welcome to "worldwide exchange." i'm wilfred frost. >> and i'm carolin roth. these are your headlines from around the world. >> european markets trade lower after a tech sell-off in the state, sees the nasdaq suffer its worst day in a month and a half. satisfaction, orange says it won't be looking for any more acquisitions after being its telecom rival sending its stock through the top of the stoxx 600. the company announcing a share buyback. and ukraine's cease-fire

teeters on the brink. fresh reports of fighting in the east of the country as russia -- flows have accelerated in the third quarter. >> announcer: you're watching "worldwide exchange," bringing you business news from around the globe. >> hello. i'm seema mody. coming up on today's show, we ask one of europe's most experienced managers why he's giving up on politics. plus, few high profile interviews from london's fashion week. we hear from bur bury's ceo and the first lady of fashion, anna windsor. and we talk to business, a celebrity endorsement. >> announcer: you're watching "worldwide exchange," bringing

you business news from around the globe. >> welcome to "worldwide exchange." what a busy day on the nasdaq yesterday. we saw the worst day since the month of july. and the big question is, is it really just clearing the dex ahead of the alibaba deal or is it a bigger sense cautioning the market ahead of the meeting and maybe exhaustion in the market as people want to take profit? >> a lot of people pointing to this alibaba deal, people creating space in their portfolio. there are not going to be that many people that get an allocation. i'm more of the view that the tech stocks have risen up very, very high. >> valuation has been a concern for a lot of the tech names. that's why one of the reasons we could have seen that sell-off in today's trade, or are investors clearing out their portfolio?

interestingly enough, twitter, facebook, ebay, all are down after alibaba made its announcement. >> is absolutely. is and we'll be talking tech sales later. but moving back to the fed more generally, goldman sachs has gone against the consensus saying the phrase considerable time will remain in this week's statement. jan says many are missing the distinction between a decision not to extend existing guidance and a decision to renege on xifth guidance. david is senior director of research at global economics. david, as ever, lots of focus on this fed meeting tomorrow. but i'm interested in how the bond markets have reacted. over the last week or two, we've seen yields tick up, led by the u.s. it suggests investors at least are expecting a significant change in rhetoric tomorrow.

>> there is a risk of the chance. you see that in the front and the euro/dollar curve, the short end moving up about 15 basis points. and we would agree that there's a good chance that, given improvements of the economy, the fed will tweak some language and point to some different indicator. but they already have -- i think i counted four qualifiers around that considerable period language would refer to the period after qe enin october. so if they change it a little bit, it's not such a big deal. they still have a lot of wiggle room. >> what's the risk that they would emit it completely or do you think they would replace it with some other wording that the market is going to fret about for the next six months. >> i think when they get rid of it, it will go entirely and be replaced by something like the word patience. there are two parts of this forward guidance. there's the part that refers to

the rate hike and then the path of rake heights afterwards. and they'll almost certainly keep that path of rate hikes being lower than the normal rate hiking cycle, intact almost in full, even after that first considerable period is -- you know, david, hawkish banter from the fed continues in the near term. but at the end of the day, the reality of the situation is that rates are still very low in the u.s. we have to think about that disappointing jobs report that came out about a two weeks ago. that is a critical point. janet yellen has made et clear what jobs numbers are what she looked at when determining rates. >> it's a noisy figure, nonfarm payrolls. other figures are pointing in different directions. unemployment is improving fast, but it's not the best indicator any more. so i think she's looking at wage

gains out here in the uk, beyond just inflation, as well. >> all right, david, stick with us. we definitely want to talk to you more about what's happening in europe, as well. >> german economic sentiment data is released at 10:00 cet with investors braced for another weak reading after the index hit a 20-month low last month. we'll move on to talking about europe. now, despite that thing that you just saw, david is still with us. david, this sentiment data coming from germany later today, we had the oec forecast lowering gdp yesterday in europe. do you think this now means we're set making sure we keep europe very low for the foreseeable future? and what does this mean for countries like germany?

>> they don't have that many to get there, but maintaining easing policy, especially in light of what the fed is likely to do, maybe not next meeting, but eventually rate hikes. that will help it achieve that goal. as far as what it means for germany, germany has a fiscal surplus and it wants to maintain that going forward. it's the wrong policy for the rest of europe and germany, of all countries, does not need a weaker exchange rate. but it's going to get it. so does that mean sentiment should pick up in germany? yes, i think, you know, it's hard to call it a move, but you can see 2% growth there for an economy that's already doing very well. >> but the high current account policy surplus, it's not merkel's fault. it's the euro's fault because it's artificially low for germany, isn't it?

>> that's certainly part of it. you know, and it's a credit to german exporters. they're extremely competitive. they're in the right place at the right time with demand from china. still being relatively strong. so it's not entirely her fault, but a looser fiscal policy would help spur demand for imports and help out others, italy in particular. >> what are you expecting from the zew later on? >> we're expecting it to show an economy that's slowing down, but still growing and still expected to maybe grow a bit faster in the future. so pretty much in line with the pmis that we saw earlier this month. >> all right. david, mroo david, please stay with us. david nowarski, senior director of research at roubini global economics. i want to know what you think,

as well, about the health of the european economy. e-mails us worldwide@cnbc.com or tweet us, @cnbcwex. after two terms in office, sweden's finance minutester has decided to leave politics following the center right government's election awl laws over the weekend. he was a prominent fixture throughout the cry sess. the country's center left party took a narrow lead in the parliamentary vote with the democrats doubling its support to 13%. now we're joined by andes borgue. thank you so much for taking the time to speak with us again. always a pleasure. why exactly are you leaving politics? you think there's a very important role for you either as the opposition or the party leader. >> well, i've decided to leave

politics. to my mind, it wasn't an option to become a part leader so this is the end of the political story on the global macro situation in the future. >> very briefly in terms of the next couple of weeks and months for sweden, are you afraid of dysfunction in the political space? it is exactly that dysfunction that you are criticized in so many other countries throughout the crisis. >> well, i think it's a clear risk that you will have a risk in uncertainty. the social democrat hasn't prepared for government, they have a weak parliamentary base, particularly now when they're seeming to only cooperate with the green party. we were one of the strongest governments in europe for the last eight years and now we're going to see a very weak government. the problem is their key policies on tax increases is where the election campaign will be. so if they don't give up the

core of their policy, they will have a tremendous policy with getting the budget through parliament. >> an did he rs, i wanted to move on to your policy on europe more generally. you and miss reinhart were one of the few supporters of uk prime minister david cameron and his aim to renegotiate britain's membership of the eurozone. given that you and your party are now departing government, is this a cameron left with very few supporters across europe? >> well, we've had a strong cooperation with the british government, particularly david cameron. i think the link between sweden and the uk is likely to remain. that has been a strong bond previously with the two countries. we are pro free trade -- over a period. so i would presume that we and the uk would be quite close to each other, people if people take this time for them to be in

a relationship. these guys are basically out of experience. they haven't participated in the international discussion. it will take a time for them to learn. >> anders, as we watch the economic recovery here in europe, there is an internal debate brewing between france and germany on the importance of spending investments to stimulate the european economy. whose side are you on? >> european growth needs to be vitalized. i think germany needs to do more for growth. on the other hand, france basically has a problem in lack of competitiveness. but the core of the problem. i mean, they've been running their economy with too high cost increases and too little productivity for close to 20 years. france needs to do fundamental structural reforms. on the other hand, germany needs to push more for growth and a much more expansionary policy. so i would be on half of each side. >> anders, at the beginning of the interview, you told me that

yes, you are leaving politics, but you will stay in the scene, in the public scene. where exactly are you going? is it going to be the central bank? is it back into the banking sector? you've lost that famous ponytail about nine months ago. maybe that wasn't a wise move. there are a lot of new finance ministers that needed a hair cap. i think it was time to get rid of the ponytail. i have a background in investment banking. i'll probably see what the options are for me and if there is an international institution on the government side, i would be obviously interested. i'm very open-minded. i would like to work with macro global. at the end of the day, i will see what offers have been approaching in. >> have you been approached yet in the two days since you made that announcement? >> i have some options that i really will have to consider seriously.

all right, anders. thank you so much for your time. i hope that we will continue to speak to to you over the next couple of years as we have over the last five years. thank you so much for your time, anders borg, the outgoing minister of sweden. >> let's up date your markets. quite a lot of red behind me. european markets open slightly down, have weak.ed a bit further over the last hour. the stoxx 600 is down about 0.44%. weakness across the board. there's a few head winds for markets today. we have the fed meeting tomorrow, of course. we have the scottish vote on thursday and we also have that weak sell-off that we've mentioned, particularly in the nasdaq in the u.s. last night. the ftse 100 down 0.2%, relatively holding up quite well. we have that important economic sentiment data out of germany at 10:00 british standard time.

that's off 0.4%. ahead of that, france, up 0.5% and italy off 0.8%. moving on to bonds, as we touched on already, as well, the u.s. treasury have ticked up above 2.6%. yields in the u.s. rising quite a lot over the last two weeks. but today, 2.56%. yesterday in trade, they just came off that level. perhaps due to that oecd economic indicator that suggested u.s. growth revised downward slightly. bonds in germany just over 1%. the ten-year gilt, just over 2.5% and italy just below 2.5%. forex, the u.s. dollar index, came back off the 14-month high. it's been up around over recent weeks. as everyone is well aware, over the last few weeks, the u.s. dollar has been very strong, so unsurprising just to see a little bit of flattening off ahead of the decision. today, euro/dollar is pretty much flat. it's at 1.2941. the yen is dollar, 107.1.

the aussie/dollar continues to weaken aagainst the u.s. dollar as that carry trade unravels and the pound weak today ahead of the vote in scotland on thursday. 1.6181 is cable. let's check in mokts in asia. sri is in singapore with us. sri. >> good to see you. what a negative session it was for the greater china markets. the biggest one-day percentage loss for shanghai in six months. that spilled over into our front doorstep in singapore. down by 1.2%. it was rather odd, all things considered, because we started off the day for the shanghai market in positive territory. the markets were front running the idea that we could see some more stimulus action by the pboc to try and safeguard growth at around 7%. but it seemed to be the worsening macro picture that the markets are running with now. we got an indication of that

with the fdi flows for august. foreign direct investment into china fell to a low not even in at least 2 1/2 years. the other factor here, wilfred, is that the alibaba effect seems to be causing some concerns about the main board listings. it could bleed some of the activity and some of the interest away from those listings. remember, we still have a number of other china ipos in the woodwork, waiting in the wings, and they're going to come to market in autumn. so that's another concern. liquidity issues there, as well. hong kong, yes, it was closed in the morning because of the typhoon. but we resumed trade at 1:00 p.m. local time. deeply negative, as well. eight straight days of losses. down by almost 1%. so the negative leadership coming from the greater china markets, again, we are seeing some worsening macro indicators. back to you now in london. >> thank you so much for that, sri. still to come, one city is

cracking down on distracted walkers, creating the world's first smartphone -- yes, stay online. we have the story next.

woesh. the tiny city of chongqing has created the world's first smartphone lane. i am one of those people who is obsessed with their smartphone. always have to stay plugged in. i think a smartphone lane could work here if london, as well. >> it's dangerous, too. if you look at your iphone or your smartphone for that matter and you walk into a car our bump into other people. actually, it is really dangerous. i'm serious about that. >> you're laughing, though. >> i have walked into a lamp post before, outright. but i don't think it's just facebook. of course, the cnbc app is totally -- >> a little plug there. >> absolutely. and we want to hear from you on this. what do you think about a smartphone lane?

join the conversation here on "worldwide exchange." worldwide@cnbc.com or via twitter @cnbcwex. so perhaps go on the cnbc app and send us a message through that. let's have a look at the top performing stocks today. aces cut its outlook for 2015. a fire in the key distribution center in the uk damaged the third quarter. asos sales off by a whooping 10%, double digit decline here. thomas cook group, not faring much better, is down by 6%. this is after the company says it expects full year earnings above 3.35 million pounds. analysts do say geopolitical risks for its german business are partly to blame.

and i want to continue with spain's jazztel shares are up by almost 6% after orange secured a 3.4 billion euro deal for the at thely come operator. the french firm says the takeover will boost its presence in the spanish stock m earngs to by 2017. last but not least, let's have a look at publisis shares. not moving a great deal this morning. up by 0.7%. the company announcing a share buyback program and, stephane, why are shares responding positively today? is it because of the succession details or is it because of the share buyback? >> it's probably because of the succession. it's been going on for quite a while.

it was due to expire next year. recently, it was not intensing to remain ceo of publisis. but this morning, the company announced he will remain ceo until 2016 and would remain chairman of the company. that is a surprise announcement. the second significant announcement is the departure of -- he was widely seen as the potential successor of maurice. his departure opens the race. it's a bit of relief for the company and for the shareholders. the succession of levy is a sensitive issue in the company. he's been, still since 1987, is extremely charismatic, the real inclination of publicis, and that is a delicate issue to

replace such a caharismatic leader. it's targeting growth 100 basis points above the market average and it's targeting a market at least 200 basis points average. publicis announced a share buyback program and will gradually increase its dividends sales from 35% for 2015 to 42% of the target for 2018. more details about the upcoming strategy will come at the end of october. the company will make an announcement which is widely expected since the failure of the merger of the u.s. company. for the time being, without any excess. but it's the top gainer of the cac 40. back to you guys. >> thank you so much for that, stephane. later on, we're going to talk to you about that all important vote.

and netflix has officially arrived in france. but "house of kafrdz" will not be included since their rival carries the rights to that in france. netflix inking a deal with telecom to roll out services on the set top boxes later this year. still to come on the show, the u.s. launches its first iraq air strike since president obama vowed to expand the operation against isis. but will the strategy make any headway? we'll speak to the former ambassador to the u.s. and former ambassador to tony blair. that's up after the break. ♪

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>> announcer: you're watching "worldwide exchange," bringing you business news from around the globe. >> european markets trade lower after a tech sell-off in the u.s. seeing the tech heavy nasdaq seeing its worst day in a month. orange sends spanish rival to the top after buying the firm for nearly 3.5 million euros. publicis trades higher after the giant extends the ceo's term. the company announcing a share buyback.

and ukraine cease-fire teeters on the brink as reports of fighting in the east of the country as russia admits outflows have accelerated in the third quarter. >> and we're just waiting for the uk inflation data, which is due any minute now. sterling has weakened through trade today. it's down about 0.4%. the data has just come in, august cpi has edged down to 1.5%. but that was largely as expected. sterling flat, as you can see, in the last ten minutes or so. so it hasn't moved too much off the back of that data. 1.5% as expected. david is still with us. david, what's your reaction to that? >> it shouldn't be a big surprise. oil prices have been moving down. and the pound has been a little bit weak against the dollar, but

it's still relatively strong against the euro. and the uk economy is not yet strong. it's growth fast, it's getting back to that point, but this is not the right time for the bank of england to be focused on inflation. that's true in normal times, but this is abnormal times. it still has a mountain to climb before it needs to get back to normal and it should be looking at wage inflation, unemployment rate and output gaps. the inflation number has usually been the get out of jail card for the boe. there was no reason to hike rates just yet. now we've got the sponsors of certainty also weighing on the boe's minds. do you think that that february rate hike that a lot of people have priced in, do you care that could be pushed out significantly into the summer of next year? >> data would have to really disappoint or something unexpected would need to happen in scotland.

but there's always uncertainty in the future. there will be the scotland referendum and uk elections and something going on in europe. the fed will be about to hike. there's always uncertainty. but the bank of england will have to get its arms around when the economy is ready to come to gribs with a rate hike as well as keeping a tie on the housing market, which it's quite worried about. >> david, thank you very much and thank you very much for joining us. just to quickly recap that data, 1.5% year on year inflation in august. down from 1.6%. that's largely as expected. sterling hasn't moved significantly off the back of that. >> all right. let's have a look at european markets. we're slightly under water today and the tech companies, they're falling, too. this is as a result of the cues taken from the u.s. and the asian trading session after that sell-off yesterday. china fdi added 2 1/2 months. that's putting pressure on markets today. the ftse 100 off by 0.3%.

the xetra dax off by roughly 0.5%. in the bonds markets, we saw treasury prices rising for the first time in seven days yesterday. maybe that sell-off was overdone. keep in mind the u.s. factory output fell for the first time in seven months. that was the reaction. so the yield slightly lower, 2.56%. the ten-year german yield just edging a little bit lower to 1.4%. and gilt yields pretty much unchanged after that uk cpi number, again, in line with expectations, 2.52%. renewed fighting in the city of donetsk has put russian militants under strain. the shelling involves a weekend in which at least six people were killed. the country's president prepares to unveil plans to separatists. gm's european brand says it will reorganize its russian operations in light of

difficulties tied to the ukraine prices. the automaker's st. petersburg factory plans to scale back to one shift production as part of the plan. french president hollande's new government will seek -- that follows the reshuffle that saw some ministers from the cabinet. now with nearly 30 rebel members expected to abstain the socialist parties marginal majority is on shaky ground. let's get back out to stephane. i'm looking at the poll from yesterday, stephane. the approval rating at a record low of 13%. what bearing is that going to have on that vote today? >> the last few weeks have been terrible for francois hollande. he was forced to reshuffle the government after criticizing the economic policy. faced the boot

ex-girlfriend who criticizes his deep left convictions. hollande and his prime minister are facing an increasing opposition from the left wing of the socialist party and we know roughly that 30 members of the socialist party at the national assembly probably won't vote the confidence to the government today. ta being said, we are not expectexpec expecting the government to be rejecteded today at the national assembly. the first one is the absolute majority. this isn't likely because, as i mentioned, up to 30 socialists mps are not going to vote the confidence and even if some radicals will vote in favor, it won't be enough probably to give him the absolute majority. the most likely scenario is the

relative majority, which means the government would get the support from the national assembly, but it will be a tiny support, not as comfortable as the last one in april. a most unlikely scenario, but still possible. the government would not get the support from the national assembly in that case. he would have to resign again and francois hollande, the president, will have different options to either choose another prime minister or to name the prime minister to form a new government. and the field options, which is mostly like. we know exactly what would come, probably a huge deficit for the socialist party and a victory for the extreme right leader. so that is the pressure on the socialist if they choose to

vote. they know it would make a significant rise at the national assembly. but, again, this is the most unlikely scenario. >> all right, stephane, thank you so much for that. the leaders of the uk party have signed a pledge. the country votes this coming thursday. the commitment comes as prime minister david cameron made an impassioned plea to keep the union intact, telling the scottish people business as usual is not on the paper as he promised a vote to independence would lead to real change. >> you don't get the change you want by ripping your country apart. you don't get change by undermining your economy and damaging your businesses. but you can get real concrete change on thursday if you vote

no. >> our next guest contributed to an open lesson with the former british ambassador warning about the potential negative consequences of independence, suggesting a yes vote would cause massive uphooefl for both stocks. the former british ambassador to both the u.s. and the eu. good rng month, it's great to have you with us. let's talk about that massive upheaval. we're talking about it not just for scotland, but for the rest of the uk. >> yeah. i'm absolutely clear that scotland will not be more secure, it will not have a more active international identity if it goes it alone. it's stronger in the uk. it will be more difficult for it to take its place in nato and the eu in the way it said it wants to do. and scotland isn't just a small country with no tradition of being tich in the world. it has a proud tradition of having a real impact internationally.

soite not like small countries around the world which vice president done very much. it wants to be out there and active and it will find it much more difficult in the country's 5 million people struggling to create alliances and secure its orders and its future. >> let's talk about those alliances. you said in the huffington post article that you cowrote that an independent scotland may not be welcomed by at the u ornateo. why is that? >> well, i think it's a different reason. because in europe, there are already these separatist tendencies, which the government in those countries like spain and belgium are not going to welcome another pressure in terms of noishl identity. so they're going to be very careful about the way scotland comes in. you've had a spanish minister saying scotland is going to have to join the euro. i think what happens happened on

that, b the reality is going to be lengthy and difficult. it's likely scotland will get in, but not without a struggle. nato is a nuclear alliance. the scottish nationalist government says that if it goes independent, it doesn't want anything. it's not clear what its defense posture and identity is going to be. i'm not saying it's going to away no for nato, but they will be cautious, kwis kal and they'll worry about the impact of what's left on the uk because that's an important part of our defense posture. so the uk, as it is, will face a huge period of upheaval and uncertainty. that's not welcome to our partners, either. as i go around the world, talk to americans, talk to people in asia and elsewhere, they are bemused that people in scotland are thinking about doing this and think they'll be more security and more welcome indiana ter nationally.

so other independence movements have been forming, if you will. how do you see those perhaps impacting or providing a risk to the broader european region? >> well, it's there. i'm not sure that anywhere in the rest of the eu you've got exactly was going on in scottland. the scotts have a moment on thursday where it could go either way. that's a huge risk of uncertainty. in belgium, you've had these pressures for federalism and to break up for a very, very long time. but the belgium state continues to be active. in spain, i don't know that the separatist threat are greater today than they were. but there's no doubt that if scotland goes independent, it will be a shot in the arm for the separatist movement. also i'm not saying that's good or bad, i'm saying it produces instability and uncertainty. and i think with the world the way it is, the last thing you

need is more uncertainty here or back now in europe. >> one more question on that front, does it increase the risk in the interest of a yes vote that britain wants to leave the european union? >> i certainly hope not. i hope it's a wake-up call to people in the uk to watch out because they can certainly go either way. actually, the one thing that unites the yes and no campaigns in scotland is their belief that we need to be in the european union. so i think whatever the results on thursday, if there is a referendum in the uk, we won't know that until next year, if there is a referendum, what it will be is it will be a reminder to people who want the uk to stay in europe for all the imperfections of the european union, to make their case more strongly, to not to allow it to go by default. there is a majority in the uk, parliament, for staying in the eu among the people of the uk. those have this rise and the

reality is that more people wanted to stay than to go. you wouldn't know that from looking at our debate today. so we have to get the realities of the political debate. we have to get the values for britain and europe out there. and i think that there will be a sort of concern that that hasn't happened, the right argument hasn't always prevailed in scotland and we must get it right. >> stenigle, thank you very much. we'll chat with him more in just a moment. moving on, the vote hasn't come early. the barrier was a joke from a group of pranksters hoping to add humor over the next couple of days. >> i like a little bit of humor, but it could be quite scary. still to come on the show, cnbc gets up close and personal with the biggest names on

london's cat walk. find out why vogue editor is talking to better bury's new ceo.

washington sets up a war plan in isis. the former british ambassador to the u.s. and the eu and tony blair's former foreign policy adviser, nigel, despite this change with president obama over the last week or so, it still seems to me that the strategy against islamic states is relatively lackluster and unclear. would you agree with that? well, i think it's being formed. countries in the west are very late waking up to the danger and the threat that isis poses, both in the region and in our own own countries, as well. i think gradually they are getting to put together the political and diplomatic coalition that you're going to need and begin the right military and intelligence strategy. a lot of this is going on behind the scenes.

i think there's a huge hole in the strategy is what to do over and in syria. i don't see how you can deal with isis only through the government in iraq and by military and intelligence action in iraq itself. and i think there's still a huge amount of ambiguity about what we're doing in syria. i think ultimately we may have to make a very uncomfortable choice about whether the main threat is isis and its group of extremists which are holding a huge amount of territory there or whether the main enemy is -- clearly neither is acceptable or palletble. but i don't think we can carry on the way we are. muddling through in syria. but i think gradually, the strategy and putting together the components of strategy, that's beginning. it's going to take an awful long time. george bush used the words global war on terror. that phrase is no longer

fashionable and ultimately unproductive. it did convey the idea that this is a long struggle with a component. and it needs leadership in the united states and it needs a policy which not only has vision, but is complemented in a steady and determined way. >> you say gradually. the world was forming a response to isis. the problem is, we don't have time for anything that is gradual. we need a response right now, otherwise, it will be too little too late. what exact steps do you want to see from mr. cameron? so far he said no boots on the ground. >> well, i think it's clear for all the western countries the boots on the ground isn't going to be the answer. that's not sustainable with our own public opinions and it's probably not the right answer as far as iraq is concerned, either. i think it's got to be very rapid, trailing of the iraqi forces and bringing in of other neighboring countries who can help more credibly with less confrontation on the ground,

training forces in the region who will oppose isis on the ground. some of the groups, for example, in syria, which are more moderate opposition forces node to be given more teeth. i think it was a mistake over the last few years not to give more practical military help to those more moderate groups. they may not be perfect, but they're better than isis. they're at the extreme edge. and there needs to be a lot done on the intelligence side by taking down and undermining the extremists internet sites, which are the way that a lot of people are being recruited. i think it has to be done over -- certainly urgency, but i don't think we should kid ourselves if you're talking about really making an impact on isis, that it will take years. in the short run, it's stopping them in their tracks, in the amount of territories they hold in iraq. it's obviously trying to track down the people holding host aemgs. that's a huge priority. those are the things we have to do today, but you need a much

wider set of activities over a long erp period. >> thank you very much. nieblgel, it's been a measure to have you on. we want to hear from you throughout the show on all the issues we're discussing. worldwide@cnbc.com. in other news, the french designer is happening up his ready to wear line for good, saying he will retire the line focusing on custom may couture. the fashion house will keep its iconic fragrances. meanwhile, london fashion week is looking at a cat walk makeover this season. burberry is teaming up with twitter to allow a new click button feature, allowing the social network to start moving into the e-commerce space. tone ya bryer caught up with the burberry chief executive christopher bailey on the sidelines of the show. she asked how he was handling

both roles after assuming the ceo title in may. >> it's going incredibly well. kind of everything has changed but nothing has changed. i've worked with this team of people for 14 years. so the familiarity is very reassuring. i get the biggest thing is my time and how i divide my time properly. but i always felt with the same thing, our role as a brand, as a company, is to inspire people. and when you do that, everything else fits into place. and i think as long as that's our objective, then the company will keep moving forward. >> does it give more pressure, though? >> you know, it does and it doesn't. i've always felt there is a lot of pressure. i've always been very involved in the strategy and all the big decisions we've made as a company. it's such a part of me, this company. i'm very proud of this great british company flying the flag all around the world. that pressure has always been

there, but it's a pressure that i enjoy and it's something that i feel this company has something to celebrate, not because i'm here or because of anything, but it's this magnificent company that makes the trench coat still here in the uk with the same factory. we weave the fabric here, we design everything here. it's really the heart and soul of the company is here and i'm immensely proud of that. >> finally, christopher, what is your vision for burberry going forward? >> my vision is that we stay curious, that we keep the passion burning and that we stay true to ourselves and authenticity is at the core of everything we do. >> tone ya joins us now. i hope she had a good night's sleep after mipgelling on the red carpet. >> you were well missed, wil. they had where were you? >> how flattering. i can't believe they said that when -- >> in the men's world. >> christopher is one of the

nicest guys in the fashion industry. he's now goal these dual roles, huge pressure. he's now the ceo and he's also the chief creator of director, as well. so you've got enormous amounts of pressure. and there he was back stage after the show, just very relaxed and meanwhile in his head he's thinking, you know what? i have to move on to the next one. i can't rest on any laurels even though everyone with a applauding him and saying it was a fantastic collection, he's moving on to the next one. >> and you talked to another very important ceo? >> oh, i was so excited. not just christopher bailey, i was at the tom ford show last night. i came across nuclear wintour because she's known to be frosty to everyone. but fortunately she wasn't frosty with me and we talked about the attraction of tom ford and london fashion week, as

well. >> i think there's an ek centricity here than we have in new york. there's lots of incredibly talented designers in the states, but i think the focus is a little bit more on sports wear and wearability, whereas here, i mean, following in the footsteps of the great john gallano and the great alexander mcqueen, i think there is a sense here for a little bit more sietta. >> and it is a big business for the uk, import and export business. i don't feel that we have the talent to increase our exports from britain? >> absolutely. i mean, i think some of the most talented designers are working here in london. i also think one of the reasons london has become such a focus for all of us is christopher bailey moving from milan back to london. and i think that really helped put london on the map as the

boc. and there's so much talent here, incredible factories, it's a real sense of cross. so there's no yoen why the business can't go from strength to strength. >> what a great interview. tonya, i have to ask another big trend that we've seen emerging from these fashion weeks is the emergence of technology, fashion tech, if you will. what -- did you see that at all on the runway? >> absolutely you are right. it's extraordinary. top shop, for the first time, actually had five sort of instagram people that had a lot of followers. and they had them showing the design straight from the catwalk. and it was the first time that they had embraced social media. we had talked exclusively to phillip green about that and burberry did exactly the same, as well. and you can now have an app on your phone that you can press, download and buy straightaway. so there's a huge move forward into digital. and, of course, the way and how you are being able to buy the

clothes. interestingly enough, though, tom ford came out and said, look, the only problem is if you're selling something like a black dress, you actually have to try it on. you can't just do it, you know, from your screen. but absolutely that is the way forward now. >> i don't think it's just the black dress. it's the suit, as well. i'm not sure i could ever buy anything with a slit. >> i'm sure everything would look good on you, as well. oh, well, to know tone ya, thank you so much for joining us, talking about london fashion week. all eyes on the nasdaq after a tech wreck tesla, ebay, amazon among others weighing on the index. what does that mean for your tech portfolio? we'll get those details talking to experts next on "worldwide exchange."

welcome to w"worldwide exchange." >> european market trade lower as the fed gets set to kick off its policy meeting. goldman sachs bucks the trend and says there will be no change in forward guidance. this as the nasdaq suffers its worst day in the month and a half. tesla, amazon, ebay all fell off as investors make way for alibaba. $4 billion out of hedge fund investments citing them as too

coastly and complicated. >> the u.s. officially expands the fight against isis, launching an air strike on militants near the iraqi capital baghdad. >> announcer: you're watching "worldwide exchange," bringing you business news from around the globe. >> i want to bring you the zew investor confidence and explore the month of september for germany. the zew institute, 6.9 points versus 8.6 in the month of august. but this is better than forecast. the poll was for a reading of around 5 points. that said though, the conditions, way below expectations of 40 points and dramatically lower than what we saw in the month of august, which was 44.3. so a mixed report, really. the zew saying in its commentary that the risk of sanctions with russia continues to exist.

the economic climate still ch t characterized by great uncertainty. the down ward trend for germany has slowed significantly. i want to have a quick look at how the euro/dollar pair has reacted to this. not a great response, to be honest. euro/dollar, still stuck at 1.2938. unchanged on the day. will, really, no surprise these numbers, given that we saw the dow break from the oecd last week or yesterday, rather. indeed. as you say, that downgrade, if it continues that same trend that we've had in recent weeks of very weak data out of europe. but this week, all eyes on the u.s. the fed meeting coming up. and it's very interesting to see that sell-off in the nasdaq. some people citing the possibility of making space in portfolios of the alibaba ceo.

could i be the conditions are too high? >> that could be. take a look at the u.s. premarket trade and you'll see that there is this narrowing risk appetite for tech. once again, the nasdaq down in premarket trade, dow jones industrial seeing a bit of a drop, three points in the s&p. session lows ahead of that scottish referendum on thursday. the xetra dax performing down about 42 points and the french and italian markets trading in negative territory. we have a couple of data points that investors will be watching this week. the fed, a lot is predicated on what janet yellen will say. will rates rise sooner than expected? and, of course, that scottish referendum, that could give us better clarity in the uk.

>> you're absolutely right. treasuries rose for the first time in seven sessions yesterday. we saw the yield dropping to 2.55%. why is that? maybe it's all been priced in in terms of what we're going to be hearing from the fed. maybe that sell-off if treasuries was overdone. take your pick. the ten-year bund yield coming off a little bit. interesting poll yesterday by reuters saying that within one year, the ten-year yield was teen at 1 is.45%. but people have been wrong on this one before and the ten-year gilt yield after the cpi number, 2.52%. quick look at the currency market, as well, we're seeing some consolidation, some stabilization in the dollar index. not too far away from the 14-month highs. but certainly taking a breath, really, taking a pause really ahead of that fed meeting. the dollar/yen pair, still above that 107 level. but only up modestly on the day. eu euro/dollar, unchange, 1.2940. and the aussie/dollar continues

to fall against the u.s. dollar. this is the further unwinding. having said that, though, we saw that iron ore price ves bounced off their recent lows. let's have a look at how this session in asia has played out. sri. >> hi, carolin. asian markets just ahead of the fomc, the nfd index down below the psychologically important 8,000 handle. so off by 1%. here in singapore, the market at five-week lows. this is where the brunt of the selling has been. in the greater china markets, the biggest daily percentage loss for shanghai in six months. investors seem to be, once again, very worried about the worsening macro picture, the latest xarchbl of this is the august fdi fell to a low not seen in a 2 1/2 years. big selling of the cyclical stocks, big risk off moves in the asian markets ahead of the fomc. seema, back to you now.

>> sri, thanks so much. let's hit what was a big market mover yesterday and that was tech. the tech index, one of the worst performing s&p sectors. that is what weighed on the nasdaq. tesla, nestle, facebook and apple -- actually, apple wasn't the key outperforms, but tesla and facebook showing a bit of red in yesterday's trade. tesla dropping on news, a report from morgan stanley which suggested its shares had risen for the wrong reason. shares of tesla were down about 4% in yesterday's trade. morgan stanley researchers saying they do not expect the stock to appreciate so consistently and one directionally from here. valuations could be one of the reasons why we're seeing tech stoms stocks underperform. we are expecting janet yellen to give us better clarity on when that rate will rise. on the other hand, let's bring in daniel morris. daniel, was yesterday's big move in the market surprising to you? >> not so much.

you really know people are going to be nervous ahead of the fomc meeting. very cautious at this point knowing when we get that change in direction in terms of guidance for interest rates, it's going to have a big impact on the market. we don't think that may come in and out. but you can feel that nervousness in the market. >> why maply tech movers yesterday, then, if it was spurreded by the fomc meeting yesterday? >> probably not so clear why it might be tech. in general, we like sectors like tech. if you look, especially in the u.s., where sector valuations there, it's more the high yielding sectors, utahs, parts of financials that have been stressed as we transition to higher .rates we think those are the sectors likely to operate and seshths like tech will probably do better. >> but in the long-term, do you see tech outperforming? if you look at history, tech tends to outperform. >> exactly. we think it's still a good environment for cyclicals. so tech in general within yeah, we think it is good.

>> i would think, you know, rates are rising because we are seeing a better economic environment. as a result of that, stocks should be soaring. >> well, i think the examples you see where rising interest rates has been a problem is when the fed is raising rates in order to bring down inflation. so it's a situation you had, obviously, 20, 30 years ago. recently when you've had a rise in interest rates for the fed, it's coincided with growth. you get the bounce. that first indication is, but widely speaking, it isn't a problem. >> for the first time in a long time, of the major and central banks, we've got clearly divergent policy. obviously, the ecb loosening and the ecb expected to move towards a more tightening rhetoric. what does that mean globally? >> i think you'll have outperformance in the european markets relative to the u.s. if you've got the ecb keeping interest rates down, in europe, it's difficult for them at this point to go much lower whereas rising interest rates in the u.s. >> but even from where yields

are at the moment, you get way more yield on the u.s. note than you can on the german note. >> where do you think yields are going to be a year from now? it's the price anticipation that puts you where you are. >> the russell 2,000 has been under pressure, again, down about 5.5% below its intra day all-time high. i cover the small caps quite often in new york. they arements seen as a leading indicator for the market, yet the u.s. economic data has come in better than expected. so why are small caps under pressure? >> i think the reason -- and also you see that in the midcap space -- is the valuation. they still look overvalued, despite the directions earlier this year. i think that's going to need to move through a little longer. >> for small caps, many domestically oriented name. very interesting to watch. >> exactly.

there's going to be an interesting impact with the appreciation of the dollar. generally speaking, we think that's going to be better for the small caps because they can focus more on the domestic market and not be as impacted as the domestic importers. >> daniel, we're not going to let you go yet. it seems like equities are the go-to in this space. but there is an alternative, right? >> we think they're attractive, but if you're looking for valuation and where there's potential appreciation over the next several years, valuations are in for better longer term returns and we think japan still looks attractive. >> all right, daniel, thank you so much for your time. appreciate it. daniel morris, global investment strategist at tiaa crest investment management. as part of an effort to simplify assetes and cut costs,

calpers will exit $4 billion hedge fund portfolio. officials questioned whether hedge funds are too complex or can effectively balance poor performing stocks during a market crash. not a big surprise, given their model is no longer efficient. it is simply too costly for the fact that their outperformance isn't great. if you look at the outperformance so far this year, hedge funds up 1% versus the s&p which is more than 8%. >> it's hard to have an edge as a hedge fund. even in 2013 with the s&p 500 up 30%, a lot of hedge funds underperform. but i still see this move from calpers as a big surprise. you're talking about paengz fund that manages about $300 million in investments. will this result in more pension funds taking money out of hedge

funds? >> absolutely. i think it's a key possible indicator. it's a crucial, crucial asset manager across all the global markets. and i wonder if this will lead to further krau for hedge funds down the line. >> and what does that mean for the markets? >> absolutely. the september ppi out at 8:30 a.m. eastern time producing prices are forecast to rise 0.1%. as for earnings, look for results from financial data providers and as well as adobe systems. now, president obama's targeted mission against isis takes effect as the eu -- the u.s. military carries out its first air strikes on iraq. more on washington's campaign, after the break. who's going to do it? who's going to make it happen? discover a new energy source. turn ocean waves into power. design cars that capture their emissions. build bridges that fix themselves. get more clean water to everyone.

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welcome back. let's give you some headlines. the tech sell-off in the u.s. bleeds into european trade as investors could be making room for the alibaba ipo. calpers is getting out of its $4 billion hedge fund calling them costly and complicated. and the u.s. carries out its first expanded mission in iraq. >> as was mentioned, u.s. war

planes have attacked islamic militants close to baghdad as washington steps up its campaign against isis. it's the first air strike in iraq after u.s. president barack obama spoke last week. take a listen to this. >> this message of we don't need to do that, we're going to do nation building at home lulls many americans into a false sense of security. the u.s. just went away, everybody would love americans again and, of course, the opposite has happened. the situation got worse, more people have died in the middle east violently under this president than under the last one. and finally, the american public got the wake-up call in form of decapitations by isis of two american citizens. >> let's get back to hadley gamble. this is very sharp criticism from a now beered mr. ferguson.

i'm not sure about that look. to what extent can mr. obama rely on the supported in congress inspect because he now has to brief them every three months? >> something like that, yeah. the republicans and the democrats are looking forward to the midterm, just a few weeks ago. and you better believe the isis story is going to play at the ballot box. but what's interesting is republicans understand now they've been called this obstructionist congress. they know they have to play ball at least on this element. and i think what's really going to be fun to watch as an political insider is how this goes forward. ear he's going to have to get further authorization for boots on the ground. that's going to require a heck of a lot more work on the isis part. essentially, he is going to have to go to capitol hill every three months and brief members of congress and tell them what's really happening. >> prime minister cameron as well as president obama have put

on this strong front against isis. but do you think that's working against the west? and is it pushing isis to retalia retaliate? >> in terms of a lot of talk and not much action, there's that. we know these militants that want to be so-called islamic states, we understand they use the media well and they're very savvy. when i talk to people from the region and i ask them the head of intelligence services and things of that nature, they say it's nothing like we've ever seen before because they're able to manipulate their own supporters. that's something that the government and the west is going to have to figure out how to take on. >> we heard from nigel earlier who said earlier, i felt, not just a fight against isis, but a fight against the -- and only a week or so ago, people rpd

wondering whether we were going to have to partner with assad. >> it depends who you talk to. even talking two days ago about turkey, this is a tight rope that they're working, not just because of the kurdish situation, but everyone, mr. assad, they were very, very close friends and that result ended as a result of an invasion. so all of on these characters have more than one side blah plan. this is a longer battle and it unfortunately has many twist and turns. >> hadley, thank you very much, as ever. moving on, renewed fighting in the city of donetsk has put -- under strain. at least sex people were killed over the weekend. the rebels have blamed ukrainian forces for violenting the truce.

and another story, gm's european brand says it will reorganize its russian operations in light of difficulties tied to the ukraine crisis. the automaker's st. petersburg factory plans to scale back production as part of the plan. >> the obama administration is preparing to step up the fight against the ebola outbreak. he's expected to announce he's assigning 3,000 u.s. military personnel to west africa. troops will supply medical reports. is the upcoming alibaba ipo the reason is for the slump in poor trade? more wex coming up. we needed 30 new hires for our call center.

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value will go through 200 billion quickly, sur spassing facebook, half the size of google. the fundamental thing is not about the consumer. the fundamental thing here is alibaba, tencent, baidu are all examples -- we say the chinese steal, right? we used to say that about the japanese. we used to say that about the south koreans. at some point if time, even if that was true, at some point in time, they learned so much they developed their own. and as i say, with 1.3 billion people, tossed are the averages are against it. they will be as good if not better. >> okay. i'm picking it up. there's no question about it, allibaba will be a gigantic dea. of course, i also wonder if investors are in a way overlooking the risks section in the prospectus. wove seen that multi nationals have had -- some multi nationals

have had a tough time doing business in china. so is that at all a concern when looking at alibaba as an investment? >> i think it certainly is. we've touched on the significance of this. but i think this is such a massive, massive ipo, that people have gone over it with a fine tooth comb. i don't think we'll get those forward issues for people. >> i have to say at the start, i was skeptical. with these ipos, people get ex utah rant. there would have been a temptation to rise the price significantly. but what alibaba did yesterday, they only twieted $12. >> $66.68. >> 30% above the original price range, facebook 9% above and that's prudent, isn't it? >> i think the biggest risk event, it's something everyone has touched on a little bit. that is the e-commerce starts to

move into social media companies, as well. so far, e-commerce is very much focused. as we mentioned earlier, twitter has clicked to buy options and that's a threat. moving on, apple fans may have to wait a little longer for the new iphone 6 after demand outstripped supply on the very first day. tom reports. >> it's looking like a strong start for i foen orders. announcing that the first point of availability, that is twice the number saw last time. that was the iphone 5. the next number we get will be the first weekend cumulative sales. if history is any guide, apple puts that number out after the phone has been in retail over the first weekend. last year, ta number was 9 million units. the year before, it was 5

million. investors will be looking for at least 10 million units this time around. this is a good sign, this first 4-hour preorder number being so strong, suggesting to him that iphone units will be up 17%, whereas a lot of people had expected them to be up just 7% before this number came out. now, the iphone 6 and six plus are, of course, larger units, bigger than the iphone 5 and 5s were in the path. more on scale with samsung's offerings like the galaxy note and galaxy s 5. we'll see how they do in the critical home day season, 50, 60 million units police is what the street will be looking for. cnbc, i'm jon fortt. some flashes out of italy where prime minister renzi said he is ready to pass special

measures if parliament tryings to block his labor reforms, this part of his 1,000 days of reform. he's trying to push the reforms important enough that he will pass certain measures if parliament tries to do et. from celebrity news photos. >> and we'll look you a look with how furchgs are trading ahead of the open. they're custom made trains. you can't get any better than that. siemens trains are not your grandparent's technology. they're something that's gonna change the cities we live in today. i find it so fascinating how many people ride this and go to work every single day. i'm one of the lucky guys. i get to play with trains.

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welcome back to "worldwide exchange." goldman sachs bucks the trend and says there would be no change in forward guidance. >> this after the nasdaq suffers its worst day in a month and a half. tesla, amazon among the stocks as investors appear to make way for alalibaba's ipo. calpers pulls more than $4 billion out of hedge fund investments citing them as too costly and complicated. >> the u.s. officially expand the fight against isis.

>> announcer: you're watching "worldwide exchange," bringing you business news from around the globe. thanks so much for joining us here on wex. let's take a look at how u.s. futures are faring at this moment. red across the screen. the dow indicating a negative open. the same for the s&p 500. we'll be putting a lot of focus today on the nasdaq after that big sell-off in tech. a lot of momentum stocks within tech as well as biotech weighing on the nasdaq. of course, very interesting to see this type of trade ahead of this fed meeting. how investors are positioning themselves ahead of janet yellen. of course, also the scottish referendum seen as a market mover, as well. that will be on thursday. on that note, let's take a look at how european markets are faring at this moment. you can see trading in negative territory. still seeing significant losses

in the ftse 100. down about 29 points, i'll call it. the xetra dax, germany markets showing a little bit of red. down 35 points. french and italian markets trading in negative territory. carolin. >> if you've just tuned in, there's a good chance you've tuned in because you want to know how you are going to make money in these markets. here is what some of the experts have been telling us this morning. >> i think growth in this region is going to move to 2%. i expect eurozone equities in general will outperform the u.s. over the next 12 months. >> i am still positive on the equities. >> companies like facebook go from a standing start to a billion global users in ten

years. this is the era for growth stocks, people can come from facebook and like allibabalibab. so there may be -- there will be short-term setbacks along the way, but i still think this is an environment for growth. >> still appear environment for growth. you heard that. yet the oecd yesterday cut growth forecasts for almost all developed markets. we thought we were going into a stronger u.s. growth environment ahead of the fed meeting today. and then the eoecd cuts that. >> that will be perhaps something that is factored in. interestingly enough, u.s. stocks typically swoon in anticipation of rates expected to rise. so that could be what we're seeing in today's trade. also narrowing risk appetite. that also could be one reason we saw u.s. stocks sell off. the nasdaq composite very much in focus with tech and biotech selling off. >> guys, breaking news from

ukraine. the ukrainian parliament, according to dow jones, has just passed a law on special status from the rebel health territories, passed that law on amnesty for some rebels. that is according the dow jones. very important news. we have been seeing some fraction necessary that cease-fire that is just a little more than one week old. >> something we'll keep on our radar. cyber security sector is expected to pull in $32 billion this year as firms look to prison and protect attacks. home depot last week told consumers it was a victim of a cyber attack and targets massive breach last year led to its ceo's resignation. there was the apple icloud hack. i saw personal photos from jennifer lawrence leaked. cyber security is a very hot issue on that note.

does that mean your company is positioning itself in a very large sector? >> i hope so. we're seeing more awareness, more demand in different places. organization looking more to what they need to do. it's an ever changing environment. this is probably the most dynamic environment in i.t. and probably the only environment where you're fighting somebody else. it's not just that you want to produce a bit of product. there's ongoing development in this area. >> we heard from a long list of companies that have been involved in cyber attacks in recent weeks and months. is that because companies aren't spending enough of their time and focus? would it be possible if you spend enough to totally protect yourself in the future? >> i wish it would be. realistically, it's like physical security. there's no guarantee that nothing will happen. i think what happened in the news that we just see more and

more actually there's much more things going on. and the reason for that is we use much more technology in everything we do. the second thing, the whole cyber market became a technology. people do different stuff with them. >> we've talked a lot about what a business can do. but what about the consumer? what if we're just tired of these constant breaches, we don't trust our bank, target or home depot any more? is there any choice in what we can do? >> i think there's the very basic things that we all should do. we should make sure that we don't click on things we don't know where they come from. we see all those links and e-mails that we don't know. make sure you have different passpo pass rd woulds for different things. and different photos if you don't want to be out there, forget about putting them on the cloud. so the very basic things.

besides that, i think we all need to continue to shop, continue to go to the internet and enjoy what we have out there. >> analysts at cowen and co write the interest of new players and similar products should be a big threat to your vision at tech point, especially if they offer consumer services. what are you doing to fend off competitors? >> first, great product. and the most important, great security. we've had a lot of technology. what's unique about checkpoint is we offer a full architecture. not a point solution. managers are given a best of breed protect. there is a market and there is a dmarntd. we will continue to bring value to the market. >> thanks for joining us in studio. >> thank you very much. the chinese city of

chongqing is segregating people would walk glued to their phones from everyone else. however, a city official is meant to be ironic, to remind people it's dangerous to tweet, instagram and facebook while they're walking. >> and we've been asking throughout the show, what do you think about smartphone lanes? are they a good idea or are you still glued to your phone that you would use one, too? josh has tweeted and he said perhaps there should be a barrier between that lane and the road. i think that's a really good idea. if you want to join the skais conversation here on "worldwide exchange," get in touch with us, world would it@cnbc.com or via twitter @cnbcwex. earlier, gisele bund chen will be showing off more celebrity gear.

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>> announcer: you're watching "worldwide exchange." >> now, that was just a small tease from nike for the latest from superstar lebron james. nike is holding an event at its headquarters to reveal the lebron 12 sneaker, hoping its outperforms last year's lebron 11. james reportedly only wore the shoes two times last season because they were up comfortable. nike sold $300 million of his signature sneakers last year, although that was flat from 2012. i would hope that these shoes are a little more comfortable, maybe, seema. >> perhaps. we'll have to see. that story got us thinking how much do athletes make on

endorsements. we found that basketball player lebron james who, of course, plays for the cleveland cavaliers has endorsements from nike, mcdonald's, coca-cola. gisele bund chen has endorsements with victoria secret and under armour, as well. roger federer still made $52 million in investments. you don't have to feel too bad for him. finally, let's take a look at christiano ronaldo, the soccer star. he has representation from armanni as well as nike and he made $28 million in endorsements. i've got to ask you. i have to say i'm somewhat of a sucker for it. it works on me.

although these are huge figures we're talking about, it does work on me. from celebrity endorsements on to star trek. space, the final frontier, nearly 50 years after captain kirk first uttered those words on star trek, the world is still fascinated by the idea and prospect of space exploration. today, nasa is getting back into the game. hampton pearson is in washington with more. >> hello, wilfred. we're going to get an update on the space program in nasa. lots of moving parts here. of course, we remember that nasa retired the u.s. space shuttle fleet in 2011. but today the agency is expected to announce the winner of a multibillion dollar winner to ferry astronauts to and from orbit. the discussion of the development of crew capital yulss or space taxis could be a milestone. it would lock in unparalleled

support for contractors to build and operate vehicles with limited government joefrt sigov. boeing is likely to be identity to smaller rivals spacex, run by elon musk and sierra nevada. the company has a nearly four decade relationship with nasa and is the primary contractor on the international space station. but the journal says the company didn't meet all the clinical design requirements. separately, there are other reports that say boeing and lockheed martin will have a joint venture that will announce on wednesday that it's teaming up with blue origin to develop a new rocket engine. blue origin is run by amazon founder and ceo jeff bezos. here looking for a way to replace russian built engines that power its rocket five

office. however, rising tensions between washington and moscow have raised concerns. russia could cut off engine deliveries, although shipments continue for now. so lots of moving parts. >> thank you so much for that, pieceon. and these are your headlines. the tech sell-off in the u.s. bleeds into european trade as invest erts could be making room for the alibaba ipo. kalpers is getting out of its $4 billion position in hedge funds, calling them costly and complicated. and the u.s. military carries out its first air strike against isis in iraq as part of president obama's expanded mission. a lot is predicated on what janet yellen will say. we'll talk next with an expert on what too expect. stay tuned.

now, investor confidence in germany slipped to its lowest level in almost two years this morning. according to the zew institute. current conditions fell to 25.4 from 44.3 last month. the group said that russian sanctions risked an uncertainty scotland independence vote contributed to the drop. the german market is off just about 0.25% today. but markets in europe have been soft overall today. as you can see, the ftse 100 down almost half a percent. france off almost 0.5% and italy down about a quarter percent. and that really just a few headwinds for markets, not only scotland on thursday, but the fed meeting come up. >> and on that note, wilfred, let's take a look at how investors are positioning themselves ahead of that fed meeting. recent market action suggests

that investors are booking profits. the nasdaq losing about 1% in yesterday's trade. trading about 35% below its intra day high. here is how the premarket trade is looking. dow futures currently down, s&p flat. the tech heavy nasdaq showing red. also on that note, let's take a look at what agenda data you should be looking out for. the september ppi is out at 8:30 eastern time. producer prices forecast to rise 0.1%. as for earnings, with the results from financial data firm factset and adobe systems, the maker of act crow bat, flash and photo shop. calpers is getting ott of hedge funds as part of an effort to simplify options and cut costs. they say its entire $4 billion investment over the next year. the pension plan is a bellwether for investment trends at other plans.

calpers exit follows a review of the portfolio that began in march. officials question whether hedge funds are simply too complex or can effectively balance poor performing stocks during a market crash. a goldman sachs's chief economist of global investment research has gone against the consensus on fed speak saying the phrase considerable time will remain in this week's statement. and in a note published yesterday, ian said many are missing the distinction between the decision not to renew existing guidance and a decision to renege existing guidance. does that resinate with you? what do you make of those comments, greg? >> i think basically we're ready for a continuation of the dwagz around the winding down of qe next month and we should be getting a reaffirmation of that guidance over the next couple of days. but just as importantly, what we're seeing from our clients is a definite indication of a

strengthening of the economy and it's a very different conversation than we were just having just 12 to 18 months ago. we're seeing a discussion around investment and things like cap ex. slowly we're getting some recovery, obviously, a little slower than we would like on the housing and the jobs data. but even that, by the end of -- you know, by the fall, we're expecting numbers dipping below 6% unemployment. so this does bode well for the underlying economy here. and i think you're going to see comments that really tie back to that. the unwinding of qe and an eventual glide path to interest rates going up later in '15. >> greg, a little bit of market volatility in yesterday's trade, the s&p, dow, nasdaq witnessing drops across the board. does that tell you that investors are booking profits, expecting janet yellen to change that language around when rates will rise? >> we're actually expecting a discussion about rates rising into the middle of '15 and we're not going to really get caught up in the movement of the

markets on a day-to-day basis. but what i would say is, you know, a discussion about rates rising is a very healthy strength to the economy. and it really does bode well that we're not having the conversations of a year ago about fed shutdowns and sequestration and is we're talking about the underlying numbers. >> greg, if it was based on a fundamentally strong economy, wouldn't bond yields already be higher? and wouldn't other indicators such as the russell be stronger than it is at the moment? >> yeah. but i do think there are other pressures, both globely and domestically that -- i mean, this has been a complicated recovery. i think we would all agree on a best case scenario. but we are seeing fundamentals about, you know, unemployment edging down to 6% and going below 6%. we are seeing a far stronger growth finally in the gdp for the second quarter. and i do think you're going to hear some forward language about the expectations of underlying growth coming out in the next couple of days. >> greg, there's so much talk

about the timing of the rate hike. do you think we're neglecting the magnitude of rate hikes over the next couple of years? >> you know, far from -- this is far from an exact, but i do think you're going to see a very slow trajectory of rate hikes. it's going to go, you know, fairley slow into the middle of 2015, maybe our expectations are for the initial hike sometime around june. nine months, ten months from now. and then you're going to see some very slow rate hikes over the next couple of years because i do think there's going to be a watchful eye that this recovery continues, that gdp growth is sustainable. >> degree, yellen has been very clear on what data point she focuses on. that's the labor market. most recent reports, the jobs report, doesn't that mean the language will stay the same? >> well, yeah, i guess, you know, the august jobs data did come out a little disappointing. but in general, i think you've seen some fairley healthy jobs number. the most disappointing aspect of

it has been the wage growth. obviously, there's going to away watchful eye on this. but do i think you're going to see, if we can get a good couple of quarters strung together, i do think it does bode well for the fed unwinding its balance sheet and a glide path to interest rates on a start basis. >> wage growth has been a concern for investors. greg, for now, thanks so much for joining us, greg, head of corporate barpging at t.d. bank. the chinese still of chongqing has created the world's first smartphone lane. we've been asking what do you think about smartphone lanes? beth tweeting those using phones while walking should be sealed in those giant, clear, plastic walking bubbles. so perhaps a mixed review on whether these should be added. i am in favor of it because i am a smartphone fanatic. >> we're going to need a lot of those plastic walking bubbles. that's it for today's show. i'm carolin roth. >> i'm wilfred frost.

>> i'm seema mody. "squawk box" is next.

good morning and welcome to "squawk box." it's the two-day fed meeting kicking off. tesla shares tumble, dragging down the nasdaq. one of the biggest losses we've seen in a while and some other big names. and mcdonald's, making a bold move in the breakfast wars. it's tuesday, september 16th, 2014. "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. preorders for the iphone 6 are off the chart. the applewatch has people talking and everyone with itunes got a copy of u2's new album, songs of independence. that a half a billion accounts around the world. it turns out, though, that not everybody is a u2 fan. we'll explain the sour note apple hit. investors will have to wait until the end of the two-day fomc meeting to legislature what the central bank has to say. some policymakers expect to drop the language that says that the fed will be keeping rates low for a considerable period. if that happens, the market is likely to interpret it as a sign that we are getting closer to rate hikes. you have to wonder what that would end up doing to equities. investors, take a look, you'll see the nasdaq off by about 48 points.