steve jobs.

again, from my point of view, we are talking about some very redefining end markets that have very -- model and quantify in the near term. >> the point i was trying to make with this downgrade coming from pacific crest and this is what they've threatened to do about two eex ago whether all of the good news that you've just outlined for us hasn't already been priced in. >> well, again, as i said, i don't know what the note says, but in the nearly term, i don't know what the gentleman's time horizon is. but at this stage, trough look at apple as a long-term story. i remember earlier on in the year, i was on the show and the gentleman on your side asked me a question about where is the innovation? i think we just have to be a little patient. we have to take a little longer term approach. now, in the shorter term, i could never say how this stom stock is going to perform. but in a longer term horizon, i

think it will continue outperforming. >> thank you very much, research analyst at william blair. we're going to update you on some -- coming out of that speech by the chinese premier that we touched on earlier saying that an estimate of economic growth of around 7.5% is reasonable. he also said that they will continue pressing on with structure reforms in the economy, particularly he mentioned the financial sector and state-owned firms and he said, as i said at the top there, that the hard landing should be avoided by china, economic growth is largely steady, and that estimate of 7.5% is reasonable. now, could the fed change its language over forward guidance as soon as next week? we'll get into that debate after the break here on "worldwide exchange." xkç

welcome back to the show. we're expecting a mixed start to the trading session, maybe a bit of a bounceback after we saw stocks at the second low in one month. now, cnbc has learned that the fed could make an important change to quality statement at its meeting next week. the change being debated is whether to drop the term considerable period after asset buying ends. something to indicate a hike in the next few months. log on to cnbc.com to read the full story ahead of next week's key fomc meeting. in the meantime, we're going to talk to marty mclaren chief of portfolio manager. in the face of a possible rate rise, are u.s. equities overvalued? >> well, i think u.s. equities overvalued, even if rates don't rise. however, the question is can

they remain overvalued in the face of what's coming next in the economy. >> well, and indeed, you mentioned in one of your notes that you expect only 4% returns per annum for the next decade because u.s. equities are overvalued by 25%. do you expect a correction in the short-term? >> we have no idea what was going to happen in the short-term. but the thing that we were intrigued by is that that 4% or 5% return which the u.s. market is priced to deliver over next seven to ten years could be front loaded. that's the total return of 50% over that time period. but we believe that there's a possibility consensus opinion around interest rates could change, that right now everyone knows interest rates are going up and, of course, everyone has been wrong about interest rates so far this year. but rates eventually will go up, but our contention is that maybe they only go from being negative to being zero as opposed to

where most potential money managers assume that we're going to get back to a 2% real interest rate where interest rates are 2% above inflation as opposed to meriting inflation. and if that happens, then perhaps we could see a continuation of the bull markets. >> marty, if interest rates go up, do you clear them altogether? >> no, because both export stocks in the u.s. represent from the best companies in america and in a low interest rate environment, dividends of 3% plus and they're growing. so in an environment where the ten-year bond is less than 2.5%, if you're getting 3% and it's growing, that's not a bad deal. paradoxically, it's not necessarily a bad response. >> thank you so much for that.

>> indeed, i'm wilfred frost. thank you for watching. >> and i'm carolin roth. see you tomorrow. bye-bye. u.s. is becoming a new kind of company. one that helps you think differently about what's ahead, and what's possible when you get things organized. ing u.s. is now voya. changing the way you think of retirement.

tim cook shaking the wraps off two new phones, new payment systems and a highly anticipated watch. did apple just change the game again or not? microsoft building an offer to buy themaker of the popular video game minecraft. and president obama is going to lay out plans to deal with isis in a prime time address tonight as the mood of the country has shifted markedly in the last few months. it's wednesday, september 10th, 2014. one day before the 11th.

as "squawk box" begins rights now. >> good morning, everybody. welcome to "squawk box" here on cnbc. i'm becky quick along with joe kernen and andrew ross sorkin. the dow, the s&p and the nasdaq all coming off their biggest drops in a month. if you check out the futures this morning, you'll see that equities at least at this point look like they are indicated higher. dow futures up by about 46 points rights now above fair value. s&p 500 up by close to 4 points and the nasdaq up by just over 10. the bond market is grabbing a lot of attention this week. the yields on the ten heavy year treasury rising above 2.5% again finally. also, oil prices, something we've been watching closely have been a lot of pressure on oil prices in the last few weeks. this morning, up slightly 26 cents to 93.01. apple t buzz stock of the week. the stock saw nearly four times it's volume yesterday in